Australia's tyranny of distance gives way to the power of proximity
The Trans-Pacific Partnership is a major opportunity, writes Tim Harcourt.
The Trans-Pacific Partnership is a major opportunity, writes Tim Harcourt. IN 1966, Geoffrey Blainey wrote his famous book The Tyranny of Distance on how Australia's destiny had been shaped by its remoteness from Britain and Europe. Coincidentally, 1966 was the same year Japan overtook Britain as the No. 1 destination for Australian shipping.In the decades since, our integration with the Asia-Pacific region has increased exponentially. From exporting coal and iron ore which we still do Australian lawyers, architects and accountants have played a key role in the development of India, western China and Indonesia. Today, if Professor Blainey were to contemplate another book through the lens of the past four decades, his title might be The Power of Proximity to describe our more recent good fortune in being part of the Asia-Pacific region.It is a momentum that has reached its most significant point with the announcement of the Trans-Pacific Partnership comprising (so far) nine of the key economies.And with Greek debt and Roman ruins undermining the "old world" economy of Europe, the Asia-Pacific presents as the main hope for economic growth and Australia is lucky to be an increasingly integrated part of the economy. But it is luck we earned after the Hawke government's decision to open the economy and the instincts of all sides of the Australian economic and political divide to continue to embrace the Asia-Pacific region.The Trans-Pacific Partnership is probably the most significant economic announcement of the 21st century so far in terms of Australia's future. Joining the US and Japan along with Singapore, New Zealand, Malaysia, Brunei, Vietnam, Chile, Peru and even perhaps Canada and Mexico in a meaningful trade bloc is a major opportunity to streamline supply chains, regulations and rules of origin across the region, as well as facilitate trade of green and digital goods.It could also lead the way to an even larger trade grouping encompassing all of the countries of the Asia-Pacific Economic Forum, perhaps including China.It is Australia's great fortune that we reformed our economy in the 1980s and 1990s just as the whole Asian region started to grow. That growth has gone beyond the traditional resources and manufacturing sectors and exploded into professional services and "stateless" services such as cloud computing, environmental technologies and other areas where Australia has developed competitive advantage.Our $1.3 trillion superannuation industry is the envy of the world and our finance professionals occupy leading roles in regional financial institutions. Integrating our financial sector, in particular our funds management industry, with the Asia-Pacific is another major opportunity which can only benefit from the TPP initiative.A key theme of the next decades will be the low carbon economy, and the APEC meeting took the step of cutting tariffs on environmental goods to 5 per cent. This is excellent news for clean-tech companies whose prospects have already been boosted by the government's carbon pricing legislation. Lower tariffs can only benefit the push for Australian-made environmental goods to penetrate Asian markets. It will really put the green back into the green and gold.Trade initiatives are important for workers as well as business. Exporters, on average, pay 60 per cent higher wages and provide more job security than non-exporters. APEC is often seen as little more than a Colourful Shirt Convention, but the TPP is proof APEC does matter and is starting to deliver.While the Doha round of world trade talks ground to a halt and with it the World Trade Organisation process, the TPP announcement and Japan's support give us reasons for regional optimism. In 1957, Japan helped Australia get into Asia by forging a commercial partnership, just 12 years after World War II. With the TPP, Japan has supported what could be the most significant partnership to date in the 21st century. It means so much more than commodities, agricultural products and old-style manufactured goods. The TPP could give our transition to the low-carbon, goods and services economy major momentum.With the TPP in place, Australia will really see the power of proximity in action and the tyranny of distance no longer holding fears for trade and commerce beyond our shores. theairporteconomist.com