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Free Trade Agreements – economic or electoral?

Since September 2013, the ‘achievements’ of our government could be broadly summarised by ‘knock it down, rip it up, sell it off or shoot it.’

Their one supposedly constructive achievement, apart from promises about roads, is hastily finalising several free trade agreements.

Aside from the co-incidence/concern of agreements that had been negotiated over several years all reaching conclusion at the same time (what did we agree to?), are these actually in Australia’s best interests or are they just political opportunities?

When John Howard signed the Free Trade Agreement with the US in 2004, it was suggested that his motive was electoral rather than economic – to highlight the American alliance and hope that if Labor opposed it it could be cast as anti-American, and hence a security risk.

The Coalition’s reaction to Labor’s attempts to safeguard Australian jobs in the China FTA has used a similar approach, branding Labor as racist.

In the first five years after the signing of the US FTA, Australia’s exports to the US grew by only 2.5 per cent, compared with double-digit growth for exports to all the major Asian trading partners.  America slipped from third to fifth among Australian export destinations, overtaken by Korea and India.

By 2009, the value of Australian exports to the US was only about a quarter of those to the two leading customers, China and Japan. The four Asian countries together took more than 10 times the value of exports to the US despite having no such trade agreements.

Moreover, between 2004 and 2009, the bilateral trade gap in America’s favour grew even larger. Australia’s imports from America grew much more quickly than its exports to America. According to US data, the gap in America’s favour grew from $US6.4 billion to $US11.6 billion.

In 2004 Australian exports to America were worth about 54 per cent of the value of imports from that country. By 2009 the figure was down to 41 per cent.

And our current endeavours do not promise any better.

Hockey’s second MYEFO showed a revenue write-down of $1.6 billion due to the FTA with Japan.

Also, the agreements with Japan and Korea effectively sounded the death knell for our car industry and manufacturing more broadly.

The Chinese deal on beef is only for an extra 10% exports before a trigger where tariffs will be charged again, and the proposed tariff reduction will not fully take place for nine years.

Agribusiness lawyer Lea Fua told a Brisbane hearing that China has a safeguard clause which allows it to add customs duties to fresh and frozen beef carcasses and meat when Australian beef imports hit a volume trigger of 170,000 tonnes.

“In 2013-14, Australia exported 161,000 tonnes of beef to China worth $787 million,” Mr Fua told the Joint Parliamentary Committee on Treaties.

“The concern here is that given the growth in Australian beef exports to China, which has been exponential in the last few years, the risk here is that the trigger will be reached fairly quickly and China is able to apply extra customs duty which appears to be against the spirit of chapter two [of the FTA],” he said.

Mr Fua said a similar situation applies to Chinese imports of Australian milk and cream solids.

As Bob Katter has warned, rather than being the food bowl for Asia, on current trajectory, Australia will become a net importer of food, and pretty much everything else other than coal and iron ore.  This will have significant implications for domestic prices as farmers can make a greater profit by exporting their produce.

If, as the unions warn, foreign companies are allowed to bring in their own workers, it becomes even more difficult to believe these agreements are in the best interests of our country.

A bilateral meeting with a friendly leader presents many domestic political advantages. It gives the appearance of advancing the national interests and attracts intense and usually uncritical media coverage, but it inevitably favours the biggest countries, such as the US and China. Their power affords them superior bargaining leverage to win concessions favouring their domestic constituencies.

After bilateral meetings, leaders can sing each other’s praises and hail the breakthrough their mutual brilliance has achieved. In practice, the promised benefits often fade just a little more slowly than the TV lights.

 

32 comments

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  1. Matters Not

    The more I read about Free Trade Agreements, the more I realise what I don’t know. You write:

    hastily finalising several free trade agreements

    That ‘haste’ is of great concern. Those ‘negotiations’ were underway for years and were ‘stalled’. Then came Andrew Robb who ‘walked on water’ and all was wonderful. Isn’t Robb a wonderful negotiator and all that. Why he is even an Officer of the Order of Australia bestowed for service to politics, agriculture and the community.

    The truth is that these ‘negotiations’ undertaken by experts in the field, over many years, did so within certain parameters, as determined by the government of the day with carriage given to the minister of the day. To break the ‘deadlock’ (and it would seem we were the ‘movers’) the parameters had to change. Simply, we had to provide the incentive for the other parties to ‘agree’.

    What we haven’t been told is what we ‘gave up’ to get an agreement. Again there is no transparency. Again the MSM let us down.

