I begin by acknowledging the Ngunnawal People, the Traditional Custodians of the land on which we meet, and extend that respect to all First Nations people here today.
It's terrific to be back at Asialink talking about openness. Asialink is passionate about making the most of opportunities in Asia. It's an ambition the government shares as we implement our Southeast Asia Economic Strategy (Moore 2023). People‑to‑people links are a valuable part of that strategy. So it's fantastic to have initiatives like Asialink leading the way for the past 30 years (Asialink 2025).
There has been significant change over the past year. The global rules‑based economic system that has underpinned decades of relative prosperity and stability for Australia is under strain. Intensifying strategic competition between our most important trading partner and most important security ally, regional conflicts and weakening multilateral institutions are all contributing to a more fragmented and less resilient world.
We're 11 days out from the Economic Reform Roundtable. Building economic resilience in the face of rising fragmentation and global uncertainty will be a key theme. In this context, and in the face of increasingly frequent global shocks, we must ensure our economy's ability to withstand, adapt and recover. It's something that's crucial to expanding your horizons. As the Treasurer has said, it goes to securing investment capital, shoring up supply chains and building more partnerships in our region (Chalmers 2025).
In other words, we're seeking ideas and proposals on opening doors not closing them. And today I want to talk about the benefits of open trade, the ways economic engagement has helped Australia prosper, and the reasons why tariffs are not the answer.
Doing what we do best
Nobel laureate and economist Paul Samuelson described free trade as the best example of an economic policy that might not be obviously beneficial, but is demonstrably welfare enhancing (Samuelson 1948). Plenty of smart people don't immediately see the case for open trade.
Trade is most beneficial when it leverages our comparative advantage. Most of us don't cut our own hair, sew our own suits or cobble our own shoes - which is a relief, since in my own case, I'd end up looking like Mr Bean on laundry day. Thanks to specialisation in the labour market, we do what we do best. Then, we pay others to do what they do best.
The same principle applies to countries. No nation can efficiently make everything it needs. But when each country focuses on producing what it's relatively good at - whether that's software or sugar, education or energy - and trades for the rest, everyone ends up better off. Specialisation and exchange allow us to produce more, waste less and enjoy a greater range of goods and services than we ever could on our own.
This isn't just textbook theory; it's how global prosperity has grown. Open trade lets Australian miners sell lithium to Korea, lets our farmers export beef to Vietnam, and lets our universities educate students from every corner of the Indo‑Pacific. In return, we import the tools, technologies and products that help drive productivity and improve everyday life. Trade is not a zero‑sum game. Done right, it's the economic version of a win‑win handshake.
This is doubly true given our size. Australia is just 0.3 per cent of the world's population (International Monetary Fund (IMF) 2025). We represent a relatively small share of the world's economy.
Trade supports 32 per cent of Australia's economic activity (Department of Foreign Affairs and Trade (DFAT) 2025). One in 4 Australian jobs are connected to trade. Trade helps to deliver lower prices for consumers. It also provides incentives for local businesses to innovate and compete (Mulino 2024). Trade exposure can also incentivise firms to expand into new markets and take advantage of economies of scale, and help establish vital business‑to‑business links.
Sustained economic engagement
Despite the benefits, Australia didn't initially embrace openness. In the 1890s, the greatest schism in Australian politics was between protectionists and free traders. In fact, the 2 most influential colonies were split. Victoria used tariffs to promote industry growth while New South Wales (NSW) largely shunned them.
Recent analysis by Brian Varian provides a rare glimpse into tariff protections for manufacturing industries in colonial Victoria in the 1880s (Varian 2025). Sectors attracting tariffs included furniture at 25 per cent, musical instruments at 22 per cent, carriages and harnesses at 19 per cent, clocks and watches at 15 per cent, and vegetable products at 28 per cent. This may be the first recorded government intervention to protect meat and 3 veg.
In the face of such high Victorian tariffs, New South Wales premier and free trade advocate George Reid feared what would happen if his state joined a proposed Federation with the protectionists (McMinn 1988, NSW Legislative Assembly 1891). Reid argued it was like a non‑drinker setting up house with 5 drunkards and leaving the question of beverages to be decided by a majority vote.
Like most politicians who become prime minister, Reid understood the importance of compromise and New South Wales did join the Federation (Church 2018). Federation got rid of internal tariffs between the colonies, but the protectionist drunkards prevailed over Reid's free trading teetotallers. Australia's external tariffs stayed high for decades to come.
Momentum for change didn't arrive until after World War II. As a show of support to our British allies, Australia took part in world trade deals to reduce tariffs. In 1947, countries representing more than four‑fifths of global trade signed up to the General Agreement on Tariffs and Trade. Between them, countries agreed to reduce 45,000 tariffs. Australia benefited from those multilateral deals.
Then starting with Prime Minister Gough Whitlam's 25 per cent tariff cut in 1973, Australia did something remarkable. We began cutting tariffs unilaterally - not waiting for other countries. We showed the world that tariff cuts are in the national interest, regardless of what other countries do.
In 1988 and again in 1991, the Hawke government phased down tariffs. Cuts came from a desire to reform industry, a desire to create a stronger economy and a desire for Australia to play a greater role internationally (Leigh 2002). Those unilateral tariff cuts were as economically sound as they were confusing for other countries that chose to hold off for mutual concessions.
