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Overlooking the benefits of ‘value add’ manufacturing: Aussie ICC chief calls for more of the same

The global impact of COVID-19 has revealed the nation’s startling over-dependence upon global supply chains, prompting calls to return a level of manufacturing to Australia, however, the first Australian secretary-general of the International Chamber of Commerce, John Denton, believes the pre-COVID order is the best way forward.

The global impact of COVID-19 has revealed the nation’s startling over-dependence upon global supply chains, prompting calls to return a level of manufacturing to Australia, however, the first Australian secretary-general of the International Chamber of Commerce, John Denton, believes the pre-COVID order is the best way forward.

For many nations, COVID-19 has served as a form of divine intervention, revealing foundations of sand and the frailty of over-dependence on the lowest cost proposition, ailing infrastructure and rapidly declining resilience – Australia is no exception, however it is in the midst of this adversity that we can truly chart our own path forward.

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Across the globe, the post-Second World War economic, political and strategic order is coming under siege, driven by mounting waves of civil unrest.

More localised tensions in the aftermath of Brexit, growing economic stagnation across the West, concerns about climate change and the increasing geo-strategic competition between the world's great powers are all undermining the global balance of power.

Adding further fuel to the fire is the global and more localised impacts of COVID-19, which range from recognising the impact of vulnerable, global supply chains upon national security as many leading nations, long advocates of "closer collaboration and economic integration", grasp at the lifeboats of the nation-state to secure their national interest.

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While this economic, political and strategic turmoil is in some ways 'unprecedented', the favoured catchphrase of many a media personality seeking to describe anything from the bushfires that devastated swathes of the landmass, the economic impact of COVID-19 or the societal upheaval sweeping the West, Australia does its best work when its chips are down.

However, for Australia, the rising impact of COVID upon the national economy as states and territories shut down their jurisdictions, having a disastrous impact upon the national economy, with many public policy leaders and economists now predicting the nation’s first recession in nearly three decades.

For many Australians this will be the first such recession they have experienced, with its impact further compounded by rolling lockdowns, rising unemployment and geo-political tensions, adding further fuel to the fire of uncertainty and disruption.

Responding to these challenges has pushed the public policy status quo to the edge, as government grapples with how to stimulate the economy, lower unemployment and prepare the nation for the increasingly disrupted and challenging decades to come.

Both the Prime Minister and Treasurer have in recent announcements moved to prepare the Australian public for the myriad challenges that now face the nation’s COVID recovery process and the ensuing economic turmoil that will dominate Australia’s balance sheet for the coming decades.

Entering the public conversation, John Denton, the first Australian secretary-general of the International Chamber of Commerce, has rebuffed the growing calls for Australia and comparable nations to retake the reins of public policy and begin redeveloping a competitive, world-leading manufacturing base and focus on a 'global response'. 

Denton said the pandemic had made global connectivity weaker and exposed an over-reliance on importing goods - particularly personal protective equipment - from China. But he also warned against panic and embracing 'short-sighted' export bans on medical equipment and supplies.

"In this era of feeble international cooperation, many political leaders questioned whether they can rely on trading partners to allow the necessary goods and services to flow in times of crisis [protectionism that seeks] in misguided fashion to reduce the risk of trade lapses by requiring production onshore," Denton explained to Bevan Shields of The Sydney Morning Herald

"This policy distortion, coupled with a resurgent discussion on industrial self-reliance, will if unchecked dramatically alter the landscape of global trade for the worse. It will lead to overall higher prices, reduced production and increase product scarcity."

What this approach fails to recognise is that for Australia to compete in the manufacturing space, particularly in light of Industry 4.0 - Australia shouldn't focus on building manufacturing capacity on the back of low-cost, low value-add consumer goods, rather Australia should focus upon developing high value-add consumer and large-scale manufacturing goods, working collaboratively with international companies. 

Seize up the mantle of leadership

As part of the nation's response, Denton believes that Australia should shun the growing sense of economic 'isolationism' along with comparable "middle powers" like France and Japan to actively promote what he defines as "free and fair trade". 

Building on this, Denton said, "Uncertainty will be the dominant challenge of the coming months and years. We will need to apply fresh thinking, to be responsive and to adapt. We may accept that going it alone can work for a while. Divisiveness can score political wins.

"But COVID-19 has demonstrated that our inability to tackle common problems in collaboration will be to our collective detriment."

Turning his attention to the besieged World Trade Organisation, Denton added, "For too long, the Geneva-based instituation's trade rules have been allowed to rest on the laurels of their creation, falling increasingly out of step with the realities of today's economy and the needs of voters throughout the world.

"I say this because acknowledging failings is not an admission of failure. It is instead an urgent call for reform of a system that has succeeded, but imperfectly." 

Your thoughts

Australia is defined by its economic and strategic relationships with the Indo-Pacific and the access to the growing economies and to strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.

Indo-Pacific Asia is at the epicentre of the 21st century’s era of great power competition and global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.

For Australia, a nation defined by this relationship with traditionally larger yet economically weaker regional neighbours, the growing economic prosperity of the region and corresponding arms build-up, combined with ancient and more recent enmities, competing geopolitical, economic and strategic interests, places the nation at the centre of the 21st century’s “great game”.

Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia.

Australia is consistently told that as a nation we are torn between our economic relationship with China and the longstanding strategic partnership with the US, placing the country at the epicentre of a great power rivalry – but what if it didn’t have to be that way?

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific and what you would like to see from Australia’s political leaders in terms of shaking up the nation’s approach to our regional partners.

We would also like to hear your thoughts on the avenues Australia should pursue to support long-term economic growth and development in support of national security in the comments section below, or get in touch with This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it..

Overlooking the benefits of ‘value add’ manufacturing: Aussie ICC chief calls for more of the same
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