  2. gangey1959

    It is time that Australian politicians stopped being self interested, and looked after our country for future generations.
    Put up a friggin’ great fence to keep out foreign products and workers, restart our national manufacturing sector, take back our national infrastructure from foreign owned companies and foreign countries, (Singapore owns Energy Australia for example), and open the doors to political refugees like we did in the post WW1 and WW2 eras.
    Stop destroying the environment with things like CSG and new coal and oil projects, and invest in major renewables and public infrastructure ventures. Let’s crawl out from underneath england’s skirts, and tell china, japan and the good ol’ boys of the us to piss off too.
    Fund the above by re-instituting the mining tax and the ETS, and by putting a duty, in my humble opinion of about 50%, on profit shifting and funds transfers to offshore accounts. The latter could be weighed off against production costs if legitimate.
    There. Now that I’ve fixed everything I’m off to the RU final.
    PS. Ban the haka.

  3. Matthew Oborne

    We have an issue in my area over 457 visa workers. Yes the obvious inference is the person against them is racist, but simply put when a company hires overseas workers in preference to local workers it is breaching the conditions of 457 visas.
    A meat processing plant near me is rejecting locals applying for jobs, they went as far as to say we have no current jobs, yet previously to have over 600 visa workers they stated they have permanent ads for workers as they cant get enough. Tamworth has the same issue and the union in Tamworth is looking for people who tried but failed to secure employment with a local abattoir.

    A small country town that can actually supply close to 600 extra workers as some have been fired after training their 457 visa counterpart.

    Small business is struggling in my area but housing is relatively affordable which means giving hundreds of local jobs with as much overtime as they can handle should easily result in increased home ownership, it should result in more local spending and would be the biggest boom this town has seen in decades, instead it struggles, social problems permeate the area.

    The business concerned has announced a substantial expansion but given foreign workers have increased at a rate of over ten percent a year those extra jobs are unlikely to have the full potential impact they could if the company simply hired the locals wanting work there.

    Another large project was announced during a state election year here promising around 1600 jobs, the final figure could be under 30 jobs.

    Politics is great at headline announcements and very poor on delivering these outcomes, FTA’s are no different research clearly shows the jobs benefits never materialise in the vast numbers stated.

    The head of Australias federal public service announced a brainfart of sacking ten percent of their workforce each year based on performance.

    A highly abusive statement which if put in practice would end the thought of anyone having a career in that area.

    A sane response would have been to publicly shame the man and demand he resign, yet his position is not in doubt at all.

    This country is on the slide an it seems obvious this government is using that excuse to remake this country in the far right image.

    Malcolm may be a moderate, but he is determined to deliver the things the far right wanted but couldnt.

    Are we feeling like slowly boiled frogs in a huge pot yet?

  4. Kaye Lee

    The ISDS clause was an obvious concession that will no doubt come back to bite us. Whilst they are saying they are shoring up employment safeguards, I am sure that being able to bring in your own workers was influential in the China agreement. I know we need foreign investment in Australia but it seems to me that if the Chinese buy the farms, employ their own workers, and then export the produce back to China, we are sacrificing a lot for no gain other than to the landholder who sold out in the first place.

  5. Matters Not

    A few facts on US and Australia trade, cited from US documents.

    US. goods and private services trade with Australia totaled (sic) $65 billion in 2012 (latest data available). Exports totalled (sic) $48 billion; Imports totaled $16 billion. The U.S. goods and services trade surplus with Australia was $32 billion in 2012

    .

    The figures move around a little on a year to year basis.

    Sales of services in Australia by majority U.S.-owned affiliates were $51.2 billion 2011 (latest data available), while sales of services in the United States by majority Australia-owned firms were $12.8 billion.

    *NOTE: Refers to private services trade not including U.S. military sales, direct defense expenditures, and other miscellaneous U.S. Government services

    No doubt the US does well out of the ‘Free Trade’ deal, Australia less so apparently. One wonders what the figures would look like if military sales were included?

    Yes KL, the ISDS is a gigantic concession.

    https://ustr.gov/countries-regions/southeast-asia-pacific/australia

  6. Unhappy

    Worst decision this bunch of politicians have ever made. The death nail for all Australians Industries. Australians will pay a very high price in the near future. They have sold out our heart and soul to these stinking Asian countries.

  7. Kaye Lee

    Unhappy,

    Since when did the US become an Asian country?

  8. Unhappy

    It may as well be seeing it is debt to the Chinese in the trillions of dollars!

  9. Matters Not

    the Chinese buy the farms, employ their own workers, and then export the produce back to China,

    Yes, but I think you can go much further. I am sure they are aware of the benefits of ‘vertical integration’. Why not set up milling operations, dairy factories and the like?

    Why not operate them as tourist destinations as a sideline, paid for in China so that no monies are ‘exported’? Go to Thailand, Pattaya in particular and watch the tourist buses (more than 50 a day) disgorge upwards of 2 000 Chinese tourists a day, board speedboats (also Chinese owned) to visit Koh Larn for a day in the sun. The only apparent benefit to the locals is the sale of souvenirs, hats, sunglasses and the like.

