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a dud deal? « Previous | |Next »
October 27, 2003

The imperial president has been and gone. It was all very quick. Hello George. Bye George. And that's it for another decade.

The visit highlighted the image of Australia's Anglo-American alliance affiliations in security, intelligence and defence. Australia is now locked into the US. The Presidential visit reinforced the way the Howard government has set Australia apart from Asia. The image is that Australia is a Western country in, but not of, the Asian region. The subtext of the image is that supporting Anglo-American terrorism in Iraq has protected us from Islamist terrorism in our region.

So what do we have after all the backslapping, praise and media adulation has evaporated? Beyond the hype about Australia & the US being the best of buddies and the strongest of allies we have this reality:
Yep. Howard said to Bush that it was time for both sides to figure out their important issues and what they were willing to trade off. Bush accepted that.

Then Howard said that Australia was willing to make key concessions on core US demands. He said that he understood that the US needed big concessions on promoting investment flows, reducing bariers to serives, toughening Australia's intellectual property rules and boosting e-commerce. Bush agreed with that.

Now I have no idea what took place between Bush and Howard. I was not there. I'm just making an educated guess. But the signs for the proposed free trade deal do not look good for Australia.

The US is not putting anything substantive on the table by way of concessions in its farm policy; and Australia appears to be giving ever more ground on investment policy, intellectual property and the services trade issues, such as the media and entertainment industry. Since Australia is fairly open about free-flowing foreign investment, that leaves the film and television industry as the sacrifical lamb. The US is conducting these negotiations in their interest, not ours. And they have more power. So they are pushing big time over the prices the US pharmaceutical manufacturers recieve for their drugs and medicine under Australia's PBS scheme. Since the PBS scheme hindered the US comapnies from recouping their investment in research and development, so it has to be modified. I reckon that is what Bush told Howard.

Kenneth Davidson says:

"The much-touted Australia/US Free Trade Agreement (AUSFTA) hardly seems to involve any special favours for Australia. There is nothing so far that suggests Australia will get a better deal than Canada, which forms part of the North American Free Trade Agreement."

Will the film and television industry be sacrificed in the Government's bid to extract a reasonable farm trade? Does that mean Australia giving up its ability to make future cultural policy, especially for emerging media? Does easing local content rules for future media mean that Australia gives up its ability to tell its own stories about our way of life?

And we have not even got started on the issues to do with the public subsidy of the PBS medicines or the Australian regulation of the environment.

My judgement is that, as things stand at the moment, it sure looks as if the US is going to benefit far more than Australia from the Free Trade Agreement. As Davidson says:

"The American-Australian Free Trade Agreement Coalition (AAFTAC) put out a report in July that said...Recent analysis by the Centre for International Economics found that US exports to Australia would increase by $US1.9 billion ($A2.7 billion), compared with an increase in imports from Australia of $US1.2 billion."

Presumably that does not factor in the cost of the negative impact on Australia's other trading partners.

So why the desperation by the Howard Government to get the free trade deal done? Would we not be better served by letting the negotiations collapse? Why bother when the long term significance of the range of agreements signed between China and Australia is that China will become Australia's main trading partner, bigger than Japan or the United States? We now export more to China/Hong Kong than to the US and China is the growth engine for the Asian-Pacific economy.

The Howard government appears to think that Australia's destiny lies with the US. But it may very well lie with our relationship with China.

Support for the above argument can be found in this article by Tim Colebatch. He says:

"Rather than the US becoming increasingly important to Australia, as the Government predicts, it is more likely that the US is now at the peak of its influence. In future, Asia will become increasingly important to us, as China and India emerge as drivers of the world economy, and their growth fuels the rest of Asia. This is the significance of ASEAN's decision to negotiate free trade agreements with both regional superpowers. China is positioning itself in a leadership role in the region, dispensing favours and expecting favours in return."

As Alison Broinowski observes Australia continues "to be perceived as indeed we perceive ourselves, as a Western country in, but not of, the Asian region."

| Posted by Gary Sauer-Thompson at 12:40 PM | | Comments (0)