How Free Is
'Free Trade'?
By Ghali Hassan
12 January, 2004
Countercurrents.org
In
August 2004, the Australian Senate passed the enabling legislation for
the Free Trade Agreement (FTA) with the US that could have the effect
of undermining Australia's health care system and Australia's national
sovereignty. The agreement negotiated with the US by the Howard government
will put pressure on the Australian government to increase the price
of medicines and open Australia to new pest and diseases.
Australia's fear
of being 'left behind' played heavily on the minds of Australian government
officials, and has contributed to Australia's decision to seek a trade
agreement with the US - only the second US free trade agreement with
a developed country. Without any meaningful debate, the Australian people
were misled into believing that the agreement will be good for Australia.
The Australia-US Free Trade Agreement (AUSFTA), has come into effect
from 1 January 2005.
Despite its participation
in the slaughter of hundreds of thousands of innocent Iraqis as evidence
of friendship with the US, the Howard government got nothing for its
service to George Bush. 'It is a political deal with George Bush', wrote
Alan Ramsey of the Sydney Morning Herald. 'It enables
[Prime Minister], John Howard to spin an electoral illusion to seduce
voters, as well as use as a cudgel should Labor challenge it. It is,
Howard prays, the key piece in his election strategy to stay Prime Minister.'
The deal is not in Australia's best interests.
It is very naive
to believe that 'access' to American markets will prove profitable for
Australia. So far, free trade operates in such a way as to allow the
US to reap the profits of markets of the countries they have an agreement
with, while effectively blocking their own markets for non-American
products. Mexico, which is included in the North American Free Trade
Agreement (NAFTA), has not profited massively, or at all from being
included in this agreement, which began on 1 January 1994. Opening the
US markets to other countries would result in more competition and decreased
profits for the US. They prefer to buy into nations in the form of investment.
For instance, more than 10 000 companies have been taken over by US
corporations since Canada signed its FTA with the US in 1988. The first
US FTA with a developed country. Today, Canada owns fewer and fewer
companies.
With the FTA and
NAFTA Canada is trading less with the rest of the world. 'Over 85 per
cent of Canada's exports now go to the US, and about 70 per cent of
Canada's international trade is handled by US corporations,' said David
Orchard of Campaign for Canada. These corporations trade with countries
of their choosing which may or may not benefit Canada. Canada is now
the most foreign-owned developed nation. According to David Orchard,
Canada's standard of living has fallen since the signing of the NAFTA/FTA,
and Canada has less access to US markets than when Canada traded with
the US under the GATT/WTO rules.
Like Mexico and
Canada, it is predicted that Australia will lose some of its manufacturing
capacity and manufacturing labour force in the first few years of the
AUSFTA. The AUSFTA will wipe out 99 per cent of US-Australia manufactured
goods tariffs. US Trade Representative, Robert Zoellick, called it 'the
most significant immediate reduction of industrial tariffs ever achieved
in a US free trade agreement'.
The Australian government
claimed that Australian industries and exporters would reap benefits
from the AUSFTA after restrictions were lifted. However, the US price
safeguards mechanism to restrict imports will remain. The price safeguards
are there to thwart any competitive goods from Australia to the US.
Commenting on the
Free Trade Area of the Americas (FTAA), US Secretary of State, Colin
Powell, stated recently: 'Our objective with FTAA is to guarantee North
American companies the control of a territory that goes from the Arctic
Pole all the way to Antarctica, free access to the whole hemisphere
without difficulties or obstacles for our products, services, technology,
and capital.' And from January 2005, 'the control' will be extended
to reach as far as the Indonesian Archipelago.
With the main markets
where Australia could compete with the US - sugar, wine, dairy, beef,
and fast boats - excluded from the US markets after the AUSFTA is signed,
there is not much left for Australia to compete with the US in a 'free
trade' deal. In addition, cheap US agricultural exports are expected
to have negative effects on Australian farmers and agricultural producers.
Furthermore, US agriculture is heavily subsidised and has had the effect
of driving down prices for a key commodity to levels that threaten the
livelihood of small-scale farmers in other countries.
Similarly, the Thai-Australia
Free Trade Agreement (TAFTA) which came into effect on 1 January 2005,
will leave about 40 000 families working in the dairy industry and a
large number of small scale farmers in Thailand hopelessly competing
with large scale and technology-driven Australian farmers. Like the
AUSFTA, the TAFTA is an agreement between executive governments, not
between the parliaments of the people. The agreement will reap benefits
to Prime Minister Thaksin Shinawatra and his cronies at the expense
of Thai farmers.
The truth about
bilateral trade deals is simple. It is no longer how the rich and powerful
(US or Australia) gain easy access to more and more exploitative measures
in multilateral from, whether WTO or FTAA. There is strength in numbers,
and a revolt by a handful of developing countries can make what Robert
Zoellick thinks of as 'progress' difficult or impossible. It happened
last year at Cancun and Miami.
