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Free trade deal will push reform in region

The Australian, Canberra

Free trade deal will push reform in region

By Cath Hart

13 October 2008

Advancing a bold free-trade agreement between Australia and Japan would be a "springboard" for influencing economic reform in the region.

Australian Chamber of Commerce and Industry president Tony Howarth says this in a speech to be delivered today to the 46th Australia-Japan Joint Business Conference on the effectiveness of behind-the-border economic reform.

Mr Howarth will urge the two governments to continue reforms of monetary policy, labour markets and trade despite the stormy climate.

"Australia has a critical interest in the economic and political reform agenda of the Japanese Government — it is our largest single export market, and our closest diplomatic partner in the Asian region.

"In many ways the quality and reliability of supply of agricultural, mineral and energy commodities from Australia fuels Japan’s economy.

"ACCI believes the best way Australia and Japan could help each other address behind-the-border issues is by negotiating a bold and comprehensive Australia-Japan Free Trade Agreement (AJFTA)," Mr Howarth said.

ACCI wants the federal Government to push deregulation to increase investment and capacity utilisation, including tax reform, cutting infrastructure blockages and promoting skilled development and migration.

Mr Howarth said that while the downturn would be the first real test of our relationship with China, the long historical relationship with Japan should be harnessed to steel against protectionism.

Mr Howarth said other parts of the world had more unhealthy leanings to protectionist positions, pointing to the $US700 billion Troubled Asset Relief Program, which was meant to put a safety net under the financial system, but had "ended up with a whole grab bag of internal protectionist reforms".

"You wouldn’t want to see that gain momentum," he said.

Mr Howarth will tell some 150 delegates from Japan and representatives from companies including Nippon Steel, Mitsubishi, Inpex and Toyota, that a "bold and comprehensive AJFTA would act as a springboard to take our bilateral relationship to a new level, and lift the capacity of the Australia-Japan partnership to influence the economic reform agenda throughout the region".

"Japan’s economic recovery, and its structural adjustment towards sustained economic growth, is very important to Australia’s broader trade and investment agenda in the Asia-Pacific region. In the same way, Australia’s sustained economic performance increases its reliability as a supplier of food and resources to Japan."

Mr Howarth said the rise of China and India also "cannot be ignored" and must be part of any reform agenda. "Indeed domestic reforms are needed to address the competitive challenges and secure the opportunities those rising economies present. The challenge for business is to keep making the case for further reform when the natural inclination of governments will be caution given the global economic downturn."