THE AGE http://www.theage.com.au/news/20000803/A46052-2000Aug2.html Free trade: the icon that has enslaved Kim Beazley By KENNETH DAVIDSON Thursday 3 August 2000 I'M CONFUSED. Reporters at the ALP's national conference in Hobart tell us that the ALP's parliamentary leaders, Kim Beazley, Simon Crean and Peter Cook successfully fought off the "union-dominated Left" - led by the Australian Manufacturing Workers Union Secretary Doug Cameron - who wanted the present ALP policy in favor of "free trade" replaced by a commitment to "fair trade". When the "fair trade" proposal was first put by Cameron in June, Labor's trade spokesman, Peter Cook, responded by calling Cameron's ideas "wacky". But how did Cook treat the issue in the trade policy discussion paper which was put on the ALP's web site before the Hobart conference? According to Cook, "the upcoming WTO negotiations will see a range of new issues on the international agenda: whether labor standards should be considered by the WTO, or confined to the International Labor Organisation (and) whether environmental standards should be considered by the WTO, or confined to environmental forums such as the Rio Earth Summit ...These issues will be fundamental to the future of the WTO. In regard to the first two (the third issue was GMOs) Canada and the United States have already indicated they support a broader role for the WTO. Unsurprisingly, the Australian government has taken the opposite stance." The Cook document then put forward a specific recommendation (13) for consideration for the conference, namely "Australia should endeavor to see that `new' trade issues, including labor standards, environmental protection and genetically modified organisms, are discussed at the next APEC (Asia Pacific Economic Cooperation forum) meeting, in preparation for the upcoming WTO Round". So what's going on? Is "fair trade", the "social tariff" or the "new trade issues" agenda "wacky" or not? Why are Canada and the US taking the issue seriously? Why must Beazley, Crean and Cook set out to establish a policy difference with unions where no real difference exists? A fair interpretation is that President Clinton and the Canadian government were badly spooked by the riots at the recent WTO meeting in Seattle and have drawn the obvious political conclusions. On the other hand, it looks as if Beazley and co have been totally spooked by the PCs in the media who have built ideas such as free trade into iconic status. Obeisance to free trade is required from anyone who wishes to be taken seriously as an alternative government. According to the Paris-based Organisation for Economic Cooperation and Development, in a report last year, Australia is the least protected country in the OECD region. (Australia also enjoys the distinction of having the largest current account deficit as a percentage of GDP in the OECD region.) According to the Productivity Commission, the average tariff is now equivalent to 3per cent of the value of import of goods, which yields a revenue of about $3.5 billion a year. Apart from the protection given to the motor vehicle and textile footwear industries, the customs duty on imports is really a revenue tariff. The main impact of removing customs duty would be the loss of revenue. What taxes would rise to compensate? Would Australia be better off with a 4per cent increase in income tax, or an increase in GST from 10 per cent to 11 per cent? Australia has gone further down the track than any other country to free trade. This has made no difference to agricultural protection in Europe and America. The economic cost of free trade for Australia will be the cost of the dole for the 75,000 workers directly employed in the TCF industry and half the 50,000 workers employed in the motor vehicle and components industries, plus the loss of customs revenue and a weaker Australian dollar. But the moral cost of rejecting fair trade will be higher. Australian consumers should no more benefit from the low costs associated with exploited labor than the receiver of stolen goods, who is as guilty in law - as well as morally - as the burglar. According to Naomi Klein in No Logo, which became the bible for the demonstrators against the WTO at Seattle, there are now almost 1000 export processing zones, spread through 70 Third World countries, employing 27 million workers in which the "management is military style, the supervisors often abusive, the wages below subsistence and the work low-skill and tedious". She said: "It's a classic vicious cycle: in an attempt to alleviate poverty, the governments offer more and more incentives; but then the EPZs must be cordoned off like leper colonies." These conditions could not continue where the workers in EPZs were free to establish trade unions and the companies forced to pay taxes to build the infrastructure necessary for a civilised environment for workers. Kenneth Davidson is a staff writer. 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