United States-Australia Free Trade Deal

["schulte-baeuminghaus" <cresscourt@xxxxxxxxx>]

Title: United States-Australia Free Trade Deal

Does anyone have any comment on the report below on an Australia-United States free-trade deal?
My own reaction is, at least to some extent, ambivalent.
On the one hand, I favour an international régime of relatively free, non-discriminatory trade.
The Havana Charter, signed in1948 but never brought into effect, and the General Agreement on Tariffs and Trade which took its place, generally regulated trade in a way that eliminated most of the more outrageous features of international trade in the interwar period, at the same time as it protected the interests of the smaller as well as the larger trading entities - not perfectly but tolerably.
The Havana Charter and GATT looked towards the creation of customs unions and free-trade areas. Thinking at the time was that it was desirable to allow the creation of such an entity in Europe as part of the rebuilding of the continent after WW2. A European Customs Union Study Group was already at work in 1947 or 1948 and, as time passed, the European Economic Community was established under the Treaty of Rome of 1957.
The EEC (now the European Union) has some good features but it is far from embracing free trade, even within the Union itself. In its trade relations with countries outside the EU, it is, in many respects and in a number of areas of trade, highly protective and discriminatory.
Much the same applies to the United States and the free-trade areas that it has created/negotiated/entered into or planned in recent years.
Therefore, as the report below acknowledges, it may be doubted whether the United States would, like the unwise virgin, go all the way in a free-trade ageement with Australia. (Texan Governor Bush, now President-elect Bush, is hardly likely to leave his Texan cattlemen, or his Texan or other sheepmen for that matter, to the tender mercies of competition with Australian producers.)
But, even if he - and the Congress - did, one must question whether the result would be all that satisfactory for Australia - or for Singapore which is also said to be seeking a free-trade relationship with the United States, although the case for Singapore could be a lot stronger.
The United States has always sought easy entry into most world markets. It tried to negotiate Treaties of Friendship, Commerce and Navigation with Australia and many other countries after WW2, which would have given the US MFN or national treatment with those countries. Some countries did negotiate such treaties although the more sensible governments diluted the terms that the US proposed, in order to ensure that they did not become wholly dominated by the United States economy and that they were not denied reasonable means of independent economic development.
Has the situation changed in the last fifty years, so that it now makes sense for Australia to enter into a thoroughgoing free-trade association with the United States?
As I have said in other contexts, both the United States and Australia have followed economic policies that have resulted in a shift of major parts of both their economies overseas - mostly to the dynamic countries of Asia. What advantage does either see in having the two "failed economies" join together?
Canada has done it but are there elements in the Canadian position that distinguish it from Australia's? Canada's unnerving proximity to the United States makes it virtually inevitable that it will be dominated by the US, so when rape is inevitable...
Would Australia be well advised to retain such independence of trade and development policy as it still has?
Admittedly, Australia has already swallowed the "free" market, globalisation line that is so close to Washington's heart. Does it matter if we now go the extra mile with Texan cowboy Bush?
One thought is that globalisation and the rest have done us little good so far. Australia's economic performace since 1970 has not been impressive. Recent growth has been rather better but from such low levels - to which misconceived policies had earlier taken it - that it may have done no more than recover a very little of the long lost ground. In relative terms, Australia has slipped steadily down the scale of significant economies for virtually the whole of the past thirty years.
Should this be taken as a warning?
In the days when anti-inflation policies most dramatically failed, the tendency was for governments, including the Australian Government, to conclude that they needed to "fine-tune" their policies or apply them with even fiercer determination than ever. (We were and still are rather like Napoleon in Animal Farm, who, when he failed to meet his norms, repeated to himself, "I must work harder, I must work harder....")
Is this the thought now? "Free" trade, "free" markets, globalisation and the rest are the answer to the policy-makers' prayer. All that is needed is to go the limit and prosperity will be guaranteed.
Is that the answer or is advocacy of "free" trade, manifested in this instance by a proposed free-trade area with the US, just another buzz-word solution to our trade and economic-development problems?
Shouldn't we really be getting our macroeconomic policy right? Should we not be tearing ourselves away from the sort of policies that have bedevilled the United States itself and led it into such rough and highly dangerous waters in the past thirty years?
Will the days of reckoning for the United States economy, which might well arrive in the course of the next few weeks or months, be a warning that Australia and other countries cannot possibly ignore?
Will that emphasise the need to embrace more carefully considered policies, to avoid buzz-word solutions, to treasure the little independence in policy-making we still have left and to say no to any further domination by the United States - and, indeed, by any other of the major world economic powers?
Even for small and middle-sized economies, that is not an impossible dream. Take a look around the world at the success stories - and the failures. (Take a look especially at those who have tied themselves too closely to the notions of the United States. Like that noble animal, Napoleon, if their hearts haven't burst yet, that fate might be not far down the road....)
So the true answer is, "Get your macroeconomic policies right, and you won't need to lean on others - they will more likely begin to lean on you."
Any comment on the report below would be appreciated.


