The Australian Financial Review
By Hugh Morgan
Business Council of Australia
The signing overnight of a free-trade agreement with the United States is an historic moment for Australia and our economy. The Business Council of Australia strongly supports the agreement reached between the Australian and US governments.
It represents a once-in-a-lifetime opportunity to achieve deeper and continuing integration with the world's largest economy an economy that alone accounts for one-fifth of the world's economic activity.
The benefits of this agreement will be far-reaching, with nearly every aspect of Australia's economic activity gaining improved access to US markets.
It means efficient and successful Australian companies and industries will be able to compete freely in the US market, without threat of protectionist action.
Australian companies will have full access to the nearly $300 billion market associated with US federal government procurement.
This alone represents a market equal to more than one-third of the size of our entire economy.
Our manufacturing industries will also receive a significant boost. Under the agreement, virtually all of our manufactured exports will enter the US duty-free. Our motor vehicles industry stands to gain substantially, as does our mining and minerals sectors. Over time, other important sectors such as textiles and clothing will also benefit as tariffs are wound back.
While much will be made of the fact that the agreement has not resulted in gains for some key agriculture markets, the fact remains that for most of the agricultural sector, it includes a wide range of benefits in terms of better access and reduced tariffs for meat producers, horticulture and food processors.
The agreement also provides a framework that will promote mutual recognition of professional standards and qualifications of Australians seeking work in the US. This represents a fundamental breakthrough as the value of Australia's export economy becomes increasingly tied to skills and expertise.
The benefits will be as much intangible as real. There are many opportunities beyond those normally captured in traditional analysis and assessment of the agreement.
Closer economic ties will result in a much more dynamic exchange of ideas and culture with what is undoubtedly the world's most innovative and entrepreneurial business environment.
This will have major impacts over time in terms of building Australia's ability and capacity to support and promote innovation, risk-taking and ultimately higher-value growth. These are the benefits and synergies that can only be derived from a comprehensive integration of our two economies.
Overseas expansion is an increasingly important source of growth for our small and emerging businesses. For example, there are many small businesses in Australia that provide specialist services that the US government needs. These will now benefit from enhanced market access opportunities.
All of this sets the scene for Australia to benefit from increased economic growth and prosperity in the long term. Agreements such as the US FTA should remind us of the growing importance of trade to the Australian economy.
From a protected, inward-looking economy in the early 1980s, export activity and returns have risen 40 per cent in the last two decades alone.
One in five Australian jobs is now directly dependent on our export industries, while export revenue accounts for nearly 25 per cent of the country's annual income.
That is why the Business Council of Australia which represents 100 of Australia's leading companies vigorously supports trade liberalisation and why we have been strong supporters of the US FTA from the outset.
Significantly, the agreement answers criticisms that politicians and political deal-making are geared exclusively to short-term outcomes. The benefits of this agreement will accumulate over time, providing the basis on which business can make long-term decisions and investment in one of our biggest markets.
In supporting a comprehensive US FTA, our view is that the agreement will not undermine our prospects to achieve further access to world markets through multilateral trade talks, such as the Doha Round of World Trade Organisation (WTO) negotiations.
While we recognise the benefits of multilateral liberalisation are potentially great, we need to be realistic and pragmatic not only about our ability to reach these agreements, but also the time it takes for negotiations to be completed and for the benefits to flow through our economy.
Our strong view is that trade liberalisation through bilateral agreements can maintain the momentum for further progress at the multilateral level. Australia's shared approach with the US on many issues in the current round of WTO talks provides a strong foundation for achieving future progress with these negotiations.
For those who claim that no deal is better than a "bad" deal, our view is that this agreement is a good deal.
The fact is that no deal would have significantly undermined Australia's future prosperity and represented a major opportunity missed.
While the potential of this agreement for our economy is obvious, in the end the benefits will only accrue as a result of our own efforts and initiative.
The agreement is not a gift, rather an opportunity. It is up to us as business leaders to make the most of this historic opportunity that our government negotiators have facilitated for us.