Free Trade Agreements–The View From Australia

The Australian Government’s Productivity Commission–an Australian Government research and advisory body–just issued a 400 page report on the effects of Australia’s existing “Free Trade” Agreements (FTAs).

This is a timely report.  Before 2003, Australia had only one free trade agreement with New Zealand.  Since then, the Australian government has signed agreements with the ASEAN countries, Chile, Singapore, Thailand and the U.S.  And, it is currently negotiating new agreements with China, the Gulf Co-operation Council, Indonesia, Japan, Korea, Malaysia, and the Pacific Island Forum.

So, what did the Commission conclude?  As the Australian newspaper, the Age, reports:

The Productivity Commission has told the government there is little evidence to suggest Australia’s six free-trade agreements have produced ”substantial commercial benefits”….

The Commission especially criticized the inclusion of investor-state lawsuit provisions in existing agreements.  These provisions enable transnational corporations to sue governments if they feel that public regulations limit their ability to make profits, even if those regulations are put in place to protect the health and safety of citizens.   In the words of the Commission:

There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS [Investor-State Dispute Settlement] provisions within agreements…..Experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions.

The Commission concluded that the totality of evidence on FTAs “suggest that the economic value of Australia’s [FTAs] has been oversold.”  Therefore, as the Age reports, “The commission says before agreeing to further free trade agreements Australia should first consider whether other options could deliver similar or greater benefits at less cost, among them trade facilitation, investor protection and mutual recognition of standards.”

One could only wish for such honesty from a U.S. government advisory board.  Our government is eagerly pursing ratification of a number of new FTAs (including with South Korea), all of which contain numerous restrictions on the ability of governments to regulate economic activity in the public interest and Investor-State Dispute Settlement provisions.  And, all of which have been oversold, at least as far as their effects on working people are concerned. 


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