The rules-based global trading system is at risk due to the failure to appoint new judges to the World Trade Organisation's Appellate Body, leaving it unable to rule on appeals, the Productivity Commission finds in its latest Trade and Assistance Review.
"It is important that Australia continues to promote open trade practices and seeks to revive the rules‑based system," Productivity Commission Chair Michael Brennan said.
"Even before the outbreak of COVID-19, the era of the world's rules-based trading system that led to open, prosperous global economies since the end of World War II had stalled. This is bad for business, and bad for jobs and income," Mr Brennan said.
In the absence of the WTO's rules-based system, Australia should continue to work to promote alternative dispute resolution bodies, and continue negotiations on multilateral, plurilateral and bilateral agreements.
"In a post-COVID economy, trade will remain vital to economic growth. The promotion of open trade in goods, services and investment is going to be particularly important for economic recovery," Chair Michael Brennan said.
The report shows there has been a long-term reduction in tariff barriers across the Australian economy, as Australia has become a more globalised and competitive economy, generating benefits for consumers and exporters.
Levels of industry assistance were an estimated $12.1 billion in 2018-19, down from $12.6 billion the previous year. This consisted of about $2 billion in tariff output assistance, $4.5 billion in budgetary outlays and $7.4 billion in tax concessions, less $1.7 billion in tariff input penalties.
The main assistance developments in the past year were rising assistance from defence procurement favouring local industries, the continuation of assistance to farmers and farm businesses, government investment in private projects, and concessions to alcohol tax.
The Trade and Assistance Review 2018-19 can be found at: www.pc.gov.au/tar2018-19
