Monday, June 15, 2015

Australia, Japan still optimistic amid TPP setback

Any lowering of tariff barriers is to be welcomed.  The difficulty is that few Republicans trust Obama to play an honest game.  He has too often said one thing and done another.  And he has taken every opportunity to do an end-run around Congress.

Key US trade partners said Saturday they were still optimistic about reaching a deal to lower Pacific Rim trade barriers, but acknowledged that a setback in Washington made the already tight schedule even more challenging.

Japan’s Economy Minister Akira Amari, speaking to reporters in Tokyo, said there was no need to be overly pessimistic. “We are looking for the House to work toward prompt passage” of legislation granting President Barack Obama broad negotiating authority, he said.

His comments followed a vote in the US House of Representatives on Friday against a program to assist workers displaced by trade. That legislation was linked to a measure that would let the president negotiate a complete trade agreement, then present it to Congress for a vote without amendments, which is seen as a necessary prerequisite for approval.

Though the House voted in favour of the second measure, both parts of the bill need to be approved for the legislation to advance. The White House said it still hoped to get the legislation through Congress.

U.S. trade partners involved in the talks have been hoping to wrap up the trade deal this summer in order for it to be approved by Congress this year, before the presidential election campaign heats up next year.

Australia’s Trade Minister Andrew Robb said Saturday he remained optimistic of a breakthrough on the TPP, despite the political setback in Congress and the blow to momentum for a comprehensive deal.

“There is always a lot of cut and thrust in these things and politics being played,” Mr. Robb told The Wall Street Journal. “There is another opportunity next week to get the ducks lined up. But second guessing the United States is always difficult.”

Mr. Robb has come under fire at home over benefits a concluded TPP may bring, with criticism from farm groups that it may not do enough to lower US tariff barriers and quotas on Australian beef and sugar. On Saturday he said the deal would translate into more jobs, growth and living standards for Australians, including the country’s politically influential farmers.

“The TPP brings the promise of enormous benefits, new levels of market access, a more seamless trading environment across countries represent 49% of the world’s GDP and lower costs for businesses,” Mr. Robb said.

In Tokyo, Mr. Amari said Friday’s setback made an early ministerial meeting of the 12 countries engaged in the talks unlikely. The TPP countries were hoping to hold such a meeting to strike a deal as early as this month. Now such a meeting would have to wait till next month at the earliest.

If the House doesn’t reverse course, “the trans-Pacific Partnership negotiations will be put into limbo for an indefinite period of time,” wrote Richard Katz, publisher of the Oriental Economist report, after Friday’s setback for Mr. Obama.

Opponents to the TPP in Japan, including farm groups and politicians representing agricultural districts, have been hoping for just such a scenario.

Japan is believed to have agreed to eliminate most of its tariffs for pork, even though the discussions are kept secret. The Japan Pork Producers Association says the reported deal is “totally unacceptable,” and warns that such a deal “would wipe out domestic pork producers.”

In Malaysia, Prime Minister Najib Razak has invested significant political capital in the TPP, and the proposed deal is at the centre of an improving relationship with the US

“This setback will rub off negatively onto the bilateral relations between Malaysia and the US,” said Tang Siew Mun, a senior fellow at the Institute of Southeast Asian Studies in Singapore.


China's growing thirst for dairy heralds golden era for Australian farmers, analysts say

Australia's dairy industry is on the cusp of a golden era of prosperity, financial analysts say, and the much-talked-about boom to supply dairy products to China is well underway.

Some experts even contend that this new "dining boom" will rival Australia's recent mining boom.

A tally of investments makes for impressive reading.  In the past two years, Australian dairy companies have spent or plan to spend more than $1.5 billion building new or upgrading existing dairy factories.

The bulk of the money is aimed at production for the export market — Asia in general, China in particular.

"The opportunity to feed Asia is an enormous one for the Australian agricultural industry and dairy in particular is one of these sectors that has got great potential," analyst Michael Harvey of Rabobank said.

The global rate of growth for dairy foods is about 2 per cent per year, but in Asia it is much faster.

"The challenge there for [the Asian market]," Mr Harvey said, "is they can't produce enough milk themselves, so they do need to import products and that's where Australia, sitting on the doorstep of these markets, has the opportunity."

FTA may lead to baby formula boom

Australia's free trade agreement with China is expected to be in place for the dairy industry by year's end and the deal will make Australian exports far more affordable.

During the next decade China will scrap import tariffs — some as high as 19 per cent — on everything from milk powder to yoghurt, fresh milk and cheese.

Without doubt the brightest star in dairy's constellation is baby formula.  The industry calls it "paediatric nutrition", a term that covers everything aimed at feeding China's burgeoning infant population.

The world's most populous nation has seen a baby boom since the relaxation of the one child policy and demand for milk-related products is skyrocketing.

"At the moment this year, it's around an $18 billion infant formula market in China," Judith Swales, Australian managing director of Fonterra, the world's largest dairy processor, said.  "By 2018, that'll be around $33 billion.

"So you look and say not only is the growth absolutely huge but it's the quality of the growth that is also giving people the confidence to invest, and that's not just the processors but also the farmers," Ms Swales said.

Trans-Tasman company ups stake in Chinese market

Fonterra is a farmer-owned New Zealand co-operative that owns and operates 10 factories in Australia.

