Estimated National Benefit
The Australia Institute stated in November 2015:
“…Modelling commissioned by the Department of Foreign Affairs and Trade (DFAT) …. estimates these agreements will:
- Increase GDP by 0.05 per cent in 2035, or an additional $780 million per year in today’s dollars.
- Increase employment in 2035 by just 5,434 jobs.
- Increase the value of Australia’s trade by about three per cent ie Increase imports by 2.5 per cent, Increase exports by 0.5 per cent.“
Other modelling finds slightly more, possibly 0.5% extra GDP after ten years or total 0.7% in 2030:
Sydney Morning Herald Economics Editor Ross Gittens concluded from various modelling, that after ten years, GDP will be 0.5% higher. New York’s Quartz news outlet quotes modelling to say Australia’s GDP increase will be 0.3% after ten years (US will be 0.2%). The World Bank finds total 0.7% more in 2030 (US total 0.4% more) (SMH Jan 2016).
These figures are consistent with various economists saying that the US and Australia have very open economies, hence little benefit.
The Peterson’s Institute in the US said “we dont calculate any increase in the number of people at work (in the US). But about one-half of 1 per cent of the US workforce will move from import-competing jobs (typically in manufacturing) to exporting jobs (typically in services)…”
Costs and Risks
The biggest risks are that
- there is no end date on a trade agreement, just negotiated amendments and journalists have pointed out how little negotiating power Australia holds when negotiating with the US.
- the agreement includes ISDS provisions
Details will emerge as the thousands of pages (originally written by multinationals) are analysed.
Inclusion of ISDS provisions are a major risk. Eminent economist Joseph Stigliz makes this point:
“if these provisions were in place when the lethal effects of asbestos were discovered, rather than shutting down manufacturers and forcing them to compensate those who had been harmed, under ISDS, governments would have had to pay the manufacturers not to kill their citizens.”