Buy Australia Policy Sparks Fears of Trade War

(Jacob Saulwick—Sidney Morning Herald)

The “Buy Australia” policy to be included in the state budget risks setting off an international trade war, the Trade Minister, Simon Crean, says.

Today's NSW budget will include a leg-up for Australian firms bidding for Government contracts in a bid to preserve jobs. But Mr Crean said giving Australian companies preferential treatment amounted to a de facto tariff and, in contributing to a “tit-for-tat downward spiral”, could have the perverse result of driving up unemployment.

“The bigger problem is that it triggers an international trade war. The gist of this runs completely contrary to everything we have said in terms of arguing not just for increased liberalisation of markets and the opening of markets but stopping the spread of protectionism.

“And what people have to understand is that there is a large number of jobs in Australia that are as the result of trade, not just in the export business but also in the import business.” Read more here.