Robb has no time to waste on Asia

ANDREW Robb has been set an especially challenging mission: to re-energise Australia's economic engagement with Asia.

ANDREW Robb has undertaken some tough tasks. But now he's been set an especially challenging mission: to re-energise Australia's economic engagement with Asia.

He is the first Liberal Trade Minister since Neil O'Sullivan, who served from 1949-56, when he was replaced by the Country Party's "Black Jack" McEwen.

Prime Minister Tony Abbott has deployed him there because of his "small l" liberal economic credentials, and his strong links with business.

Despite the upbeat rhetoric surrounding last year's well-intentioned Asia white paper, we've been treading water at best.

In 2012, we have just learned, our exports to the APEC markets, the world's biggest, fell by 3 per cent.

And the economic weather ahead is uncertain too. Standard and Poor's warned yesterday that "financial market volatility still has the potential to derail or dampen investment recovery in the Asia-Pacific region despite its resilience to global economic weakness so far".

The agency's economist Vincent Conti says that "changes in global financial risk appetite matter more to regional investment outcomes than changes in real external demand".

Robb is not in a position to change global financial risk appetites -- yet -- although we must hope his government does succeed in diminishing what he described yesterday as Australia's "very sorry reputation about sovereign risk".

Foreign investors -- including the usually diplomatic Chinese -- complained increasingly, in recent years, about government policies and legislation that undermined productivity and profits, but their views mostly fell on deaf ears.

Besides helping improve Australia's own investment climate, Robb can start to do something quite soon about staunching the loss of markets in Asia that has resulted from our competitors cutting trade and investment deals that we have eschewed.

We should learn from New Zealand, which has achieved considerable success in boosting its Asian economic integration, including trade deals with China, Hong Kong and Taiwan.

Australia is still struggling with the former, and has explicitly ruled out even talking with the others -- despite Taiwan being our sixth-biggest export market, and Hong Kong being China's chief jumping-off point for overseas investment.

The first and easiest gesture would be at least to agree a double tax treaty with Hong Kong, which was knocked back by Canberra even over this modest move.

The Coalition, Foreign Minister Julie Bishop says, will deal with international arbitration clauses in trade deals on a case-by-case basis.

This will give the green light for the rapid conclusion of the free trade agreement with South Korea, which was kyboshed by Canberra because of that arbitration clause.

Philip Morris used its incorporation in Hong Kong to take Canberra to international arbitration under a 1993 investment treaty, over the introduction of plain packaging for cigarettes. Its temerity in doing so incensed the Labor government to the point that it decreed that it would never even undertake a negotiation over such clauses in any future agreement.

This prevented the conclusion of the deal with South Korea, which was just embarking on a massive drive to attract foreign investment and sign up trade partners. As a direct result, Australian exporters -- led by beef and wine -- have lost substantial market share to their competitors with countries whose FTAs have slashed tariffs.

Michael Funican, the Korea manager for Meat and Livestock Australia, told The Australian: "Companies operating in Korea know the importance of concluding the FTA quickly. We would like to see the new Trade Minister visiting Korea early in his new role to re-engage with the Koreans and resolve the small number of remaining issues and conclude the negotiations quickly.

"From a meat industry perspective, conclusion of the FTA is the highest market access priority. The beef industry is dealing with a growing competitive disadvantage in this very important market against the USA which will have an 8 per cent tariff advantage over Australia from next January 1."

And what of Japan, our second-biggest trading partner, which is now rousing itself from its two-decade economic slumber?

Manuel Panagiotopoulos, who runs Australian and Japanese Economic Intelligence, said that "the Australia-Japan FTA is incredibly close to being finalised. That means a great deal of effort has been expended and a thorough, detailed and wide-ranging agreement is on the cards".

"Although other, multilateral agreements are also attractive, they will take a lot more work and negotiation to achieve any meaningful outcomes. Missing out on the benefits of a signed FTA with Japan while waiting for others to be concluded is a massive opportunity cost."

He said signing the FTA with Japan would allow negotiating resources to be used elsewhere.

"With a new government in Australia and the continuing resurgence of the Japanese economy supporting Prime Minister Shinzo Abe in his reforms, there is a window of opportunity to put ink to paper. Windows of opportunity can close unexpectedly."

China would come next -- and will require the government to demonstrate courage and leadership in using up some of its extensive political capital to get what remains a challenging deal over the line.

Abbott declared in almost his first breath after being elected that Australia is again "open for business". That's an essential first step. But work now needs to be done.

Robb, born on a dairy farm, an economist, director of the National Farmers' Federation and the Cattle Council, Liberal Party director and company director, is admirably well placed to act.

That means travelling swiftly to north Asia where, as he said yesterday, building respect and trust, and discovering common ground, are essential elements in doing business effectively.