    They ‘know’ how to operate.

    KL, the decision by Canada will ‘up the price’ we pay as well. But think of the photo opportunities.

  10. Kaye Lee

    I think you are missing the point Unhappy.

  11. gangey1959

    A few years ago I applied directly to company X for a position as a forklift driver, for which I am extremely experienced and skilled.
    99% of the work-floor staff were from the sub-continental region of the world, and spoke and wrote accordingly. I did not obtain the advertised position because in the managers exact words “You are not likely to fit harmoniously into my working team”.
    Company X sorted recycled garbage into glass, plastic, paper, etc, etc, if anyone was wondering.
    My question is, and this is something that I have not really considered before, but when companies are preparing positions for 457 visa workers, can fluency in written/spoken non-English (Mandarin for example) be a legal part of the job description, and therefore be used to preclude Australian workers?

  12. Unhappy

    Pretty bloody soon we won’t have Australia to call our own. That’s the saddest part of all. We sell to the stinking Chinese and then be force to buy our products back from them with God knows what in them. Someone has to take a stand on Australia, obviously it won’t be you! Anything to make a quick buck and to hell with the consequences!

  13. Matters Not

    written/spoken non-English (Mandarin for example) be a legal part of the job description

    No one really knows. But one can imagine, for valid workplace health and safety reasons, that there be a requirement to speak a particular language or read a particular language, given the machinery to be operated.

    Unhappy, you seem to have a penchant for using ‘stinking’. Please explain.

  14. Unhappy

    You are not an Asian! You don’t speak their bloody language. How long do you think it will be before China will demand to bring their own stinking workers over here because it’s cheaper than hiring Australians. How long do you think it will be before this gutless bunch of politicians say “Why Not” Go ahead, bring in as many as you want. It will be the Australians going onto the poverty line because there will be no business, no jobs, no bloody nothing for Australians because there is nothing left to call our own! Next will be the bloody Muslims taking their bit of Australia and the rest of the world. God help us all!

  15. Matters Not

    Unhappy, are you aware of which country has (or soon will have) the largest English speaking population?

    As for ‘God help us all’. Don’t worry, we are the ‘chosen’ people.

  16. Matters Not

    Free Trade deals, whether we like them or not, are the future. It’s the ‘future. They simply ‘ratchet up’. So what to do?

    First we must understand that we can’t compete in terms of ‘labour’ price. Even many of the smart Chinese factory owners are shifting their operations to other countries which have even lower labour costs. Vietnam is a preferred destination at the moment.

    We won’t compete in terms of labour price and we shouldn’t even try. If we are going to compete economically, we must ‘invest’ in our current and future workforce. Education is the hope of the side. Areas of study must include Science, Technology, Engineering, Mathematics. (STEM or STEMM if you want to include Medicine). Yet we still see ‘education’ as a cost rather than an investment. Abbott never understood it. Turnbull ‘talks the talk’ but there’s no movement.

    We are going to finish as the ‘poor white trash’ of Asia

  17. Zathras

    I’ve always felt that those 3 deals were signed in haste just so they could get some runs on the board and look like they were doing something economically.

    The China deal negotiations were started back in Howard’s era so it’s an amazing coincidence that three could be signed off in quick succession.

    Commentators are keen to talk up alleged benefits but ignore the down-side.

    For example, the US deal meant that we could no longer claim our beef was “better” than US beef but only “as good as” , despite their mad cow disease problems and another little-known outcome was that our domestic blood supply (once totally owned and controlled by us) is now in the hands of a private US company once investigated and charged by their own government for poor practices.

  18. Tony Rabbit

    I recall the Japanese heyday, around 20 years ago, where Japanese companies were buying up Australian assets including hotels, tour operators, souvenir operators and restaurants in popular tourist destinations such as Cairns and then shipping in shiploads of Japanese tourists. Very few of them ever ventured outside the Japanese owned anything.

    Not much money going back to the locals that wouldn’t already have been had they not been bought up!

  19. Backyard Bob

    You are not an Asian! You don’t speak their bloody language.

    Hahahahahahahahahahahahahah!!!! Oh, hang on, that’s not actually funny…..

  20. gangey1959

    Fēn’érzhìzhī
    “Divide and Conquer” for those of you who don’t speak mandarin.
    I looked it up on google.
    Stop squabbling, and learn how to bow and scrape to our new overlords.
    At least they won’t win the rugby.

  21. mars08

    @gangey1959… It shouldn’t be a problem. We probably won’t be seeing our new overlords much anyway. The dodgy local satraps will continue to administer the joint, just as they did for the poms and the yanks.

  22. Jexpat

    So, what’s Labor’s excuse for caving in this time?

    But…but.. “we “won” some “concessions?”

