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Free trade agreement with Japan urgent, say business leader Hugh Morgan

The Australian, Canberra

Free trade agreement with Japan urgent, say business leader Hugh Morgan

By Lisa MacNamara

9 October 2012

Veteran business and academic figures are warning free trade agreement negotiations between Australia and Japan are now a matter of urgency as challenges from the Asian Century emerge.

One of Australia’s foremost business leaders, Hugh Morgan, and Peter Drysdale, an economist from the Australian National University, both called for the FTA to be dealt with promptly, after talks between the two nations over the past five years.

Speaking at the Australia-Japan Joint Business Conference in Sydney yesterday, Mr Morgan said that FTAs were not just about trade issues but reflected the political and social relationship between countries.

"Time is passing and other events are happening and it’s a matter of urgency for our countries to press on with (the free trade agreement)," Mr Morgan said.

"We have made great progress with other countries — there are things happening — and we haven’t solidified in a formal sense anything really structural since 1957."

The warning follows many rounds of negotiations, where Japan has been reluctant to grant too much leeway on agricultural tariffs. In his keynote address to the conference, Professor Drysdale, an expert in East Asian economies and a member of the advisory panel for the soon-to-be-released white paper on Australia in the Asian Century, said both nations had approached the FTA negotiations far too narrowly and "with too little strategic purpose".

"Rather our strategic focus needs to be on the achievement of deep and efficient economic integration of our two countries in Asian and global markets more broadly, and serving as a model for regional integration," he said.

"To be frank, we have been under-utilising the assets in our relationship in recent years — at the government-to-government level, even ministerial meetings have fallen into disuse."

The changes under way in the Asian region, and the risks and opportunities that presented, would require deep reform and institutional change to government systems while managing the effects of growth on the environment, climate, food and energy security, he said.

Australia and Japan needed to "look forward together" more than ever and act strategically.

"The challenges that we face in our region mean that the time has come to stop treading water, to lift our ambitions for change decisively."

He also hinted at the white paper’s reformist program and stressed that "having a resilient, internationally open, competitive, well-regulated economy with strong micro- and macroeconomic policy settings and institutions allows us best to capture external opportunity as well as protect against external shocks".

In particular, reform of and investment in Australia’s infrastructure markets were critical to improving national productivity, including inter-urban connectivity in the southeast and in regional growth centres, Professor Drysdale said.

"Where is the Japanese and Australian forward-thinking on high speed rail development between Australia’s major cities?" he asked, while saying that Japan’s own ports no longer matched international competitive capacity.

The success of the Australia-Japan relationship should be used as a template for Australia as it decides what sort of partnerships it wanted with emerging nations Indonesia, China and India, he said.