Australian Manufacturing Workers' Union


Op-Ed: The Problems with Trade

The AMWU is not anti-trade - but we're for fair trade, not free trade.

by Paul Bastian, National Secretary


The Coalition government and media have been vocal in denouncing the union movement as anti trade, xenophobic and protectionist, especially in light of the union campaign to fix the worst parts of the China Free Trade Agreement (CHAFTA).

Our concern about CHAFTA and other so-called free trade agreements doesn’t come from ideology; it’s based on simple and increasingly widespread views. Put simply, we believe that the shape of the playing field matters.

The AMWU has never been anti trade. Trade can be good for people’s wellbeing and the economy’s efficiency. But we don’t shy away from pointing out where trade agreements fail to live up to their promises and where they sacrifice sovereignty, fairness, or labour rights.

While they are called “free trade agreements”, bilateral agreements like CHAFTA are not about free trade at all. They preference trade with one country over trade with others and they preference some industries sector over others. Rather than free trade, they should be called preferential trade agreements that pick winners along the way. This is not a ‘protectionist’ view, it is shared by free trade economists and orthodox economic institutions like the Productivity Commission.

At a time when the Australian economy is becoming simpler rather than more advanced and less rather than more diverse, with an increasing rather than falling reliance on primary industries like mining and agriculture, these trade agreements fuel such trends. They are often ‘beef for car’ deals that sacrifice advanced value added sectors for simpler primary sectors. This is bad for good jobs and it is bad for our longer-term growth. If we are to have these agreements, they should be accompanied by industry policies to lift up the more advanced value adding sectors of the economy that inevitably bare the cost but in our experience, the same governments that are happy to ‘pick winners’ through trade agreements are loath to ‘pick winners’ through strong industry policy.

Trade agreements don’t create a fair and even trade playing field. When they don’t include strong and enforceable labour and environmental chapters, as none of the recent agreements do, they open the door to companies and countries gaining competitive advantage from labour and environmental exploitation. This doesn’t promote efficient resource allocation, it promotes resources being allocated based on exploitation that will only increase misery today and rob us all of prosperity tomorrow. It is bad enough to lose your job because your government goads your industry into closing. It is worse to lose your job because the worker replacing you can be exploited overseas and you can’t be at home. Yet this is the reality of what ‘free trade’ agreements actually deliver for too many manufacturing and other workers.

To be fair, trade agreements should include a basic standard of reciprocity; give and take should be balanced in a basic way. Yet too often, Australian governments agree to deals that give benefits to trade partners that we don’t get ourselves. The recent frustration expressed by the Australian Industry Group that the CHAFTA sees Australian tariffs for paper and packaging products go to zero on day one, while Chinese tariffs on the same products do not fall at all, is just one example. This has been labelled a $58 million subsidy from the Australian government to Chinese producers, while Australian businesses struggle to compete and good Australian jobs disappear.

Trade agreements are increasingly including ‘Investor State Dispute Settlement’ clauses, which elevate foreign investor profits above the sovereign rights of Australian citizens. These clauses mean that when Australian governments make laws or policy in the interests of Australian people, foreign investors can sue for damages in an international kangaroo court. Kangaroo court is a fitting description because these ISDS tribunals don’t need to consider the benefits of the policy change, don’t have an independent judiciary, don’t need to respect precedent and don’t have an appeal mechanism. By being restricted to foreign investors, these clauses also discriminate against local businesses which can only access our domestic court system for any claims for compensation.

We’ve seen Australia get sued for plain packaging on tobacco products through ISDS after the case was thrown out of our domestic court system and we’ve seen Egypt get sued by a French company for among other things increasing their minimum wage. Free trade is about the ability of companies to sell their products around the world, it isn’t about elevating foreign company’s rights to profit above Australian’s right to decent laws and policies.

These are criticisms that hold for the vast majority of trade agreements, including CHAFTA. But in addition, CHAFTA includes provisions around labour market flexibility that are unprecedented and extremely troubling for anyone who cares about Australians access to work in their own country and the exploitation of migrant workers. Union concerns about these provisions have been confirmed by 3 media fact checks as well as testimony by Government officials during joint Parliamentary hearings. Yet we are still labelled liars, xenophobic and protectionist, even in the face of undeniable evidence our claims are correct and even by a new Prime Minister that says he wants to lead a consultative government.

There’s no doubt that one of the main reasons trade agreements have deviated so far from basic notions of fairness, reciprocity and even free trade is due to how they are negotiated and implemented. There is zero transparency for the broader community while these agreements are negotiated. Industry and unions are also typically excluded from any detailed consultation, and we must all wait till an agreement is reached before we learn what our government has signed on to on our behalf. Once agreements are signed, there is no Parliamentary debate or vote on the agreement as a whole. It’s implementing legislation, which is debated in Parliament, doesn’t cover the majority of concessions made and anyone who dares to raise concerns is immediately labelled a xenophobic protectionist.

If we are to have any hope of improving these agreements in future, we need a new approach to trade policy. Not only to what we agree to in trade agreements; enforceable labour and environmental chapters, accompanying industry policy, reciprocity, but to transparency too. We need a process that sees wide and real consultation during negotiations, full and honest assessment of agreements after negotiations and full and open Parliamentary debate on all aspects of agreements.

Until we see a fundamental change in our approach to trade policy and crucially to how trade agreements are made, we will continue to be sold short by politicians that care more about a quick ‘win’ than they do about either free or fair trade, or for that matter, our countries future.

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