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"Let's say Australia united with the rest of the south pacific. If we pursued free trade, all of that population would have dynamic productivity increases and reduced transactions costs. I think even without political unification a customs union (which has no external tariff or NTBs) is a good idea." Any political or economic treaty with South Pacific nations will have to deal with freedom of labour movement. This may not be politically expedient in either Australia, where we would have to face down our latent xenophobia, or in the South Pacific states themselves which could see almost an entire young generation flock to Sydney to become bankers, bakers and candlestick makers. The economic benefits to all would be significant, put the political fallout could be unacceptable to the political parties. Of course, a reinvigorated Wallabies winning back the World Cup might bribe the masses (Marx would have had a field day if he wrote Das Kapital with Australia in mind). I live in Britain (for the time being) where I can see the economic benefit London receives from having relatively open freedom of labour movement, from the Aussies and Kiwis that seem to run the City banks, to the Polish girls who clean their flats. And yet, despite all the obvious benefits, the Labour Party have decided to lead with tighter immigration policies as a way to undermine their Tory rivals in the run up to an election.
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