Havachat: Free, fair or foolish? The Australian-US FTA - Day 4

Havachats are week-long email dialogues between two prominent advocates on an issue of the day. To vote on the issue and make your view count, click here.

Day 1 . 2 . 3 . 4 . 5.

Doug goes first. Alan responds.

From: Doug Cameron
Sent: Tuesday, May 28, 2003 14:48
To: Alan Oxley
Subject: First response

Dear Alan

The AMWU supports trade. Trade that promotes social justice, human rights and democracy - fair trade.

Fair trade is not about blocking trade with Bangladesh because workers in Bangladesh don't receive the same wages as US or Australian workers. This is a common misrepresentation by people such as yourself. Fair trade insists that trade agreements include commitments to core labour standards. These basic human rights include:

• the elimination of all forms of forced or compulsory labour;
• the effective abolition of child labour;
• the right of workers and employers to freedom of association and the effective right to collectively bargain; and
• the elimination of discrimination in respect of employment and occupation.

Fair trade is about saying that the rules for trade should be designed to benefit the community, not just some select group of powerful companies or countries.

It is clear that every country, including Australia, that has climbed up the development ladder has done so not through "free trade" but through strategic government support and intervention to enable effective participation in high productivity growth areas. The agenda of the US is to kick away the ladder to development by using subsidies, the defence industry, and patents to protect its dominance and, use free trade to remove from other countries the capacity for effective government intervention and support for local economic and social development.

Studies have shown that trade unions, in both developed and developing countries, want labour standards in trade agreements - even if their governments (many of which are not democratically elected or have a poor record on human rights) do not!

Free trade, as you call it, doesn't lift workers out of poverty. For example, the wages of Mexican workers have fallen since the introduction of the North American Free Trade Agreement (NAFTA). Joseph Stiglitz, ex-Chief Economist with the World Bank, has observed that free-market policies have, in fact, increased poverty in Russia and Eastern Europe.

In their latest National Trade Estimates Report on Foreign Trade Barriers, the US identified a whole series of what it calls "trade barriers" including:

• Australia's quarantine laws;
• requirements for labelling of genetically modified foods;
• government procurement;
• controls on foreign investment;
• commodity boards and agricultural support;
• local media content requirements;
• the government holding a stake in Telstra.

The US government sees the Pharmaceutical Benefits Scheme as contrary to free trade because it keeps prices for Australians too low and, therefore, limits the profits for the US drug companies. Polls have shown that up to 90 per cent of Australians oppose a US free-trade deal that would change the PBS. The community opposes changes to the PBS because Australia has been founded on the ideal that access to good health should be based on need, not ability to pay. This is an ideal that is worth "Protecting".

The cost and quality of our quarantines, post and telephone services are similarly under threat. Trade agreements like NAFTA have clauses that have been used to challenge the right of States to subsidise their essential services like communications and these clauses have even been used to challenge laws protecting the environment.

The real concern for ordinary Australians is that, unless specifically excluded, services such as health, education, water and post will be affected by a USFTA. Surely the people, through their parliament, should be determining the policy and direction of the delivery of these core services.

Free-trade agreements mean trading away the ability for our governments to form independent economic, environmental, social and cultural policy.

As to your final comment about "self-appointed civil society groups", perhaps I need to remind you that positions such as my own, and indeed most others you have listed, are elected by the people they represent. The union movement represents about two million Australians. "Pat Ranald’s small network" consists of over 65 organisations including the ACTU, Oxfam, the Australian Council of Social Services, the Catholic Commission for Justice and Peace, UnitingCare and others.

Doug

From: Alan Oxley
Sent: Monday, May 28, 2003 17:38
To: Doug Cameron
Subject: Re: First response

Doug,

You warned at the outset that the FTA would be too costly. Australian culture and social systems would be undermined. This is not the case. If these are the only problem areas, we are in for an easy time.

You claimed the FTA would free foreign investment, double pharmaceutical prices, undermine Australian film production and scrap controls on quarantine and GMOs. This is a scare campaign - the claims are hollow, or we benefit.

We need foreign investment. It has given us world-class automobile, pharmaceutical, mining, food processing or metals processing industries. Are your members worse off working for companies that are foreign owned, like Ford in Geelong and Mitsubishi in Adelaide?

Today, every new foreign investment over $10 million has to be scrutinized by a committee of Canberra officials in Canberra. This is pointless red tape. We do not make Australian companies do this. Most proposals are approved anyway. Such controls deter investors. If an FTA can make foreign investment more automatic, we win. More foreign investment means more growth, more new technology and more jobs.

Don’t forget, such rights in an FTA also protect Australian investment in the US. Most foreign investment from Australia goes to the US. It has grown rapidly over the past decade. Australia invests more in the US than in France. I’ll bet your union’s pension fund has investments in the US. All good funds do. It is the heart of the world economy.

The pharmaceutical companies do not want the pharmaceutical Benefits Scheme scrapped and never have. You and others continued to say this when it was never true. They employ 12,000 Australian workers and are one of our largest manufacturing exporters. They want to continue to invest in Australia. But if they cannot get a commercial return on their investment, it is not worthwhile.

If the government wants the people to have lower drug prices, the effective way to do this is to subsidise the prices from tax revenue, not force drug companies to sell at uncommercial prices. The result we need from an FTA is one that supports continuing investment in the pharmaceutical industry and access to affordable drugs.

There is no threat to Australian film production. In fact, it is thriving. Last year it produced half a million dollars worth of film, mostly for US studios. It has never created more work or jobs. The key interest of the US film industry in Australia was tougher penalties for piracy of DVD movies. Canberra has already agreed to do this. I am told that Australian rules requiring TV broadcasters to show a certain amount of Australian product (local content) is not likely to be a major issue.

Quarantine and GMOs. The latter are not an issue - ask the Americans. The only person who said they were was a rookie journalist at The Sydney Morning Herald. On quarantine, we have as much to challenge in regulations as they have in ours. I predict a nil-all draw on that issue.

If these are the so-called costs of the Agreement, then it will be painless indeed. Normally in any deal, Doug, you measure the gains against the losses. As I said earlier, the big long-term gain for Australia is being kitted out to succeed in the global economy as we move into the Information Age. Imagine being able to do that without pain and in the interim secure increases in Australian exports to tune of over $2 billion dollars for agricultural and manufacturing industries? Looks like a bargain to me.

Alan

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Day 1 . 2 . 3 . 4 . 5.