Labor must hold its nerve on the FTA

• by Tony Kevin, Canberra Times, Opinion Page, 21 July 2004
  
  

The United States Congress has voted overwhelmingly in favour of the Australian-US Free Trade Agreement. Conventional wisdom in Australia now is that the pressure is on Opposition Leader Mark Latham and the Australian Labor Party to fall into line and back the agreement. It will take courage for Labor to hold its present ground.

Australia's senior parliamentary committee charged with reporting on the issue - the Senate Committee chaired by the veteran of many trade negotiations and trade deals in his former job as trade minister under the Hawke and Keating governments, Senator Peter Cook - has yet to hand down its report to the Australian Senate and public. Labor should await what they say, and allow time for some public debate on it.

Here are the main fallacies now being put forward.

Fallacy 1: The United States has clearly voted for this deal, so it must be good for Australia.

Response: It is not the duty of the US Congress to weigh Australian interests in this FTA. Its obligations are to the economic welfare of the US people. If that is secured at the expense of Australia, so what? It is the Australian Parliament's job to judge and protect Australia's interests.

And just because the US and Australia are political and defence allies does not mean that a trade deal that is good for the US is necessarily good for Australia. We don't even know whether this was why the US House of Representatives voted for this deal. It is likely that some representatives voted thus because they saw it as a kind of a "reward" for Australia's military support in Iraq. Certainly the Australian Embassy in Washington would have lobbied on those lines. Neither possible reason necessarily involves any welfare benefit to Australia. We have to judge this trade deal on its merits to our country as a trade deal.

Fallacy 2 . Having worked hard to negotiate this agreement, we would look foolish now if, after it had been passed by both houses of the US Congress, it was stalled by the Australian Senate.

Response: The agreement Australian negotiators worked hard for was not the agreement they got. The final US offer on sugar, beef and dairy was so disappointing for Australia that Trade Minister Vaile and chief negotiator Stephen Deady are reliably reported to have recommended to Prime Minister John Howard that Australia walk away. Howard overruled their professional advice on political grounds.

There would be nothing foolish if the Australian Parliament does not approve a decision taken by one man on the run and under political pressure. This FTA has to be judged on its merits in terms of Australia's national interest - not John Howard's political survival.

Countries do not enter into significant trade agreements because they are afraid of looking foolish. We will need to have the courage to say no if that is necessary.

Fallacy 3: The United States will be angry and will think Australia wasted their time.

Response: Australia conducted a serious negotiation. In the end we were disappointed on sugar, beef and dairy markets of great importance to us. The Prime Minister's initial acceptance was ad referendum to our Parliament - as the US agreement was to the US Congress. Both countries have the right to our own processes of Parliamentary scrutiny and decision.

Fallacy 4: The issues that Shadow Trade Minister Stephen Conroy says Labor still has concerns about - the impact of the deal on the Pharmaceutical Benefits Scheme, quarantine, intellectual property rights and local content for Australian television - are relatively trivial in the broad context of the great trade opportunities this FTA offers to Australia.

Response: Most Australian-US trade (except in agricultural markets that are mostly closed to us) is virtually tariff-free free and thriving already. As expert studies have shown, the trade creation gains from this FTA are predicted to be minimal, and the negative trade diversion effects on our trade with Asia potentially large.

And the issues of concern to Australians cited above are not minor.

The PBS goes to the economic welfare and freedom from financial penalty of all Australians who rely on cheaper medicines under the PBS. What proportion of those who now choose to buy cheaper generic brand pharmaceuticals on doctors' prescription wish to lose that option ? Down the track, this is what this FTA threatens as new generations of medicines will come on to the market that will be subject to FTA protocols.

Quarantine really does matter, as the recent expensive and destructive case of citrus canker in Queensland reminds us. Up to 40,000 hectares of citrus trees had to be destroyed because a disease got in. We cannot risk compromising our vital quarantine regime under powerful US grower pressures. This FTA will make it harder to maintain that regime's strength.

Intellectual property and local content issues matter if Australia is to remain Australian and not become a second-rate copy of the United States. This is not an anti-American sentiment. Australia's culture and sovereignty are values that mean something to most Australians. We express our sovereignty, our special-ness, in large part through our culture. It should not be thrown away to further fill Hollywood’s pockets.

Fallacy 5: There is no alternative. We have to get on this bus now.

Response. There is always another WTO multilateral trade round in the pipeline - it remains Australia's policy to support WTO rounds. There are also regional alternatives. Under either a new Coalition or Labor government, Australia will be able if it chooses to join in with and seek to catch up to the current steady progress towards an East Asian-ASEAN economic community which is the logical way for Australia to go in terms of our geography and trade patterns.

We only need to rediscover political courage and diplomatic sensitivity if we choose to resume that approach - an approach maintained by previous Australian Coalition and Labor governments, and which has not been permanently blocked by the present Australian government’s mistakes and gaffes over the past eight years. There is still a bedrock of goodwill towards Australia in Asia.

Labor should hold its nerve and not be panicked by Howard into green-lighting a bad agreement. The stakes for Australia are very high.

Tony Kevin is a Visiting Fellow at the ANU's Research School of Pacific and Asian Studies.