  23. gangey1959

    @Mars08. From my new landlord.
    “Qīn qīn wǒ de chòu huáng de túnbù”
    (Kiss my smelly yellow buttocks)

  24. jimhaz

    When Abbott said “we are open to business” it was a statement the people should have taken more notice of as it meant that he and his suckhole party of business sycophants party was prioritising business interests above any concerns of Australians.

  25. mars08

    呸…!

  26. mmc1949

    Politicians decide nothing. They put into practice what their corporate handlers tell them to.

  27. RosemaryJ36

    Am I just cynical? We are a relatively small country – particularly compared with the USA and China.
    We are also increasingly ruled by big business rather than by our elected government..
    So how do we expect to benefit from all these ‘free’ trade agreements?
    I always believed that there was always a price tag as nothing is ever really free.

  28. Friday

    Poor old or little??
    Billy simply had to look at the NZ experience. The kiwis put a limit of 1800 Chinese FIFO with a 100 maximum per sector.
    Here it is unlimited.
    Rod slater(NZ beef and lamb CEO) says Aussie beef and lamb flood the kiwi BBQ partly due to their farmers exporting. ie the price has increased at home.
    The workers, especially unionists, are those robb erred in his trade off and labor is short on support of any unions at the moment.
    Sadly it is both poor old billy is firmly wedged by the royal commissions and the unions and little billy hasn’t the guts to fight preferring to leave the field, as he did for gillard, taking labor with him.
    His spirit broke when he re-annointed the lemon and he should/will go down in history as the rabbott’s mate who swapped labor with the greens by dumping on those he used to represent.

  29. Adrianne Haddow

    It is beyond belief that these politicians who lied, connived, abused and back stabbed each other to gain office, are happy to hand sovereignty of this country over to the global corporations.

    Squeaky clean Baird has just about gifted NSW and its farming land and its infrastructure over to the Chinese. The electorate are told ” look at all the money we have to spend on infrastructure” i.e. roads to carry the resources the foreign owned mines and farms rip off to the nearest port. ( In Newcastle, the largest coal port in the world until the Adani Abbotts Point port is built, is now owned/ 99 year leased by a Chinese corporation.The port fees increased in the first twelve months of their ownership. So now the billions of dollars in revenue is wending its way to China or some off-shore tax haven.)

    The Libs/ Nats stopped the boats for genuine asylum seekers, oops, economic refugees and swapped them for the fly in, fly out kind with no limit to the numbers the companies wish to bring here.

    I understand they had a mission to destroy the unions, but the logic of these free trade agreements defeats my understanding, because it also beggars our farmers, killed off our manufacturing industries and sells our commonwealth to the highest bidder.

    Given the Chinese capacity to rewrite history, it won’t be long before the red flag is flying over this land, with the excuse that China was invited in.

    I recommend a book that discusses the Chinese take over of the world economy.

    Death by China: Confronting the Dragon – A Global Call to Action, by Peter W, Navarro, Greg Autry.
    Scary reading.

  30. mars08

    It’s ridiculous! Politicians have been relentlessly selling out Australia’s interests… yet make a big show of passing some feeble laws about foreign ownership of residential real estate. Damn clowns!

  31. Alison Ryan

    From the United Nations Dept. of Economic and Social Affairs and under the heading of ECONOMIC ASPECTS OF SUSTAINABLE DEVELOPMENT IN AUSTRALIA (1999) at http://www.un.org/esa/agenda21/natlinfo/countr/austral/eco.htm we read:
    “Globalisation remains one of the profound influences on Australian trade policy. Trade liberalisation has underpinned Australia’s economic growth and living standards over the last fifty years. The Australian Government is committed to open markets and free trade, which it pursues through the WTO, regional forums such as APEC and bilateral efforts”.
    Free Trade Agreements are the result of the United Nations’ Agenda 21 (1992) and UN Sustainable Development initiatives, with a new Agenda just recently outlined and unanimously adopted by all Member States at the UN Sustainable Development Summit of 25-27 September 2015 for humanity and the planet. It’s called “Transforming our world: the 2030 Agenda for Sustainable Development”.
    Globalisation/One World/A New International Economic Order has long been envisaged by the United Nations and globalists of the Trilateral Commission to “facilitate the integration of all countries into the world economy and the international trading system” (Agenda 21.Chapter 2, 10c).
    The new 2030 Agenda reads – 30. States are strongly urged to refrain from promulgating and applying any unilateral economic, financial or trade measures not in accordance with international law and the Charter of the United Nations that impede the full achievement of economic and social development, particularly in developing countries. (https://sustainabledevelopment.un.org/post2015/transformingourworld)
    This shows us that Free Trade Agreements are economically motivated for sustainable development purposes.
    An informative source is Patrick Wood who has written Technocracy Rising-The Trojan Horse of Global Transformation. See http://www.technocracyrising.com/

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