Don’t make the mistake of thinking that because you are a small business you won’t be affected by the Free Trade Agreements signed with South Korea and Japan, with China like to follow later this year.
This is not just about big business. It’s about how much easier it will become for big players, like Japanese retail giant Uniqlo, to enter this market and wipe the floor with the smaller local competitors. There’s plenty more Uniqlos that will follow this one’s entry earlier this year.
Taking away tariffs away doesn’t make life easier, it makes it harder.
Opportunities will emerge for some fast learners. But you will have to be fast and you will have to be niche. Others will perish as the agreements take hold.
Worker should also understand the change. It will not only determine your future job-prospects, but will also tell you about the wage-pressure you will feel, as your company competes with even more imported products.
Take the lessons of the Textile, Clothing & Footwear industries. Before the Hawke Government came to power in 1983, tariffs in the TCF industry were well above 100 per cent (tariffs are simply taxes, imposed on companies that import products into Australia).
The Industry Minister Senator John Button, in 1988, started the ball rolling, pushing tariffs for clothing down to 55 per cent by 1995. Quotas on imports — meaning how many singlets or bras, for example, could be brought into Australia — were eliminated from 1993.
Under the Howard Government, tariff cuts continued. They are now generally 5 per cent. But under the FTAs they are likely to disappear altogether.
The good news on the flip side is Australia will be able to send wool and raw cotton to these countries without tariff barriers.
The TCF industry, many small businesses among them, is well and truly exposed to global trade. You can see this with highly publicised examples such as Pacific Brands closing its Australian plants, to manufacture in China and the closure of local fashion labels.
Yet parts of the industry remain, with more than 40,0000 employees that represent around 10 per cent of all manufacturing jobs in Australia. Even now the industry is calling on Government to raise tariffs to protect jobs and businesses, though these latest agreements show this has clearly held no sway.
Textiles, clothing and footwear is just one industry of many that must think laterally, and quickly in the face of FTAs. Opportunity exists for those who can develop technology and systems that can be exported, and also those who find niches in the local market.
Also published in theTelegraph Sydney 15th April 2014