Tuesday, December 14, 2010

Productivity Commission tells the truth about free trade agreements

No wonder they won't let it near the NBN

A year-long investigation of Australia's free trade agreements has found they are often nothing of the kind.

The Productivity Commission has told the Gillard government there is little evidence to suggest Australia's six free trade agreements have produced "substantial commercial benefits".

Some may have actually reduced trade by introducing complex rules that make it difficult for Australia to sell goods made with products imported from countries not party to the agreements.

The extra cost imposed by these so-called "rules of origin" could amount to 8 per cent of the value of each export shipment.

Copyright provisions inserted in the US-Australia Free Trade Agreement could eventually cost Australia as much as $88 million per year as the nation pays an extra 25 per cent each year in net royalty payments, "not just to US copyright holders, but to all copyright holders"...

The copyright provisions extend payments from 50 years after an author's death to 70 years and enshrine in Australian law "rules that would otherwise be anti-competitive such as permitting the use of region codes on DVD players".

The provisions have, in effect, saddled Australia with copyright obligations "even higher than in the United States," the report says.

"This is because we matched their higher level of copyright protection but have maintained our lower level of copyright users' rights."

The net present value of the extra copyright costs imposed on Australia by the provisions agreed to by the Howard government when it signed the US-Australia agreement might amount to $700 million.

"And this is a pure transfer overseas, and hence pure cost to Australia," the report says.

It finds provisions inserted in the US Australia agreement granting drug manufacturers greater rights in their dealings with Australia's Pharmaceutical Benefits Scheme had real potential for adverse outcomes and that "vigilance was required to ensure this did
not arise".

The Commission says before agreeing to further FTA's 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.

Until 2003 Australia had only one free trade agreement, with New Zealand.

The Howard government signed agreements with Singapore, Thailand and the United States, and the Rudd government with Chile and ASEAN.

The Gillard government has continued to negotiate agreements with China, Malaysia, Japan, Korea, Indonesia, the Gulf Cooperation Council and the Pacific Island Forum.

The Department of Foreign Afffiars and Trade was unable to tell the Commission how much it spent negotiating the agreements, saying its trade work could not be "separately identified and costed".

Trade Minister Craig Emerson welcomed the Commission's report saying he had already announced a review of Australia's entire trade policy framework.

The Australian Services Roundtable said the existing process "does not work".

"For a decade now trade negotiations based on the trade-off mentality have not delivered any
significant reductions in services trade barriers," said executive director Andrew McCredie.

Published in today's Age

Related Posts

. Free Trade Agreements that are anti-trade

. What Australia signed up to in 2004

. What extending the copyright term exterminates