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Two Impacts and fightbacks

Australia–US free trade agreement – fair trade or foul?Jemma Bailey (September 2007)

Asia and Pacific

The cartoon showed a koala (representing Australia)standing on a chair and craning its neck to see over thetable. On the other side of the table sat Uncle Sam (theUS), dressed in red, white and blue. Over the table, thekoala and Uncle Sam are smiling and shaking hands.Under the table. Uncle Sam is holding a gun firmlyagainst the koala’s belly.

In truth, the story of AUSFTA is not as simple as this. Thepolitical party in power in Australia during the negotia-tions – the conservative Liberal party – was very commit-ted to free trade and very keen on cosying up to the US.But as in most trade negotiations with the US, theAustralian government was far from an equal bargainingpartner. Ultimately a very bad deal for the Australianpublic was signed.

The AUSFTA campaign journey

AUSFTA negotiations began in March 2003. By February2004, the deal was agreed and the final text – all 800pages of it – brought out from behind closed doors.

The power imbalance in the negotiations was clear – theAustralian economy is the size of only 4% of the US econ-omy. Nevertheless, the Australian government went intonegotiations with little more than a heartfelt commit-ment to free trade and neoliberalism, a false apprehen-sion that the US would open up its agriculture marketsand a misguided belief that the US was a “mate” whowould look after it in the negotiations.

The famous book cover of How to Kill a Country (Allen & Unwin, Sydney, 2004)

A lasting image from the campaign against the Australia–US Free Trade Agreement(AUSFTA) is a cartoon that appeared on the cover of a book about the negotiationscalled How to Kill a Country.

The Australian government, with the help of businesslobbyists and the Rupert Murdoch media, furiously spunthe worth of the agreement. Prime Minister John Howarddescribed AUSFTA as “a coming together of the planets… which won’t again happen in a generation or more”.For Parliamentary Secretary to the Trade Minister De-Anne Kelly, AUSFTA was the “world cup of trade”.

A strong community campaign opposed the undemocra-tic nature of the negotiations and demanded that health,social and environmental policies be excluded from AUS-FTA. The final stages of the campaign mainly targetedthe more progressive opposition party, the AustralianLabor Party (ALP), in the hope that the ALP would blockany changes to Australian law in parliament.

The deal went through parliament in August 2004. Itpassed after the more conservative faction within theALP used its majority to force support for the agreement– albeit with amendments to penalise abuse of patentsby drug companies and to maintain protections for cur-rent media forms.

The final deal was lopsided, to say the least. Australia’smost competitive exports, including fast ferries, stonefruit and wine, continue to be barred from entry into theUSA or are very restricted. Sugar is entirely excludedfrom the agreement, and beef and dairy tariff reductionswill be phased in over 18 years.

Lining up the targets – impacts of AUSFTA

In 2002, former US Trade Representative Robert Zoellickwrote to US Congress with a list of key social policies inAustralia that the US had identified as burdensome “bar-riers to trade”. This letter was an important documentthat identified the key areas of the AUSFTA campaign.

• Affordable medicines – Pharmaceutical BenefitsSchemeUS negotiators had identified Australia’s Pharma-ceutical Benefits Scheme (PBS) as a barrier to trade.Under the PBS, the Australian government bulk-buysapproved medicines at wholesale prices to ensurethat medicines remain affordable in Australia.Medicines in Australia are 3–10 times cheaper than inthe US. Not surprisingly, big US pharmaceutical inter-ests wanted AUSFTA to deliver greater rights for drugcompanies … and of course, more expensive drugs.Community campaigning saved most of the PBS.Small changes however, such as allowing the exten-

sion of patent periods for medicines, are likely toundermine the PBS and delay the availability ofcheaper generic medicines.

• Labelling of genetically modified foodsAs a result of consumer campaigns about the environ-mental and health impacts of genetically modified(GM) foods, Australian law requires them to belabelled. US negotiators wanted to weaken Australia’slaws, bringing them in line with the lax US labellingrequirements. A strong campaign by farmers andenvironment groups in Australia blocked US attemptsto scrap the labelling system.

