Australia has a stake in Brexit and no one will thank the UK or EU for erecting harmful trade barriers

Australia has a stake in Brexit and no one will thank the UK or EU for erecting harmful trade barriers

Intuitively, protectionism seems to make sense – that’s why it’s so popular. It might seem that protectionism supports local economies and protects jobs. But in fact, the opposite is true.

Protectionist measures lead to inefficient and unproductive work practices and poor quality. Manufacturers become internationally uncompetitive, because their input prices are higher – so you lose your export markets. Innovation is stifled because there is no incentive to innovate. Invariably, protected industries become unable to compete on their own terms. Taxpayer pounds that can be spent on health, education or infrastructure are instead spend protecting vested interests from their own inefficiency.

And it’s all paid for by the consumer – either at the till or through higher taxes, or both.

Alternatively, one can take the path to wealth and prosperity by opening one’s markets to international trade. It might seem counter-intuitive but it’s true – try to think of a genuinely open, free-trading country that is poor.

We tried trade liberalisation in Australia, and it worked for us. In the early 1980s, we faced an economic crisis: high inflation, high unemployment, rigid labour and financial markets, high tariff walls and low productivity.

We had protected inefficient industries such as our motor vehicle industry, arguing that under the ‘infant industry’ argument, they just needed a few more years of protection from foreign markets before they could stand on their own two feet. They never could. Our cars were expensive and no-one else wanted to buy them. Without protection, the industry could not survive.

Starting in the 1980s, the Australian Government embarked on a comprehensive programme of economic reform, including trade liberalisation. Australia slashed tariffs across the board and removed non-tariff barriers in sectors such as agriculture.

And we’ve signed free trade agreements: nine in the past 12 years alone. We trade and compete with large exporting countries, the USA, China, Japan, South Korea and many of the ASEANs confident in the knowledge that our innovation can compete with our competitors’ subsidisation.

The results are startling: Australia has now achieved 26 consecutive years of economic growth. Our businesses have had the freedom to trade where the global demand has been highest, confident in the knowledge that we could compete in any overseas market. And consumers are better off – now our cars are actually cheaper than they were 20 years ago.

This hasn’t meant a race to the bottom either. Our living standards and overall wealth have never been higher – Australian wages have risen over 60% over the last 15 years.

Trade liberalisation isn’t just smart, it’s part of being a good global citizen. Trade improves the economic growth and development prospects of all nations, helping to foster regional integration and stability. This is part of the rationale for the PACER Plus agreement, which Australia recently signed with several Pacific Island countries and New Zealand. In short, those who care about development and developing nations should be the loudest voices in support of trade liberalisation.

As a country with much at stake in an open global trading system, Australia also has a stake in Brexit. With protectionism on the rise, we think it’s important that the EU and the UK both show leadership, by agreeing to a comprehensive, trade liberalising agreement. No one will thank the UK or the EU for erecting barriers to trade that harm the global economy, costing jobs and hurting growth.

The Australian Government has made clear it wants to pursue Free Trade Agreements with both the UK and the EU. We’ve concluded scoping discussions with the European Union on a possible FTA. Our declared objective is to finalise an Australia-EU FTA by 2019.

We’re also keen to sign a trade agreement with the UK, when the time is right. We’ve already established a trade working group to scope out the parameters of a future ambitious and comprehensive bilateral FTA with the UK. In the meantime, we can pursue opportunities in areas that don’t fall within EU competence. We can continue to build links between our trade officials, so that trade negotiations, when they do commence, can be concluded quickly.

The more liberal one’s trade policy is, the easier it is to sign FTAs. Our FTA with the USA took only 15 months to conclude from the announcement date. Since then, our exports to the US have risen by over 70%.

But it’s much bigger than just us. The UK is the world’s fifth largest economy and a permanent member of the Security Council. The UK carries a voice that is heard by all. So we’re encouraged to hear that the UK fully intends to resume its place as a great, global trading nation.

It’s a role that befits your history, and which will benefit the British and global economy, including the developing world. We will be a ready partner with you in the days and years ahead.