Dean Forbes



Australian Vice-Chancellor’s Committee

International Education Conference

Adelaide 22-23 November 2005

Professor Dean Forbes

Deputy Vice-Chancellor (International)

Flinders University


Free Trade Agreements (FTAs) have become a significant focus of the government, brought about, in part, by the slowdown in international free trade negotiations. 

I am not a trade specialist, and this is not a technical presentation.  I completed my Honours thesis on Australia’s trade with Southeast Asia, but my focus since has more often been on economic and social development than on trade or investment per se.

West Wing, Series 5, Program 19.  Josh Lyman negotiates a free trade treaty.  It promises to open the Indian market for US business.  He is ecstatic, having overcome opposition.  Shortly after it is announced, it becomes evident that 17,000 IT jobs will shift from the US to India.  There is panic.  This was meant to benefit the US.  Business representatives respond: it is about building business.  Reluctantly he accepts that India might also benefit from the agreement. 

Yes, free trade opens the possibility that both partners will benefit from a less restricted business environment!

The purpose of my presentation is to:

•    Outline some key aspects of free trade arrangements

•    Talk about how they impact on the universities. 

•    And encourage you to think about the kinds of barriers that exist to trade in international education, and to be able to make suggestions about how these barriers could be overcome.

Free traders and protectionists.  The debate between them has been going on for centuries.  The reason it has persisted is there is a degree of truth in both perspectives.  But if the goal is economic growth, there is no doubt that it is crucial to have as much free trade as is possible.

According to the World Competitiveness Yearbook 2004, Australia’s education industry is the third most competitive in the world.  It is not surprising that, in the circumstances, education is an increasingly important item in trade negotiations.


The Australian government has three broad strategies aimed at liberalizing international trade: membership of the World Trade Organisation (WTO); regional approaches eg Asia Pacific Economic Cooperation (APEC); and bilateral free trade agreements

The World Trade Organisation

There are currently 147 members of the WTO, who between them represent over 97% of world trade.  China joined relatively recently (December 2001).  Some countries in the Asia Pacific are not members.  Lao PDR is one.  It is working towards membership.

“The General Agreement on Trade in Services (GATS) is the WTO agreement that sets out rules and disciplines which apply to international trade in services.  Individual WTO members under the Agreement made specific undertakings by outlining market access and non-discriminatory treatment arrangements to apply in their markets” (DFAT 2004 p 11).

Education fits under the GATS.

The first set of WTO negotiations was the Uruguay Round, which occurred from 1986-1994. 

The current round commenced in Doha (Qatar) in December 2001.  Australia made its initial offer at the WTO in March 2003.  In other words, it put what we were offering in the way of trade liberalization on the table.

Then in the second half of 2004, DFAT (Department of Foreign Affairs and Trade) commenced a follow-up process, asking what additional commitments could be made and seeking advice on priority countries and sectors.

The WTO negotiations are long-winded, and very political.  In order to move things along, Australia works with like-minded countries on different issues.  The best known is the Cairns Group, which Australia leads, and focuses on agriculture.  When it comes to the GATS services negotiations, Australia’s allies include the US, the European Union, Canada, Japan, Switzerland, Norway, Singapore, New Zealand, China/Hong Kong, Chile and Korea.  What do they have in common?

APEC and the ASEAN Free Trade Area

A strong motivation for establishing APEC (Asian Pacific Economic Cooperation) was the desire to facilitate business and trade in the region.  Prime Ministers Hawke, and later Keating, were instrumental in driving APEC forward, though John Howard is less engaged.  APEC has just met in Busan, Korea.  You will have seen the photographs of leaders in their funny jackets, a feature of APEC.  The New Zealand Herald this morning bemoaned the fact that very little was achieved on progressing the free trade agenda at the Busan meeting.

ASEAN (the Association of Southeast Asian Nations) tacked a freeing up of trade, through the idea of AFTA, the ASEAN Free Trade Area, onto a more general agreement.  An Australia-ASEAN free trade agreement is under consideration.

In many ways, the regional initiatives have lost steam.  APEC and ASEAN, despite both putting forward serious goals to promote trade liberalization, have made little real progress, and have really been overtaken by the WTO and free trade agreement mechanisms.

Though there has been some progress.  An example is the APEC Card.  The intentions for the card were excellent.  It allowed business travelers to obtain pre-arrival clearance, and hence avoid the need for visas.  I got my first APEC card in about 2001.  Initially  the card facilitated entry to Singapore and Australia, but not the countries I most needed, because not all the APEC members had signed on.  I have just received my new card.  It now gives me fast access to a longer list of 13 countries.  Australia.  Brunei.  Chile.  Hong Kong.  Indonesia.  Japan. Korea.  Malaysia.  New Zealand.  Peru.  Philippines. Thailand. Taiwan.  I am still waiting for clearance from China and one other country.