In a bilateral deal,
on the other hand, the rich and powerful almost always retain sufficient
leverage to push through much harsher measures. They are starting small
- US bilateral deals with Jordan, Morocco, and Singapore won't exactly
set global markets afire, and even Chile and Thailand are only middling
players. But rack up enough highly restrictive bilateral deals and you
increase the pressure in both bilateral and multilateral negotiations,
even on bigger players. Bilateral free trade is the West's new tool
for intervention into the affairs of other nations, and reaps benefits
for Western corporations.
Under the AUSFTA,
not only drug prices in Australia will rise as a result of the new Pharmaceutical
Benefits Scheme (PBS), the Australian government will cooperate in a
backdoor deals of denying life-saving drugs (generic drugs) to millions
of people in developing countries. Furthermore, this rise in prices
for generic drugs will affect the budgets of public hospitals, and in
effect will put severe pressure on the financing of the Australian health
care system. Known for its efficiency, the Australian health care system
relies on the practice of government purchasing power to negotiate prices,
and 'evidence-based' procedures for marketing pharmaceuticals.
All these will be
eliminated by the AUSFTA, and prices will rise markedly. Never before
has the US directly tried to undermine and challenge how a foreign developed
country, like Australia, operates its national health care system and
provides inexpensive drugs to its citizens. It should be borne in mind
that the Bush Administration wants to strengthen the protection of expensive
brand-name US drugs in wealthy countries, like Australia, where the
highest profits can be made. That is why the US is not
interested in having 'free trade' with Burundi.
Do Australians want
to have the same health care as Americans? Health care in the US is
worse than any of the industrialised countries, with appalling statistics.
The US is one of the few countries in the world that do not provide
universal health care for children and pregnant women. Infant mortality,
low birth weight, and child deaths under five are ranked among the highest
in the US as compared to Western industrial nations and Japan. More
than forty five million Americans lack basic health care cover. Australians
will suffer at the hands of unaccountable US corporations.
Although much of
the debate over the AUSFTA has been about higher drug prices, one important
issue is absent from the debate: its impact on Australia's national
sovereignty. Australia has been lucky to escape all the pest and diseases
prevalent in other parts of the world and Australia's quarantine regime
is designed to ensure that we stay that way. The AUSFTA will intervene
in policies of utmost national importance for economic security, and
will influence the quarantine decisions in Australia. The inclusion
of US trade representatives in Australia's quarantine decision-making
processes will give American officials the power to intervene. Australia
will be forced to compromise its scientifically based quarantine decisions
to allow untested and harmful US chemical products in to Australia.
For example, in
1979, the Toxic Substances Control Act (TSCA) took effect in the US.
The TSCA required chemicals to be tested before being registered for
use. However, 80 per cent of the US chemicals on the market worldwide
today were introduced before 1979, and are not required to be tested
before being registered for use. These include highly toxic substances
that were effectively allowed into the market by TSCA, such as industrial
solvents like ethyl benzene, known to cause nerve damage; heavy metals
like cadmium, an ingredient in many paints and industrial ceramics that
can cause kidney failure; and a family of plastic by-products, called
furans, that are potent carcinogens and endocrine disrupters. According
to Mark Schapiro in The Nation magazine, many of these chemicals have
been found in high concentration in the bloodstream of Americans and
Europeans. With compromised quarantine and no regulatory policies to
test chemicals for toxicity on human health and the environment, not
only the Australian people are in danger of developing disease, but
also Australian flora and fauna are left at the mercy of US officials
and giant US chemical companies.
Furthermore, the
US wants the technology of the future monopolised by large private corporations.
The agreement includes product patents. For example, if Australia wants
to design a new technique for producing an effective vaccine against
bird flu virus, or avian flu, using genetic engineering
techniques, Australia can't do it because the biotechnology patents
impede such innovative activity. It will also place restrictions on
compulsory licensing, according to experts in the area.
The most cunning
of the changes introduced by the AUSFTA are certainly those to do with
intellectual property rights (IPRs). The AUSFTA beefs up protections
for copyrighted US and digital products such as music, movies and consumer
software. For instance, the price of CDs and DVDs will increase
after the AUSFTA comes into effect, and this will also lead to a rise
in piracy. The US wants the local contents rules abolished to prevent
them covering subscription TV, the Internet and other new media. The
US also wants media ownership restrictions in Australia lifted. The
Australian cultural sector should have been fully excluded from the
AUSFTA. The impact of the AUSFTA is uncertain, but the drowning of Australian
cultural identity by the US Big Mac of monoculture, and by what Edward
Said rightly calls cultural imperialism is not difficult to predict.
In conclusion, the
AUSFTA is not in Australia's national interests. Australia is not fully
ready and cannot compete with the US; therefore the AUSFTA is not beneficial
for Australia. Australia should conduct risk analysis before entering
into a free trade with the US. There will be a better time for a fairer
free trade.
Ghali Hassan lives
in Perth Western Australia. He can be reached at e-mail: [email protected]
Further Reading:
Linda Weiss, Elizabeth Thurbon and John Mathews (2004). How to Kill
a
Country. (Allen & Unwin paperback).
(This article was
first published in the Newmatilda.com)