• Adopting US copyright law The US sought to replace Australia’s copyright lawswith US copyright law. The intellectual property chap-ter in AUSFTA is basically a cut-and-paste of US laws.Among other things, AUSFTA extends the lifetime ofcopyright from 50 to 70 years. Libraries and publiceducation bodies campaigned strongly on this point,as it will mean higher costs for copying materials,even for educational purposes.

• Local content rules in media Australian local content laws require a minimumnumber of hours to be reserved for Australian-madematerial in film, television and radio. Local contentlaws support the local media industry and ensure thatdiverse Australian voices are heard. US media compa-nies already dominate the local market, and withoutthis requirement for local content the Australianmedia industry would struggle to survive. The com-munity campaign succeeded in keeping local contentrules for existing forms of media but not for emerg-ing or new media. This means that the Australianindustry will lose its protection as technology in film,television and radio advances.

• QuarantineAustralia has fairly stringent quarantine laws, whichthe US identified as a barrier to trade. Australianwine, pork and chicken producers claimed that weak-ening quarantine laws would leave them vulnerable tooutbreaks of US diseases, viruses and pests not foundin Australia. After a strong public campaign, Aus-tralian quarantine laws were largely maintained.

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The US–Australia FTA was widely seen by the Australianpeople as a sell-out to the US and its powerful corporatesector.

The trade-off involved in the US–Australlia FTA(Image Andrew Weldon)

• Limits on foreign investment The Australian Foreign Investment Review Boardreviews proposed investments by foreign companiesin Australia. The US wanted to remove these controlsto get access to our strategic industries, such asmedia, telecommunications, airlines and banking.The US succeeded in raising the threshold for reviewfor investments from A$50 million to A$800 million.

• Regulation of services and investmenThe US sought to change Australia’s laws such thatUS companies could not be treated any differentlyfrom Australian companies. The campaign focusedon essential services. Some key public services, suchas health, education and public broadcasting werespecifically excluded from AUSFTA. Water, energy andpublic transport remain in the agreement, however.

• Tariffs in key manufacturing industriesAustralia has maintained high tariffs in the textile,clothing and footwear industry and the car industry.The Australian Manufacturing Workers’ Union arguedthat cutting tariffs through AUSFTA would effectivelyclose down those sectors and mean over 130,000 joblosses, mainly in regional communities.

• Investor–state disputes mechanismThe US wanted an investor–state disputes mechanismin AUSFTA. This would have allowed US companies tochallenge some Australian laws on the basis that theywere inconsistent with AUSFTA and harmful to com-pany profits. This would have effectively tied theAustralian government’s hands behind its back whenit comes to making laws that could affect US compa-nies. Under an investor–state disputes process, com-plaints would be heard by a panel of experts in aninternational tribunal, closed to the public.

A strong campaign against AUSFTA used examples

from the North American Free Trade Agreement(NAFTA) of companies challenging local laws. Thecampaign succeeded in keeping an investor–state dis-putes mechanism out of AUSFTA.

The campaign

The campaign against AUSFTA brought together adiverse range of organisations and movements inAustralia, including trade unions, faith-based groups,environmental groups, public health and educationadvocates, librarians, pensioners and students. Many ofthese groups had not worked together before – norworked on trade issues before – and alliances wereformed that have lasted beyond AUSFTA.

These groups came together mainly through theAustralian Fair Trade and Investment Network(AFTINET). AFTINET coordinated many joint actions dur-ing the campaign. So what did the campaign look like…?

• Community education – A large focus for the cam-paign. At the start of the campaign, many peoplestill didn’t understand what an FTA was, let alonewhy they should care about FTAs. There were publicforums, public meetings and community stalls in allcapital cities and many smaller towns. A number ofpopular education publications were produced, aswell as cartoons and animations, highlighting differ-ent aspects of AUSFTA. Check out the animation onlocal media content produced by the ScreenProducers Association of Australiahttp://www.spaa.org.au/freetrade.html

• Mobilisation and movement-building – Steppingbeyond education, the campaign sought to involveand activate people. Public rallies were held in mostcapital cities. Organisations held campaign and

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AUSFTA was a blatantly bad dealfor Australia – opposed by themajority of people in Australiaand questioned by mainstreameconomists. It is rumoured thateven the government’s own tradebureaucrats recommendedagainst signing the deal. So whatcompelled the Australian govern-ment to sign on the dotted line?

