Socialist Party Australia - What does the US/Aus Free Trade Agreement mean for workers?

By Renate Cumalkovs, Socialist Party Perth
For many workers it is difficult to understand the real implications of the Australia-United States Free Trade Agreement (FTA). Both ruling classes participating in the negotiations have responded in terms of self-interest, that is, all seem interested in pursuing goals that will have the most effect in filling their own pockets.

It is obvious that the Agreement significantly enhances the possibility of greater US investment in Australia and some local exporters will have greater access to the US, a market which represents one third of the world’s Gross Domestic Product.

What is free trade?
But what is free trade? It is the freedom of movement for capital between borders, freedom to dodge taxes and to dodge restrictions on unchecked profit and thereby create a footloose capital that forces all governments operating under this system to do the bidding of big business. On the other hand proponents of free trade usually also argue for restrictions on the movement of labour (migrants and refugees) and limitations on the right of workers to organise and undertake industrial action.

The capitalist alternative to free trade, unfortunately supported by some leaders of the union movement such as Doug Cameron of the AMWU, is for tariffs, multilateral trade agreements, economic nationalism and support for local capitalists. The failure of such policies in the past was precisely the reasons the bosses shifted to a neo-liberal or free trade agenda.

One of Australia’s negotiators on the FTA, Stephen Deady, claimed it was a huge deal for Australia. He went on however to say we had not really given up too much for too little, although he also said that the US had such a big agricultural market in comparison to the amount of product we could ever export to them that, had they maintained no protection barriers whatsoever, it would have minimal impact on their farm produce. In fact, the US will maintain safeguards on 35 agricultural products for 18 years. What’s more if prices for these 35 Australian products are considered too low, Australia will face renewed trade restrictions to continue the protection of inefficient US farm practice.

PBS under threat of erosion
One of the main concerns in the FTA negotiations was whether Australia could protect its arrangements for subsidised medicines. Currently the PBS uses bulk buying power to offer consumers lower prices than in the US. The Doctors Reform Society have said that the FTA could lead to higher costs for our drugs because 1) the establishment of a review committee to review drugs rejected by the PBS board and 2) the establishment of a joint Australian/US government medicines working group to make further changes to the PBS. Concerns are also growing in the Australian film, television and audio-visual industries. We currently have a 55% content protection in the Australian media industry. In the FTA there is a ratchet mechanismin place whereby if for some reason we reduce the 55% content protection we cannot re-instate that level. This means ongoing liberalisation.

Our film industry currently receives funding by two means: investment by government agencies and/or grants and subsidies. Grants and subsidies remain untouched, but who is going to be able to apply for funds from investment bodies? Will local film-makers really have to compete with institutions like Fox Studios for local investment? This will mean the loss of jobs in this industry plus the continued us by US Hollywood giants of Australian as a scab, cheap labour venue for movie production to undercut hardwon workers’ rights in the US. As with all US FTAs, the US is intent on removing barriers on trade and investment in services. This would definitely lead to greater privatisation in the few services currently still in public hands, eg water, postal services, health.

Rules of Origin
Many Australian products will be denied access to US markets due to Rules of Origin, which require a certain level of Australian component in the product. This is a trick to benefit the US capitalists. Most Australian goods have ‘too many’ products with either New Zealand, European or Asian components. Mixed with the same Rules of Origin applying to New Zealand and Singapore under our FTAs with them, this makes for a range of trade complexities too difficult to manage! So much for ‘free trade’. These “rules of origin” apply especially to the textile industry and will certainly deny any increase of clothing sales to the US.

The US Federal and State governments procurement market is to be opened to Australian firms. This is seen as a big win but Australian firms won’t be given preferential treatment. It simply implies they have the right to compete against 28 other countries already designated under US law such as the EU, Japan and Korea. At the same time many years of using government procurement as a tool for industry development has been brought to a stop in all areas except defence.

This FTA was supposed to provide $4 billion worth of benefits for Australia. During negotiations, this was reduced to $3 billion with the rising $A. A large part of this came from two products only: dairy and sugar, both of which remain severely hampered by US protectionism. As well, cultural services have been included in the FTA because that was where the US really wanted barriers lifted.

No wonder US Trade Representative Robert Zoellick “bragged to the (US) Senate Committee how little the US had opened its key markets to Australian farmers under the new FTA...(he claimed) the US stood to gain abut $2.64 billion in increased exports of manufactured goods to Australia...no extra Australian sales could occur until the third year of the 18-year deal...on dairy products, he sounded especially pleased, using irony to call the Australian increase ‘huge’ and trumpeting the fact that Canberra had been unable to end the tariff protection for US dairy farmers.” (Australian 11th March). US unions opposing the FTA couldn’t find much economic losses (for the US) so have argued against it on the grounds that the deal’s languages “is insufficient to ensure that core labour standardds will be respected in Australia”. Teamsters Union President James Hoffa pointed out that “Australia, while it had a vibrant labour movement, has an imbalanced, inadequate system of labour laws that fail to fully protect workers’ core rights”!

If it’s so bad why did Howard push for it
The obvious question is why would the Howard government, therefore, be so keen to push ahead with the FTA, especially in a US Presidential year where there was always little chance of getting a decent deal for his ruling class mates in Australia? Well there are some sections of the ruling class here that may benefit such as those with big interests in the US such as Wesfield Holdings, BHP Steel, Visy, Southcorp, the car industry etc. But most sectors will miss out and no wonder a report prepared by ACIL Consulting for the government predicted a 0.2% reduction to GDP.

The main reason Howard pushed for this second rate FTA was political. He wants to drive Australia closer to Washington and have American backing for mini-imperialist venters in PNG and elsewhere in the region. The Coalition wants - like the UK in Europe - to position itself as the main US ally in the region. Latham’s alternative capitalist geo-political strategy is to position Australia close to both the US and neighbouring capitalist powers.

Another political advantage of the FTA is that it gives the local ruling class a weapon to hit workers with: ‘accept cuts to wages and conditions or face capital relocating overseas’. The FTAs with the US, Singapore etc reflect a shift away from multlateral trade agreements ever since the ex-colonial states rebelled at the last WTO talks at the IMF, World Bank and major powers for using multilateralism as a weapong to promote imperialist interests.

Socialists say to workers that both FTAs and mulitlateral trade agreements are in the interests of the elite who run society. We need to defend our jobs through militant industrial action (including occupations) and nationalisation of companies threatening closure or relocation overseas. We need to build direct links with workers overseas who, like us, face the face multinational companies. The answer to free trade and FTAs is not economic nationalism but international working class solidarity, militant action to defend jobs and a democratic socialist economic plan. That’s why our future depends on socialism...