Buy American! After this FTA not much will be made in Australia

There has been much commentary about the likely positive or negative impact of the proposed Australian US Free Trade Agreement. This agreement was negotiated in secret, and even since its announcement very little real detail has been made available to the public.

On the available evidence, the Australian Manufacturing Workers’ Union has real concerns that this agreement will be bad for our industry, bad for manufacturing workers and bad for Australia overall.

In the aftermath of the signing we heard a great deal about how the agreement would affect our agricultural industry and our sugar farmers in particular.

While the players in that sector have every right to be concerned, it is the manufacturing industry that will be hardest hit in this country as a result of the US/Aust FTA.

It is not widely known that most of the trade between the US and Australia is in manufactured goods. And while John Howard insists that we are increasing our manufactured exports, trade figures for elaborately transformed manufacturing (26.5 billion in exports versus 95.7 billion in imports) show that we are being drowned in imports. All indications are that this will get worse once the agreement is in place as zero tariffs and the deliberate policy of the Americans to devalue their dollar gives American manufacturing a further 25 per cent competitive edge over their Australian counterparts.

The American manufacturers are estimating that an extra $2 billion worth of business will flow to their sector which means that things presently being made in Australia will be imported from the States.

The zero tariff on 99 per cent of US exports will affect the areas of auto, auto parts, electrical equipment and appliances, fabricated metal products, medical and scientific equipment, non-electrical machinery and paper and wood products. In the auto parts area we fear huge job losses as car companies (which are predominantly American owned) will no longer be obliged to support Australian industry but will be free to source their car parts from wherever they like.

While the details are sketchy, it appears that the Howard government has made serious concessions in relation to the right to have local content in manufacturing. While some Australian businesses will now have limited access to US government contracts, it appears that we will be considerably constrained from being able to insist on contracts going to Australian business. This is a significant setback as future governments will be limited in their ability to provide effective policy to promote Australian industry.

The uneven playing field upon which the agreement has been enacted is also of concern to us. The US government has a strong interventionist industry policy and it spends billions of dollars on research and development. We have no industry policy, no trade strategy and the huge differences in the size of our economies means that we can only come out of this as losers as tens of thousands of manufacturing jobs go down the drain. The effects of this will be considerable pain throughout the Australian community.

The AMWU is very concerned about the way this agreement may affect working people because of the Canadian experience. The Canadian government made similar assurances as the Australian government that a free trade agreement would result in increased opportunities for manufacturing. The reality was that between 1988 and 1994 Canada’s free trade deal with the United States cost 334,000 manufacturing jobs.

The AMWU is opposed to the Free Trade Agreement because the effects will be felt wider than just our industry and our jobs. It's about what this means for Australians, our industry and our economy, our people and our way of life. If we allow our manufacturing industry to decline even further, we lose our economic independence, and our capacity to participate in the knowledge economy.

The strong economies are not the ones that rely on the tourism industry or let multinationals plunder their natural resources. We can’t just be a good tourist destination. We can't simply be a quarry for mining companies. We need a sustainable and broad economic base, we need a manufacturing base. Unless Australia engages in the knowledge economy that manufacturing provides, we will continue to lose our brightest young people to other countries that can provide them with career opportunities that tourism, farming and mining will not provide.

The AMWU is not alone in its opposition. No Australian economist of any stature believes that this agreement will be good for Australia and the fairy story that Australia will benefit to the tune of $4 billion has been totally discredited.

While we don’t know the detail of the agreement, we do know that our industry and our workers are in for a shake up, the ramifications of which we don’t want to imagine.