AUSFTA: by Colin TeeseNews Weekly
Will Green preferences sink trade agreement?
, July 31, 2004
In the Melbourne Age (July 20), the paper's Economics Editor, Tim Colebatch, produced the best summation of the demerits of the Australia United States Free Trade Agreement (AUSFTA) of any economics writer for any daily newspaper so far.
Leaving aside the non-trade issues such as quarantine, media, pharmaceuticals and others, Mr Colebatch reminds us that the trade benefits arising from the agreement heavily favour the US.
The figures are revealing enough to repeat. From day one, 99 per cent of all US imports, including farm products
(my italics), will enter Australia duty-free - with 100 per cent free trade in 10 years. The US, for its part, has offered nothing like reciprocity.
Australia will never receive full free trade for its exports to the US. For farm products, there is some relaxation of the existing restrictions for some of our exports. But all of our exports (including farm products) will be subject to safeguard restrictions whenever there is import pressure on US industries - whether or not from Australia.
But while all of this is both interesting and important, some of Mr Colebatch's observations - at least by implication - connect AUSFTA quite closely to Australian politics in general, and to the forthcoming election in particular.
These are worthy of further comment.
Although local content rules are not, on any definition, part of international trade, they are part of AUSFTA. Under US pressure, the present fairly onerous local content rules will, in future, only apply to free-to-air television. For pay-TV, significantly less restrictive rules will apply. Only 6 per cent of actual pay-TV program time need be devoted to Australian drama content, compared to 20 per cent as applies on free-to-air channels.
Now it should be recognised that the Murdoch empire, which half owns our pay-TV network, will be a great beneficiary of the AUSFTA arrangements.
And it is also true that the Murdoch media presence in Australia has the capacity to influence public opinion, and hence the decisions of our political parties.
When these considerations are recognised, perhaps the attitude of the Coalition towards AUSFTA is more easily understood.
Indeed, it is difficult to imagine that the Coalition (that is, the parties in government) could afford to ignore such influences. And, as the party aspiring to office, neither could Labor. It's perhaps not a pathway towards the best policy outcomes, but that's politics.
When these considerations are taken into account, certain of the provisions of AUSFTA take on new significance in terms of a possibly important political and electoral influence. Mr Colebatch urges Labor to throw out the present draft of AUSFTA, on the grounds of the new media arrangements alone.
Presumably, he is assuming that Labor has greater freedom to move in this area, because it cannot expect the same support from the Murdoch media as might apply to the Coalition parties. In a word, Mr Colebatch's proposition infers that Labor can afford to ignore Murdoch, and the Coalition can't.
Perhaps. But does that necessarily means that Labor considers itself able to give less consideration to the interests of the Murdoch group?
Probably not. Both major parties (not to mention the National Party) are facing essentially the same dilemma. However much the Coalition believes it needs the support of Murdoch - and thus is committed to supporting the agreement in its present form - it ignores, at its peril, the opposition to AUSFTA that is now deep-seated in the farm community. And not only, as might have been thought originally, in Queensland. The CEO of the South Australian Farmers' Federation has recently voiced its dissatisfactions with AUSFTA in the clearest possible terms.
Labor, despite the optimism of Mr Colebatch, is probably no better placed. It's hard to believe that its new leader is able to be totally insensitive to the influences of the Murdoch empire. Against that, it is now evident that Labor's electoral position is heavily dependent upon the minor parties (Democrats and Greens) who can be expected to oppose AUSFTA.
And this little drama is likely to play itself out in the Senate Committee currently examining AUSFTA. Put simply, Labor can sink AUSFTA by combining with independent forces in the Senate. Alternatively, it must combine with the government to bring AUSFTA into effect. However, in doing so, the Greens could switch preferences to the Democrats in the forthcoming election. And, according to present polling, Labor cannot win without Greens' support.
The Coalition dilemma is different. It carries the burden of having already decided: its bridges have been burnt. It has no option but to support AUSFTA in its present form.
It can do nothing more than tough out mounting dissatisfaction within an important element of its support base (farmers), and hope it won't be too damaging politically.
Labor is spared this burden. It still has room to move. And, if it is clever, it could even have a bit each way, as Mr Colebatch suggests.
It could, for example, with the help the independents in the Senate, disallow the enacting legislation for this AUSFTA while retaining the option of re-opening negotiations with the United States after the election with the intention of achieving a more balanced outcome.
Whatever the adverse political fallout from this approach, it would be less damaging than, say, total rejection. And it would keep the Greens and the Democrats onside for the forthcoming election.
But the question is: does the Labor leader have - in the language of Mr Howard - the 'ticker' to take such a decision, or has he been so burned by the strident criticisms of him by US leaders, that he won't risk further adverse criticism?
We don't yet know, but unless the Labor leader has lost his nerve (a distinct possibility), a wise man, forced to make a choice, would probably prefer the Labor dilemma in the present circumstance. But it all depends on Mark Latham's 'ticker'.