The US–Australia free trade agreement: The interface between partisan politics and national objectives
The literature on the drivers behind bilateral treaties implies an assumption that international treaties are entered into primarily to achieve national objectives, not partisan political goals. This paper investigates whether this assumption is valid, using as a case study the recently enacted US–Australia Free Trade Agreement. A stated original purpose for the agreement—increasing access to the US market for Australian agricultural products—would yield significant economic benefits for Australia. However, when it became clear that this goal would not be achieved, the objective of the Australian government shifted. The most plausible explanation for the shift is that domestic political objectives had moved to the fore and prompted the government to pursue and adopt the treaty despite some evidence that it might not be in the national interest to do so.
The new bilateralism in the Asia Pacific
For most of the past half-century, Western Pacific countries largely eschewed preferential trade agreements. Their preferred form of trade liberalisation was unilateral action on a non-discriminatory basis. In the past four years, however, more than 20 preferential schemes involving two or more Western Pacific countries have been put forward. The new interest in bilateralism is explained by: an increasing awareness of the weakness of existing regional institutions and initiatives; perceptions of positive demonstration effects from regional agreements elsewhere; and changing configurations of domestic economic interests. Contrary to arguments that emphasise a new sense of collective identity in East Asia post-crises, as many agreements have been proposed with prospective partners outside East Asia as with other East Asian countries. The agreements will have little impact on overall trade or economic growth because they typically involve countries that are relatively insignificant economic partners for one another. By exploiting ambiguities in wto rules, however, they enable governments to exclude sensitive domestic sectors. This 'liberalisation without political pain' has potentially negative consequences for the domestic political economy equation.
Analysis: The Agenda 2007 Proposals: Evolution or Revolution?
On 10 February 2004 the Commission published its proposal for the financial perspective 2007-2013. A week later it adopted the third report on economic and social cohesion. These two documents form the basis of the so-called ‘Agenda 2007 reforms’. They will be the greatest challenge for the enlarged EU after the intergovernmental conference, since they will determine the financial basis for EU policy-making until the middle of the next decade. The Agenda 2007 proposals certainly hint at courageous reforms, because they place a previously unheard-of emphasis on performance and quality. Under the proposals, structural operations should generate value for money, and the funds should focus on projects which generate added value at a European level. Overall the Commission’s proposals point in the right direction, because they balance, on the one hand, solidarity for the new Member States and weak regions in the old Member States with, on the other hand, investments in future tasks. Moreover, they constitute a paradigm shift. For the first time, the Common Agricultural Policy will not be the dominant expenditure category. Now it is up to the Member States to examine the proposals politically and find a compromise between sometimes very divergent interests. It is to be hoped that, during the debate over expenditure limits and division of funds, national interests do not outweigh European interests.