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Australia is true to its best international instincts when it opposes barriers to agricultural trade. But the jury is still out on Australia’s attitude towards foreign investment.

By Maria
Livanos Cattaui

Prosperity
for Australia, as for most people on this earth, depends on cooperative
arrangements with other countries, not only to develop markets for exports but
also to attract foreign investment and the jobs and additional business that
come with it. Trade and investment are two sides of the same coin.

 

On trade,
the record is clear. Besides seeking greater market access for its products,
Canberra makes common cause with the developing countries. Australia joins them
in demanding an end to farm protectionism, so that they too can sell their
products in the affluent markets of the industrial world.

 

Only last
month, Prime Minister John Howard put his money where his mouth is by
announcing that Australia plans to eliminate all trade tariffs on imports from
50 poor countries.

 

Even though
Australia is an island continent, it is not self-contained, and this provides
the rationale for its free trade stance. The Australian government is a
commendably high-profile member of the Cairns Group of countries heavily
dependent on agricultural exports.

 

Canberra’s
opposition to increased agricultural subsidies in the United States and the
European Union’s trade-distorting Common Agricultural Policy commands
widespread support from international business. Liberalization of trade in farm
products is a make-or-break issue for the World Trade Organization’s Doha development
round, whose end-2004 deadline is already agonizingly close.

 

The WTO
reckons that if the Doha round succeeds in halving trade barriers in
agriculture and textiles alone, developing countries would gain more than $US
200 billion a year in additional income by 2015.

 

A
hospitable policy towards foreign investors is a natural corollary to your
support for freer trade. Yet like many countries, Australia seems to be
somewhat schizophrenic in wanting foreign investment but fearing foreign
ownership of assets on Australian soil – a recent example being the decision to
retain the foreign ownership cap on Qantas.

 

Accepting
foreign ownership of Australian icons can look to some like pawning the family
silver, but this reaction is misguided since countries that block foreign
investment are the losers in terms of jobs, technology, management skills and
the creation of business opportunities.

 

There is an
opportunity for progress right now on improving the investment climate in
Australia. Reviews of government policies on compe tition and taxation are in
full swing. International business hopes these reviews will solve important
problems such as excessively restrictive rules on mergers and takeovers and a
tax regime that is unwelcoming towards foreign multinationals.

 

Government
decisions based on these reviews should aim to make Australia a more attractive
place for outside investors. Foreign-owned companies should be encouraged to
make their views known on what sort of reforms will make a real difference.

 

Australia’s
international stance is especially important at the present time. After the
Bali outrage and its toll of innocent young lives, it would be a natural reflex
for Australians to allow terrorism to push them into isolationism, to develop a
‘fortress Australia” mentality. Other countries that have been the victims
of terror attacks have had the same understandable reaction.

 

But these
reflexes must be resisted for Australia’s own sake. Terrorists are enemies of
globalization, of peaceful exchanges among nations. They want to instill
suspicion, fear and confrontation in place of trust and international
cooperation.

 

Contrary to
the claims of the anti-WTO protesters in Sydney, globalization – the
progressive intermeshing of national economies through trade and investment –
is a positive fact of 21st century life.

 

Globalization
is a force for peace and stability. Australia, like the rest of us, needs more
of it.

 

Maria
Livanos Cattaui is Secretary General of the International Chamber of Commerce.
She is in Australia this week for consultations with Australian government and
business leaders and will address the National Press Club in Canberra today
(Wednesday, 27 November).