Free Trade versus Fair Trade

US Free Trade Agreement threatens social policies and democracy

Negotiations are under way between Australia and the US for a Free Trade
Agreement to remove all trade barriers between the two countries. What will
this mean for Australian society?

The US trade negotiators have identified a range of Australian laws and
policies that they want to remove or change as part of any agreement. They
are arguing that these operate as 'barriers to trade' for US corporations
and investors. The US targets include:

The Pharmaceutical Benefits Scheme, which ensures that prescription
medicines are affordable in Australia, especially to those on low incomes.
US medicines are over three times the price of those in Australia, and US
pharmaceutical companies want higher prices for their products in Australia.

Essential services like health, education and water, which in Australia are
regulated and often delivered by governments to ensure equity of access. US
private service companies want to invest in these services, as they do in
the US.

Labelling of genetically modified food and regulation of genetically
modified crops, which gives Australian consumers choice about consuming
them. US agribusiness has successfully lobbied against labelling laws in
the US, and they want to water down our labelling laws.

Local content rules in film, television and music which ensure that
Australian voices are heard and Australian stories are told. Without them,
Australia's cultural identity and diversity would be swamped by US imports,
which already have a large share of the Australian market.

The Foreign Investment Review Board limits on foreign investment in media,
telecommunications and airlines. The US wants to give corporations the
right to challenge laws and sue governments if such laws harm their
investments. Under similar provisions in the North American Free Trade
Agreement (NAFTA) US companies have challenged environmental regulation and
sued the Canadian and Mexican governments for millions of dollars.

Despite community concern about these targets the Australian Trade Minister
has said that no topics are off the table in these negotiations. Most
Australians support these social policies, which help make Australia a more
equitable society that the US, with a distinctive culture. A survey by UMR
Research reported in the Australian Financial Review on March 21, 2003
showed that 90% of respondents rejected a trade deal that changed the
Pharmaceutical Benefits Scheme and 70% opposed a deal that threatened
Australian content in film and television.

Furthermore, these negotiations are proceeding despite economic studies
which predict no significant economic gains for Australia from such an
agreement.
The government has commissioned two studies about the economic impacts on
Australia. Neither predicted large economic gains as a result, and in fact
one predicted economic losses because of diversion of Australian trade with
Asia. The study that did predict small economic gains (less than half a
percent of GDP per year) based this on the assumption that all US
agricultural tariffs and quotas would be removed, which it acknowledged was
very unlikely to happen. An inescapable fact is that the Australian economy
is only 4% the size of the US economy, so our bargaining power is minimal.
The Australian Fair Trade and Investment Network (AFTINET) is a network of
65 community organisations, unions, church groups and individuals that
conduct community campaigning, education and lobbying about international
trade agreements. We argue that social policies which protect the public
interest should be publicly debated here and decided by parliaments at the
national or state level, not negotiated in a trade agreement. Currently
trade agreements are secretly negotiated and the signed off by Cabinet,
rather than subjected to parliamentary vote.

President George W. Bush and Singapore's Prime Minister Goh Chok Tong
signed a free-trade agreement in May. This means Singapore joins Canada,
Mexico, Israel and Jordan in having such a deal with the US.

"This free trade agreement will increase access to Singapore's dynamic
markets for American exporters, service providers and investors," Bush has
said.

This article was printed in the AusBuy Connection Winter 2003, magazine.