FTAs: Goldmines or economic health hazards?

Economist and author Tim Harcourt

Author and economist Tim Harcourt is helping Australian companies do their homework before expanding into global markets.

The past five years have not been great for Australian trade. In Australian dollar terms, export values sit broadly where they were in early 2011; compared to a year ago, they’re down.

None of that is stopping Tim Harcourt, the hyper-positive economist and author, who over the past decade has become the voice of Australian trade. He’s still full of enthusiasm for the opportunities for Australian companies to expand overseas – as long as those businesses do their homework and understand the issues.

“No-one is saying it is a boom environment,” says Harcourt, “but with the GFC fading into history, there is a sense of stability returning.

“China might have gone off the boil a little – although it is still showing growth rates that most other countries would envy – but the ASEAN bloc of countries are doing pretty well, and their doors are open to Australian companies.

"India is also shaping up as a major economic power, and there are opportunities across a wide range of sectors. Brazil has slipped back a bit but Chile and Peru have emerged as very promising markets.”

Harcourt is the author of Trading Places, a book aimed at helping Australian companies understand the global environment. He has worked as an economist for the Reserve Bank of Australia, the Australian Council of Trade Unions and Australia’s national trade and investment promotion body, Austrade, where he became a high-profile booster of Australian exporting.

Though he left Austrade in 2011, he’s still in the habit of promoting it, saying “many people don’t know how much help there is available, on everything from trade fairs to regulations … this is what organisations like Austrade are for.”

“FTAs are not goldmines, but they can make a positive difference.”

These days, Harcourt holds the J. W. Nevile fellowship in economics at the UNSW Australia Business School, following in the steps of his academic economist father, Geoffrey Harcourt. He is to be the pivotal figure in a television series to be produced later this year called The Airport Economist, in which he will interview figures in the trading area in Asia and Australia, as a means of offering advice, information and guidance.

He is also working on another book, The Power of Proximity: Australia and the Asian Century, which will examine trade policy since 1945.

The recent free trade agreements (FTAs) with Japan, South Korea and China have helped to lift the profile of Australia in those markets, and Harcourt believes they have equally increased the awareness of trade opportunities in Australia.

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“I know there are people who are wary of the value of bilateral trade agreements and think that attention should be focused on multilateral [trade] agreements [MTAs],” he says.

“But the reality is that MTAs, and more importantly the organisations under them, are pretty much dead in the water at the moment. So FTAs are the only game in town. They are not goldmines, but they can make a positive difference, and that adds up over time. Japan in particular has been more positive than expected.” 

Now he wants Australia to explore similar agreements with India, Indonesia, the Gulf Cooperation Council states and Latin America.

Together with an improving world economy and FTAs, Harcourt cites one more Australian trade advantage: the nation’s large and varied expatriate community. Half of the companies engaged in exports have principals born overseas, he calculates. This can help with issues such as language – but the more important advantage it gives, says Harcourt, is world view.

“There is no reason why an Australian entrepreneur with a Chinese background should not look to South American markets,” he says.

“The thing is to be business-ready, to understand the risks and the issues and to be willing to take the plunge.”

Read next: What you need to know about the global business of free trade zones

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June 2016
June 2016

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