Bilateral Free Trade Agreements (FTAs)

The final main thrust to achieve free trade is the FTA.  DFAT call them WTO Plus arrangements.  That is, they have to be consistent with the principles and negotiations being carried out through the WTO, but they are ways of doing things more quickly, and in a more focused way.

Australia now has four FTA agreements, which include services. New Zealand (1983) was the first, building on the Closer Economic Relations agreement and pre-dating  education becoming an export industry.  Then followed Singapore (2003), Thailand (2005) and the USA (2005).  So FTAs have only recently been implemented, which, of course, makes the overall impact hard to determine.

Currently, two proposals have been the focus of studies, and are now moving onto the negotiation of agreements.  A scoping study for Malaysia was commenced in 2004.  The other is China.  And I mentioned discussions with ASEAN earlier.

Overall, the government says it is trying to achieve two things with the WTO arrangements (and, in general, but less directly, with the FTA’s and regional arrangements).  First, a strong, transparent, rules-based multilateral trading system.  Second, securing more open markets for agricultural, services and industrial products


Services are elusive.  They are hard to grapple with and to measure.  Therefore they are often ignored, and effort focused on commodities (eg in the South Australian state plan).

Services are important to the Australian economy.  In 2003-04 they represented 71% of Australia’s GDP and about one quarter of total exports ($34 billion).  The major markets for Australian services are the USA ($4.8 billion); UK ($3.8 billion); Japan ($3.2 billion); Singapore ($2.1 billion)

Education exports are significant. According to Minister Nelson, education exports was worth  $7.5 billion in 2004 (Nelson 2005 p 109).  The $7.5 billion is made up of four components.  Onshore students accounted for $6.9b, by far the largest part.  $203m was derived from  Australian lecturers traveling overseas.  $56m came from business to business transactions.  And $374m was derived from income transfers from offshore students fees. Putting this in context, this is greater than our exports of iron ore $5.2b, or beef $3.9b, or wheat $3.4b (or beef and wheat combined $7.3b).


In the following sections I will focus primarily on FTA’s, but, as I indicated earlier, the issues are consistent with the WTO/GATS negotiations.

The key question is: What are the barriers to trade in education that are generally raised during FTA negotiations?  Anyone who says Deputy Vice-Chancellors are a barrier will be removed from the room.  It is OK to say VCs.

Recognition of Qualifications

There are a number of concerns about the recognition of Australian degree qualifications that are given attention.  In some situations, Australian three year degrees are not recognized qualifications for the purposes of government employment (Indonesia).  In the discussions about an FTA with Malaysia, the High Commissioner for Australia in Malaysia. James Wise, has expressed concern that Australia’s four year honours degrees are not recognized as any better than three year honours degrees from the UK.  Sometimes there is simply a lack of transparency about what Australian qualifications are recognized, and to compound that, the lists can be way out-of-date.  And there are sometimes concerns about the value and recognition of Australian distance education and offshore degrees.

Let me illustrate with a specific case study of degree recognition issues that emerged in the Australia-Singapore FTA negotiations.  When negotiations commenced, it was clear that qualification recognition in Singapore was a problem.  According to an IDP publication of March 2001, all Australian degrees in a range of disciplines were recognized by the appropriate Singapore body.  Accountancy, by the Institute of Certified Public Accountants.  Architecture by the Singapore Board of Architecture.  Dentistry by the Singapore Dental Council.

However, the situation was not nearly as straight-forward for a range of other disciplines, including Law, Medicine and Engineering.  I was particularly concerned because neither Flinders Law nor Medicine were recognized.  In the course of the FTA negotiations, these problems were referred back to the appropriate bodies which were gently pressured by the Singapore government to reconsider.  There were significant results, especially for Flinders University, which gained formal recognition for both Law and Medicine.

The professional recognition of Australian awards in Singapore meant that Law was controlled by the Singapore Board of Legal Education.  Prior to the FTA only degrees from the universities of Melbourne, Sydney, NSW and Monash were recognized.  The Board expanded the number to include one from every state (Flinders was the only university recognized in South Australia).

Medicine is managed by the Singapore Medical Council and pre-FTA it only recognized awards from the universities of Melbourne and Sydney.  Post-FTA the Council decided to recognize awards from every medical school in Australia.

Engineering proved more difficult to manage.  Singapore Professional Engineers Board intention was to sign the Washington Accord, which means it would recognize the process used in each country which has signed the Accord.  Therefore recognition would be forthcoming.

