Submission to Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT)
By Dr Jeffrey Wilson
The Perth USAsia Centre’s Research Director Dr Jeffrey Wilson prepared the Centre’s written submission to the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) Inquiry into the implications of the COVID-19 pandemic for Australia’s foreign affairs, defence and trade.
– Australia’s economic success has and will depend on its international trade and investment relationships. However, Australia will face a number of external economic shocks in coming years.
– Interruptions to global value chains due to COVID-19 public health measures, recessions in key trade and investment partners, and a rising trend of protectionism, together pose the most adverse external economic environment Australia has faced in a generation.
– A lack of diversity in Australia’s economic ties will magnify the domestic effects of these shocks. A narrowly concentrated export basket, and dependence on a small number of trade and investment markets, increases Australia’s exposure to a deteriorating external environment.
There is now a pressing need to increase Australia’s resilience to external economic shocks by diversifying the trade and investment profile.
– Policy efforts should focus on five objectives: fostering new export industries, diversifying our trade partnerships, developing new investment partnerships, better understanding value chain risks, and engaging in coalitional diplomacy to resist a turn towards protectionism.
– A suite of practical policy options are identified that the Australian Government can action in the immediate term, which would help add diversity and resilience to external economic ties.