James Cumes


back  Canberra in Bush push on free trade
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Canberra in Bush push on free tradeBy Washington correspondent ROY ECCLESTON
20dec00

AUSTRALIA will urge President-elect George W. Bush to consider an historic, but controversial, free-trade deal that aims to boost the nation's economic ties with the world biggest economy.

Australia's US ambassador Michael Thawley has strongly argued the merits of the deal, saying it could significantly boost the bilateral relationship, now worth $30 billion annually in two-way trade.
The free-trade agreement was quietly floated by the Clinton administration, but the Howard Government believes that Mr Bush, with his free-trade ethos, has a better chance of making it a reality.
However critics, including Australia's former foreign affairs and trade chief, Professor Stuart Harris, and former ambassador to China, Ross Garnaut, fear it will send the wrong signals to Asia, a bigger trading region for Australia.
Mr Thawley told the American-Australian Association at a New York meeting that those criticisms were misplaced.
"I do not agree . . . and it defeats me how that can be thought to be the case," Mr Thawley said.
"A stronger and more prosperous Australia will be a better partner for Asian countries and our economic links with the US are an important part of what makes us strong and prosperous. Australia cannot afford to think like this and allow its options to be ruled out pre-emptively."
Australia has a free-trade deal only with New Zealand, but last month announced it would negotiate a similar deal with Singapore over the next 12 months.
Labor has publicly backed a proposed deal with China.
The Government is keen to actively pursue the proposal with the Bush administration once the President-elect appoints his trade representative and other key economic advisers.
Comments in recent days by Mr Bush and his senior foreign policy staff, Secretary of State-designate Colin Powell and National Security Adviser Condoleezza Rice, have given a fillip to a possible bilateral deal by stressing a renewed focus on relations with allies as well as the importance of free trade as a force for world peace.
Mr Bush said "we must be true to our friends" and added that "we will promote a fully democratic western hemisphere bound together by free trade".
Mr Powell said his first priority was "letting our allies know that we appreciate all we have been through over the last 50 years".
With the ANZUS security pact 50 years old in 2001, and bilateral celebrations planned, Australia believes the timing is good for an approach.
Mr Thawley pointed out to the American-Australian Association that Australia has no natural constituency in the US from which to lever political support; it relies on its partnership through all the major wars of the century, and other links with the US, to give it a hearing when problems arise.
Proponents of a free trade deal say its value is that it institutionalises the economic relationship "and provides a mechanism for supporting and facilitating it at a political level".
But there are many domestic political obstacles in the US to a deal. Without significant concessions from the US on agricultural imports (sugar and lamb in particular) it would be impossible.
Australia, too would have to prepare for changes: there would be more car imports to pressure Australia's protected industry, pressure also for change to media rules, and possible consequences for Australian rules on local content in television shows.
But Mr Thawley told his audience there were many benefits possible: it could improve access to the US market; attract US attention to the Australian market, and "it could provide a fillip to our economic relationship across the board".
Supporters of the US-Australia deal also point out that Singapore is negotiating a free-trade deal with the US, which they say makes a nonsense of claims that Australia would be seen to be turning away from Asia.
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