February 10, 2004


Writing with Tim Colebatch in The Age, Marian Wilkinson seems mostly delighted about Australia’s new free trade agreement with the US:

The Australian economy is set to enter a new era, with manufacturers, mining and service companies gaining free entry into the giant United States market - while some highly competitive farm sectors remain shut out.

The Australian and US governments yesterday finally shook hands on a free trade agreement that will remove most trade barriers between the two economies, with the glaring exception of the US farm sector.

But teamed with Tom Allard in the Sydney Morning Herald, Marian is all gloomy:

The Federal Government faces a battle to persuade Parliament and regional voters to support its free trade agreement with the US after it signed a deal that benefits America more than Australia.

Bowing to US demands to keep its massive barriers to sugar exports out of the agreement, and accepting only small and slow cuts to beef and dairy tariffs, the Prime Minister said that he agreed to yesterday's deal because he believed it would still benefit the economy.

Posted by Tim Blair at February 10, 2004 01:57 AM

is he wes clark's evil twin?

Posted by: Mr. Bingley at February 10, 2004 at 02:18 AM

or maybe that's a she

Posted by: Mr. Bingley at February 10, 2004 at 02:20 AM

It's all about sugar !

Posted by: The Gnu Hunter at February 10, 2004 at 05:42 AM

Howard Lied!
Cattle Fried!

Posted by: Rob Read at February 10, 2004 at 06:03 AM

The NYT says the FTA is just great for Americans, adding US$2bn in manufacturing sales to a US$9bn trade deficit in the US's favour. Nice little election year present for George from his lackey mate, John Howard.

And for our next trick, we roll over and play dead.

Posted by: Miranda Divide at February 10, 2004 at 06:09 AM

The Federal Government faces a battle to persuade Parliament and regional voters to support its free trade agreement with the US after it signed a deal that benefits America more than Australia.

Anti-free trade fallacy: that the US benefits from such restrictions.

Domestic (US) sugar producers and beef producers may benefit, but the United States as a whole would be better off with cheaper sugar and beef.

Posted by: Bombadil at February 10, 2004 at 06:10 AM

And for our next trick, we roll over and play dead.

You first Miranda.

Posted by: Quentin George at February 10, 2004 at 06:34 AM

I can just see i am going to get thoroughly sick of explaining basic economic principles to morons who are blinded by ideology.
Miranda, if i suggest a deal where i make $10 and you make $5, and if we dont do the deal, both get nothing - would you accept? Of course you would prefer $8 or even $10 but - and let me say this clearly - YOU ARE STILL BETTER OFF. Why is this so difficult to comprehend.
Who cares about the sugar industry? The idea of giving them 'relief' is BS. They are no worse off than if no deal was signed. It would have been nice to get the sugar access, but the only reason the US market is so attractive is because the price is artificially high. If those tariffs are removed, the price is going to go south in a huge way.
As an Australian, I think this agreement is of vital importance to our future prosperity. I will be outraged/gutted if Latham uses it as a scare tactic (i believe you would call it a 'wedge' if Howard tried it) and a nervous parliament/electorate shies away.
As for congress, well that is up to the US. Come to the party fellas

Posted by: Paul Dub at February 10, 2004 at 07:30 AM

Unfortunately, the US Sugar lobby is very very powerful, possibly the most powerful single lobby.

Which is a huge detriment to the entire world, including the US. Candy manufacturing jobs are being lost to other countries, not because of labor costs, but because of sugar costs. Many poorer countries can't sell their main export, sugar, here, and so they stay poor.

Still, Free Trade pacts, or Free-ish in this case, help both parties.

Posted by: Jeremy at February 10, 2004 at 07:41 AM

Can't Australia build a couple candy & soda-pop factories & ship it State-side, full of Aussie sugar ?

Posted by: Arik at February 10, 2004 at 07:52 AM

Paul Dub, I see your point, but given the relative sizes of our respective economies, given the massive trade imbalance already in the US's favour, and given that they are supposed to be SO grateful for our support in Iraq, don't you honestly think that it could and should have been $10 for us and $5 for them?