Visa Issues

International education relies on the marketers and others involved having quick, easy and inexpensive access to their markets.  Visa arrangements are an important part of this.  That means the costs of visas, both in terms of financial cost and the time and the work involved in getting the visa,  the difficulties of getting multiple entry visas, concerns about the category of visa (do you have to use a visitors or tourist or business visa to talk with prospective students?), and how long can you stay on the visa, and for how long can it be renewed?

These are the kinds of issues that are often raised in FTA negotiations.  Improvements often do follow.  As a result of the Australia-USA FTA, the USA announced in October 2005 that it was issuing a new E-3 Visa for Australians wishing to reside and work in the US.  There are 10,500 of them (more than the 900 of the traditional H-1B visa); they will be easier and cheaper to get; and spouses will now be able to work in the US (Austrade Export Update 6 October 2005  The Thai government decided to allow Australian business travelers a longer stay in Thailand.

Agent Restrictions

Is the government (ours or our partners) excessively intrusive with agents, or does it create a barrier to trade?  The Chinese governments has major restrictions on agent licences.  Is this an unnecessary restriction? Is the Australian government moving in the same direction?

Intellectual Property Rights

This is a difficult area.  The protection of IP must be a central part of any realistic FTA.

Educational Investment Offshore

Australian universities are making significant investments of a combination of human capital or intellectual property or financial capital offshore in countries such as Singapore, Malaysia and China.  Educational investments of this kind are always risky, and often confront a series of problems. 

Take China, for instance. There are barriers in getting registration as an education provider through a representative office.  In the case of IEN (International Education Network Pty Ltd) it took two years to complete the paperwork to establish a representative office, but changing government rules made it redundant soon after it was established.  The movement of funds out of China, and taxation arrangements have been a problem, and so too has the complexity of dealing with multiple levels of government, especially trying to reconcile the needs of provincial and national governments.

When FTAs deal with investment issues, as they often do, it creates an opportunity to improve the working environment of offshore programs and reduce the risk.  An example is the Australia Thailand FTA, which was implemented in 2005.  Its centerpiece is the phased elimination of tariffs, which is of more significance to manufacturers than service providers.  But the agreement also had benefits for services industries.The Thai government moved towards more transparent, legally binding rules for investment in service industries, and made a commitment to further liberalise these in the future.  Previously there was a 49% cap on investment in services companies, meaning that no Australian group could have majority control, but under the FTA majority equity will now be permitted, for example in educational programs which have a significant science orientation.

Contract Arrangements and Dispute Resolution

Contracts and disputes are not unique to education, as this is an issue we share with all business arrangements.  It is difficult to impose the western view of a contract in countries such as China.  But it is possible to ensure that there are real dispute resolution mechanisms and lobby the government to force courts to operate in an open and honest way.

The Environment Created by Negotiating FTAs

How are the FTAs negotiated with Singapore and Thailand will, or are, affecting Australian trade and investment?  It is still a little early to tell.  However, the real benefits are the changes in the “soft environment” within which business occurs. The networks and relationships which are built up. The greater transparency that results from open discussion (The APEC card and DFAT response I mentioned earlier).  And the follow-on benefits.


It goes without saying that moving towards a greater free trade environment should have benefits for both countries involved (you might recall my West Wing story at the beginning). What opportunities does it open up for education institutions in partner countries?

Carnegie Mellon is establishing a campus in Adelaide.  Legislation has been changed in order to allow it to operate.  Students will have access to FEE-HELP, but not to HECS, yet.  Has the Australia-US FTA facilitated this? Directly, no, but indirectly it has probably had an impact by changing the overall environment for these kinds of initiatives.

When DIMIA revamped its immigration arrangements a few years ago, it installed IELTS as the main test of English language competence.  The TOEFL providers lobbied DIMIA about IELTS monopoly, citing the Australia-US FTA.

Can an FTA create problems for our partner countries?  It probably can, in the longer term, by increasing the level of competition.  However, there are a number of regional education hubs emerging in the Asia-Pacific region (Singapore, Malaysia, China etc), and their current progress does not seem to be inhibited by the competition.  On the contrary, they are depending on international universities to bolster their own international standing.


This brings me to the final part of my presentation.  I have said that there has been substantial recent progress on two new trade agreements.  One with Malaysia.  The other with China.  I want to say a few words about the agreement with Malaysia before spending much longer on China.


Malaysia is an important trade partner of Australia.  Australia exports more services to Malaysia than it imports.  However, we import more merchandise from Malaysia than we export.

