Free trade means free movement

Kevin Rudd’s proposal to implement an European Union-like organisation in the Asia-Pacific region is nothing short of insane. The conditions prevailing in Europe in the 1950s when integration was first proposed, or even now that it has been more fully achieved, and those in the Asia Pacific region are so different that even the suggestion that a similar integrative structure might work is simply ludicrous.

One of the basic structural processes operative in the EU is the free movement of people within the EU’s member countries. In this day and age, free movement of people is a necessary underpinning for “free trade” since - especially for countries like Australia - the trade in services which are delivered by people  are is more and more important than the trade in goods.

A European Union based model in the Asia Pacific region that allows free trade by allowing the free movement of people between member states would mean the end of Australia as we know it. It would be completely and utterly unworkable because it would see mass-migration of overseas workers into Australia at a level so completely unmanageable as to lead to the breakdown of the economy and the social infrastructure.

If this sounds a little extreme - that I am suggesting an “end of the world as we know it” scenario - it is because the scheme would lead to just that.

Using the example of exactly what happened in the EU after the entry of Eastern European States illustrates this point.

In April 2006 statistics from the UK Government's Worker Registration Scheme lists 345,000 eastern European workers, including 205,000 from Poland. Unofficial statistics indicated that the real figure was significantly higher. In August of the same year the BBC reported the following admission from the UK’s Home Office Minister:

“About 600,000 people have come to work in the UK from eight nations which joined the European Union in 2004,” says Home Office minister Tony McNulty. “New figures show that 447,000 people from Poland and the seven other new EU states have applied to work in the UK.” But Mr McNulty said the figure would be nearer 600,000 if self-employed workers - such as builders - were included.

The statistics indicated that about half of the workers were from Poland. Poland’s population in 2006 was about 38 million - and the migration to the UK in the two years 2004-2006 was thus equivalent to about 0.8 of 1 per cent of the Polish population (assuming the migration of the Home Secretary’s 300,000 Polish workers)

Polish worker influx into the UK makes an excellent comparison benchmark for what Australia might look forward to under Mr Rudd’s “EU” plan. Clearly, workers from a poorer country, like Poland, will migrate to a richer country, like the UK, given the opportunity. Admission of Poland into the EU, with its open border policy, was just such an opportunity.

In the year these migration statistics were announced, the UK had a income per capita of $40,180 whereas Poland had a income per capita of just $8,190 (or 20 per cent of the UK’s) (World Bank Development Indicators 2007). Clearly, the UK was a more desirable place to live than Poland and so poor, unemployed workers had an incentive to move - and did.

Logically, the same thing would happen in Australia were Australia to be a member of a “no-borders” EU style grouping of countries, where some of those countries were poorer than Australia.

In 2006 Australia’s income per capita was $35,990: China’s income per capita was $2,010; Indonesia’s income per capita was $1,420; and India’s income per capita was $820.