Thread: free trade agreements, do they work both ways?

A better question "Do free trade agreements work AT ALL?"

And.... no.

Originally Posted by bob10

Was it a good idea to have a free trade agreement with Korea? What do we get in return,

Hello from Brisbane,

The topic and responses got me thinking about that - so I decided to look up the Dept of Trade site to see what we do get.

No doubt more lies than Pravda, but this is a synopsis of the Aust-Korea trade link.

We export about $22 billion of products and services to Korea (2012) and they sent about $10 billion back. Huh?

Total Australian investment in Korea is modest, around $10.5 billion, while total Korean investment in Australia is a whopping $12.0 billion - so I guess they got us there.

Korea accounts for only 5% of our total trade, but is Australia's third-largest export market and our fourth largest trading partner. Mainly taking iron ore, coal and crude petroleum, and a lesser amount of agricultural exports (beef, sugar and dairy), tourism and education services. We imported a higher value of refined petroleum ($2.7b) than cars ($2.0b) but the largest import was shipping and other services.

So what about the unfair trade agreement?

Well, it seems that the USA, EU and other ASEAN countries already beat us to the negotiating table, and if Australia hadn't signed up it was estimated (presumably by Treasury modelling) by the time their agreements had reached the full implementation stage (2030) Australian exports would have fallen by around 5% - but agricultural imports would have fallen 30%, mining by 1% and manufacturing by 7%.

What do we get by signing the same deal as the others?

The same modelling suggests that by 2030 total exports to Korea would actually be 25% higher worth about an additional $5 billion or $$650 million per year. Agricultural exports would be about 73% higher than otherwise (an additional 5% increase over all agricultural exports), mining exports would increase about 17% and manufacturing exports to Korea by about 53%. The present tariff on manufactured products is 13% which the agreement progressively removes within the next 7 years.

Who loses?

Probably motor vehicles, car parts, steel products, textiles, clothing and footwear which are already in decline.

So, yes there is some pain - but not much in the overall scheme of things. I guess there is more to Australia than football, meat pies and Holden cars...

Cheers,

Yes it's absolutely true with the figures you quote, however a lot of the industries from where we export products to SK are employment poor in terms of total numbers. While the nation and the industry owners are better off it doesn't facilitate employment within Australia and the benefits of value adding.

Unless we can find ways to employ the unskilled, low skill and less educated people we will continue to widen the gap between the rich and poor with a diminishing middle class a consequence.

Originally Posted by S3ute

Mainly taking iron ore, coal and crude petroleum

and there's a problem right there. We need to value add these here in Oz and using Lotza Landies employment options. Then sell the products on for greater income along with greater employment. Eg. a steel plant some where in the mid-north of SA serviced by a fast transit public transport system from Elizabeth so GM workers could be re-employed there. Close to power and sea ports too. We should never sell raw bauxite either but value added alloy ingots instead and probably lots of other options too. BUT we need a political environment that encourages investment in these type of industries......

According to the Foreign Affairs and Trade website in 2011 (latest figures available) Australia exported goods worth $25billion to South Korea and imported goods worth $7.2billion. The near $18billion in our favour currently is an awful lot of Comodores...

Whilst I empathise with the Holden workforce continuing to subsidise the company is hardly the answer.

Originally Posted by mark_coffey

forgive me if I am wrong, but isnt the coil steel that the cars are being made from imported from korea now, it was when my brother was working in the press plant a couple of years back.

Yep Korea and or Malaysia, lots of steel coming in from Penang.

Originally Posted by S3ute

Hello from Brisbane,

The topic and responses got me thinking about that - so I decided to look up the Dept of Trade site to see what we do get.

No doubt more lies than Pravda, but this is a synopsis of the Aust-Korea trade link.

We export about $22 billion of products and services to Korea (2012) and they sent about $10 billion back. Huh?

Total Australian investment in Korea is modest, around $10.5 billion, while total Korean investment in Australia is a whopping $12.0 billion - so I guess they got us there.

Korea accounts for only 5% of our total trade, but is Australia's third-largest export market and our fourth largest trading partner. Mainly taking iron ore, coal and crude petroleum, and a lesser amount of agricultural exports (beef, sugar and dairy), tourism and education services. We imported a higher value of refined petroleum ($2.7b) than cars ($2.0b) but the largest import was shipping and other services.

So what about the unfair trade agreement?

Well, it seems that the USA, EU and other ASEAN countries already beat us to the negotiating table, and if Australia hadn't signed up it was estimated (presumably by Treasury modelling) by the time their agreements had reached the full implementation stage (2030) Australian exports would have fallen by around 5% - but agricultural imports would have fallen 30%, mining by 1% and manufacturing by 7%.

What do we get by signing the same deal as the others?

The same modelling suggests that by 2030 total exports to Korea would actually be 25% higher worth about an additional $5 billion or $$650 million per year. Agricultural exports would be about 73% higher than otherwise (an additional 5% increase over all agricultural exports), mining exports would increase about 17% and manufacturing exports to Korea by about 53%. The present tariff on manufactured products is 13% which the agreement progressively removes within the next 7 years.

Who loses?

Probably motor vehicles, car parts, steel products, textiles, clothing and footwear which are already in decline.

So, yes there is some pain - but not much in the overall scheme of things. I guess there is more to Australia than football, meat pies and Holden cars...

Cheers,

Total Australian investment in Korea is modest, around $10.5 billion, while total Korean investment in Australia is a whopping $12.0 billion - so I guess they got us there .Quote


Did the report say what they invested in? Let's say, primary industries. Cattle, sheep, wheat. If they own the land, produce the goods, export to Korea, does Australia get as much out of that, if we owned the land etc.,
Does that mean we've sold the farm? as well as our manufacturing industries. Does that mean the only jobs our grandchildren will have, is working for foreign owners in their own land? Fairly soon the biggest industry Australians will be controlling will be the drug industry, much like Mexico. Who let this happen? Bob

Originally Posted by Lotz-A-Landies

Yes it's absolutely true with the figures you quote, however a lot of the industries from where we export products to SK are employment poor in terms of total numbers. While the nation and the industry owners are better off it doesn't facilitate employment within Australia and the benefits of value adding.

Unless we can find ways to employ the unskilled, low skill and less educated people we will continue to widen the gap between the rich and poor with a diminishing middle class a consequence.

Well said, Diana. There are over 500,000 unemployed in Australia plus an unknown number of pensioners various who are capable of working, and another invisible multitude who would like a job but have given up looking. It is only manufacturing that has the capacity to employ large numbers of unskilled and semi-skilled people. Why are we exporting our natural resources and primary produce without value adding? Dig it up, chop it down, ship it out hardly produces jobs. We must develop industries that value add to our produce.