Howard is sacrificing our interests
The Melbourne Age Date: June 13 2002
By Kenneth Davidson
Is John Howard mad, or is he just looking for an excuse during his visit to Washington to bask in the reflected glory of George Bush and his unilateral war on terror?
What, precisely, does Howard expect to gain for Australia out of an Australia-US free-trade agreement (AUSFTA)? Is there anything in the words or actions of Bush, his administration or the US Congress that suggests Washington would make any trading concessions to Australia that might hurt some domestic US interest?
Based on actions, not words, the present US administration is the most protectionist since the Republican Hoover administration presided over the notorious Smoot-Hawley tariff in 1930 that played as big a role as the Wall Street crash in 1929 in precipitating the Great Depression.
The $340 billion assistance package to US agribusiness is not designed as social welfare for struggling US farmers. It is designed to ensure that US agribusiness can undercut in export markets the most efficient farmers in the world in countries such Australia, New Zealand and Canada, and the most heavily subsidised farmers from the European Union.
So we have a choice. If agriculture is in the AUSFTA then the US can swamp the domestic Australian market with temperate-zone agriculture products as well as Australian export markets. The subsidies are worth 30 to 50 per cent of the value of US output. This means Australian farmers would have to be 30 to 50 per cent more efficient than their US competitors to stay in business.
In terms of our non-agricultural trade between the two countries, protection levels are already so low that there are no major economic benefits to either country from the abolition of what amounts to small revenue tariffs. The question becomes: which taxes have to be raised to cover the revenue shortfall?
Tradewise, Australia is on a hiding to nothing from AUSFTA. So what does the US want from free trade with Australia? The US wants the abolition of the Foreign Investment Review Board (a paper tiger, but it could conceivably be resurrected by a nationalist government) and the Pharmaceutical Benefits Scheme (which curbs profiteering in the Australia market by US and other pharmaceutical multinationals), and full access to the local film and television market (television networks would be opened up to foreign ownership, local-content rules for free-to-air TV networks would be abolished, and film subsidies for Australian film companies to make Australian films would be extended to foreign film companies).
But this is the small beer in the US objectives. To pursue the proposed AUSFTA, Bush has to get Congress to delegate to him a six-year "fast track" authority to negotiate free-trade agreements with more than 30 countries, mainly in Latin America and the Caribbean. The "fast track" authority, rebadged by Bush as the "Trade Protection Authority", is modelled on the North American Free Trade Agreement (NAFTA), which takes in Canada, the US and Mexico.
This has been sold as a free-trade agreement; in fact it is more of an investment agreement designed to give investors unprecedented legal rights that they can exercise against government through tribunals set up under the NAFTA. Such tribunals have the effect of bypassing the national courts and nullifying local laws and regulations designed to enforce local planning, health, and environmental policies.
Democratic governments have the power to appropriate private property for public purposes, provided they give just compensation that shields private property from direct expropriation.
But chapter 11 of NAFTA goes further. Expropriation is broadly defined to include any government administrative measures, policies or laws that are "tantamount to expropriation". The losses, which must be compensated, include the loss of future or potential earnings.
The implications of chapter 11 were not understood when they were first implemented in 1992. The provisions were sold as relatively benign safeguards necessary to protect investors from state seizure of private property, such as the Mexican nationalisation of foreign oil refineries in 1938. But the examples of how these provisions are being used to assert the interests of foreign investors over democratically elected governments are truly hair-raising.
For example, an American company, United Parcel Service, has filed a suit challenging the government provision of parcel and courier services by the Canadian postal service, and a Canadian steel fabrication company has challenged a federal "Buy America" law for highway construction projects in the US.
Critics of the way in which NAFTA threatens both democracy and the environment abound. The respected Public Citizen has released a series of reports on NAFTA's actual performance in relation to investor-to-state cases, titled Bankrupting Democracy.
The report points out that previous trade or investment agreements typically focused on ensuring "national treatment" - that is, that foreign investors or goods obtained the same treatment as domestic businesses and products.
"But NAFTA establishes new rights applicable only to foreign investors claiming compensation from taxpayers for the costs of complying with the same domestic policies that all domestic companies must follow," it says.
It is reported that John Howard is going soft on signing up to the International Criminal Court, on the grounds that it would undermine our sovereignty. This is nonsense.
But why is he apparently eager to sign up to an agreement which, if it follows the NAFTA rules, will cripple Australia's sovereignty in favour of foreign investors?
Kenneth Davidson is a staff writer. His column appears on Mondays and Thursdays. E-mail: dissentmagazine at ozemail.com.au