Guest blogger Bryan Mercurio writes the following:
Governments often commission and rely on economic analysis to publicly justify FTA negotiations, but it seems to me that such analyses are becoming increasingly meaningless and even deceptive, at most serving only as a 'best case' scenario and often being used to justify a decision that has already been made.
The latest example of this is the recent release of the preliminary results of an Australia-Japan scoping study that finds a comprehensive FTA between Australia and Japan would be worth at least $38.7 billion to Australia over two decades and $27.4 billion to Japan (http://www.dfat.gov.au/geo/japan/tef-study/faq.html ). Based on this information (or so it has declared), the Australian government has expressed a readiness to begin negotiations.
But what appears deceptive to me is the fact that the scoping study uses a model based on almost complete liberalisation of all markets, including agriculture and services. This is mere fanciful thinking given Japan's long history of, among other things, keeping out agricultural imports by protecting sensitive products and maintaining 'food security'. Japan has already attempting to take such items off of the negotiating table. At best, Australia can only hope to match the deal Mexico negotiated (and I am not even sure that Australia's negotiating position will be as strong as Mexico's).
My second 'concern' regarding scoping studies/economic modelling is that they are conducted by groups hired by the governments with an implicit (and sometimes explicit) mandate of the finding benefits outweigh the detriments. Leaving aside the inherent difficulties with predicting gains in IP and services, the fact the governments go through the motions without an interest in actual gains/losses seems like a wasteful effort designed to justify a decision that has well and truly already been made. Making matters worse, the group which is always hired to conduct such studies in Australia are former diplomats with close ties to the government and, in what would seem to be a conflict of interest, have been or are prominent members of the pro-US, China, Japan and Malaysia FTA FTA lobbies.
I don't have a problem with FTAs or even this particular partnership. In fact, given the state of multilateral negotiations and meteoric rise in FTAs (and their consequences), Australia should negotiate this deal (to be sure, a comprehensive deal would benefit Australia. Japan is Australia's largest market for agricultural products, coal, LNG, aluminium, LPG and crude petroleum. It is the second largest source of tourists to Australia.). I do, however, have a problem with the process of this and many other FTAs.
Looking more broadly, have there been any studies looking at the predicted gains of FTAs (at both the start of the negotiations and conclusion) with the actual realised gains and analysing why the figures did not match?