Is it free trade or legal rape and pillage?

Senator LEN HARRIS

One Nation Senator for Queensland

M E D I A  R E L E A S E

10 February 2004

 
One Nation Senator Len Harris says the Free Trade Agreement with the USA is rotten to the core and is an offence to Australian workers, farmers, small businesses and manufacturing industries.

Senator Harris who spent last night examining the details of the FTA said the Agreement marked a national day of shame for the Liberal-National coalition.

 
Senator Harris said the Agreement would spell the death knell for many manufacturing industries, and would have severe consequences for our media, arts and entertainment sector, postal services and the PBS.

Senator Harris said the FTA had been negotiated by the Trade Minister behind a 'Vaile of secrecy,' with the powerful Senate Foreign Affairs, Defence and Trade Committee denied information about key negotiating strategies and sectors.

 
"It is no accident that the Free Trade Agreement is released to dissolve in the blur of the new Federal Parliamentary sitting period or be pushed off the front page by media hype about the Queensland Election,"  Senator Harris said.

Warning representatives of the media that the FTA would put journalists' jobs in jeopardy,  Senator Harris said the Agreement contained "unprecedented provisions" to improve market access for broadcasting and audiovisual services for US films and TV programs. TO AUSTRALIAN JOURNALISTS, ONE NATION SAYS YOU HAVE REPORTED ON THE DEMISE OF THE WOOL, DAIRY, TOBACCO, CLOTHING AND TEXTILE INDUSTRIES AND YOU ARE CURRENTLY WITNESSING THE DEATH THROES OF THE SUGAR INDUSTRY.  THIS FTA WILL  LEAD TO THE DEMISE OF YOUR INDUSTRY.   WAKE UP!  IS IT SHEER STUPIDITY, IGNORANCE OR DO YOU HAVE YOUR HEADS STUCK IN THE SAND?  THIS FTA MEANS YOUR JOBS.  SPEAK OUT NOW OR DON'T COMPLAIN TO US LATER! THERE IS NO JOY IN US TELLING YOU LATER WE WERE RIGHT.

 
"Of major concern is that the Agreement is based on the "Negative List" approach.  This means that any goods or services not listed as 'excluded' from the Agreement will be automatically liberalised," Senator Harris said.

"This has grave ramifications for new generation technology which could be developed in the future.  Twenty years ago, who would have envisaged the advantages or possibilities of the Internet?  How many 'Internets' will be conceived in the future?  Each one of them unable to be protected or regulated by our own government because of this FTA." Senator Harris said the public was not hoodwinked by what the Senate Committee described as DFAT's  'brute propaganda' about the FTA. "If you look at this Agreement from the American perspective,  more than 99 percent of US manufactured goods exported to Australia will become duty free immediately upon entry into force of the Agreement," Senator Harris said.

 
"US manufacturers estimate that there will be $2 billion worth of imports to Australia from their sector alone. That means nearly AUD$2.6 billion worth of  Australian products  will no longer be produced in Australia and those Australian workers will lose their jobs, all in the name of free trade."
 
Senator Harris said under the Agreement all US agricultural exports to Australia, worth US$400 million, will receive immediate duty free access with no growth limits. Conversely, Australia's dairy exports to the US will increase to $55 million but will be restricted to a 5% growth per annum. Australian beef will not gain free access to the American market for 18 years and the sugar industry is permanently locked out. "There will be immediate tariff elimination on processed food, soups, bakery products, fruit and vegetables, dried onions, fruit and vegetable juices, dried plums (prunes), potatoes, almonds, tomatoes, cherries, raisins, olives, fresh grapes, sweet corn, frozen strawberries and walnuts,"  Senator Harris said.
 
"The US has also stated that food inspection procedures (quarantine measures) which were barriers to trade have been addressed through the Agreement.  Current quarantine measures in Australia restrict the importation of certain foods from the US due to exotic diseases and pests.  The United States Trade Representative states that  changes in food inspection procedures will  pave the way for US pork, citrus, apples and stone fruit to enter Australia."

Senator Harris said he was alarmed that Australia will allow the US 'substantial market access' to service sectors.   "This FTA is a bilateral version of the WTO's General Agreement on Trade in Services (GATS)," Senator Harris said.   The GATS Agreement defines government services under Article 1 (Scope and Definition) as: "A service supplied in the exercise of governmental authority...any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers."

Senator Harris said icons such as Australia post would be put at risk by the FTA.  "Australia Post's express delivery services will be opened up to competition from powerful US service providers such as FEDEX.  There are almost 3000 Licensed Post Offices (LPOs) in Australia, and they form almost 80% of the retail post office network. Each is privately owned and over half of them are situated in country areas.  A major revenue generating part of their operations will be gone under this Agreement, putting the viability of their businesses at risk!

