Lessons for Australia from Canada's Rocky Road Towards Agreement

Tony Cooke, The West Australian, page 17, October 15th 2003

Did you know that Australia is about to capitalise on its renowned relationship with the United States?

But perhaps we have something to learn from those who share an even closer relationship? Canada shares a common border and a much longer history that has not always been harmonious.

Australia has begun negotiating a free trade agreement (FTA) with the US, and Trade Minister Mark Vaile has confirmed a joint hope it will be concluded by the end of the year.

But how can such a significant event not be accompanied by the fanfare of a political coup?

The Canadians went down the bilateral trade road with the US during the 1980s with an FTA, and by the inclusion of Mexico during the '90's, it became the North American Free Trade Agreement (NAFTA).

In considering closer integration of trade relationships with the US, we need to examine the experiences of others.

As Australia is in the first stage of negotiations, the US is progessing the third round with Canada.

The Canadians are well ahead of us in these matters of dealing with the US on the myth and reality of "free" trade. Hell, Mexico has 10 years on us. And the record? Not impressive in a wide variety of areas.

The US is very reluctant to open up its agricultural markets. No surprise there, I hope.

Developing nations in the World Trade Organisation didn't trust it and the last WTO meeting collapsed as a result.

Canada and Mexico have demonstrated the experience under the NAFTA. Sure, genuine free trade in agriculture with the US would benefit Australia, but the Canadians were promised access in grain, wheat, meat, dairy and sugar, and have lived to regret its naive trust.

The US is also very protective of its pharmaceutical companies and their commercial interests and the Canadians have experienced severe pressure on its Medicare system and fear more to come. Imagine how our buyers' group, the Pharmaceutical Benefits Scheme offends those drug companies, and how an FTA could give them a free kick.

As a bridge between pharmaceuticals and agriculture, the US has a clear agenda on regulation and labelling of genetically modified organisms (GMOs). The US wants no regulation or labelling in its international trade dealings, despite the reality that the most heated debates are among its own population.

In a related area, the US has flagged that it seeks relaxation of Australia's quarantine standards. Can we afford the risk of disease as part of trade negotiations? Remember the consequences of animals infecting humans.

Add to this, the desire to open up global markets for essential services like education and health care - another involving a lot of money - energy and water. Behind the FTA is the desire that there be no controls on investment in Australia, like media ownership, or regulation to protect our culture, independence or capacity to influence the world in our own name. Perhaps governments should no longer have any control over investment decisions or other efforts to regulate fair access to essential services? I'd strongly doubt it and I'd prefer debate to stupor.

And here's the killer ... the NAFTA has created an ability for companies to prosecute governments at all levels that do things like prohibit the importation of cancer-causing additives in petrol or prevent the
dumping of toxic waste or protecting water resources. As at March this year, NAFTA "investor-government actions" had been issued with many yet to be resolved. Sure, nine were against the US - but what's the point? Is this really the way to do business?

Many may say, "Who gives a stuff, you can't trust government". But remember that no company has the capacity to regulate hours of work, wage rates, environmental standards or fair tax arrangements. Even where it has the will, it does not have the capacity. These matters are the business of government and central to maintaining a cohesive society.

Most ominous is the evidence from Canada that "free trade" may be code for "slack government". You sign the cheque and then pretend it was never your business. There was no alternative: the evidence was overwhelming; we had to get with the action, etc. You, the elector, gets off the hook of expecting more and governments travel the path of least resistence. Signing an FTA may be pulling the wool over everyone's eyes. The theory of free trade may have much going for it but has yet to be fully tested. The danger lies in accepting the theory because it is convenient to do so.

And at this moment in global history, is Australia's interest served by shifting focus from Asia to the US?