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Delivered at the Opening Plenary of the Now We The People conference, University of Technology, Sydney, 23.8.03 Where are Howard and Bush are taking us through the Australia-US Free Trade Agreement? Dr Pat Ranald Henry Kissinger, in an unusual moment of frankness, wrote in the Irish Independent on October 13, 1999, "What is called globalisation is really another name for the dominant role of the United States…" He then listed the main features of the US model, financial deregulation, privatisation, small government etc. Since September 11, 2001, the US has tried to link support for the "war on terror" with support for its agenda of corporate globalisation. At the WTO Ministerial meeting in November 2001, the US and EU used threats about aid and trade preferences to bully many countries into submission as they sought expansion of the WTO agenda to include controversial issues like investment. However the US has also been prepared to act unilaterally in the WTO. For example at the behest of pharmaceutical companies which have been key donors to the Bush camp it delayed for two years the changes to the WTO TRIPs agreement to enable developing countries access to affordable medicines. The final deal reached in August 2003 put additional conditions on this access for developing countries at the insistence of the pharmaceutical companies The US decision to invade Iraq despite its failure to gain support from the UN shows a new stage in aggressive unilateralism. The US trade strategy is now putting less emphasis on multilateralism through the WTO and building a network of bilateral agreements which permit it to impose its agenda more quickly and in worse forms than through the WTO The
US-Singapore, US Chile and US Australia Free Trade agreements all have
the same template , which is worse than the WTO. They have the same structure
as the infamous MAI, defeated in community campaigning in 1998: The key
features are: The
strategy is to build a network of such agreements and use these for the
new benchmarks for broader agreements in the WTO and regional agreements. An FTA would aim to remove all trade barriers (tariff and non-tariff) between the US and Australia. It is true that the discussion about a possible Free Trade Agreement began before September 11 2001 and before the war with Iraq. But since the announcement of negotiations last November both governments have adopted an accelerated timetable and linked it to defence policy . The government clearly hopes that its commitment of Australian troops to Iraq will make the US give concessions in the trade negotiations. This ignores the long history of US trade policy which shows that domestic US lobby groups have much more influence in trade negotiations than small military allies. Both governments are trying to rush it through by the end of this year. The US FTA is a bad idea for three major reasons: 1) There are no clear economic benefits for Australia. Australia is in a weak bargaining position, only 4% of size of the US economy. The government's economic study by CIE consultants shows only small economic benefits for Australia, (0.3% increase in GDP after 10 years) mainly through access to US agricultural markets. Recently the US Congress has increased its subsidies to farmers which are paid across the board cannot be removed for trade with Australia. Only tariffs (taxes on imports) and quotas (quantitative limits) can be negotiated bilaterally between Australia and the US. But it will be very difficult to remove specific agricultural tariffs (taxes on imports) in areas like sugar and dairy products because of the strength of the US farm lobbies. Other equally orthodox studies by ACIL consultants and the Productivity Commission show no benefits from such agreements, mainly because of loss of trade to other trading partners, especially in the Asia Pacific (see Senate Submission at www.aftinet.org.au for more detail). 2) Both governments have referred to the 'Integration" of Australia into the US economy. The real Howard government agenda is that it admires the US model of deregulation and privatisation and sees a US FTA as a way of achieving that model. 3) Australia has few tariffs (taxes on imports) and those we do have are in the car and clothing industry and are relatively low. But complete removal of these could affect tens of thousands of jobs, many in regional areas of high unemployment. Because our tariffs are so few, the main targets identified as "trade barriers" by the US are our public services and social regulation. I will just mention some examples and will look at these in more detail in the workshop. a) The MAI "negative list" approach means that all regulation of services and investment at all levels of government is included unless specificallly excluded, which is worse than the WTO. This places severe restrictions on the ability of governments to regulate b) US corporations want access to privatise public services like health, education and water. They could argue that public provision and regulation of such services is a barrier to trade and investment. Under the NAFTA, the UPS the giant courier company is suing Canada's public postal service on the grounds that it is a barrier to trade. c) Removal of all limits on foreign investment, including in Telstra Qantas, and the media, removal of rights to local industry policy and giving corporations the right to challenge laws and sue governments. Again this is worse than the WTO where only governments can complain about the laws of other governments. d) Removal of price controls on the wholesale price of prescription medicines through the PBS. The government uses "reference pricing" to negotiate lower wholesale prices for medicines and then subsides them through the BPS. The US does not control wholesale prices in this way. US pharmaceutical companies want higher prices for their products. The government keeps saying that they will protect the PBS but this issue is still being discussed in the negotiations. There is a specific leaflet and letter to the Minister about this on our website. e) Australia has minimum content rules in film, television and music to ensure that Australian voices are heard and stories are told. The US wants to reduce these or to limit them so they cannot be increased or introduced for new technology in future. e) Australia has national labelling regime for genetically modified food and most State governments have regulated the introduction of GM crops to prevent contamination. The US is the world's largest exporter of GM food and does not have such regulation. These issues are still on the table. Most
Australians support these social policies, which help make Australia a
more equitable society than the US, with a distinctive culture. A survey
by UMR Research reported in the Australian Financial Review on March 21,
2003 showed that 90% of respondents rejected a trade deal that changed
the Pharmaceutical Benefits Scheme and 70% opposed a deal that threatened
Australian content in film and television. Social policies which protect
the public interest should be publicly debated here and decided by parliaments
at the national or state level, not secretly signed away in a trade agreement.
The government is having problems with the negotiations: US farmers want lower tariffs phased in over 12 years, as in the Us-Chile Free Trade Agreeemnt, and Australian farmers are not happy with this. There is public pressure to keep PBS reference pricing and local media content and there it opposition to giving corporations the right to sue governments. There are some signals that they will not meet the end of year target for finishing the negotiations. There is a strong community campaign against the agreement. See www.aftinet.org.au for campaign leaflets, letters and other materials. You can join our mailing list for regular updates. There have been public meetings, rallies and media publicity in the main national media. There is a Senate Inquiry into the USFTA which has held public hearings and will report before the end of the year. The next major event will be a rally in Canberra on Monday October 27 at 12.30 pm in front of Parliament House for the next round of negotiations.
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