All the way with FTA?


In the very week that the United States’ bombers, cruise missiles and marines started pulverising Iraq, a crack squad of US trade negotiators arrived in Canberra to begin talks on the long-awaited US-Australia Free Trade Agreement.


A coincidence? Yes. But an illustrative one, a starting point for having a closer look at this FTA, the motivations and agendas behind it, and the linkage between security and trade.


The FTA has been in the pipes for a considerable period of time, but it is only now that preparations have finally moved into the stage of direct negotiation.


Both the United States and Australia are amongst the foremost purveyors of the “free trade” ideology worldwide.


The United States’ record is clear and well-known. It has been the major force pushing for trade liberalisation, through multilateral institutions like the World Trade Organisation (and GATT before it), through regional agreements like NAFTA (North American Free Trade Agreement) and through direct bilateral agreements such as this US-A FTA.


Australia is one of the most fervent and driven members of the Cairns Group, a group of agriculture-exporting nations which lobby constantly for the lowering of restrictions on trade in agricultural commodities.


You’d think therefore that, given their ideological commitment to it, all these countries would need to do to secure a free trade agreement is come together with their red pens and just cross out the laws which restrict trade.


But the truth is that, to describe this agreement as being one which will introduce “free trade” is wrong – the respective governments will continue to regulate trade at either end of the Pacific. Rather this agreement will simply reshape the existing system of trade regulation, scrapping some regulations and introducing others, to the benefit of some and the detriment of others.


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


In Australia’s case, it’s principally the agricultural commodities which have been the mainstays of the country’s exports for two centuries: wool, wheat, beef, sugarcane. Australia wants to sell beef to the Americans, rice to the Japanese and all sorts of foodstuffs to the Europeans – and want all of those countries to drop their tariff and other barriers to doing so.


In the US’s case, they’re trying to sell just about anything and everything to anyone and everybody. Indeed, US trade negotiators have a hard-nosed reputation of seeking to secure trade concessions according to shopping lists provided them by large US companies. The US has, for example, tried to use the WTO to crush Brazilian aeroplane manufacturers (at the behest of US aeroplane manufacturers), Indian drug companies (on the orders of US drug companies) and South Korean steel makers (at the request of US steel makers).


(After hearing stories about them, it’s not hard to imagine US trade officials as Mafiosi, albeit in better suits: “So, let me give you an offer you just can’t refuse: you let us sell you Twinkies without tariff charges and we’ll let you keep your face”!)


Indeed, a close knowledge of US trade policy can lead you to only one possible conclusion: that the US government views trade as simply a non-violent form of conquest. One country gets Tommy Franks (US commander of the war in Iraq), and another gets Robert Zoellick (Bush’s trade representative).


So what are they trying to sell?


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. But 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.


The United States’ demands will be more wide-ranging – the shopping list includes items from a wider range of corporate sectors. Among the targets:


  • Pharmaceutical Benefits Scheme. The PBS, in place for 50 years, ensures Australians have access to subsidised medicines through the bulk purchase of medicines by the government. The US drug industry has long considered it a “barrier to trade” and is demanding it be overhauled – 15 companies have even formed a lobby group specifically for this purpose.

  • Foreign Investment Review Board. The board enforces requirements for minimum Australian ownership in some industries. US industry wants the removal of its powers to specify ownership limits in the media, telecommunications, airlines 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 domestic entertainment industries and to ensure that specifically Australian cultural forms can be disseminated. The US entertainment industry is keen on removing such barriers.

  • Labelling of GMOs. Australian law requires that any foodstuff containing genetically modified organisms must 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 occur here out of the country. US companies claim that these quarantine laws are in fact a “means of restricting trade” and are calling for them to be eased.


What is striking about comparing the two lists is how uneven they are – concessions on agriculture 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 (pop. 280 million) and Australia (pop. 18 million). The Australian government’s own report compares the size of its 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, they’ve 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.


So why the haste on the part of Canberra?


Part of the answer can be seen on the headlines of our newspapers – it’s about war and “security” and Australia’s place in the world.


Australia is one of only three countries to have publicly committed combat troops to the war on Iraq. Why? There seems to be little direct “national interest” to Australia in overthrowing Saddam. Certainly no-one believes that Hussein represents a clear and present terrorist threat to Australia (at least not before we declared war on him).


But the present Howard government has publicly stated that it sees the country’s “national interest” as being inextricably tied up with the Australian-American Alliance. Howard even once described himself as Washington’s “deputy sheriff” in this region. By joining George W Bush’s crusade against Saddam, Howard deliberately seeks to strengthen ties with Washington.


The same attitude can be seen in the crass Australian government parroting of US positions on a wide range of issues – on the Kyoto protocol on global warming, on Star Wars, on the International Criminal Court, on attitudes to multilateralism and the United Nations in general.


And the same attitude can be seen in trade. It’s not just that Howard hopes that cosying up to Bush will lead to trade concessions (possible but unlikely). Howard sees a Free Trade Agreement between the US and Australia as a model – the model – for the rest of the world to follow.


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


There’s possibly another motivation too. If trade can be used as a weapon (as the US seems to do, constantly), perhaps it doesn’t always have to be a weapon aimed at foreign enemies. Perhaps it can be aimed at domestic ones also.


The thing that strikes you when you look at the likely list of Australian concessions is that the Howard government has an ideological opposition 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 just engages in a little “wealth redistribution”. It trades off policies it has long opposed and which don’t benefit its constituencies anyway, and in exchange it gets hold of some extra export dollars for certain farmers and agribusinesses (which are part of its constituency).


Certainly these 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 they weren’t going to call for any major changes to it.


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.

Leave a comment