A Culture of Complacency


It’s been nearly two years since our Free Trade Agreement (FTA) with the USA came into force. John Howard assured us this ‘once in a lifetime opportunity’ would bring unprecedented gains: it would expand exports, increase investment, create jobs and drive up living standards.

But two years on, who is gaining and who cares? Australia’s huge trade deficit with the US has climbed even higher as imports have soared and our exports to the US have fallen not helped by allowing the US to retain protectionist barriers against our world-class fast ferries and sugar.

The ‘good news’ stories are lamb, citrus and cheese, which have increased their exports to the US, though not as much as anticipated. But such stories are rare so rare, that according to Howard Government insiders, DFAT staffers have been put on alert for ‘wins’ to publicise, no matter how small.

The areas initially touted as ‘big wins’ by the Government such as beef and autos have turned out to be fizzers. The increase in beef quotas that we ‘won’ targets the low-grade end of the market (like hamburger meat) not the quality end our producers have been trying to expand! And while the US reduced tariffs to enable exports of Australia’s Holden Monaro for the first time, they simultaneously changed their airbag safety standards, which meant that the Monaro would no longer meet US requirements. Holden Australia is now pulling the Monaro from the US market.

Balance of trade issues aside, the losses associated with the deal involve more than money for Australia. While many don’t realise it, the FTA covers much more than ‘market access,’ or export/import issues. It involves major changes to the regulations that underpin our economic security and health standards, from quarantine controls and pharmaceutical pricing to government procurement arrangements, and intellectual property regulation.

The real dangers lie here.

Take the screening and processing of blood plasma. Australia’s high safety standards, presently secured by a long-standing arrangement with CSL, are on track to be jettisoned under assurances given in the FTA. The Government will recommend open tendering to accommodate US players (such as Baxter International, with its string of product recalls and malpractice suits for fraud and tainted blood), paving the way for blood plasma processing to be conducted offshore and out of sight of the Australian public.   Even the AMA’s vigorous protest against putting the health of Australians at risk has not deterred the Government’s readiness to serve its powerful trading partner.

In a similar move, Australia has also agreed to review its ban on imports of beef from countries affected by mad cow disease. In an unprecedented concession to US interests, Australia is now promoting American-devised standards internationally in order to assist the US to re-enter the Japanese and Korean beef markets. (Like Australia, these countries began rejecting US beef following its mad cow outbreaks.) Remarkably, we have agreed that an increase in our low-grade beef exports to the US be conditional on the US being able to increase its exports to our most valued markets in Japan and Korea!

The Government made a great pitch for Australian firms gaining access to the ‘vast’ government procurement market in the US. But even the most enthusiastic supporters of the deal are now recognising that progress will be painful as the US ‘Buy American’ clauses start to bite.

One recent experience of a firm, Australian Defence Apparel, tells the story. This long-running Australian company produces innovative ceramic plates for use in bullet-proof vests. It won supply contracts with the British military and London’s Metropolitan Police, and went on to win an order from the US Army, after receiving a go-ahead from the Pentagon. But this order was countermanded under Congressional rules (the Berry Amendment) that ban foreign supply of clothing or fabric to the US military despite ADA’s ceramic plates being neither. ADA has pursued the issue, and we understand that they will bid again under new solicitation rules in November, and also might tackle the US market in collaboration with a US firm, Armorworks. So much for open access to US government procurement.

Meanwhile US firms enjoy unfettered access to the Australian government procurement market, growing strong on the IT contracts that routinely come their way, while our local industry, marginalised by its own government, struggles to survive. Even in lower-tech activities, it seems we are now choosing American over local witness Bechtel securing the hefty Hunter Valley Port Waratah Coal Loader contract.

Thanks to Paul Batey

The FTA lifted the investment ceiling, to $800 million, for US firms buying Australian firms without needing any reference to the Foreign Investment Review Board (FIRB). This certainly helps to promote US ‘investment’ into the Australian economy, but where is the gain?

The first case under the new rules involved a takeover of the Australian iron ore exporter, Portman.   After securing valuable export contracts to China and Japan, Portman was snapped up in early 2005 by the US firm Cleveland Cliffs; in March 2005 the takeover was finalised at $605 million so, no reference to the FIRB needed. Ironically, this was the very company that Mark Vaile as Trade Minister promoted as leading Australia’s push into the resource markets of China and Japan. Vaile had no comment to make when this Australian champion, and its contracts, passed to US interests.

On intellectual property rights, we are unaware of any Australian benefits resulting from the extension of copyright from 50 to 70 years as a result of the FTA. But we are certain that Australian royalties flowing to the US are rising, and royalties flowing to Australia are falling. We cannot prove it because the Australian Bureau of Statistics (ABS) refuses to publish the data surely a sign that the story being told is highly unfavourable to Australia.

A huge swathe of US legislation on Intellectual Property Rights was incorporated into the FTA such as clause after clause of the highly controversial Digital Millennium Copyright Act which effectively becomes Australian law. It is remarkable how this has attracted so little comment. But at least a Parliamentary Inquiry has been staged into one aspect of this extraordinary capitulation on Australia’s part, namely into the provisions governing Technological Prevention Mechanisms and their exceptions. The Inquiry expressed outrage at the cavalier way in which this criminalising statute has been sneaked into Australian law, and heard evidence from organisations like the Australian Taxation Office testifying to the fact that their pursuit of tax cheats is now being hindered by copyright-enforcing technological restrictions inserted in software by American corporations.

This is what we mean by ‘killing a country’ the systematic substitution of
one country’s laws and rules by those of a foreign power. They call it ‘harmonisation.’ We call it ‘institution cleansing.’ But do not blame America for this. They did not initiate this trade deal; and they certainly did not force our hand to sign up to the dud agreement. For that we must thank our political leaders.

The spectacle of our elected leaders so ready to sideline and forfeit the interests of their own country and their own people on so many fronts would be high comedy if it weren’t so serious. Would our Government be so remiss in the absence of an Australian culture of complacency?

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.