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Free trade: its all go go « Previous | |Next »
February 10, 2004

I'm on the road for a few days.

From the news headlines I can see that all the buzz is about the Free Trade Agreement with Australia. Free trade is the main story of the day, even though some of the journalists are running with the Latham's hare of politician's superannuaton in Australia. It is the main story because it is about Australia's alignment with the US, Australia's turn away from the regionalism of East Asia and the growing integration of Australia with America.

The Free Trade Agreement (FTA) is a win win deal say those in Australia who support the free trade agreement. It's all benefit with no negatives. No doubt they will say that the opposition will come from the protectionists who are all doomsayers. However, the gains from the FTA are likely to be small for Australia.

There are different spins in different countries about the significance of the FTA.

What can be said about significance or benefits of the free trade agreement for Australia? Anne Caplan says:

"Judging by the media statements from both countries, there is a gross imbalance in this FTA. Australia already suffers from a $US9 billion ($A11.7 billion)-a-year trade deficit with the US, and this looks set to worsen. The US manufacturing sector alone expects to achieve export gains of $US2 billion a year, thanks to the FTA. By contrast, Australian Trade Minister Mark Vaile spoke yesterday of millions of dollars of benefits for Australia - a far cry from the $A4 billion figure that was touted by the Government for the past three years."

Caplan then goes on to give a negative interpretation of the FTA. She says that:

".... the gains [for Australia] are truly few and far between.

For instance, Australian beef producers will get duty-free access to the US - in 18 years. Australian dairy exporters will make marginal gains, but will still be adversely affected by massive American subsidies that contribute to global market distortions. Sugar has been excluded from the agreement. We are still not able to export our world-class high-speed passenger ferries to the US.

And as for Australia's services sector, the jury is still out. There appears to be a great deal of unfinished business in the services negotiations, which means the FTA is likely to become a platform that will enable the US to continue to press its demands in areas such as education, training and culture."

Given this platform the PBS is a real worry. What have the politicians agreed to? More expensive drugs? We will have to wait for the Senate to uncover what the Howard Government is keeping a veil on.

And we should expect there to be lots more subsidies for the sugar industry from the Howard Government. Industry restructuring is the order of the day. The National Party will have be in damage control on this.

Michelle Grattan spots the difficulties the National Party is in over the Free trade Agreeement:

"One of the Government's handicaps now on the FTA is what it said previously. Nationals leader John Anderson famously claimed it would be "un-Australian" to do a deal that excluded sugar. It was silly hype. Yesterday he was left to explain why it would have been un-Australian not to do it.The Nats especially are juggling a double line, crying in sympathy with the sugar growers, but extolling the virtues of the agreement generally."

That highlights the hype over the FTA, does it not? Ross Gitten's deflates the hype. He says that:

"... this deal is the result horse-trading between the protectionists on both sides of the Pacific. The object of the game was to persuade the other guy to give up more of his protection than you gave up of yours."

It's more a preference deal between the US and Australia than a free trade agreement. No doubt, one that will lead to an increase in Australia's trade deficit because we will buy more manufactured and cultural goods than the Americans will buy off us.

And what about those cheaper Asian goods?

Paul Kelly highlights the significance of the FTA. when he says that "the new US deal... [if] realised...will become one of the half dozen defining elements of Howard's prime ministership and integral in his gearing towards the US in terms of security, economics and values. The conundrum lies in the complex assessment of the gains and risks in this strategy."

| Posted by Gary Sauer-Thompson at 5:22 PM | | Comments (0)