Australia's other Free Trade Agreements
Free Trade Agr0ements with Malaysia, the United Arab Emirates and the ASEAN countries will present challenges and opportunities for Australia's textile clothing and footwear industry, as Belinda Smart reports
Ever since the Australian Federal Government began talking about Free Trade Agreement (FTA) negotiations with China, that country's megalithic presence has cast a shadow over the Australian textile clothing and footwear (TCF) industry.
So much so, claims the Council for Textile and Fashion Industries of Australia (TFIA), that many Australian TCF companies are ignoring FTA negotiations with three comparatively minor countries or trading blocks - namely Malaysia, the United Arab Emirates (UAE) and the Association of South East Asian Nations (ASEAN), which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand; Brunei and Vietnam.
These negotiations have stealthily been gaining ground, and because - at least in the case of Malaysia and the UAE -- they involve more nimble negotiating partners, they are likely to be finalised relatively quickly.
While negotiations with China rumble on with no definite finishing line in view, the Malaysia and UAE agreements look set to be wrapped up by mid 2006. The ASEAN FTA may not be too far behind.
TFIA executive director Ashley Van Krieken claims Australian TCF companies need to acquaint themselves with the challenges and opportunites of each of the three FTAs in question as soon as possible.
While the effects of the Malaysia Free Trade Agreement (FTA) on Australia's textile clothing and footwear sector are small relative to the FTA with China, "they will certainly be of significance to some Australian companies," he says.
The UAE -- whose economy is growing at a rate of five to six per cent per year, and has already built up a respectable base as a specialist in synthetic textiles --
is also a country to watch, he claims.
Of less immediate but potentially greater importance will be Australia's FTA with the ASEAN countries, with Australian Bureau of Statistics (ABS) figures showing that average apparel imports from those countries have grown steadily in recent years.
"There are important questions that need to be addressed, such as how do these countries' competition policies work, what is the regime for obtaining import or export licenses, what is the customs regime and how will those countries' bureaucracies affect trade," claims Van Krieken.
"We must ensure there are sufficient procedures -- such as getting rid of non tariff barriers and attaining easier access into those countries -- to allow Australia to maximise the benefits of these FTAs," he adds.
Van Krieken is also concerned that Australia's agreements with Malaysia, the UAE or ASEAN will affect future agreements with other countries.
"We must make sure that the conditions and outcomes are the same for all countries. For example, if we say we don't want tariffs lowered with regard to China but we do for Malaysia, that is sending a confusing signal to those countries."
Not all TCF industry commentators share the TFIA's sense of urgency however. Trevor Thomas, strategic programs director of national TCF consultancy TCF Services believes the impact of these FTAs - at least regarding imports -- will be minimal.
"In five years time we're estimating that around 30 per cent of TCF products will be manufactured onshore while 70 per cent will be manufactured offshore. Of that 70 per cent around 80 per cent will still come from China, so the amount of imported product we're talking about [from countries other than China] is very small. The main game will always be with China," he claims.
Thomas maintains that the areas in which Malaysia, the UAE and ASEAN will be of relevance to Australia is in niche sectors, such as hand crafted items including embroidered apparel or specialised performance textiles and apparel. Thomas maintains the real opportunities for Australia stemming from these agreements will be in exports, albeit in the arena of non-apparel textiles.
Countries like the UAE will almost certainly be a beneficiary of Australia's specialist knowledge in the shade cloth market, he claims.
"There is a huge market for this type of cloth in the Middle East, supplying schools with shade cloth to protect their playgrounds from the heat of the sun," he explains.
"There will also be opportunities in exporting safety clothing and technical fabrics such as geo fabric, which is used in construction to prevent soil erosion. Australia is also a specialist in creating textile-based filters to prevent pollution from industrial processes," he adds.
"As we lose share in the fashion industry to China, not everyone has given up. Many companies have adapted their customer base from fashion to industry," he adds.
Regarding non-tariff barriers in those countries, including customs, poor distribution networks and bureaucracy Thomas' attitude is no-nonsense.
"The important thing is knowing what your customer wants and being able to provide it. I believe that in the export game if the end customer really wants the product they will do everything they can to bring it into the country."