Leaders back free-trade pact but unions warn on tariff cuts

AUSTRALIAN exporters will secure access to a free-trade bloc covering one-third of the world's gross domestic product after agreement from the US to lead the development of the Trans-Pacific Partnership.

But the Gillard government faces a 12-month negotiating battle to ensure the final design of the proposed TPP includes abolition of all tariffs among the nine member nations, amid fears Japan could seek exclusions for agricultural products, which would significantly devalue the deal.

And the trade deal ran into immediate domestic friction from leaders of Australia's most powerful unions and a key Labor backbencher, as the Greens labelled the pact a dangerous US-driven plot that could undermine national interests.

Julia Gillard and US President Barack Obama joined other Pacific region nations in Hawaii yesterday to commit to creating the TPP, ordering their trade ministers to begin talks aimed at creating a legal text for a full agreement by the end of next year.

The Prime Minister emerged from the talks saying she was delighted that the leaders, who met on the sidelines of the Asia-Pacific Economic Co-operation group summit in Honolulu, had agreed to set a zero-tariffs target, which she said would provide massive opportunities for Australian farmers and manufacturers.

"Trade's good for growth and it's good for jobs," Ms Gillard said, adding that there were hopes the pact could evolve into a free-trade agreement covering the entire Asia-Pacific region.

"We are a great trading nation and anything we can do to increase our capacity to trade is good for Australian jobs. It's an important development for our nation's trading future."

Ms Gillard was unable to quantify the potential financial benefits, but said they would be substantial.

But the union movement warned yesterday that a rapid move to a new free-trade zone could eliminate what tariff protection remains on industries that were already struggling with a high Australian dollar and competition from more regulated economies, such as China.

The national secretary of the Australian Manufacturing Workers Union, Dave Oliver, demanded the government commission "a full social and economic statement" on the proposed trade deal before agreeing to it.

He was supported by the national secretary of the Australian Workers Union, Paul Howes, who said while the AWU generally supported multilateral trade agreements, the timing was questionable in this case.

For some manufacturing industries, Mr Howes said, the removal of tariff protection in the current difficult circumstances could be the "death knell". Influential left-wing ALP senator Doug Cameron also expressed concern: "I don't think we should administer our manufacturing industry one iota of disadvantage given the pressure it is already under."

The idea for a TPP has evolved over recent years amid frustration over the failure of the World Trade Organisation's Doha Round of talks to advance the cause of trade liberalisation.

Yesterday's agreement was signed by the leaders of Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the US and Vietnam. Japanese Prime Minister Yoshihiko Noda said on Friday that his country was also interested in joining.

But with his government facing domestic political pressure not to open Japan's agriultural sector to competition, there was caution yesterday about whether its inclusion could impede progress.

Ms Gillard made clear that although Japan's interest was welcome, Australia was a free-trading nation and wanted a high-quality agreement. "In ambition, the TPP has as a goal eliminating barriers to trade in our region," she said. "That is eliminating tariffs.

"That is a very important expression of the level of ambition of this new partnership. There is a great deal of ambition and scope.

"We will now keep working as quickly as possible with the nations involved. We are aiming for the TPP to reach the stage of legal text during 2012."

Mr Obama also acknowledged that negotiations over fine detail would be difficult. "I don't underestimate the difficulties of this because each member country has particular sensitivities, political barriers," the President said.

"It requires adjustments within these countries where certain industries or certain producers may push back. For Japan, for example, in the agricultural sector, that's going to be a tough issue for them.

"But we're not going to delay. Our goal is to try to get something done by next year."

Australia has been reducing its tariffs since the mid-1980s, with the remaining tariffs affecting mainly the automobile industry and the textile, clothing and footwear sector. The liberalisation push is widely accepted to have boosted the nation's economic competitiveness and set the nation on a path to its ongoing prosperity.

Until recently, Australian officials were uncertain about Mr Obama's level of interest in the TPP, with trade liberalisation politically fraught in the US and the President facing election late next year.

But with his re-election hopes shackled by a sluggish US economy sluggish, the President has begun pursuing trade reform as a driver of jobs growth.
http://www.theaustralian.com.au/national-affairs/leaders-back-free-trade-pact-bu...

It is hardly fundamentalism. It is about as mainstream as you can get.

Or would you prefer to go back to weaving baskets and paying duty at the NSW/VIC border?

The only thing you can guarantee for yourself is poverty, which is what you will end up if you put certainty before everything else. If you want to improve your lot, you have to take risks and make sacrifices.

How would you feel if our ancestors from 100 years ago demanded certainty and guaranteed we had nothing more than what they had?