Opinion article by John W.H. Denton, Partner and Chief Executive Officer, Corrs Chambers Westgarth published in The Australian Financial Review on 19 September 2013.

The incoming government’s commitment to injecting a measure of pragmatism into our key trade negotiations is a welcome step into what is the Asian Century.

The quicker we can conclude free trade agreements with our largest trading partners, the sooner we will benefit from increased access for Australian goods, services and investment to some of the world’s biggest markets.

In its Action Plan for Enduring Prosperity, the Business Council of Australia highlighted the importance of deeper global economic engagement to national prosperity and living standards.

Make no mistake – trade matters.

One in five Australian jobs is related to trade. And numerous international studies have shown trade liberalisation is a strong engine for job creation and higher wages.

Australia is currently engaged in a complex web of nine different free trade negotiations, mainly focused in our region.

Separate trade talks with Japan, Korea and China, which started between 2005 and 2009, together represent a potential combined market of over 1.5 billion people and a GDP of US$15 trillion ($16 trillion). And the huge Trans-Pacific Partnership (TPP) Agreement negotiations bring together 12 countries in our broader region, accounting for nearly 40 per cent of global GDP and around 35 per cent of our total two-way trade.

There are major challenges in bringing these deals to a successful conclusion. But given our existing seven free trade agreements only cover 28 per cent of our total trade, we need to lift our game.

The incoming government’s flexible approach to including investor-state dispute settlement (ISDS) clauses in Australia’s negotiating position could be the impetus needed to get some of these negotiations over the line. ISDS provisions allow private companies to take dispute settlement proceedings against foreign governments.

Australia’s previous refusal to even consider ISDS provisions in bilateral and regional trade agreements weakened our negotiating coin, and resulted in our experienced trade negotiators from the Department of Foreign Affairs and Trade having one arm tied behind their backs as they sat across from their counterparts in Seoul, Tokyo and other regional capitals trying to conclude the “noodle bowl” of separate free trade agreements.

In the face of this blockage, Australia’s exporters have increasingly been at a competitive disadvantage. In the Korean market, for example, Australian beef growers face a tariff rate five percentage points higher than US beef, due to preferential terms under the US–Korea FTA. Over the next decade or so, that gap will expand to a substantial 40 per cent difference. Our wine exporters face a 15 per cent disadvantage, as wine from the US, EU and Chile now enters Korea tariff free. And European services exporters are similarly benefiting from preferential access to the Korean market through the EU–Korea FTA. Trade negotiations are by their nature an exercise in give and take, and balancing risks versus benefits.

Australia needs a principled but pragmatic approach to trade negotiations, with the aim of achieving comprehensive, high-quality, WTO-consistent agreements. We should allow our negotiators to address the question of ISDS clauses on a case-by-case basis, with the negotiated outcome then considered by existing Parliamentary processes, with an eye to what is in the national interest.

The benefits for all of us are too important to ignore any longer.