Havachat: Free, fair or foolish? The Australian-US FTA - Day 1

Havachats are week-long email dialogues between two prominent advocates on an issue of the day. To vote on the issue and make your view count, click here.

Day 1 . 2 . 3 . 4 . 5.

Doug won the toss and goes first. Alan responds.

From: Doug Cameron
Sent: Sunday, May 25, 2003 8:32
Subject: Australia should not become the 51st state of America

Dear Alan,

I guess you could sum up my opposition to the Free Trade Agreement along the lines that Australia must not become the 51st state of America. This FTA has the potential to destroy our unique culture, our economic independence, and our capacity to have a modern manufacturing industry capable of providing diversity and added value to the economy and the nation.

Not only that but it will exacerbate the structural imbalance in our economy by weakening our manufacturing base and consigning Australia to no more than a quarry, a farm, or a nice place to visit.

What I want is "fair trade". A policy that enhances employment growth; social justice; core labour standards; environmental protection; and the advancement of democracy.

The (USFTA) will not advance the social and economic position of the majority of working Australians. Worse an "everything on the table" free trade agreement or "regional integration agreement" as you like to call them Alan will cost Australians dearly in terms of the ability of future governments to meet their economic, social and cultural policy responsibilities.

Illusory Gains

Proponents of the USFTA rely on a Centre for International Economics (CIE) study to argue that a USFTA could lead to a $4 billion gain for Australia. Nobody seriously believes this gain will be realised. The gain was rejected by an ACIL Consulting study commissioned by the government. The ACIL Consulting report found that a USFTA would actually harm Australia. Even neoclassical economists like Ross Garnaut have rejected the findings of the CIE report. The AMWU and others have also criticized the unrealistic econometric assumptions underpinning the CIE study.

Even if we accept the dubious gains - the CIE study suggests only that GDP will be 0.4% higher in the long run for full liberalisation, including agriculture. This is a tiny gain for what will be asked of Australia.

Job Loss

The US National Association of Manufacturers is predicting a $US 1.8 billion a year gain for United States manufacturing under a USFTA. Some of the biggest gains for the United States will be made in the automotive industry - an industry that provides tens of thousands of jobs all over Australia. A USFTA together with our rising dollar will directly threaten those jobs. The combination of our rising dollar, loss of government industry support mechanisms, and tariffs through a Free Trade Agreement will also mean reduced investment in Australian manufacturing.

Between 1989 and 1997 free trade agreements with the United States and Mexico cost the Canadians 270,000 jobs - the majority of them in manufacturing - what can Australian manufacturing workers and their communities expect?

There are a lot more issues to cover - the things we are being asked to give up; lack of parliamentary oversight of treaties - but we can talk about those later in the week. Over to you Alan.

Doug

From: Alan Oxley
Sent: Sunday, May 25, 2003 16:00
Subject: Re: Australia should not become the 51st state of America

Doug,

Free trade promotes open societies. Australia is a successful society because it has always been open: open to trade (it could not have developed without imports or creating export industries); open to investment (foreign investment funded our first export industries: wool and wheat), and above all open to people. Australia is a migrant society.

Being open has not undermined Australia's culture. When most contact (trade, migration, investment) was with Britain, we remained firmly Australian. Today cultural exposure to the US is great (but less than it was with Britain for a century) as well as to many other cultures and Australia's sense of cultural independence has never been stronger.

Openness does not suit all societies. But Australia has grown and thrives on it. An FTA with the US will not significantly magnify Australian exposure to US culture any more than this process will continue as the global influence of the US grows. Some Australians may dislike this, but it is a reality and most Australians seem comfortable with it.

Openness has been fundamental to Australia's success. Only when we closed ourselves off to the world, as we did when we increased protection of manufacturing in the seventies, did we get into trouble. Protection saps national wealth, and kills industries. We nearly lost our automobile and steel industries in the eighties because we sheltered them too long from world markets.

We are now a successful exporter of manufactures. One quarter of all exports are manufactures. Many said this was never possible. We export Magnas (and soon Monaros) to the US, steel to Asia and fast ferries and scientific instruments to Europe.

There are fewer workers today in manufacturing, but that is the impact of technology - a worldwide phenomenon. The services sector is now the big employer in industrialized economies. Even so, exporting creates well-paid jobs in manufacturing. Analyses by the Australian Bureau of Statistics show Australian workers in businesses that export are paid more and have more security.

Australia's trade barriers are low, so we have few barriers to remove if US companies are to operate in Australia on the same terms as Australian companies. That is the basic point of a Free Trade Agreement.

The opportunity for Australian companies to have the right to operate in the US on the same basis as US companies will generate bigger benefits for Australia. It is a bigger market. Australian farm groups now expect to secure significant access to US farm markets though an FTA. Beef exports, worth today about $1 billion could double over a couple of decades. Dairy and sugar exports could also increase by several hundred million dollars.

Last year our exporters of steel, wine and lamb to the US earned about one billion dollars. These industries are confident they can expand exports, earning hundreds of millions of dollars extra and create more jobs. All have been harassed in recent year by ad hoc US trade restrictions. An FTA could curtail this.

US unions supported the bans on Australian steel exports. Surely they couldn't justify them on the grounds that industrial conditions for steelworkers in Australia are exploitative? All they did was threaten the jobs of Australian steelworkers. They would be better off suing the US Government for adjustment packages than attacking imports.

An FTA with the US will protect jobs for Australian workers and increase jobs for Australian workers.

Alan.

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Day 1 . 2 . 3 . 4 . 5.