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Protectionism – back to the future?

By Carolyn Currie - posted Wednesday, 28 September 2011

Recently there has been debate again regarding whether we will impoverish our country in the future by our blind allegiance to World Trade rules regarding tariff barriers. The closure of BlueScope and Onesteel manufacturing is cited, as well as the destruction of our leather and clothing industry, although the former could be due to the uncertainty of new carbon taxes, high dollar and labour costs.

The latter is happening throughout the world due to the artificially low exchange rate of Chinese currency, which is crippling both Old World and New World orders. This itself is a trade barrier. Also, the People's Republic of China does not adhere to patent laws, intellectual copyright agreements as well as human rights legislation. Yet it is not a signatory to the free trade rules of the WTO.

Another impetus is coming from the agricultural sector, which objects to overseas ownership of land and water rights, and the increase in foreign ownership and control of our resource sector. Witness the development of the biggest coalmine in the world – Alpha and its immediate sale by Gina Hancock to an Indian company, together with the infrastructure.


We have also had numerous complaints with respect to Coal Seam Mining and its effect on our ground waters. These companies are often owned by state run enterprises. We have had enough trouble with trying to restore environmental damage from bonds lodged with the government for such an event. Problems occur after companies liquidate themselves deliberately, to avoid paying restoration costs, having extracted huge wealth for overseas shareholders from our soils

Even Argentina has stopped overseas companies from accumulating land in Patagonia, which does not have the status of Prime Agricultural Land. Now 10% of Australian land appears to be owned by overseas interests. But do we have reliable statistics? Moreover, mining has a far higher concentration of overseas ownership and questions need to be raised as to the statistics announced by the Mining Council as to how, about 75% of that, returns to Australian hands.

Where a sovereign is behind investment in land, minerals and water rights the argument arises as to what would happen in the event of national interests conflicting?

The undervalued Chinese Yuan is destroying Australian manufacturing. I am in Argentina to encourage a trend towards higher quality imports, to rival Chinese imports, as there is nowhere left in Australia where I can source Australian made outdoor sports gear.

Australia needs to pause and study the effect of its trend to obey economic rationalism and observe best international practice. Does lowering tariffs appear fair when a major partner such as China effectively subsidises exports through a manipulated exchange rate?

Yes Julia, we do need an enquiry into Australian manufacturing but also into the benefit of sovereign investment into our scarce resources. Other countries are using their wealth funds for such investments, but we do not even have our own fund.


If we must have a carbon tax I would prefer not to see it evolve into an emissions trading scheme, whereby eventually $50billion per annum could start flowing out overseas into dubious carbon neutral schemes. I would prefer this tax to be deposited directly into a sovereign fund, to help restore our landscape and our manufacturing base.

Protectionism has no advantages in creating cheaper inputs, where the manufacturing sector has disappeared, and the inputs are being used by sovereign powers to increase their efficiency in developing their ownership of our water, our land and our minerals.

Moreover a country's control of scarce resources is deemed essential during wars, but what about during economic downturns, or even dire events such as famine, fire, storm or tempest?

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About the Author

Dr Carolyn Currie is the Managing Director of Public Private Sector Partnerships Pty Ltd.

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All articles by Carolyn Currie

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