Freer trade

Although “not yet finished(link to sto­ry in The Aus­tralian newspaper)”:,5744,8605754%255E601,00.html, the nego­ti­a­tions between the Aus­tralian and US gov­ern­ments on a free trade agree­ment seem now to be in the final stretch. In a dete­ri­o­rat­ing envi­ron­ment for trade liberalization—particularly in agri­cul­tur­al markets—the emerg­ing deal looks like a cred­i­ble step for­ward that will improve prospects for open­ing mar­kets on a glob­al basis. The signs are that the deal will open most goods and many ser­vices mar­kets on both sides, but will not ful­ly open access to some of the Unit­ed States’ biggest agri­cul­tur­al mar­kets any­time soon. US bar­ri­ers to Aus­tralian dairy and beef imports will be low­ered incre­men­tal­ly; bar­ri­ers to sug­ar may scarce­ly be touched. The over­all shape of the deal is not yet clear, so it’s dif­fi­cult to judge whether it meets the require­ment of the WTO (Arti­cle XXIV of GATT) that a bilat­er­al agree­ment should lib­er­al­ize ‘sub­stan­tial­ly all trade’. Nor is it clear whether, as a whole, the deal will meet the ‘guide­line’ added by WTO in 1994 that bilat­er­al FTA’s should achieve this stan­dard of mar­ket open­ness with­in a decade. These typ­i­cal­ly vague WTO stan­dards have been tar­nished by ques­tion­able obser­vance and by the glacial progress most WTO mem­bers have made in open­ing their domes­tic mar­kets to glob­al trade. So a more impor­tant question—certainly a more prag­mat­ic one—is whether any spe­cial treat­ment the bilat­er­al agree­ment might offer pro­tect­ed farm indus­tries in the USA could prej­u­dice the chances of a more ambi­tious glob­al agree­ment in the WTO next year or the year. If so, it would be a big loss for both Aus­tralian and US farm­ers. At present, the out­look for progress in the WTO talks is bleak. There seems to be lit­tle hope of mak­ing sig­nif­i­cant progress on reduc­ing pro­tec­tion in world agri­cul­tur­al mar­kets. Ratio­nal­i­ty has tak­en a hol­i­day in the US elec­tion sea­son: even for­mer stal­warts of glob­al mar­ket lib­er­al­iz­tion such as the US Farm Bureau seem to be allow­ing the ‘tail’ of declin­ing indus­tries to wag the dog. bq. The Amer­i­can Farm Bureau, at its annu­al meet­ing in Hawaii this week, vot­ed by a nar­row 204–202 mar­gin to endorse a new stance in which the group would only sup­port future trade agree­ments “that pre­vent eco­nom­ic dam­age to import-sen­si­tive com­modi­ties … while advanc­ing US agri­cul­tur­al trade and food secu­ri­ty inter­ests”. (“Finan­cial Times(FT sub­scrip­tion page)”: The “Demo­c­rat contenders(NY Times story)”: for nom­i­na­tion do not have the courage to crit­i­cize the Pres­i­den­t’s record of polit­i­cal­ly cal­cu­lat­ed pro­tec­tion­ism (steel, tex­tiles, sug­ar) but pan­der to the invi­ta­tion of pro­tec­tion­ists to treat trade as if it were a threat to the secu­ri­ty of the Unit­ed States, to jobs and to moral wel­fare. And across the Atlantic, the EU Trade Com­mis­sion­er is “test­ing acceptance(link to FT report)”: of a pol­i­cy that would approve the use of bans on trade that some­how offend nation­al ‘col­lec­tive pref­er­ences’ (read “might be pro­duced using genet­i­cal­ly mod­i­fied plants” or “ani­mals treat­ed with nat­ur­al hor­mones” or “not marked with fash­ion­able envi­ron­men­tal icons”). In this envi­ron­ment, steps towards open­ing the most pro­tect­ed sec­tors of US and Aus­tralian mar­kets can only be seen as encour­ag­ing the rest of the world to believe that progress can be achieved on a wider scale. Assum­ing, of course, that the Con­gress approves the deal as proposed …

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