Global Trade Watch – FTA Article

Labor rethink on FTA is welcome

The Australian, 18/8/03, Editorial.

SIGNS are gathering that, economically, Labor is shaking itself out of its policy slumber - and free of special interests and the Left.

Yesterday's comments by Opposition Leader Simon Crean on the free trade agreement with the US suggest that Labor is moving back towards the kinds of progressive economic policies that brought it, and the country, so many rewards during the 1980s. A fortnight after Opposition Treasury spokesman Mark Latham declared that he wanted Labor to be "well and truly in the business of economic reform", Mr Crean signalled yesterday a shift towards a more open-minded position on the current negotiations on the FTA.

Mr Crean said, first, that Labor would support an FTA if it was "consistent" with the Doha round of global free trade negotiations. That is a point that neither the Australian nor the US governments would challenge: both parties have committed themselves to work on the WTO front as well. He stressed that an FTA would have to offer a fair deal to our farmers. That is also quite true, and Trade Minister Mark Vaile knows it: without eventual unrestricted access to the US market for our primary producers, and a phasing down of subsidies to US farmers, an FTA simply does not work for us.

Mr Crean also stipulated that the FTA must not threaten the integrity of the Pharmaceutical Benefits Scheme. Even though the PBS is a monopoly buyer, US negotiators have made it clear that the most they will ask for is greater transparency in the process by which the PBS includes and excludes new drugs from its register: once again, it seems that Mr Crean's objections can be met. And, finally, Mr Crean issued some "motherhood" cavils about more transparency in the FTA process itself, and keeping Labor in the loop. Since bipartisanship is good for the FTA talks, the Government would do well to take note of his overture.

If none of this sounds - yet - like Mr Crean waving the draft of the FTA around and shouting "Hallelujah!", it is nevertheless a very long way from what we were hearing back in May, when his former trade spokesman, Craig Emerson, threatened to scuttle the FTA if Labor came to power, and argued that we were being forced into concessions on "important social issues". That is code for the PBS, and for the interests of the local film and television lobby, who think that Labor will always come good for them and immunise them against competition. But the US team has made it clear that it does not challenge the current level of Australian content quotas in film and television. What the local lobby really wants is to retain the power to ratchet up those quotas down the track, when there is a subservient Labor government in Canberra. Mr Crean would do well to show that right now he has a tin ear for such special pleading.

Another group that will oppose Mr Crean's softening position is the unions, who have already protested against Mr Crean's shift to a "neutral" stance on the FTA. When Mr Latham told The Australian a fortnight ago that Labor was committed to "an open, competitive market economy", he was swiftly rebuked by Doug Cameron, national secretary of the Australian Manufacturing Workers Union, who said: "The free marketeers have led Labor into irrelevance over the last couple of years." To this sort of rubbish, Mr Crean and Mr Latham can reply that the rejuvenation of free trade thinking in the Opposition, far from taking it away from its roots, reconnects it with a proud tradition of Labor tariff reformism that includes Gough Whitlam, Bob Hawke and Paul Keating. The only thing that threatens irrelevance for Labor is underestimating an electorate that is vastly more economically literate since the 1980s, and that knows that we cannot afford to isolate parts of the economy from reform and international competition. It also knows that a free trade deal with the US could be worth a job-creating $4 billion a year to our economy.

Labor is still sending out some confusing signals on the FTA, but that is better than the negative signals we were getting three months ago. So now it is time for Mr Crean to assert his authority and get the whole ship moving in the direction of economic common sense.