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Free trade and fair trade

By Valerie Yule - posted Monday, 19 September 2011


Free trade and fair trade are complex issues. A few thousand words can only open up the many elements that are relevant.

Free Trade really began as a mercantile ideal, with the repeal of the English Corn Laws in 1832. This was a blow for freedom, and for the workers who needed bread, as the farmers had to bring their excessive prices down. It was a sign for the English exporters of goods, who wanted freedom to export anywhere. During the next century, free trade was a banner for the British and American push backed by navies and armies, into overseas markets, especially India, China and Japan.

Today however, trade can be governed by Free Trade Agreements with other countries, especially the United States, which always bargains in its own favour. The high rate of the Australian dollar encourages imports and discourages exports. Cheap labour in competing countries makes their prices lower than ours. A level playing field is not possible when other countries have tariffs, dumping policies, low wages, subsidies and low exchange rates. The abandonment of the principle of balanced trade allows us to import things that we once made or grew ourselves.

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Big supermarkets buy the cheapest from overseas. Most people's main consideration when buying goods is price. Origin is not considered.

Many people believe that they are helping the third world develop when they buy overseas goods. However, each purchase should be scrutinised and determined whether it actually does help the citizens of these countries. Sometimes commodities produced in developing countries are controlled by multi-nationals at the price of those countries' own self-sustainability. Sometimes the production of commodities for overseas consumption prevents a developing country developing for its own needs. What happens to developing countries if we don't buy from them? What is charity and what is helping them develop their own industries and standing on their own feet? Buy from them what we can'tgrow or make, and be sure we give them a long-term, durable future.

We need to keep some industries of our own. Self-defence needs steel, for example. We need to be able to feed ourselves. We cannot rely on the exports of mining and innovative products produced by a few ingenious minds. We can take in each other's washing, with service industries, but that does not fulfil all our needs. Tourists may not always come to Australia bringing their extra money.

Currently, much that is made or grown in Australia is controlled by businesses owned overseas, and the profits go overseas. Investment from overseas can be a desirable source of capital, but this is not often the case in many of the overseas' takeovers of flourishing Australian companies.

There is inhibition of free trade that can also harm us. For example, excessive copyright laws prohibit the free exchange of information, and go beyond fair reward to the originators. The most important free trade is free trade in knowledge and ideas.

What can be done?

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Everyone can do something to reduce the harm from imports that compete unfairly with our home products. Everyone has a part to play, from the consumer and retailer, to the negotiators of free tradeagreements, and the home producers themselves, who can ensure that their integrity and quality remain high.

Indeed, Australia does have some lazy workers and incompetent and greedy businesses. Just look at the failure of the government insulation schemes and school building, which were wrecked by some contractors. We need watchful eyes on them. Nevertheless, most producers are straight players; they struggle on the tilted playing field.

Australian manufactures go under, but people laugh because they can buy cheaper shoes, clothes, chemicals and furnishings from overseas. They do not consider that the cost of freight and of overseas goods will be higher in the future. They do not consider how the former workers will be unemployed, a burden on the fewer taxpayers, rather than sharers in paying taxes and buying other Australian products. Who knows the count of jobs and businesses that have gone under?

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About the Author

Valerie Yule is a writer and researcher on imagination, literacy and social issues.

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