"Also opened to US predators are 'computer and related services,' (Information Technology) which would shift jobs offshore.  It would be a similar outcome to the 2001 recommendation by Foreign Affairs Minister, Alexander Downer, who advocated that Australian business should tap in to cheap Indian labour by outsourcing their IT work offshore. "Outsourcing with cheap offshore labour is hugely profitable for the big companies and the American multinationals.  The question remains what do we do with our redundant Australian IT workers? The ones that the Coalition government encouraged to enter into IT university courses (incurring HECS debts).

Senator Harris said the FTA gives the US the right to invest and establish a local services presence for a range of investment, banking and insurance services.  Under the agreement, most US investments will be exempted from screening by the Foreign Investment Review Board (FIRB).

 
Also of grave concern is the section titled: PROTECTION AND PROMOTION OF WORKER RIGHTS.   The section  states:
 
"Both parties reaffirm their obligations as members of the International Labor Organisation (ILO) and shall strive to ensure that their domestic laws provide for labor standards consistent with international recognised labor principles."

 
Senator Harris questioned whether Australia's labour laws would be weakened to the extent of those in the US.  "The American states have just agreed to grant legal status to the 4.8 million Mexicans living illegally in the United States.  Does this Agreement raise the potential for illegal immigrants in Australia to attain worker status?"

"When will Australians wake up to the fact that the Federal Labor party also supports free trade?  It will be interesting to note whether Labor Senators protect Australian jobs by voting down the necessary legislation and regulations for the FTA.  Senator Harris said he will protect Australian workers by voting against all legislation, regulations and amendments that facilitate the flight of Australian jobs offshore. "Anyone who is under the delusion that more jobs will be provided to Australians by the FTA is living in la la land."

 
On pharmaceuticals, the Agreement states:
 
"In the area of pharmaceuticals, the U.S. Food and Drug Administration and the Australia Therapeutic Goods Administration will work together to make innovative medical products available more quickly." "Does this mean that we will now see in Australia, the revolving door where pharmaceutical representatives will sit on the Australian Therapeutical Goods Administration and as reported in the US, blatantly introduce dangerous products such as the genetically engineered L-tryptophan, which resulted in multiple deaths and thousands of people permanently condemned to dialysis for the rest of their life, all in the name of the almighty US Dollar?"

 
"It is ironic that, on arrival at Parliament House,  Senators and Members have received invitations to the annual Medicines Australia Parliamentary Dinner.  Is this timely invitation to dinner intended to influence Senators and Members decisions relating to the PBS section of the FTA?"

The Agreement also lists a section PHARMACEUTICALS A SHARED COMMITMENT TO ACCESS ON INNOVATIVE MEDICINES which states:
 
"The two sides also agree to establish a medicines working group that will provide for continued dialogue between the US and Australia on emerging health care policy issues."

 
"Will we see a similarity between the medicines working group and the facade of the recent WTO negotiations in Cancun where there was a brilliant PR strategy of advertising a meeting,  allowing the public protest to run its course, all the while knowing that the real negotiations would proceed afterwards, uninhibited, at a ministerial level?"

"Are the USA/Australian governments saying that its hands off the PBS publicly, while both sides have agreed to facilitate negotiations behind closed doors?"

 
Senator Harris said he was shocked to find the Agreement would allow US suppliers the right to bid for contracts from 80 Australian Federal Government entities, including key ministries and government enterprises.  "The current privileges and favourable treatment that we afford our own local Australian owned businesses will be abolished and they will be forced to compete with the US multinationals with their greater economies of scale and cheap Mexican labour." Senator Harris said the Textiles and Apparel aspect of the FTA would be virtually useless for  Australia, under the yarn-forward rule of origin.
 
Australian textile and apparel manufacturers import their fabrics from overseas then manufacture items here in Australia.  Under yarn-forward rules, only goods made from Australian produced fabrics (not imported fabrics) would be eligible to export to the USA.

 
The section   STRONG PROTECTIONS FOR WORKER RIGHTS AND THE ENVIRONMENT states that the Agreement:
 
"ensures effective enforcement of labor and environmental laws and establishes labor and environmental cooperative mechanisms."

 
"The mind boggles! Is this the ultimate in spin doctoring or gobbledygook at its absolute extreme?" Senator Harris said.   "How could a government with the best interests of the Australian people possibly sign a document with such open ended and manipulative language?" Senator Harris said the US political system had safeguards that allowed Congress to accept or reject the Agreement.   Australia has no vigorous parliamentary scrutiny of such Agreements.   Australia's elected representatives will not have the same opportunity as their US counterparts.  Australian MP's and Senators will not be able to accept or reject the final text of the Agreement.

