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The Forum > Article Comments > Mixed signals on free trade > Comments

Mixed signals on free trade : Comments

By Greg Barns, published 29/8/2006

Trade Minister Mark Vaile and Industry Minister Ian MacFarlane need to start singing the same tune.

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Macfarlane often appears ignorant. In any economic reform, the benefits tend to be spread widely, while costs fall more narrowly and/or are more obvious in the short term. This is why broad-based reform is most effective - benefits are appparent more quickly, costs are shared more widely and the costs are more easily recognised as being part of a mutually beneficial process.

Twenty years ago, the economists advising the Hawke Government's Ministerial Committee on Longer-Term Economic Growth (chaired by Sen Button) advocated a "tops-down" approach to reducing border protection, with major cuts to the massive protection to the PMV and TCF industries, which would bring rapid and widespread major benefits to many people, helping to generate support for the wider reform process. Sadly, these industries had their protection initially increased, and it remains way above that of almost all other industries.

The evidence is clear - free trade is highly beneficial; and in its absence, unilateral tariff cosrs are the most welfare-enhancing policy.
Posted by Faustino, Thursday, 31 August 2006 5:38:06 PM
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