Havachat: Free, fair or foolish? The Australian-US FTA - Day 2

I don't believe that Australian management culture needs to be driven any further towards the "greed is good" culture of many US firms. Are you seriously advocating that Australian business should more closely resemble the deceit, corruption and lack of corporate governance epitomised by Enron and WorldCom?

Your claim that we nearly lost our automobile and steel industries in the '80s because we sheltered them from world markets is again, a simplistic assertion based on your increasingly isolated view of the benefits of free trade.

The capacity for government to intervene in these industries, to assist them to modernise, introduce new technology and management systems was a key factor in their survival. This was achieved with the full support and involvement of the Australian trade union movement. Under a proposed USFTA, government capacity to intervene in the interests of Australian communities will be significantly limited.

Contrary to your claims that we are now a successful exporter of manufactured goods, DFAT data for the calendar year 2002 shows Australia's Elaborately Transformed Manufacturing trade deficit has blown out to $70 billion. ETM's are recognised as providing more added value to an economy and are a significant user of information technology and research and development. The USFTA will simply drive us towards an increased reliance on agriculture and mining and a bigger ETM deficit.

I don't want more Australian workers looking for "adjustment packages", I want them in high-skilled, well-paid manufacturing jobs.

Doug

From: Alan Oxley
Sent: Monday, May 26, 2003 23:22
To: Doug Cameron
Subject: Re: First response

Doug,

The gains for Australia from an FTA are too great to be dismissed with slogans and selective quotes. You say the US National Association of Manufacturers expects an FTA to expand exports to Australia by US $1.8 billion. True. Our manufacturers also expect to increase exports by hundreds of millions of dollars. That is the whole point of an FTA. Trade for both sides expands. It is win-win. And the smaller economy usually wins more. New Zealand did better from the FTA negotiated with Australia 20 years ago.

You say Australian manufacturing will be up against it. Surely you have noticed over the past 15 years that manufacturing has been Australia's best-performing export sector; better than mining and farming. It doesn't matter if we import more manufactures than we export. Economically, it's the overall balance of total trade and investment that matters and that's in good shape. Our manufacturers have proved they can compete and win in the US market. They had a go and succeeded. Recognize their world-class performance.

You pick and choose among Australian free-rade economists as they suit your case. Normally you wouldn't have lunch with them. Of the study by the free trade CIE group in Canberra, which estimates an FTA will add $4 billion a year to the Australian economy (and that is an underestimate - econometric modelling always underestimates real results: Australian business expects an FTA will deliver at least double that), you say simply that won't be achieved.

Your evidence? Another free trader, Professor Ross Garnaut from ANU. Ross opposes the FTA because he prefers multilateral trade liberalisation, something I haven't seen you endorse. And you endorse a similar critique from ACIL, another free trade group. They will be tickled. I don't recall your approving their work when they were advising the Howard Government on how to bust the MUA.

And now you quote approvingly a report from the Productivity Commission, the great nemesis of Australian protectionists. It shows that several free-trade agreements divert trade. This is based on long-established economic theory. It can happen if trade barriers are high. But read all of the report. You will see it does not assess the case of an FTA with the US, it is a warning to do it properly. There is no problem. Trade barriers between Australia and the US overall are low.