As we all know, Malaysia has for a long time been a major education market for Australia.  Tourism and education are the two major components of our services exports, which were worth $912 million to Australia in 2003 (DFAT 2004 p 1).  In fact education related exports, which amounted to $401 million, are by far the single biggest component of services exports to Malaysia.  Not only are there large numbers of Malaysian students coming to Australia, there are also Australian campuses of Monash, Curtin and Swinburne in Malaysia, and a whole host of other offshore arrangements.

At the time of the Australia-Malaysia scoping study, the High Commissioner identified a number of potential issues for an FTA.  These included:

•    Recognition of degrees by JPA

•    The process of Lembaga Accreditasi Negara (LAN) approval for offshore courses

•    The movement of business people

•    Electronic commerce issues

•    Intellectual property rights

•    Government procurement of services

•    Dispute settlement

•    The ability of staff in Australian offshore campuses to apply for Malaysia research funding.

Quite a list.

China Feasibility Study

Let’s move on to China.  Where are we at?  The first phase commenced in October 2003, and led to a study to determine whether there was an interest in, or need for, an Australia-China FTA.  The report, titled Australia-China Free Trade Agreement: Joint Feasibility Study, was released in March 2005.

The study argued that “while bilateral trade has grown strongly over recent years, significant barriers to further goods and services trade growth remain in place in both countries” (DFAT 2005 p 3).  In general it nominate three broad areas.  Tariffs, quotas and the like.  Regulations, mobility, dispute resolution, IP.  Transparency

In 2004, bilateral services trade between Australia and China totaled $US1.2 billion, and was growing at 26% per annum.  Education is Australia’s main service export to China, followed by tourism.  This is significant. Education exports to China totaled $US250 million, more than coal and aluminium (DFAT 2005 p 11).  In 2004 there were 30,000 Chinese students studying in Australia.  Offshore programs are also important.  The Chinese have approved 859 cooperative Chinese-foreign education (not just Australian) programs in China.

Moreover both China and Australia have made GATS commitments on education.

Where does the feasibility study suggest the main efforts should be concentrated in education?  By removing regulatory barriers in China, at whatever level of government they occur (ie national, provincial, or local).  Allowing a commercial presence in education (ie moving beyond cooperative programs).  Removing barriers to the movement of educational professionals.  And further facilitation of mutual recognition of professional and academic qualifications (DFAT 2005 p 71).

Towards the Australia-China FTA

It was decided there was a need, and so the process began.  I was in Beijing recently and talked with Kathryn Campbell who was engaged in the process.  Two meetings have been held in Beijing, and there is now an attempt to organize the next meeting in Australia.  Lots of defining of the parameters is going to occur, and then it will be a laborious process of defining the issues and the positions.  As part of all this there will be a systematic attempt by DFAT to flesh out the issues of importance to the various stakeholders in Australia.


As I said, the jury is out on the impact of FTAs.  It is too early to make a meaningful assessment of their impact. 

But it is important that the education sector is included in the consultations, and that we are able to frame our issues and concerns in a way that trade negotiators are able to grasp and insert them into FTA negotiations.  We face some barriers, because trade is focused on commodities, not services.  Moreover, education is often seen as a public good, and not a tradable commodity (despite the prominence of education in exports). 

I think that the main benefits of FTAs for education is not in the formal negotiations and agreements, but in the spotlight which FTA discussions shine on barriers to trade.  This is where our gains were made in the Australia-Singapore FTA, and it is where we are likely to get some future benefits. 

Finally, we must remember that the benefits of FTAs (or any trade liberalization measures) accrue to both parties.  An inevitable outcome is greater interest, and invariably greater competition, in the Australian market by foreign education providers.


Department of Foreign Affairs and Trade 2004 Australia’s Trade in Services: Sophisticated, Competitive and Growing.

Department of Foreign Affairs and Trade 2004 Australia-Malaysia FTA Scoping Study.  Industry Consultations, Canberra.

Department of Foreign Affairs and Trade 2004 Trade in Services Australia 2002-03


Department of Foreign Affairs and Trade 2004 Australia-United States Free Trade Agreement.  Guide to the Agreement, Canberra

Department of Foreign Affairs and Trade, Australia and Ministry of Commerce, China 2005 Australia-China Free Trade Agreement: Joint Feasibility Study


Economic Analytical Unit 2003 Globalisation. Keeping the Gains, Department of Foreign Affairs and Trade, Canberra.

Economic Analytical Unit 2005 Education Without Borders: International Trade in Education, Department of Foreign Affairs and Trade, Canberra.

Nelson, Brendan 2005 Higher Education Report 2004-05, Department of Education, Science and Training, Canberra.