May 8th 2004

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Articles from this issue:

COVER STORY: Trade deal - surrendered sovereignty

EDITORIAL: Competition policy destroys retail liquor competition

NATIONAL AFFAIRS: Will new NCP inquiry be a whitewash?

COMMENT: Economic zealotry triumphs over commonsense

EMBRYOS: Cloning - a licence to kill

STRAWS IN THE WIND: Fallout from hospital strikes / Lots of help for MPs

ENVIRONMENT: PM at odds with Murray River report

HEALTH: Sexual reassignment at age 13!

Expert advice? (letter)

Dairy industry (letter)

Latham and Asia (letter)

DEVELOPING WORLD: Grameen Bank - banking on the poor

EAST ASIA: Why Japan is building a ballistic missile defence

BIOFUELS: Sugar industry forum on ethanol

COMMENT: Iraq is not Vietnam

HUMAN RIGHTS: Vietnam's sex trade shame

FAMILY: Why John Howard is right on marriage

ASIA: Why Taiwan should be in WHO

BOOKS: LEFT ILLUSIONS: An Intellectual Odyssey, by David Horowitz

BOOKS: The Coming Of The Third Reich, By Richard J. Evans

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Trade deal - surrendered sovereignty

by Colin Teese

News Weekly, May 8, 2004
The merits of having a so-called free trade agreement with the United States (AUSFTA) have been well-debated in strictly trade advantage terms. And as far as these advantages are concerned, the arguments in favour of AUSFTA are by no means compelling. Nevertheless, we can assume that the Government majority in the House of Representatives will pass the enabling legislation to bring it into effect.

Further, there remains the strong possibility that the agreement could attract the support of the Senate Committee currently charged with examining it: thus, the way would be cleared for it to be brought into effect.

Only the Labor Party is capable of blocking any enabling legislation in the Senate. And there are reasons why Labor may be inclined to look favourably upon the agreement. Importantly, there are a number of powerful, narrowly self-interested business groups putting their weight behind AUSFTA.

Disparate views

Against that, most of the opposing views are being put by a variety of community interests, whose views, necessarily disparate, may not carry the same weight in the eyes and minds of politicians.

One such group is the arts community. Its objection is to the liberation of television networks from the need to supply a certain percentage of locally produced content. This, they argue, weakens our cultural heritage.

There is substance to this group's position, but it hardly counts when put alongside the alleged economic benefits of AUSFTA. And, for all kinds of other reasons, the "arts view" won't carry the same credibility as some of the views on the other side. Perhaps that's unfair, but it's reality.

Now much has already been said about the fact that AUSFTA, as a trade liberalisation package, is seriously unbalanced in favour of the US, not least by this writer. But outside this narrower focus, an important new circumstance has arisen. It relates the possibility of a resumption of the World Trade Organisation negotiations on agriculture.

The so-called "Cairns Group" of agricultural exporting nations led by Australia has been at the forefront of the pressure on Europe to open up its market for agricultural imports. In an effort to defuse the influence of this Group the EU has devised a policy of "divide and conquer". It is attempting to negotiate separately with certain Latin American countries, including Brazil and Argentina.

Ordinarily, that would not have been much of a concern: indeed, it probably would not have happened. Because, under WTO rules, any concessions given by the EU to Latin American countries, we could have demanded be given also to us.

However, we have not so far objected in the WTO to other so-called free trade agreements which have not passed on benefits to all WTO members - and have even concluded some such agreements ourselves. Thus we are hardly in a position to complain if the EU delivers special concessions to agricultural exporters of its choice.

Besides this, there is another consideration of yet greater importance associated with AUSFTA. It relates to the issue of sovereignty. So far, it has not so far attracted widespread and direct attention.

It has, however, been alluded to indirectly. One of the most informed academics in the field was, quite possibly, the first to observe that, in his opinion, the agreement had little to do with trade - free or otherwise - but was an barely-concealed attempt to weld our economy onto that of the US. And, I understand, one of the AUSFTA's main negotiators on our side has hinted, more or less publicly, that the agreement was more concerned with economic integration than with free trade.

The more this view of AUSFTA is considered, the more persuasive it becomes.

And the more easily does the previously unexplainable become clear. If the intention is not trade but economic integration, then we can readily understand why any explanation based on trade flows and any overall balance of advantage does not make sense.

What we are talking about is a power play in which Australia must inevitably lose. We all know, if a smaller party is hell bent on becoming part of a larger, then whatever terms the larger party demands must be accepted.

The outcome can, in no sense, be regarded as a negotiation. In terms of the politics of the deal, of course, neither side will want to concede that point, and will find ways of dressing up the outcome, but it is, nevertheless, the reality.

If we concede economic integration, rather than trade liberation, is the motivating force behind AUSFTA, then much of the Government's comment in the lead-up to the negotiations, makes sense.

It will be remembered that the Prime Minister is on record as asserting that the US is the most powerful economy on earth, will remain so for at least the next fifty years, and that we must become part of it.

It can be argued, and some did, that the Prime Minister's judgment was flawed. But it was, and remains, his view. Perhaps we should have taken more notice at the time.

Of course, the question of whether, in economic terms, we should be tying ourselves so closely to the US is, in itself, worthy of serious and quite detailed attention.

But the far more important consideration for us - and for the Senate Committee - is that of national sovereignty.

National sovereignty

The first thing that should be said about sovereignty is that it is the most powerful weapon - maybe the only weapon - that the small economies have over the large. Short of invasion and overthrow of the government by an invading power, Australia owns, absolutely, its internal decision-making processes. They are exercised entirely at its discretion.

We are, and should be, prepared to do deals which may concede some ground on sovereignty, subject to two fundamental conditions. There is nothing wrong with trading concessions - economic or security - which involve some part of national sovereignty.

What a negotiating partner seeks we should be prepared to give all or part, in return for getting what we want - provided that the bargain is balanced and freely entered into. More importantly, we should never conclude deals which limit our ability to change our minds at our discretion: especially where national integrity could be at risk.

Our sovereignty already appears to be compromised.

To appease the US, Australia did not recently join Brazil in obtaining a successful interim decision in the WTO against US cotton subsidies - which give US farmers US$4 billion for a crop worth US$3 billion - even though Australia is the world's third largest producer of cotton. Australia assumed only observer status to the case. Hence, Australia is not even entitled to read the interim judgment.

Further, to appease the US, Australia has agreed to no longer defend single selling desks arrangements for industries like wheat and sugar in future trade negotiating rounds in the WTO.

It also appears that Australia has indicated a willingness to drop our quarantine standards on pork imports in a manner agreeable to the US pork exporters, even though quarantine is not a trade issue open to negotiation, as distinct from trade issues like tariff and quota arrangements.

The question is, how much of our economic sovereignty has been conceded in what should be properly described as an "economic integration agreement", not a free trade agreement, with the US?

Quite apart from the questions about the balance of trade concessions exchanged, the Labor Party, in particular, should be concerned with this fundamental question aspect of AUSFTA. Supposing the agreement does come into effect, is a future government, in light of experience, to be denied the opportunity to change it? Are, or are not, the nature of our commitments, realistically, subject to revision? Or, is Labor to be locked into what this Government has agreed?

This is important because we must be well aware of the unbalanced power relationship between us and the US. Whatever may be the legalities of AUSFTA, the US could not be prevented from securing whatever changes it wanted. If, on our side, change is not a realistic option, then AUSFTA is fundamentally unbalanced. Given all this, would it be wise for Labor, out of government, to sign off on it?

  • Colin Teese

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