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Free Trade Agreements - Do they produce benefits?


We have been following some the recent progress of FTA’s especially what the Australians trumpeted as a break through agreement with Japan in early April.

While many smiles were present at the signing ceremony commentators in Australia are querying the likely impact of the agreement on its farming sector.

There is a realisation that net benefits for the Australian farming sector will be small as production from the Aussie farming sector is only 2% of current GDP. Prospects of becoming Asia’s “food bowl” appear to be grossly exaggerated, as room for increased production is limited.

The immediate impact of the Japan FTA on the Australian dairy industry yields less than $AU5 million rising to $11.4 million by 2031 according to the Australian Dairy Industry Council. Dairy farmers there already export $AU511 million to Japan annually.

The high Australian dollar also is a negative to be added to the mix.

New Zealand on the other hand has its FTA with China. With luck the TPP FTA will include Japan, but it is unlikely to yield the kind of export growth that the China/NZ FTA has produced for the NZ farming sector.

There are reports that the Australian/Japan FTA watered down critical aspects of a successful FTA and that Japan’s highly protected farmers still remain intact.

This is hardly good news for New Zealand and for the eventual prospects of a successful comprehensive TPP FTA.

Free Trade Agreements - Do they produce benefits?

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