A report by the Government’s economic think-tank shows significant increases in US President Donald Trump-style protectionism would trigger a global recession, from which Australia would “not escape unscathed”.
“Rising protectionist sentiment and actions in some countries may suggest to some that a rethink of Australia’s commitment to free trade is needed,” the report said. “They would be wrong.”
Instead, Australia should aim to work with “a coalition of countries” to “resist protectionist pressures”, with the Regional Comprehensive Economic Partnership the most likely candidate.
The commission modelled a scenario where all countries raised tariffs by 15 percentage points. It found global trade would drop by 22 per cent.
The largest declines would be seen in dairy, with a 38 per cent drop; followed by wool and non-cattle meat at about 37 per cent. Cattle meat trade would drop by more than 34 per cent.
The same scenario indicated median weekly household incomes in Australia would fall almost $1500 a year, and almost 100,000 jobs could be lost.
It argued that regional trade agreements were vital for Australia in the face of a rise in protectionism.
Trade Minister Steve Ciobo said it was “evident we cannot afford a widespread backsliding into protectionism”.
“Our ability, as a country of less than 25 million people, to sell our goods and services to billions of other people around the world is what makes us rich,” Mr Ciobo said last week.
“For the one in five Australian jobs that are now trade-related, the importance of open markets means even more to their household budget.”
GrainGrowers trade and economic manager Luke Mathews said free trade must stay high on the agenda, with 60 per cent of all Aussie grain sold offshore.
“Access to strong, open and fair international markets is critical for both the current and future success of the Australian grain industry,” he said.
Source: The Weekly Times