Diversification of markets must be Labor’s main goal

Even before his new government is sworn in, Anthony Albanese rightly is making the diversification of markets for Australian goods a priority. The government will move quickly to capitalise on recent calls by the EU and India to speed up negotiations on new free-trade agreements. The need to do so is becoming more pressing as Australia and the rest of the world struggle to deal with the chaos triggered by Donald Trump’s tariffs. In his latest pronouncement, the US President has foreshadowed a 100 per cent tariff on films made outside the US, a move that will damage Australia’s film industry.

To secure a free-trade deal with the 27-nation EU, the Prime Minister has offered to scrap Australia’s luxury car tax in ­return for better access for Australian agricultural exports to the EU’s 450 million consumers. The luxury car tax was the sticking point when negotiations for an Australian-EU FTA collapsed in 2023. It raises about $1.2bn a year, adding 33 per cent to the price of cars above $91,387 for fuel-efficient vehicles and above $80,567 for other cars. The EU is keen to see it abolished to boost the European car ­industry, which has been devastated by the Trump tariffs and cheap Chinese electric vehicles. Mr Albanese also will offer India priority access to Australia’s critical minerals and greater labour market access in return for tariff cuts for Australian farmers. India’s protection of its rural sector has long been a stumbling block for Australian producers attempting to access such a major market.

Department of Foreign Affairs and Trade figures released in June 2024 show India ranked fifth among Australia’s two-way trading partners, behind China, Japan, the US and South Korea in the 2022-23 year. Two-way trade with the EU collectively ranked third, ahead of the US, mainly because of strong German and Italian imports to Australia. Not one EU nation was among Australia’s top 15 export customers. In March, the EU’s ambassador to Australia said the long-hoped-for FTA was a “no-brainer”. Drawing a contrast with the US under Mr Trump, Gab­riele Visentin said Europe was a ­reliable and predictable partner that respected the rule of law and knew how to keep a deal. Trade minister Don Farrell and EU Trade Commissioner Maros Sefcovic agreed to restart stalled FTA negotiations just weeks before the election, to ease the blow from Mr Trump’s trade war.

Mr Albanese, on the first overseas visit of his new term, to Indonesian President Prabowo Subianto, also has scope to step up trade with our northern neighbour. Despite its proximity and impressive development, Indonesia ranked 13th among Australia’s two-way trading partners in 2022-23. The government’s efforts to diversify export markets also have been buoyed by word from the United Arab Emirates that it is set to ­ratify the countries’ recent deal giving Australia free-trade access to “the warehouse of the Middle East”.

In the absence of an automotive industry, luxury car taxes in Australia are about revenue raising. Despite Mr Albanese’s vital commitment to free trade, luxury car taxes in Victoria and Queensland, both heavily indebted states, could hamper the effectiveness of his move to dump the federal version of the tax for leverage in trade deals, Matthew Cranston and Ben Packham report. For the good of the national economy the states must do so.

During China’s unfair imposition of severe trade sanctions on Australian exports from 2020 to 2024, our producers survived and thrived because DFAT and various export sectors diversified markets. That strategy will stand our economy in good stead again in sustaining and increasing exports despite the effect of US tariffs on our trading partners’ economies.