10/27/2004

Complete Protection

Australian Trade has a problem. The Australian veiw of protection from plant/animal pests and other diseases has been characterized as "Complete protection whatever the cost." Australia has very strict quarantine policies. Importers have to wait years or even decades in some instances to get a complete scientific assessment of import risk.

Recently the Europeon Union has formally challenged the policy in the WTO. The Europeon Commission stated, "The EU does not dispute Australia's right to set an appropriate level of protection. The EU does however consider that Australia should not unfairly protect its own market and producers by imposing quarantine rules which block imports without scientific justification, often for many years."

Although the amount of trade lost due to the quarantine is hard to quantify. However, the commission showed the EU exports of fresh vegetables in Australia were 8,000 tons compared to the 35,000 tons exported to Canada (a comparable market).

I don't think that having any economic policy enforced "whatever the cost" is ever a good idea. There has to be some cut-off point where it is realized that the benefits of a policy are for overshadowed by the costs. I think this is the case with Australia's quarantine. Some sort of change needs to take place in order to relax the strict policy and increase imports.

5 comments:

Biancca said...

I would add to that, that aside from imports/exports, domestic manufacturing should not be done "whatever the costs" either. I was recently in former East Germany and the polution problems there are astronomical. The government had almost no controls on polution. Manufacturing was done just to meet the quotas of the communist party, at any cost. Now the lakes are ruined, every 3rd tree is dying, and former West Germany is taking over the costs. And the worst part is, most of the goods east germans manufactured were taken away by the former soviet union. The country was ruined for the good of another country.

Rufio said...

I agree that this strict import policy probably isn't a good idea, but restrictions on imports can be a good thing for Australian businesses. This is because the demand for the items that would have been imported are still at high demand, and demand can only be satisfied by businesses and organizations in the country of Australia.

Similar strict import restrictions in the U.S. were made a few years ago on motorcycles. This was done in an effort to boost Harley Davidson sales. This restriction scheme seemed to work, but it was removed eventually. I beleive that Australia is trying to boost its own economy by envoking these restrictions. I don't think it would be wise for them to do this on a long-term basis though. Restrictions can be good in the short-run, but eventually the restrictions need to be lifted when Australia's economy can stand on its own two feet in a global market.

John West said...

No one has ever accused the Aussie's of being all that bright and this occasion gives credence as to why such is so. Australia needs to allow free trade to happen and the EU has every right to be concerned. Hopefully the WTO takes care of this issue.

Maudi said...

There are many ways of getting things past in foreign countries. Austrailia exports good to a lot of other countries. If they want to play hard ball then so should the WTO it is only fair that the aussies play by the same rules.

Dr. Tufte said...

This is an example of using regulatory policy as a cover for trade policy. The Australians don't want to appear to be against foreign trade, so they dress it up as environmental protection. The WTO is calling their bluff.