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Labor's free trade hypocrisy « Previous | |Next »
October 4, 2010

I see that the Craig Emerson, the Minister for Trade, is banging the anti-protection free trade drum and he is manning the barricades to oppose inserting environmental and labour standards into trade deals. Emerson structures Labor's hard edged free trade position in opposition to the Green's fair trade position.

I presume that by free trade Emerson means something like we won't put quotas or tariffs on your products if you won't put quotas or tariffs on our products. The major premise is that by removing trade barriers, consumers will benefit from the comparative advantages that different nations have in producing goods. Those nations that have a resource, technological, labor, or other type of advantage will be able to produce a better product at a lower cost to the consumer if artificial barriers protecting domestic producers are removed.

Emerson says that:

the [Gillard] government would fight European threats to erect trade barriers around countries not imposing carbon pricing, dismissing them as "old protectionism". We won't cop governments cloaking protectionism in this sort of green cloak of respectability, where it's just old protectionism. Of course we are committed to putting a price on carbon, but let's not believe that this is all about climate change. There is a very clear European old protectionist instinct under this green cloak of respectability and we won't cop it.

His stance of fighting environmental protectionism is at odds with Labor's subsidies of the car companies in the form of a green car innovation fund (hybrid Camry); and its subsidies for farmers in the form of water infrastructure, drought relief ad import restrictions.

So much for comparative advantage as understood by
Ludwig von Mises thusly:

There are countries with relatively favorable and others with relatively unfavorable natural conditions of production. In the absence of interference on the part of governments, the international division of labor will, of itself, result in every country’s finding its place in the world economy, no matter how its conditions of production compare with those of other countries. Of course, the countries with comparatively favorable conditions of production will be richer than the others, but this is a fact that cannot be altered by political measures in any case. It is simply the consequence of a difference in the natural factors of production.

The political reality is that free trade agreements typically involve some sectors are protected under the agreement and the agreement sets up an uneven playing field between countries and between industries. The Gillard government is seeking to protect jobs in Australia.

Secondly, GATT/WTO dispute-resolution panels have consistently held that various domestic environmental laws impermissibly interfered with free trade obligations.That is why segments of the environmental community have called for reforms to free trade agreements to make them more responsive to legitimate environmental concerns and objectives.

| Posted by Gary Sauer-Thompson at 7:52 AM | | Comments (6)


Australian politicians must be rather sensitive to the issue because of the likelihood we will be the target of trade sanctions in the not-too-distant future if we keep dragging our heels on an ETS. It doesn't hurt to retaliate first and establish the story that it's not really about climate change, it's those evil protectionists looking after their local industries.

I should have added: any workable global ETS system must eventually have sanctions for non-compliance, otherwise it will be too easy for nations like Australia to trot out the "Hey we only contribute 2% of global greenhouse gases so it doesn't matter if we stay out" argument. But it will happen incrementally; pretending we can wait and do nothing until there is a grand global agreement to which all nations are committed is just a recipe for endless inaction.

This was the argument that should have been put up against all the tripe about an ETS damaging the economy. Sooner or later we will find ourselves in a position where not having one will damage the economy.

Manna from heaven reading above, especialy coming from LP where Robert Merkell has thread started a converstion on exactly the same issue.
It's about time the circumstances of international trade were explained more effectively to the public, lest we be hoodwinked by more AUSFTA type deals that remove our right to protect ourselves from the worst excesses of exploitative capitalism.

Nan, do you ever get past the capacity of the think tankers to get five out of one plus one?
Thanks for the link, if only to provide an example of tanker dishonesty that would have even had Herman Goering blushing.