Ideology. The conservativeHoward government was ideo-logically committed to neoliber-alism. It seems that AUSFTA wasa good means to lock in theiragenda of deregulation and pri-vatisation.

Corporate lobbyists. A numberof well-funded business lobby

groups played a key role in push-ing for AUSFTA. In particular: AUSTA – Business coalition runby Alan Oxley. And includingAustralian Chamber ofCommerce and Industry and theAmerican Chamber ofCommerce in Australia. Business Council of Australia –Made up of so-called “Australian”companies yet many of Aus-tralia’s biggest companies areforeign-owned.Medicines Australia – Representspharmaceutical businesses inAustralia, including local sub-sidiaries of US pharmaceuticalcompanies

The Australian government wasalso careful to compensate some

of the important industries thatlost out in AUSFTA. For example,sugar farmers received anadjustment package of A$444m.Buying silence, perhaps?

The war. AUSFTA was negoti-ated in the shadow of the so-called war on terror and theAustralian government’s support– without the mandate of theAustralian people – for the inva-sion of Afghanistan and Iraq.AUSFTA became increasinglylinked with Australia’s militaryinterests. Having hitchedAustralia’s wagon so closely tothe US in the Coalition of theWilling, Australia’s PrimeMinister seemed unable to walkaway from AUSFTA.

Pulling strings – THE FORCES BEHIND AUSFTA

letter-writing workshops. There were day long teach-ins in Sydney and Melbourne and train-the-trainereducation sessions on AUSFTA.

• Lobbying – AUSFTA was negotiated in the lead-up toa federal election in Australia, so the campaign alsofocused on lobbying politicians, especially politi-cians from the ALP and sympathetic minor parties.Thousands of letters and emails were sent to politi-cians during the campaign, and AFTINET coordi-nated people to visit and lobby their local politi-cians. The campaign forced two parliamentaryinquiries, which received over 700 public submis-sions. At the local council level, motions were tabledagainst the AUSFTA.

• Media – The campaign attracted a lot of mainstreamand community media attention. Media unionsbrought in high-profile actors (and strugglingsingers) such as Toni Collette and Russell Crowe toraise the profile of the campaign.

There was some joint campaigning between activists inthe US and Australia. For example, the AustralianCouncil of Trade Unions and the American Federation ofLabor and Congress of Industrial Organisations(AFL–CIO) issued a joint media statement, as did envi-ronment organisations. Unfortunately, most of this jointcampaigning was through larger organisations, and notvery sustained.

An important aspect of the campaign was research todebunk the government’s rhetoric that the AUSFTAwould be great for the Australian economy. The govern-ment relied on research produced by the Centre forInternational Economics to claim that the FTA wouldgenerate US$2 billion in economic benefits after 10years. The devil in the detail was that these studiesassumed totally free trade in agriculture – which wasnever going to happen. Groups within the campaigncommissioned their own studies which projected lossesand undermined the government’s claims.

From little things big things grow – measuring suc-cess in the campaign

Despite the strength of the campaign, AUSFTA wassigned. Some could say that we snatched defeat fromthe jaws of victory. But the campaign did succeed in cre-ating a genuine shift in the public debate about freetrade. In Australian politics, free trade had become asacred cow that could not be challenged. The acceptedwisdom was that free trade would lead to greater wealthand prosperity for all. And the ALP sang from the samesongsheet as the conservative Liberal Government onthis point.

The AUSFTA campaign sparked the biggest debate thatAustralia had seen on a trade agreement. The debate inthe community – and even in the mainstream media –questioned whether free trade agreements were aboutmaking trade more open or whether they were aboutsecuring rights for large corporations and underminingpublic control in social policy.

