The Guardian September 5, 2001

"Free Trade" bonanza for US

by Anna Pha

When Prime Minister John Howard visits Washington later this month he hopes 
to return with a commitment for negotiations for a free trade agreement 
(FTA) between Australia and the United States. The proposals for such an 
agreement extend far beyond the question of trade and could have a very 
serious impact on Australia's future sovereignty and independence.

Trade Minister Mark Vaile and Foreign Minister Alexander Downer are at the 
helm of the push for such an agreement. A report commissioned by the 
Department of Foreign Affairs and Trade last June from the Centre for 
International Economics claims that such an agreement could bring about an 
annual increase of US$2 billion in GDP by 2010. (Note the figure is US$ the 
Australian Government provides US-Australia trade figures in US dollars!).

Last year the United States was Australia's second largest trading partner 
just behind Japan. In 1999 Australia exported US$8.1 billion of goods and 
services to the United States while the United States exported US$15.2 
billion worth to Australia.

The US is the source of nearly 20 per cent of Australia's imports and 
accounts for around 11 per cent of Australian exports.

A free trade agreement between the two countries would not automatically 
result in a lifting of tariffs, subsidies and other mechanisms which are 
considered as barriers to trade or disadvantaging one country's products in 
the other country.

Specific products and services would be negotiated and the removal of 
barriers phased in.

Australia is looking in particular for the US to reduce tariffs and remove 
other restrictions on imports of agricultural products. At present 
Australian sugar exporters are disadvantaged by various barriers that 
amount to a tariff equivalent of 80 per cent. For dairy products the tariff 
equivalent amounts to nearly 24 per cent. Lamb, cotton, metals and 
financial services are other areas of concern.

Australia has just had a break-through with reductions of tariffs on 
Australian lamb although some of this break-through will be off-set by an 
increase in assistance to US farmers.

In the long term Australian farmers may actually stand to lose a great deal 
if the US gets its wishes in an FTA.

One of the US's key demands is the removal of quarantine restrictions on 
products such as chicken, pork, corn and course grains, stone fruit, 
apples, Californian table grapes and Florida citrus.

The removal of these quarantine restrictions could see the entry of 
diseases and pests with the potential to destroy Australian crops and wipe 
out whole sectors of the industry

And as if we do not have enough US TV programs already, one of the demands 
of the US is for the complete removal of local content rules on Australian 

The US pharmaceutical lobby is also supportive of an FTA with Australia. It 
wants to see the PBAC abolished and our Pharmaceutical Benefits Scheme 
destroyed so that US pharmaceutical transnationals can freely enter and 
sell their products at monopoly prices to those who can afford them.

The US is also seeking to get rid of the wheat marketing board and have 
Australia abolish other marketing systems such as with rice. It would like 
to see a situation such as we have in the coal industry where various 
mining interests in Australia are competing with each other, undercutting 
each other to sell their products.

Prices would be forced down, farmers put out of business and in the long-
term Australia would lose badly.

The US is also keen to see protective measures removed in the purchase of 
military equipment, submarines and other military expenditure. 

The FTA proposal being floated is not just restricted to trade. It could 
take the form of a mini-multilateral agreement on investment. US 
corporations expect the remaining restrictions on investment in the 
financial sector and other areas lifted so that they can make further 
inroads in taking over the Australian economy.

The United States is already the largest source of foreign investment in 
Australia. Such an agreement would just increase its control and 

On the surface, the FTA would appear to be moving towards the so-called 
level playing field. In practice it would be an agreement or arrangement 
between two very unequal partners. It would amount to a take-over by US 
corporations in the interests of US corporations at the expense of the 
Australian people, Australia's sovereignty and economic independence.

Apart from the direct economic damage it would do to Australia it would 
also have ramifications for Australia in the Asia Pacific region. Giving 
preference to the US over other countries in the region, would only be seen 
as another bending of the knee of Australia to the US, along with our role 
as deputy sheriff. In this case we would not be a deputy we would be 
swallowed up by the US.

The Australian Government sees an FTA with the US as an important step 
towards economic integration between Australia and the US and as a 
deepening of a strategic (military and political) alliance with the US. It 
certainly would be a step towards economic integration, not between 
Australia and the US, but of Australia into the US with a complete loss of 
sovereignty and economic political independence.

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