Posted by: Richard at February 10, 2004 at 08:27 AM

I'm with Paul Dub - where does the Australian agricultural lobby get off? Its disappointing that sugar wasn't in the finished deal, but the benefits of the deal, even to cane growers, are just that, benefits. There's no downside for produceres, they get more. And I've yet to see in the media that the costs of production for cane growers will go down, as tariffs on inputs are removed. Cane is cheaper to produce when there's no tariff on spares for your harvester, for example.

Posted by: tortfeaser at February 10, 2004 at 08:28 AM

I dont think our involvement in Iraq should have a bearing on it. If we had sent our troops into harms way in order to curry favour for a trade deal, that would have been reprehensible.
As for the trade imbalance, that is still avoiding the central point - do we benefit? Do I think the agreement could have been better? Absolutely, though I think the US sugar lobby should be neutered for the sake of all countries, not just Australia. But is the agreement to our benefit? YES.
Was the NZ/Australia free trade agreement to our benefit and theirs? YES
And where were the cries when we signed an FTA with Thailand? Where were the doomsayers claiming that all our jobs would be exported? Some people automatically distrust anything to do with Howard and/or the US, and will spin it negatively automatically. It is a shame that the deficiencies in the agreement may provide enough traction to shoot it down. I for one sincerly hope that this is not the case.

Posted by: Paul Dub at February 10, 2004 at 10:08 AM

Paul Dub, don't get me wrong, I think the FTA is a great achievement. But if the US sells us $10 extra worth of goods and services, and we're selling $5 more, aren't we going to be an extra $5 bucks in the trade deficit hole?

I personally believe that tariffs, subsidies and other distorting government interventions belong in the last century along with the entitlement mentality of the welfare state. Scrapping tariff protections means we will be forced to develop lean, mean market competitive industries that will, in the long run, see Australia focused on areas in which it excels. Hence the FTA is good.

In the short term though, the terms of trade are likely to get a bit ugly. I think the best idea would be to focus on the long term. Do we want to go down the EU path, and have farmers being paid thousands of Euros an acre to grow nothing, or do we want to be part of the real world?

Most good, right leaning Down Underians know the answer to that question.

Posted by: Al at February 10, 2004 at 10:18 AM

Rotten Little Johnny's screwed up big time.
He's destroying our industries and culture in the name of free trade.
He should have walked away from the deal because he didn't get enough free trade.
Jeez it's hard sometimes to be a Howard hater.
My head hurts.

Posted by: slatts at February 10, 2004 at 10:20 AM

"...some highly competitive farm sectors remain shut out...."

"...with the glaring exception of the US farm sector."

OMG I think I've figured out Mork's Secret Identity! (Say, where is Mork anyway? I thought this sort of thing was near and dear to his heart.)

Posted by: Andrea Harris at February 10, 2004 at 10:44 AM

I agree Al - multilateral trade agreements are much better than a web of FTA's (e.g. Thailand signing one with us because they assumed we were going to sign one with the US), unfortunately there is an almost hysterical response to any sort of trade agreement. Governments dont even bother trying to push a multilateral trade agreement anymore, as they know it would be political suicide. That leaves us with imperfect FTA's.
The 'anti-' brigade shows just how ludicrous their position is by defending the 'dudding' of the sugar lobby. What are the labor party and the greens doing going into bat for queensland sugar farmers? what planet am i on?

Posted by: Paul Dub at February 10, 2004 at 11:05 AM

The thing is Paul Dub, that you can be in favour of the agreement, in the sense of accepting that we've got no real choice but to sign it, while still believing that the Governement should have done a whole lot better. And I fully support our involvement in Iraq on other grounds, but for God's sake, if we can leverage it for a better deal on trade, why the hell shouldn't we? - and frankly, the US is in need of steadfast friends at the moment. Given how faithful to the cause we've been, I feel quite strongly that the deal we've been handed is a bit of a kick in the guts.

Posted by: Richard at February 11, 2004 at 06:52 AM