The campaign shifted public opinion. At the start of thecampaign, support for AUSFTA stood at 65%; by the timeAUSFTA was signed, support had dropped to 35%. Eventhough AUSFTA was signed, it is universally acknowl-

edged in Australia as a bad deal. The campaign also suc-ceeded in making a bad deal less bad than it would haveotherwise been. There was no investor–state disputesprocess, and Australia’s quarantine laws remained rela-tively intact, as did laws on the labelling of geneticallyengineered foods. Local content rules for current formsof media were maintained and existing limits of foreigninvestment in Qantas, Telstra and media ownershipmaintained.

In the key area of medicines, the campaign pushed theALP to force an amendment to safeguard Australia’smedicines policy against the practice of “evergreening”by drug companies. Evergreening describes the practiceof drug companies lodging bogus patent claims to delaythe marketing of cheaper generic drugs after patentshave expired.

The sting in the tail is that in areas where the US did notachieve its goals, the US moved to set up jointAustralia–US committees to allow for ongoing and unac-countable input into Australia’s policy making. AUSFTAset up joint committees in medicines, quarantine andtechnical standards including food labelling. Three yearson, we are still not able to find out who sits on thesecommittees, when they meet and what they discuss.

The koala and the gun in perspective

It is important to put AUSFTA in the context of otherAustralian trade negotiations. The Australian government,despite being the koala with the gun to its belly in AUS-FTA, is far from innocent. A quick look at Australia’s tradenegotiations with Thailand and Pacific countries show thatthe Australian government is itself quite adept at holdingthe gun under the table and negotiating its own tradeagreements that push harmful neoliberal policies.

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The campaign continues …

AUSFTA came into effect on 1 January 2005.

Almost three years into its operation, the impactsare becoming evident. Despite promises of eco-nomic riches, Australia’s trade balance with the UShas declined by 32% – a deterioration of $3.3 bil-lion. The Australian Manufacturing Workers’ Unionestimates that over 10,000 jobs have been lost asa result of the agreement.

Not surprisingly, the Australian government hasrefused to conduct any public review of AUSFTA.Instead the government trots out a handful of indi-vidual success stories. Apparently an Australian piecompany is doing well. Community groups andacademics continue to monitor and highlight theimpacts of AUSFTA and there have been somesmall wins along the way. For example, AUSFTAopened the door for US firms to tender for bloodsupply contracts. In 2007, community campaigningpushed state governments to reject the federalgovernment’s attempt to push this through.

AUSFTA allows for either country to pull out of theagreement with only 6 months notice. The cam-paign against AUSFTA continues.

The challenge that remains for the movement inAustralia is to harness the momentum of the AUSFTAcampaign to hold the Australian government accountablefor playing the role of the bully with other countries.

Resources

Australian Fair Trade and Investment Network www.aftinet.org.au.AFTINET brought together over 80 organisations during the AUSFTAcampaign. This site has a great archive of campaign bulletins. Formore detail about the impacts of AUSFTA, check out the AFTINET “10devils in the detail” leaflet.

Global Trade Watch Australia http://tradewatchoz.org/ This site has acomprehensive record of media from AUSFTA campaign.

Australian Manufacturing Workers’ Union, Say No to USFTA campaignhttp://www.amwu.asn.au/ default.asp?Action=Category&id=68

Friends of the Earth AUSFTA campaign page http://www.foe.org.au/trade/learning-resources/australia-2013-united-states-free-trade-agreement/

Pat Ranald, “The Australia–US Free Trade Agreement: a contest ofinterests”, Journal of Australian Political Economy, No. 57, June 2006.www.jape.org Good discussion of social and corporate forces for andagainst AUSFTA.

An Environmental Impact Assessment (EIA) of the US Free TradeAgreement http://www.OzProspect.org

ABC radio interview on impact of AUSFTA 2 years on with John Matthews,co-author of the book How to Kill a Countryhttp://bilaterals.org/article.php3?id_article=7828

Joint statement from Australian groups calling on the Australian Senateto block the AUSFTA legislation http://aftinet.org.au/campaigns/ US_FTA/usftasignonstatement.html

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