All the way with FTA?


When they met over steaks and beer at the US president’s Texas ranch, the discussion between John Howard and George Bush turned quickly to the Australian government’s “reward” for participating in the Iraq war.

And this, we are told, is it — a free trade agreement (FTA) between the US and Australia which will further integrate Australia into the US economy, gut existing social and environmental policies and allow freer reign to giant US corporations. Some reward!

“Free trade”, it’s been said, is a salesperson’s slogan. When you hear someone say “free trade”, you should ask “What are they trying to sell me?”

Australia enters these negotiations with a very simple agenda — secure concessions on the sale of agricultural products in the enormous US domestic market. Not only will this make economic sense to the government — agriculture is still a major export earner. It will also make political sense — the National Party hopes that some concessions will shore up its votes, presently leaking due to the economic crisis facing many farmers.

Washington’s demands will be more wide-ranging — the shopping list includes items from a wider range of corporate sectors. Among the targets:

• the Pharmaceutical Benefits Scheme. The PBS, in place for 50 years, ensures Australians have access to subsidised medicines through the bulk purchase of drugs by the government. The US drug corporations have long considered the PBS a “barrier to trade” and are demanding it be overhauled. Fifteen companies have even formed a lobby group specifically for this purpose.

• Foreign Investment Review Board. The FIRB enforces requirements for minimum Australian ownership in some industries. US corporations want the removal of its powers to specify ownership limits in the media, telecommunications, airline and banking industries.

• “Local content” rules in film, television and music. The government regulates to ensure that a certain amount of content is of Australian origin, both to protect the domestic entertainment industry and to ensure that specifically Australian cultural forms can be disseminated. The US entertainment industry is keen on removing such barriers.

• Labelling of genetically modified organisms (GMOs). Australian law requires that any foodstuff containing GMOs must be clearly labelled as such, and restricts the growing of GM crops. US agribusiness, the world’s largest user of GMOs, is lobbying hard for these restrictions to be scrapped.

• Quarantine rules. Australian laws on quarantine of food and other materials has traditionally been tough, to keep diseases which don’t exist here out of the country. US companies claim that these quarantine laws are a “means of restricting trade” and are calling for them to be eased.

• Restrictions on the provision of public services. The FTA would allow US corporations to challenge government provision and regulation of services such as health, education and water, and lead to privatisation. This is the same agenda as the multilateral General Agreement on Trade in Services (GATS) negotiations currently proceeding in the World Trade Organisation, but in an even worse form.

• There is even the possibility that this FTA may include provisions giving private corporations the right to directly sue governments for the impacts of their policies on those companies’ operations. This right is presently enshrined in the North American Free Trade Agreement, covering the US, Canada and Mexico, and has allowed, for example, the UPS parcel service to sue Canada for the fact that Canada Post has a monopoly on standard letter delivery. It has also allowed another US company (Metalclad) to successfully sue a Mexican city for refusing it permission to build a toxic waste dump.

What is striking about comparing the two lists is how uneven they are — concessions on agricultural exports in exchange for concessions on a wide range of social and environmental policies.

Partly this is a product of the sheer unevenness of any bargaining between the US (population: 280 million) and Australia (population: 18 million). The Australian government’s own report compares the size of the Australian economy to that of a “medium sized state, roughly equivalent in GDP to that of Pennsylvania”.

But that doesn’t explain why the Australian government is so keen on the deal — if anything, Canberra has pushed it on Washington, not the reverse. It’s especially inexplicable when much of the modelling of likely economic benefits is far from optimistic.

The most recent government-commissioned report, from ACIL Consultants, was almost buried after it showed that, once unrealistic assumptions were removed, Australia would actually suffer small net losses from an FTA. Another report, by the CIE, found positive results — but of still marginal size.

So why the haste on the part of Canberra?

Part of the answer can be seen in a coincidence of timing — US trade negotiators arrived in Australia the very week bombs started falling on Baghdad. This agreement is very much about war and “security” and Australia’s place in the world.

The Howard government has publicly stated that it sees the country’s “national interest” as being inextricably tied up with the US-Australian military alliance. The Australian government’s recent white paper on trade and foreign affairs said the FTA would “put our economic relationship on a parallel footing with our political relationship”.

Further, John Howard has consciously allied the country with the US mission to reshape the world according to hypercapitalist principles, ie, to marketise, privatise, corporatise, consumerise. For the PM, the Australian “national interest” is identical to the US ”national interest”, world domination and all.

The thing that strikes you when you look at the likely list of Australian concessions is that the Howard government is ideologically committed to all of them. It opposes restrictions on GMOs, has tried to get state governments to back down on their restrictions on GMO dissemination. It wants to allow foreign companies to buy Qantas and Telstra and domestic banks. It doesn’t give a damn about Australian content on television, film and radio. And it has an ideological opposition to the Pharmaceutical Benefits Scheme, seeing it as part of the dreaded “socialised medicine” scheme.

Under such a scenario, the Coalition government’s objective in getting the FTA is a little “wealth redistribution”. It trades off policies it has long opposed and which don’t benefit its corporate backers anyway, and in exchange it gets hold of some extra export dollars for certain farmers and agribusinesses.

Certainly, Howard and company are not the people you want negotiating on the fate of such schemes — they have no commitment to such things. But more — could we put it past them to use negotiations on an FTA as an easy excuse to gut these things?

Fortunately, it’s still early days in the negotiation of this FTA and already public opposition is slowly starting to coalesce. The US trade team, for example, has already tried to placate public concern about the PBS, promising that Washington isn’t going to call for any major changes to it. Meanwhile, the Australian film, television and arts industry has just launched a campaign aimed at saving local content rules.

If community organisations, unions, student bodies and political groups unite against this FTA, on the grounds that it presents a major threat to progressive social and environmental policies (and indeed even to our right to make such policies), then there is a major chance to defeat this agreement, which will enrich a few, both in the US and Australia, at the expense of the many.

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