EDITORIAL: by Peter WestmoreNews Weekly
Trade talks: Australia still 'flogging a dead horse'
, July 7, 2007
The latest WTO trade talks have collapsed, but the Australian Government is behaving as if nothing has changed.The collapse of the latest round of World Trade Organization (WTO) talks aimed at liberalising world trade, particularly in agriculture, will have serious consequences for Australia.
Over the past 10 to 15 years, the Australian Government has sacrificed many Australian primary industries in an effort to get the United States and Western Europe to open up their agricultural markets to Australian exports.
The Government argued that Australia could not preach the virtues of free trade if it did not practise it at home. As a result, thousands of farmers were forced out of a range of industries, including sugar cane, dairying and others, as governments dismantled the support structures which ensured their viability.
However appealing this might be as an intellectual proposition, it was based on the proposition - frequently stated but utterly unproven - that the large agricultural exporting blocs were willing to sacrifice their industries in the interests of poor people living in the Third World, as well as Australian farmers.
It points to the failure - predicted in these columns - of Canberra's strategy of relying on the WTO to deliver free and fair access for Australian goods to the largest world markets, the EU and the United States, from which they are still largely excluded.Setback
Trade Minister Warren Truss issued a statement saying that Australia remained strongly committed to the WTO negotiations, despite the failure of the talks. He said the failure of the meeting "was a setback for world trade reform and the hopes and ambitions of countries like Australia and the Cairns Group of agricultural exporting nations".
Further, he indicated that the Federal Government would not change direction. "Australia will fight on", his press statement said.
Surely it is time for the Australian Government to look again at what is happening.
In earlier trade rounds, the self-styled champions of free trade, the United States and the EU, have consistently ruled out unilateral concessions on trade, with each condemning the other for the consequent impasse.
One cause of concern to the Europeans is that the 2007 US Farm Bill proposes to increase US support for agriculture, over the next 10 years, from $614 billion to $619 billion.
In the latest negotiations in Germany, a further roadblock has appeared. Two of the major developing countries, India and Brazil, have refused to grant US and EU investment capital and manufactured goods free access to their economies, convinced that because of the asymmetric nature of investment, it would simply entrench the economic power of the wealthiest nations over the Third World.
As things stand, the Doha trade round is dead - but the Australian Government is still pushing ahead as if nothing has changed.
The ideologues in the Department of Foreign Affairs and Trade have not only pursued this agenda regardless of what is happening in the rest of the world, but have undermined much of Australia's agriculture and manufacturing industry in the process.
A parallel case of amnesia can be said to exist in relation to Australia's trade with the United States.
When negotiations were underway to reach a free-trade agreement in the United States, Australians were told by both industry and government that the deal would be a major boost for Australia's manufacturers and farmers, and would narrow the trade deficit with the United States.
In November 2003, John Howard told listeners on Radio 3AW: "It stands to reason that if we can't get something quite big on agriculture, then we won't have a free trade agreement, we won't." He added, "To get something big on agriculture, we will obviously have to agree to some things that the Americans put to us."
In January 2004, before the free trade agreement was signed, Mr Howard said that an agreement would require US concessions on access to America for sugar, dairy products and beef. Mark Vaile, then Australia's Trade Minister, said there would not be a trade agreement if it did not give Australian sugar-producers access to the US market.
None of this happened. Yet the agreement was endorsed by the Prime Minister, the ALP, the Business Council of Australia (BCA) and, somewhat reluctantly, by the National Farmers' Federation. The BCA said that the agreement would provide benefits in almost every part of the economy, and "provide massive opportunities for Australian companies of all sizes to gain access to the world's largest market".
Mr Howard said that as a result of the agreement, Australia's exports to the US would grow faster than imports.
In fact, exactly the reverse has happened. By the end of 2005, the first year of full implementation of the Australia-US Free Trade Agreement, Australian exports to the US were virtually stationary, while US exports to Australia increased. Australia's trade deficit with the US worsened further in 2006.
When will we ever learn?- Peter Westmore is national president of the National Civic Council.