Winning or playing fair in world markets?

When I was an aspiring soccer star in the Under 7 Seagulls we were constantly told that “it doesn’t matter if you win or lose, it’s how you play the game”. I wonder what my coach would say about the contest of international trade. The “Winning in World Markets” (PDF 1.45MB) review of Australia’s trade programs was released last week offering nothing other than advice on how we can “win” the trade game.

The review was given the brief to look at Australia’s current trade programs and policies and report back on what’s working and what isn’t. Generally speaking the review repeats the same old calls from business: “less regulation”, “better support for exporters”, and “more access to foreign markets”. Missing in the report though is any hint of irony at the free market ideology that drives business to ask for more and more support from government to do business.

According to the review, Australia’s game plan for victory focuses on our innovation and competitiveness. Much of the focus on how Australia can better compete in the world market comes down to how we can better produce and innovate in Australia. Building better infrastructure is seen as key to this, not just the physical expansion of ports, railways and so on, but the skills infrastructure too. Better education and training programs are indeed a good idea, but they cannot simply be a system to produce meal tickets for people. Education after all does have a public good and isn’t only for getting jobs in the export sector.

Australia’s bilateral trade agreements were given special mention in the review: after all, we need to know if they’re working. The results were … inconclusive. Of course the worsening trade balance and mixed comments from exporters was simply explained away as the agreements only being in place for a few years and perhaps not enough liberalisation has occurred. That’s right, perhaps liberalisation isn’t working because there’s not enough of it. I mean, the theory of it works, it’s just an issue of quantity, right?

In response to this assessment, the review has staked out investment and trade-in-services as the goal scoring opportunity to pull Australia out of our negative trade balance. Of course to do this we need to get rid of all those pesky regulations in foreign countries such as screening of investments, minimum local content, and foreign ownership limits. All those tools that allow governments to ensure that investment and services are of benefit to the population are barriers to trade, and when it’s our trade, that’s a problem.

Of course though, we’re not so rude as demand that countries undo such regulations straight away. That’s why the review has recommended the use of more subtle tools such as “collaboration” and enhanced “economic integration”. Like the recent trade agreement between Australia, the Association of South East Asian Nations and New Zealand, the “Economic Cooperation” chapter was aimed to help those nations integrate more with the free trade program. Through co-operation, they’ll be more ready for our trade.

Despite all this concern with bilateral trading, the review realised that it’s the multilateral arena that’s the main game. The recent collapse of the World Trade Organisation talks, the fourth time it’s happened, led the review to agree with the Warwick Commission’s recommendations for the WTO.

One of these focused on the decision making structure of the WTO. Currently it’s a consensus procedure where everyone has to agree to all aspects of any agreement. This, to the frustration of many rich countries, has given the poorer countries a chance to refuse the “development” round that actually does nothing of the sort. What team would agree to kicking an own goal? Clearly this veto power is unacceptable, but what could work is a “critical mass” approach. That is, once there is agreement in somewhat of a majority in a negotiation area it’s agreed. In this situation, it’s a case of changing the rules in order to win.

The other solution to getting more out of the multilateral system is the use of disputes settlement. Through this process we can take countries to the WTO trade tribunal to challenge aspects of their regulations or levels of domestic support, and if we win, make them change or pay up. This has already happened in Australia with a challenge on imports of live salmon overturning our quarantine standards, and now we’re back at the WTO trade tribunal over New Zealand apple imports.

The review went to the extent of following the Warwick Commission’s recommendations for the WTO to undertake a reflective exercise on the future of world trade. Sadly they didn’t accept all of that recommendation, which suggested the WTO address the relationship between current trade rules and fairness, justice and development.

This review has reaffirmed the basic tenant of Australian sport - it’s OK to focus solely only on winning, so long as we’re the ones that do. No one likes a self obsessed, arrogant sports team unless it’s theirs, and it seems that attitude is the same for trade. The review misses the wider concerns that were expressed to it, that is, trade has social, environmental, and cultural impacts that we need to address.

The ALP went to the last election saying they would conduct independent assessments of these impacts. So far, nothing. This review further reinforces the blind faith that the economy operates in a bubble. It doesn’t matter if we’re exacerbating climate change or undermining job security or restricting the right of governments to regulate in the interest of the public. As long as we’re winning, it doesn’t matter how we play.

We can change what it means to win though. We can build a trade focus that supports both economic development and protects labour, human and environmental rights. It isn’t a trade off, and we’re under estimating our ability if we think that’s the case.

If this review was an under seven Seagull, it wouldn’t get any oranges at half time. Thankfully there’s still ample time to play this game, and play it on the terms we decide.