Monday, 7 September 2015

Bilateral trade agreements and refugees

Two items in the news are the so-called free trade agreement with China and the Refugee crisis in Europe which is emanating from Iraq/Syria.

First of all the 'benefits' of the China free trade agreement is highly exaggerated as Peter Dixon and Maureen Rimmer point out.Peter Martin agrees. Bear in mind the CIE's analysis of the US free trade agreement was in retrospect highly optimistic. Ross Garnaut was entirely correct when he said it didn't pass the laugh test.
The reason why the benefits are modest is because of trade diversion. This has been long recognised in economics.
Update:

I don't really disagree with John Quiggin.

I particularly agree with the comments of Uncle Milton when he said 'There’s actually very little left to do to liberalise imports, unless you think that reducing tariffs from 5% to a smaller number will make any difference.
That leaves the non-trade part of FTAs, like foreign investment rules and IP rights. I’m not sure that even in theory it’s necessarily welfare-enhancing to unilaterally liberalise these.'



In terms of the refugee situation we have to react. ISIL only came about because of the illegal invasion of Iraq. Thus we helped to create the present situation.
It should also be noted a turn back policy doesn't save lives. If people die in boats the ONLY way you can stop people dying in the sea is to stop boats.

If you are turning back boats ip so facto you are not stopping them. It is only luck people haven't dies in the seas thus far.
Neither are the refugee illegal. They can only be proved after the fact.

Update:

The facts on how generous we are is interesting. Clearly we are nowhere near as generous as we claim