Due to Australia's relative size, we know strength in numbers matters when it comes to removing trade barriers. So we continue to engage with like‑minded economies through international forums. Over the years, this includes the Asia‑Pacific Economic Cooperation Leader's Meeting, the Cairns Group, and the G20 (DFAT timeline n.d.).
From the early 2000s, as it became clear that another global tariff cut through the World Trade Organisation would be challenging, Australia increasingly pursued bilateral and regional trade agreements (Productivity Commission (PC) 2025). governments on both sides have worked to ensure agreements cover our major trading partners (PC 2025). Australia now has 18 free trade agreements with 30 economies.
Legislation enabling entry into force for Australia's 19th free trade agreement, with the United Arab Emirates, passed through Parliament on 31 July. We are looking to bring that agreement into force in the next few weeks. Negotiations with the European Union and to build on the existing free trade agreement with India are continuing.
Economic engagement and advocating for open trade has benefitted Australia's economy.
Fewer rocks in the harbour
The phase we're going through is not the first backlash against openness, and it won't be the last. And there are 5 general points I want make about tariffs.
First, when tariffs are high, they deter trade a lot. It's like wind resistance - the burden rises with the square of the tariff (Harberger 1959). That means for large tariffs, this could create disproportionately large impacts, and distort economic choices in undesirable ways.
Economist Justin Wolfers gives a simple example of how tariffs can lower households' standard of living (Wolfers 2025). He argues delaying the purchase of a new washing machine extracts a different kind of cost on consumers over time. It might be higher energy and water bills when sticking with a clunky washing machine.
Second, tariffs can reduce consumer choice too. Even a small tariff requires paperwork from importers, which can deter them from bringing in a new product. In bureaucratic terms, that's called 'death by form B650'. In a seminal study, Christian Broda and David Weinstein (2006) showed that US tariff cuts over the last 3 decades of the twentieth century tripled the number of imported product varieties, delivering a gain to American consumers equivalent to 2.6 per cent of national income. Lower tariffs, more choices.
That's why the Albanese government scrapped around 500 'nuisance tariffs'. Nuisance tariff is economist‑speak for 'we can't believe these still exist either'. They are tariffs that raise little revenue, have negligible benefits for producers, but impose compliance burdens (PC 2022). Removing nuisance tariffs for products like crocheted fabrics, cutlery and walking sticks will reduce red tape and save Australian importers time and money (Treasury 2024). Which means it's now cheaper to import a crocheted walking stick. For all your slow‑fashion mobility needs.
Third, it would be easy just to take the populist approach and respond to tariffs with tariffs. But that's not the Australian way. It's not how we handled previous impediments to trade with China - which totalled around A$20 billion at their height - and it's not how we're responding to US tariffs.
Australia is a trading nation and a strong advocate for open and rules‑based trade. Australia and the United States have a gold standard free trade agreement in the Australia‑United States Free Trade Agreement. Our country has a well‑earned and highly respected position around the world in terms of commitment to open trade rules. That's why we continue to advocate for removal of unjustified and unwarranted tariffs on Australian goods, and why we won't be implementing tariffs in return.
We continue to advocate for removal of unjustified and unwarranted tariffs on Australian goods. Imposing tariffs on Australian exports to the United States hurts American consumers - resulting in higher prices, supply chain disruptions and slower growth.
An aphorism that's often attributed to economist Joan Robinson is that just because your trading partners put rocks in their harbours, it doesn't follow that you should put rocks in yours. The ideal is no rocks. But fewer rocks are better.
Fourth, trade isn't just good for consumers; it's good for workers too. Many Australians have jobs that depend on exports. Department of Foreign Affairs and Trade modelling shows jobs directly associated with exports are 8.7 per cent better paid (DFAT modelling, FY2022-23). Others work in industries that rely on imported parts and materials. In a modern economy, trade is woven into the fabric of how we work and what we make.
Fifth, turning away from global markets would hurt the very workers some claim to protect (Clausing 2019). Tariffs are typically regressive, meaning that they hit low‑income households hardest (Leigh 2017). And trade wars don't protect jobs, they cost them. Farmers lose markets. Factory workers face rising input costs. The uncertainty hurts everyone.
When we put up walls, we don't just shrink our economic opportunities - we damage our relationships with allies who are essential to solving shared problems, from climate change to tax avoidance.
Put simply: trade expands opportunity. Isolation shrinks it.
Closing remarks
Openness is one of Australia's great strengths. As Paul Samuelson's insight makes clear, we must continue to explain the case for free trade if we are to deliver the best outcomes for Australians. That's what our government is doing, through our broad bilateral and multilateral engagement.
In an era of uncertainty, the case for openness is stronger, not weaker. Our prosperity has never come from closing ourselves off, but from connecting: with ideas, with markets, and with our neighbours. Trade has made us more competitive. Immigration has made us more dynamic. International cooperation has made us more secure. Resilience isn't about building walls, it's about building networks strong enough to withstand the shocks.
As you step into leadership roles across business, government and civil society, I hope you'll carry the case for openness with you. Australia has prospered not by retreating from the world, but by engaging with it: confidently, creatively and on our own terms. Thanks to Asialink for 3 decades of building those bridges, and for continuing to lead the conversation on how we stay open, resilient and connected.
Note: My thanks to Treasury officials for valuable assistance in drafting these remarks.
References
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