ASEAN agreement another export blunder?

NATIONAL: Ongoing free trade negotiations between Australia and South East Asia could fail to offer domestic textile clothing and footwear businesses any substantial export benefits, industry experts have warned.

Trade minister Simon Crean, who attended negotiations for the ASEAN-Australia-New Zealand Free Trade Agreement earlier this month, vowed to deliver "commercially meaningful" outcomes for local businesses trading with the 10 ASEAN countries.

However, Council of Textile & Fashion Industries of Australia economist Lachlan Caddy believes the Federal Government is at a risk of repeating the shortfalls of previous agreements. Caddy said although Free Trade Agreements (FTAs) had the potential to provide Australian TCF companies with significant benefits, poor negotiating meant many had yet to materialise.

"Due to inequities in some FTA's, it is possible for Australian TCF companies to be ineligible for preferential access to other markets," he argued. "A FTA that does not allow for companies from both countries to compete on an equal basis weakens the position of Australian companies, undermines business confidence in the ability for the government to stand up for Australian companies and ultimately costs Australian jobs."

Caddy said the main issue was the existence of non-tariff barriers that prevented Australian exports from entering a partner country. In the case of ASEAN markets, this included lengthy and non-transparent import licensing requirements; issues with intellectual property right enforcement; limitations on the distribution of foreign goods; facilitation fees and delays for custom clearance and examination and internal charges such as import deposits and luxury taxes.

"It is imperative the government work towards lowering the non-tariff barriers that prevent Australian companies from trading fairly with our partners," Caddy said. "ASEAN represents a true opportunity to provide Australian TCF companies with new and freer access to growing economies."

International business development consultant Caroline McIntosh said fashion designers were already suffering from draconian agreements with key trading partners such as the United States. McIntosh said the plight of onshore manufacturing meant designers were forced to look overseas for production capabilities.

"As a result, they cannot take advantage of Free Trade Agreements negotiated by Australia as their goods are no longer classed of Australian origin," she said. "Unless the country of destination has some agreement in place with the country the designers manufacture, there might be higher duties than if the products were of Australian origin."

The United States-Australia Free Trade Agreement, for instance, stipulates that apparel and textile goods must be manufactured in Australia to quantify for preferential access, but must also use fabrications and yarns sourced from Australia or the United States. Caddy said the agreement worked well for American exporters, who were able to source yarns and fabrics from a number of US-based textile companies.

"However, there is virtually no yarn manufacturer left in Australia and the fabric manufacturing sector is significantly smaller than it used to be. This means that even though the company might be manufacturing the actual garment here, they are unlikely to receive the same preference as their US counterpart companies." 

Negotiations for the ASEAN-Australia-New Zealand Free Trade Agreement are expected to conclude at the next meeting of officials in Singapore in August.

By Assia Benmedjdoub