Australia to Review Trade Policy in 2011, May Lower Tariffs, Emerson Says

Australia will release a trade policy review next year that may propose tariff reductions, Trade Minister Craig Emerson said, calling a dispute about foreign-exchange rate advantages in the global economy a “zero- sum game.”

“Currency wars are no substitute for trade liberalization,” Emerson said in the text of a speech today in Sydney. “Australia must not wait for other governments to reform their economies before reforming ours.”

The U.S. Congress is considering trade legislation “with teeth” next year to counter China’s policy of restraining the value of its currency, Senate Foreign Relations Committee Chairman John Kerry said this week. That disagreement is one of several in which developing and emerging nations are accusing each other of pursuing cheap currencies as a way of driving economic growth through exports.

Emerson said his office will issue a report on the future of Australia’s trade policy near the end of the first quarter of 2011, which he said “can be the year of trade.” Exports account for about one-fifth of the country’s $1.3 trillion economy.

The review will not stall efforts to complete proposed trade deals with Korea, Japan, China and a trans-Pacific agreement with nations including the U.S. and Singapore, although it will “have a bearing on the government’s approach,” Emerson said in remarks to the Lowy Institute for International Policy.

Emerson said the review will draw on principles that include a unilateral approach to tariff cuts and separation of trade policy from foreign policy. It will also take into account a Productivity Commission report on existing policy and be part of wider government plans to improve the economy, he said.

Australia should “dispense with the bargaining-chip approach to the remaining Australian tariffs,” Emerson said. “Australia should make its offers, our trading partners should make theirs, and where appropriate we should encourage them to go further. But if the final deal is not in Australia’s national interest we should not accept it.”

Dec 9, 2010

By Tracy Withers

Source: bloomberg.com