The Minerals Council of Australia has proposed a range of practical ideas to boost Australia’s international engagement, recognising the importance of open markets, economic cooperation and regional stability to Australia’s future prosperity.
The MCA’s submission to the Federal Government’s Foreign Policy White Paper calls for the Government to pursue further trade liberalisation, maintain an open foreign investment regime and foster greater Australian engagement in Asia’s energy and infrastructure needs.
It also proposes strengthening Australia’s ability to deal with geo-economic challenges by forming a new National Economic and Security Council bringing together senior Ministers, foreign, defence and security officials, and senior business leaders.
The submission focuses on the contribution of minerals and energy exports to Australia’s economic and strategic relationships.
It notes that Australia’s links to East Asia are deeper than ever. In 2016, Australia supplied over 60 per cent of China’s iron ore imports and more than half of its metallurgical coal imports. Australia supplied two-thirds of Japan’s energy coal imports and about half of its coking coal needs and about 40 per cent of Taiwan’s energy coal requirements.
Our trading relationship with China alone generates more than 5 per cent of our GDP.
There is a further, less understood dimension to this relationship of deep economic interdependence.
Australia’s close trading relationship with East Asia means we have a big indirect stake in the exports of our regional trading partners. MCA analysis shows that there is more than US$57 billion in Australian value added embedded in East Asian exports, including US$27 billion of minerals and energy exports.
This underlines the importance for Australia of a stable, rules-based trading environment in the Asia Pacific.
The MCA’s submission identifies emerging trends which pose risks to this outlook, including
- Growing strategic competition in the Asia Pacific with the risk of disputes escalating into serious trans-Pacific trade conflicts.
- Slowing world trade growth accompanied by a backlash against globalisation, rising protectionist sentiment and stalled momentum for trade liberalisation.
- A growing tendency for countries to pursue “geo-economic” strategies by deploying economic instruments to advance their political and strategic goals – and vice versa.
The submission argues that the White Paper should map out how Australia will respond to these challenges, through both international and domestic policy.
The international dimension of these response strategies should include:
- How Australia’s relationships with the US and China will develop.
- How Australia will support the US and China in advancing their relationship.
- How Australia will pursue future opportunities through trade and investment policies.
The domestic dimension should include:
- Developing internationally competitive policies in areas such as taxation, infrastructure and industrial relations, recognising that resources exporters’ costs, and hence competitiveness, are determined largely on domestic markets.
The MCA’s submission makes a number of practical recommendations, including:
- Pursue further trade liberalisation – by prioritising bilateral trade negotiations with India and Indonesia; securing the benefits from the Trans Pacific Partnership; accelerating Regional Comprehensive Economic Partnership negotiations; and supporting long-term Asia-Pacific trade and investment liberalisation through a Free Trade Area of the Asia Pacific (FTAAP).
- Maintain an open and transparent foreign investment regime – by ensuring consistent application of rules and transparent decision-making; resourcing the Australian Bureau of Statistics to publish data on the contribution of foreign-owned businesses; reviewing the registers of foreign ownership of agricultural land and water entitlements; and enhancing outward investment through Australia’s free trade agreements and bilateral investment treaties.
- Pursue an Asian Clean Energy Initiative – to enhance energy security and economic development in Asia while achieving substantial emissions reductions by promoting the take-up of high efficiency, low emissions (HELE) electricity generation technologies.
- Engage in China’s One Belt, One Road infrastructure initiative – seeking opportunities for Australian participation in Asian infrastructure investment, building on our Asian Infrastructure Investment Bank membership and leveraging our capabilities in infrastructure financing, development and construction.
- Strengthen Australia’s preparedness for geo-economic challenges – by improving consultation through a National Economic and Security Council bringing together senior Ministers, foreign, defence and security officials, and senior business leaders.