How DFAT (yet again) let us down

In the Canberra bureaucracy, DFAT’s mandarins have long been famous for taking the softest line on China, for being generally pollyanna-ish about the regime and for fretting about anything which might damage the relationship. Which often means helping the regime get its way. There will have been much nodding in the R.G. Casey Building at Andrew Forrest’s rubbishing of the foreign minister’s call.

When it emerged recently that Queensland University took the astonishing step last year of appointing China’s consul-general in Brisbane as an adjunct professor – and that he then congratulated pro-regime thugs who had assaulted Hong-Kong democracy ‘splittists’ at the university – few Canberra watchers were surprised to be reminded that Queensland University’s chancellor is none other than a former DFAT Secretary.

The Coalition’s election victory in September 2013 required DFAT to change its customary approach. While Tony Abbott was determined to conclude the free trade agreement talks launched with China in 2005 (as well as free trade deals with Japan and Korea), he was much more concerned than Labor or DFAT about the risks of economic dependence on China, including because of the regime’s record of using trade as a political weapon. So he directed that opportunities for trade diversification be pursued as a priority. The key initiative in this area was to start free trade talks with the European Union. The Coalition’s view was that the absence of a trade agreement with the EU was anomalous. Taking together its then-28 member-states, it was the world’s largest economy and Australia’s second-largest trading partner, with great potential for further export growth in key areas like beef, lamb and seafood.

The dry end of the Liberal party, Tony Abbott included, had long shared the British Eurosceptics’ distaste for the European Union after it evolved from the Common Market free trade area supported by Margaret Thatcher to the sovereignty-sharing, increasingly woke mini-United Nations ‘European project’. Yet Abbott recognised that whatever one’s reservations about the EU, it controlled the trade policies of its member-states. At the November 2014 Brisbane G20, Abbott persuaded Europe’s key leaders to start the process towards a free trade deal. Assuming the talks take around the same time as it took Canada to complete its free trade deal with the the EU (eight years), expanded export opportunities should start opening up around 2023.

If Labor hadn’t been asleep at the wheel on this issue during its last term in office, Australia’s beef producers, seafood exporters and others might not now be so dependent on exports to China. The lack of interest by the Rudd and Gillard governments in this opportunity is one of their many failures. It’s not as if the opportunity was difficult to spot. The EU, having long been fiercely protectionist, began, just before the election of the Rudd government, to show a new preparedness to do free trade deals with developed countries outside Europe.

Free trade talks began with Korea in 2007, Canada in 2009 and the US and Japan in 2013.  The Canadians estimated that a free trade agreement with the EU would result in a C$12-billion increase in Canada’s GDP, 80,000 new jobs and an increase to household annual income of C$1,000. Meat and Livestock Australia and the European Australian Business Council lobbied vigorously for Australia similarly to start work on an EU free trade deal. Why was nothing done?

Labor ministers’ preoccupation with Rudd-Gillard factional in-fighting was part of the reason as was DFAT’s central obsession at the time of realising Kevin Rudd’s vanity project of a two-year seat on the United Nations’ Security Council.  On trade issues, a goldrush fever had gripped DFAT and the often-encountered mantra was that China was ‘the only game in town’.

Europe, by contrast, despite the big potential export opportunities – and, ironically, despite the fact that the left-liberal orthodoxies of Brussels are much more in tune with DFAT’s sensibilities than those of Asian capitals – was considered, as in the Keating years, a bit old hat. Then-foreign minister Bob Carr announced the closure of one of Australia’s few embassies in Europe’s eastern half (Budapest) in favour of putting more resources into Australian representation in Africa as a victory for progressive common sense. DFAT’s officials at the time were dismissive of the case for a free trade deal with the EU.

Five years since talks with the EU on a free trade deal started, its completion – as well as one with the post-Brexit UK, which has accounted for about 40 per cent of Australia’s exports to the EU – is rightly an important government priority. Labor has offered bipartisan support. But it and DFAT are yet to explain why we had to wait for Tony Abbott to champion the idea.

Labor’s failure under Rudd and Gillard to pursue opportunities to reduce our trade dependence on China – the consequences of which are now being felt – was a shocking case of neglect of the national interest. And DFAT shares much of the blame.