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Perth losing out in trade wars

Perth losing out in trade wars

Perth is at the centre of an international trade dilemma which is costing the world economy trillions of dollars, according to a US-based partner of a global law firm.Speaking to Lawyers Weekly…

Perth is at the centre of an international trade dilemma which is costing the world economy trillions of dollars, according to a US-based partner of a global law firm.

Speaking to Lawyers Weekly during a visit to Australia last week, Shanker Singham, the head of Squire Sanders' international trade team, said trade barriers are adversely affecting the world economy and Australia is particularly susceptible.

Known as anti-competitive market distortions, Singham said such barriers can include laws and government regulations that affect entry to or exit from a particular market, or other regulations - such as those related to safety and environment - which can result in an artificial distortion of costs.

"For example, many countries have laws that provide that if you terminate your local distributor, you have to pay very high levels of termination indemnity," he explained. "That decreases competition at the distribution level, which increases the profit margin of the local distributers. They then pass that on to consumers, and it means consumers are paying high prices."

According to Singham, Australia's economic structure means it is particularly vulnerable to the negative effects of market distortions - especially when taking into account its key trading partners.

"Australia has a unique make-up, economically. The big exports out of Australia are obviously things like agriculture and mining products," he said. "To the extent that those products face anti-competitive distortions around the world - particularly in the key markets which are China, Japan, Korea and South-East Asia - if that is happening, then it is severely damaging the Australian economy and severely damaging Australian companies."

Singham recently spent several weeks in talks with governments in China, Korea and Australia in an attempt to find solutions to the problem which he said is on an "enormous scale".

While Washington-based Singham advises on these issues in state capitals across the world, he said Australia's uniqueness means Perth - and not necessarily Canberra - is the ideal location in which to develop an international trade practice.

"I don't think you need to be in Canberra to do this type of practice in the way that you might need to be in Washington for this practice in the US," he said. "What you need more than that is to be close to the people who are most adversely affected by the barriers ... The advantage of Perth for us - and we have looked at Australia for a while - is that you do have here a lot of those mining and energy companies, and big agricultural players, that are directly affected. So you want to be close to them."

Singham also said Australia has a key role to play in solving many of these issues.

"There is a general recognition of the problem and the scale of the problem. What we are working on now is the policy proposals and policy proscriptions that you can use," he said.

"One of the things we discussed in Canberra was that the countries that are big stakeholders in solving this problem are all to be stepping up to the plate in terms of finding ... a multi-lateral solution to the problem, as opposed to individual countries taking unilateral actions."

According to Singham, who is also a leading trade advisor to the US Government, the issue of anti-competitive market distortions is likely to be a significant issue in the 2012 presidential election.

"I think this is going to be a big issue in the 2012 US election campaign. It's already been floated by Governor Romney in his campaign, and I think you are going to see it as a major issue in the actual election," he said.

"Trade is rarely an issue on which elections are won or lost, but I think, broadly, the role of government in the economy is going to be a threshold issue in this election."

Claire Chaffey

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