BOOKS: by Colin TeeseNews Weekly
HOW TO KILL A COUNTRY: Australia's Devastating Trade Deal with the United States
, November 20, 2004
US free trade agreement "an enormous backward step"HOW TO KILL A COUNTRY: Australia's Devastating Trade Deal with the United States
By Linda Weiss, Elizabeth Thurbon and John Mathews
Allen and Unwin, 190 pages, paperback RRP $24.95
Available from News Weekly BooksThree quite distinguished academics in the fields of economics, politics and management have collaborated to produce How to Kill a Country: they have produced an illuminating review and condemnation of the so-called Free Trade Agreement that Australia negotiated with the United States earlier this year.
Within that restricted framework the book can be considered successful, but it falls short of what we most need - a comprehensive and in-depth study of what the agreement means for Australia's sovereignty.Specific issuesHow to Kill a Country
, properly analysed, amounts to a series of essays dealing with certain specific aspects of the agreement, notably quarantine, pharmaceutical benefits, government purchasing and intellectual property rights. An introductory chapter covers what the authors believe is an account of why the deal is lopsided, and a conclusion explains (very well) how and why we ended up with such a bad deal.
All fine, of course - and much of it highly informative - but too much is left unexamined.
We are told, for example, how the government came to sell the arrangement publicly. First by the self-congratulation method. Patting itself on the back for getting a good deal. Picking out a few winners and turning them on the losers. And all the time obfuscating the broader national interest consideration.
Further tactics include demonising all opponents, by characterising them as anti-American, and winning support from important media interests.
However, the authors of How to Kill a Country
have barely touched on perhaps the most important question of all - that of surrendered sovereignty. They do point out that we seem to have wholly accepted US patent laws, but that is about all.
In the end, sovereignty is about the ability of a government to make or unmake laws in accordance with its prevailing judgment of national interest transmitted through the electorate. This agreement appears to be premised on the notion that there will never be any future need to reassess its basic assumptions.In perpetuity
It will, of course, be maintained that the hands of future governments are not tied, and that the legislation underwriting the agreement can be overturned. Theoretically, that may be so. But what about the practicalities? Would so powerful a partner allow a future government that luxury? Or have we been tied into this document in perpetuity?
If that is the case, then Australia could be said to have taken an enormous backward step. In the early 1930s, the then United Kingdom government passed the Statute of Westminster which conferred on Australia full sovereignty and complete power to legislate in its own right. It also made the Commonwealth a voluntary member of the British Commonwealth of Nations.
When that document was finally incorporated into our Constitution in 1942, Australia became, for the first time, a fully independent nation. Meanwhile, we were able to continue with a mutually beneficial trade agreement with Britain, which in no way compromised our sovereignty, and which continued in force until Britain joined the European Economic Community in 1973.Further loss of sovereignty
However, the loss of sovereignty has the potential to go much further.
As a member of the World Trade Organization (WTO), Australian is committed to the rules of the General Agreement on Tariffs and Trade (GATT) which were incorporated into the WTO in the mid-1990s.
The philosophy underpinning the GATT was that, as it aimed to reduce restrictions on trade, it would encourage free-trade agreements (FTAs), but only if they genuinely freed "substantially all trade" between two countries, and only if those forming a free-trade area did not then erect barriers to trade with other nations.
Hence Article XXIV8b of the GATT said that an FTA would only be recognised if "the duties and other restrictive regulations of commerce ... are eliminated on substantially all the trade between the constituent territories in products originating in such territories."
On the other hand, the GATT aimed to discouraged agreements that granted only a limited range of trade concessions between two nations, to the exclusion of other nations.
For this reason the opening paragraph
of the GATT insists that any preferential trade concessions given by one country, such as Australia, to another, such as the US, must be granted to all other members of GATT-WTO.
Article I states that "any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties."
This has profound implications for Australia, given that the agreement we are about to enforce with the US is clearly not an FTA, as it does not cover "substantially all trade". It means that other WTO members could claim the same concessions we have granted the US.
On the other hand, the US would not be similarly affected as it has not given us any concessions of substance.Quarantine
So, for example, Australia has agreed to appoint both quarantine and trade officials to a joint Australia-US quarantine committee to review decisions by Australia's quarantine agency on the many US farm products precluded from entry to Australia because of our high quarantine standards.
Arguably, New Zealand could now demand the establishment of a similar committee to review Australia's exclusion of apples from NZ, where fire blight is endemic.
Or again, European drug companies could now demand that a committee be formed that includes EU drug companies to review decisions about new drugs being included on the Pharmaceutical Benefits Scheme, and their pricing.
Such is the quantum loss in sovereignty now facing Australia.
Unfortunately, none of this was canvassed in How to Kill a Country
Also, what is not tackled at all is how the government managed to convince all the state Labor governments of the virtues of the agreement, in the face of such compelling expert opinion to the contrary.
There is a fleeting consideration of why the farm industry organisations, whose industries received so little from the negotiations, have been so reticent in condemnation of the government and the negotiations. But there has been no more than superficial examination of why this might be so.
This is a strange omission, and it is fair to say that the role of the farm organisations in the negotiations has been better covered in News Weekly
than in How to Kill a Country
We cannot know the answer to this puzzle definitively, but it is possible to speculate.
We know that some key farm industry organisations are funded by compulsory levies collected from farmers by government regulation.
The boards of these organisations are not elected on the basis of one vote per farmer, but according to the size of the producer and processor. This means that a tiny minority of farmers and processors control the bulk of votes and so control many farm peak bodies.
For example, leading beef producer, John Carter, has pointed out the controversial way that Meat and Livestock Australia (MLA) operates. Just four percent of beef producers from across the nation register to vote at the AGM, and just 25 big beef-producers and processors control the two per cent who actually vote. The MLA collects about $70 million annually from producers, $10 million from processors and about $25 million from government.Outcry
Imagine the outcry if voting for our Federal and State parliaments were allocated to individuals in proportion to their wealth instead of "one vote one value".
These farm organisations appear to have unfettered discretionary power as to the distribution of these funds, without accountability to Parliament or farmers. And it is well known that many of these organisations no longer have the support of farmers.
They seem to be closer to the interests of the National Party - and therefore to the free-market policies of the Liberals - than they are to farmer interests.
And since the National Party is a part of the Coalition Government, and a senior National Party minister actually negotiated the FTA with the US, it would come as no surprise that farm organisations closely linked to the National Party and to the Coalition, will be reluctant to criticise the outcome of our trade negotiations with the United States - especially as the Coalition appears able to manage the compulsory collection of monies from individual farmers to the advantage of farm organisations.
If this analysis is correct, then the Coalition has, by means of compulsorily levies on farmers, found a way by which it can permanently insulate itself from genuine criticism from the farm sector.
Certainly, this would go a long way to explaining why farm organisations were so muted in their criticism of the failure of the trade agreement with the US to have achieved anything of real value for farmers.
The authors have not given us any deep analysis of how the government has been able to neutralise the compelling arguments mounted against the agreement by almost all of the most respected economists.
Nevertheless, its authors have, within the limited terms they set themselves, produced an interesting book. It could, however, with a more ambitious purpose, have become an even more interesting, and certainly a more important book. Perhaps the authors could be tempted into collaborating on something more ambitious.
In the meantime, How to Kill a Country
is, to those wanting a little more information about the Trade Agreement our government has concluded with the United States, well worth reading.
- Colin Teese is a former Deputy Secretary of the Department of Trade.