"The FTA  is around 500 pages long,  with up to 24 chapters.   If the government is transparent and accountable then it must release the full text of the Agreement immediately," Senator Harris said.

 
"Australia's political representatives must be able to view the full text before making decisions that have the potential to impact permanently on the future of our country and our people," he said.

ENDS

 
Senator Harris 07 4092 3194

Ian Marston
Electorate Officer for Senator Len Harris

January 6, 2004

OP-ED CONTRIBUTOR

Second Thoughts on Free Trade

By CHARLES SCHUMER and PAUL CRAIG ROBERTS

was brought up, like most Englishmen, to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt but almost as a part of the moral law," wrote John Maynard Keynes in 1933. And indeed, to this day, nothing gets an economist's blood boiling more quickly than a challenge to the doctrine of free trade.

Yet in that essay of 70 years ago, Keynes himself was beginning to question some of the assumptions supporting free trade. The question today is whether the case for free trade made two centuries ago is undermined by the changes now evident in the modern global economy.

Two recent examples illustrate this concern. Over the next three years, a major New York securities firm plans to replace its team of 800 American software engineers, who each earns about $150,000 per year, with an equally competent team in India earning an average of only $20,000. Second, within five years the number of radiologists in this country is expected to decline significantly because M.R.I. data can be sent over the Internet to Asian radiologists capable of diagnosing the problem at a small fraction of the cost.

These anecdotes suggest a seismic shift in the world economy brought on by three major developments. First, new political stability is allowing capital and technology to flow far more freely around the world. Second, strong educational systems are producing tens of millions of intelligent, motivated workers in the developing world, particularly in India and China, who are as capable as the most highly educated workers in the developed world but available to work at a tiny fraction of the cost. Last, inexpensive, high-bandwidth communications make it feasible for large work forces to be located and effectively managed anywhere.

We are concerned that the United States may be entering a new economic era in which American workers will face direct global competition at almost every job level — from the machinist to the software engineer to the Wall Street analyst. Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid, equally skilled worker thousands of miles away. American jobs are being lost not to competition from foreign companies, but to multinational corporations, often with American roots, that are cutting costs by shifting operations to low-wage countries.

Most economists want to view these changes through the classic prism of "free trade," and they label any challenge as protectionism. But these new developments call into question some of the key assumptions supporting the doctrine of free trade.

The case for free trade is based on the British economist David Ricardo's principle of "comparative advantage" — the idea that each nation should specialize in what it does best and trade with others for other needs. If each country focused on its comparative advantage, productivity would be highest and every nation would share part of a bigger global economic pie.

However, when Ricardo said that free trade would produce shared gains for all nations, he assumed that the resources used to produce goods — what he called the "factors of production" — would not be easily moved over international borders. Comparative advantage is undermined if the factors of production can relocate to wherever they are most productive: in today's case, to a relatively few countries with abundant cheap labor. In this situation, there are no longer shared gains — some countries win and others lose.

When Ricardo proposed his theory in the early 1800's, major factors of production — soil, climate, geography and even most workers — could not be moved to other countries. But today's vital factors of production — capital, technology and ideas — can be moved around the world at the push of a button. They are as easy to export as cars.

This is a very different world than Ricardo envisioned. When American companies replace domestic employees with lower-cost foreign workers in order to sell more cheaply in home markets, it seems hard to argue that this is the way free trade is supposed to work. To call this a "jobless recovery" is inaccurate: lots of new jobs are being created, just not here in the United States.

In the past, we have supported free trade policies. But if the case for free trade is undermined by changes in the global economy, our policies should reflect the new realities. While some economists and elected officials suggest that all we need is a robust retraining effort for laid-off workers, we do not believe retraining alone is an answer, because almost the entire range of "knowledge jobs" can be done overseas. Likewise, we do not believe that offering tax incentives to companies that keep American jobs at home can compensate for the enormous wage differentials driving jobs offshore.

America's trade agreements need to to reflect the new reality. The first step is to begin an honest debate about where our economy really is and where we are headed as a nation. Old-fashioned protectionist measures are not the answer, but the new era will demand new thinking and new solutions. And one thing is certain: real and effective solutions will emerge only when economists and policymakers end the confusion between the free flow of goods and the free flow of factors of production.

Charles Schumer is the senior senator from New York. Paul Craig Roberts was assistant secretary of the Treasury for economic policy in the Reagan administration.