More than 2 million tonnes of dairy products roll off the trans-Tasman multinational's production lines annually to markets in more than 100 countries, but the company's recent joint venture with China is the jewel in the crown.

"We've invested $NZ740 million to buy an 18.8 per cent stake in Beingmate, the largest infant formula player in the Chinese market with around a 10 per cent share," Ms Swales said.

"So that gives us part of their business and it gives us access to their sales engine.

"That'll include access to 80,000 points of sale that they have, 1,000 stores that they own, and 20,000 maternal advisers, advising Chinese mothers how to feed their babies."

Such joint ventures are becoming more common.

"As well as providing the industry here with access to markets through marketing and distribution capabilities, you're also getting the expertise coming from the Asian economy back into this region, plus capital to build the new facilities," Mr Harvey said.

Even more vital is the assurance that Australian dairy products comply with the highest possible food safety standards.

In 2008, in what became known as the Chinese milk scandal, infant formula and milk was adulterated with melamine, a toxic compound that made products appear to have a higher protein content.

At least six babies died and there were reports of 300,000 victims having consumed the tainted formula.

"It sparked a revolution in China for the consumer to become far more discerning," Steve Spencer, a Melbourne-based dairy analyst, said.  "And therefore the Government is far more discerning about how they source product.

"Scandals from time to time in that market help because they generate strong interest from consumers who can afford to pay higher prices for imported product."

Australian must boost milk production: analyst

Some Australian fresh milk has been selling in China for more than $9 a litre, but Australia's major dairy companies believe China's increasing affluence and Westernisation will see products such as cheese and yoghurt also grow as valuable exports.

But to meet this voracious demand, Mr Harvey says Australia's dairy industry must rapidly grow its annual milk production, which currently stands at about 9.4 billion litres.

And he warns that dairy companies from around the world are also vying for a stake in China's dairy market.

"So they're all making investments to get access to that market and to get product into that market," Mr Harvey said.

"So China and Asia won't be the silver bullet unless we actually get growth in milk supply here in Australia."


Victoria's quest to be the Education State

The Victorian government is on a quest to be the 'education state'. Two discussion papers were released this week to generate community interest and feedback. The discussion paper on schools is not lengthy but it is revealing.

It reiterates the Victorian government's decision not to commit to the full term of the six year funding agreement signed with the previous Labor federal government - the so-called 'Gonski' funding package. Only the four years to 2017 will be funded; a new funding model is being developed for 2018 and beyond. While this decision has attracted criticism from the NSW education minister and some of the members of the Gonski review committee, there are good reasons for it. First among them is the recognition that committing future governments to a very large increase in the school education budget is not defensible. In addition, the existing model can be improved, so locking it in for six years would be inadvisable. Funding for disadvantaged and struggling students can and should be targeted more effectively.

Importantly, the document also reveals the Victorian government's commitment to autonomy and choice in schools. Its case studies demonstrate what can be achieved when schools have flexibility to use their resources to maximise educational impact ­­­- for example, electing to have slightly larger class sizes to free teachers for mentoring and feedback. It speaks of striving for excellence in all schools, 'ensuring that all schools are schools of choice'. Teaching is rightly a focus in the document, but perhaps the most glaring omission is the lack of attention to principals and school leadership.

Federal systems of government are often frustrating, but they are also useful. States can be like 'policy laboratories' - if they are successful, other states can replicate their reforms. If they fail, only one state is affected rather than the whole country. The Victorian government's approach to school education is in many respects quite different to that in other states and territories. No state has it entirely right, but there is a lot to like about Victoria's approach.


Citizenship and the rule of law

 The hideous 30 Years War in the 17th century ended with the Treaty of Westphalia in 1648; a treaty that, despite some lack of  clarity, established the notion of 'nation' as an entity with complete 'sovereignty' or control within its borders, and composed of 'citizens' owing allegiance to that entity.

The jihadist movement and terrorism are now forcing the federal government to wrestle with questions of citizenship, the rule of law, and the meaning of national sovereignty in a world becoming ever more tightly integrated through technology, trade, immigration (both legal and illegal), and the claims to authority of the United Nations and international law.

That's the background. The immediate - and pressing - issue is the integrity of Australian citizenship and its protection by domestic law.

There is little doubt that past immigration arrangements have been careless about the value and integrity of Australian citizenship; an issue raised many years ago by our most distinguished historian, Geoffrey Blainey, and savagely dismissed by the bien pensants. We have made citizens of some who hate us and who now kill wantonly here and overseas as Australians. This shames us all and it is clear that we must take more care in the future.

As for the present, there is no serious argument against the view that such people should be stripped of the citizenship they have mocked, despoiled and betrayed. But how should this be done?

It seems the government wants to manipulate a distinction between those who have sole Australian citizenship and those who have dual citizenship. But that is a secondary issue. Surely nothing could be done until either sole or dual citizens have been shown to have betrayed their citizenship by the conduct at issue? If the rule of law is to be upheld, guilt has first to be established for both types of citizen before any form of punishment or dismissal can be effected.

Although proving guilt may be difficult, that difficulty should not be finessed away by abandoning the rule of lawand leaving judgment of guilt in the hands of a federal minister.


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