Opposing the Australian Free Trade Agreement

August 2, 2004 Off By leigh

Reading the U.S. Senate Congressional Record of the U.S. Senate approval of the Australian free trade agreement (H.R. 4759), reveals some of the positions of the U.S.

Reading the U.S. Senate Congressional Record of the U.S. Senate approval of the Australian free trade agreement (H.R. 4759), reveals some of the positions of the U.S. and Australia in this proposed agreement (taken from articles from the 108th Congress United States-Australia Free Trade Agreement Implementation Act — (Senate – July 15, 2004 beginning page: S8178)).

The Senator Nickles from Oklahoma, stated “Prime Minister Howard of Australia has been a good friend and ally of the United States”. Senator Grassley from Iowa noted “for the first time, this agreement opens much of Australia’s lucrative government procurement market to United States exporters. The government procurement provisions are especially important, as Australia is one of only a few developed countries that are not members of the World Trade Organization Agreement on Government Procurement”.

A Senator from Montana outlined his state’s current benefit of trading with Australia: “Australia is one of the few countries with whom the U.S. enjoys a trade surplus, with the bulk of this surplus in manufactured goods. With this agreement, U.S. manufacturers predict that U.S. exports will grow by an additional 20 percent–$2 billion per year. Montana already exports $3.4 million per year in industrial goods to Australia. And these exports will grow with this agreement”.

Senator Fritz Hollings of South Carolina declared “We don’t have a better friend, whether we were going into Korea, whether we were going into Vietnam, whether we were going into Iraq. I am telling you right here and now that the best friend we have ever had is Australia”.

Perhaps he meant this for Australia firing the first shots of the Iraq war, thereby continuing to be the good colonials Australians have always been fighting other peoples wars. This is blood money, brokered between the ruling classes of the U.S. and Australian power elites.

To be expected, some of the Australian Labour Party (ALP) forming the Australian Senate committee examining the FTA came out endorsing it, albeit noting how little it actually does for Australia, at best earning AUS$53-$54 million per year.

Even more worrying is what it will do to Australian workers wages and conditions. Australia runs the very real risk of destroying it’s current economic boom and seeing wages and conditions of average workers deteriorate to U.S. wages (currently less that $6 per hour, federal minimum wage). Historically, Australia’s tariff’s have been used to protect Australian wages from deteriorating against Asian workers oppressed by successive regimes (leftist and rightist). The introduction of an FTA with America, when the U.S. is concluding FTA’s with other countries having less protective wages and conditions will have a chain reaction ultimately dragging down Australian wages. Expect the first casualty to be Australian technology and knowledge workers conditions as they attempt to compete with larger U.S. corporations being able to bid for Australian government contracts.

Perhaps more ominously, it further locks the Australian economy to a U.S. dollar based valuation. If the U.S. dollar depreciates with a free trade agreement in place, working conditions and therefore the economy in Australia will also be dragged down. The likelihood of rapid depreciation of the U.S. dollar is something I’ve argued the possibility of before, due to it’s use as the oil transactional currency, despite the increasing value to OPEC of using the Euro.

This is the letter that I contributed to writing to the leader of the opposition, of the Australian Labour party, courtesy of sites monitoring and opposing the FTA nofta.org and tradewatchoz.org:

Opposition Leader Mark Latham

Parliament House

Canberra, ACT, 2600

Dear Mr Latham,

In the coming months, the ALP will decide on an important issue for Australia’s future, when enabling legislation for a Free Trade Agreement (FTA) with the United States is introduced in the Senate.

If passed by the Senate, the FTA would restrict Australia’s right to regulate local content in the media, weaken Australian quarantine laws, reduce Australians’ access to creative products under copyright in the US, increase the privatisation of our public services, and destroy tens of thousands of jobs in Australian manufacturing. All this is a heavy price to pay for a very small increase in agricultural exports.

In addition, recent evidence in Australia and the US has shown that the FTA will increase the cost of the Pharmaceutical Benefits Scheme – which currently guarantees us all access to affordable medicines – by up to $1.5 billion a year.

Prof. David Henry, former Chairman of the Government’s Pharmaceutical Benefits Advisory Committee says ‘Every single provision in the text of the agreement as it applies to drugs is to favour the US companies, to increase the prices, to ultimately reduce access to cheap, affordable drugs in Australia. There’s no question about it.’

I support a fair trading system which serves social, cultural and environmental objectives, not one which sacrifices them for highly questionable economic gains.

I support a trading system which increases citizens’ control over our own livelihoods, not one which undermines our democratic systems by giving greater power to transnational corporations.

As an Australian citizen having lived in the U.S.A for five years, I have seen the damage done to the U.S.A, Mexico and Canadian workers (both white collar and blue collar) in erosion of their wage and living standards to the lowest common denominator by NAFTA. The FTA will only reduce Australian workers wages, it will not increase them. Without trade and wage protections, Australian workers wages will be drawn down to U.S. lowest wage incomes, which are themselves depressed by NAFTA’s forcing of competition with lower income workers in Mexico. If there is no control on the U.S. forging other free trade agreements, there will be a race to bottom. A depression of wages for middle income earners (manufacturing and technology workers) will plunge Australia into the economic depression the U.S. is currently in.

The ALP has promised not to support the FTA if it undermines the PBS or fails the ‘national interest test’. It is clear to me that the FTA undermines many important areas of Australian social, cultural and environmental policy, including our Pharmaceutical Benefits Scheme. I urge you to keep your promise to the Australian people by ensuring the ALP votes against all enabling legislation for the US-Australia FTA in the Senate.

Finally, I urge the ALP to support legislation requiring all trade negotiations to be open to public input and scrutiny at all stages of the negotiation process, and requiring the social and environmental impacts of all trade agreements to be comprehensively assessed before they are signed.


Leigh M. Smith, Ph.D