SECTION ONE
Overview
The Australian Fair Trade and Investment Network (AFTINET) welcomes
the opportunity to make a submission to the Senate Foreign Affairs, Defence and Trade
References Committee Inquiry into the GATS negotiations and the US Free Trade Agreement.
AFTINET is a network of 65 churches, unions, environment groups, human rights and
development groups and other community organisations as well as individuals, and conducts
public education and debate about trade policy. AFTINET supports the development of
trading relationships with all countries and recognises the need for regulation of trade
through the negotiation of international rules. AFTINET supports the principle of
multilateral trade negotiations provided these are conducted within a framework which is
transparent, provides protection to weaker countries and is founded upon respect for
democracy, human rights and environmental protection.
This submission is divided into three sections. The first section
contains an introduction and recommendations regarding trade agreements generally, and the
GATS and USFTA negotiations specifically. The second section concerns the terms of
reference for the GATS negotiations, and the third section deals with the terms of
reference for the USFTA negotiations.
Introduction
Since the end of the Uruguay Round the subject matter and reach of
trade agreements has extended into areas which had previously been considered the domain
of domestic policy. This expansion has taken the form of a range of new multilateral
agreements within the WTO, as well as an increased emphasis on bilateral and regional
agreements. Significant differences exist between treaty making on a bilateral basis
compared to a multilateral basis, particularly where large power imbalances are present
between the parties.
AFTINET supports the concept of international regulation of trade
through multilateral trade negotiations. In principle such negotiations have the potential
to mitigate the economic power of the largest economies and the influence of transnational
corporations. However, for this principal to work in practice, there must be a
multilateral framework which guarantees the interests of less powerful nations and
regulates corporate influence. The current WTO framework does not meet these goals. In
theory all 146 member governments are equal in WTO decision making. However scholars of
the WTO processes have analysed how in practice the WTO is dominated by the most powerful
trading nations, the US, Canada Europe and Japan, whose dominance of the WTO informal
power structure is recognised in WTO jargon, which dubs them ‘the quad’
(Braithwaite and Drahos, 2000). They initiate much WTO policy and their endorsement is
required for the progress of any initiative in the WTO. They conduct ‘informal’
meetings with up to 30 other governments, previously known as the ‘green room’
process and more recently through informal ‘mini-Ministerial’ meetings like the
one held in Sydney in November 2002. Over 100 smaller and developing countries are
effectively excluded from the decision making process, and are pressured through aid and
other forms of economic influence to join the consensus (Kwa, 2002).
This process means that WTO agreements often reflect the interests of
the powerful. A key example is the Agreement on Agriculture, which has resulted in the
opening of markets in developing countries but has not addressed the issue of subsidies in
industrialised countries. Another is the impact of the Trade in Intellectual Property
Rights (TRIPs) agreement on developing countries, which is discussed further below. The
TRIPs agreement has been described as not a free trade agreement but one which
‘extends the life of patent monopolies’ to the detriment of developing countries
(Braithwaite and Drahos, 2000, pp 203-4). The GATS negotiations also provide examples,
which are discussed in the GATS section of the submission.
Corporate influence is also dominant in the WTO, through corporate
lobbying of governments, and participation in government delegations. The most recent
powerful example of this was the lobbying by US pharmaceutical companies in December 2002
which resulted in the US government blocking proposals to change the interpretation of the
TRIPs agreement to make medicines more affordable to developing countries (Hamburger,
2003). This issue, which was hailed as a key gain for developing countries in the Doha
round of negotiations, remains unresolved. The increasingly dominant and unilateral role
of the US in the WTO has reflected its recent behaviour in the context of the United
Nations and is the subject of increasing commentary (Becker, 2003).
AFTINET supports changes to the WTO framework to make it more
transparent and accessible for smaller and developing countries of the kind which were put
forward by developing countries in March 2002 but rejected by the ‘quad’, and by
other key industrialised country governments, including Australia. We also support a
comprehensive review of existing WTO agreements to review their social and economic
impacts before any new agreements are contemplated, specifically the proposed new
agreements on investment, competition policy and government procurement. Our submission to
the Joint Standing Committee on Treaties inquiry on Australia's relationship with the WTO
outlined these and other proposals (AFTINET 2001).
Bilateral agreements have none of the potential mitigation of power
relationships provided by multilateral agreements. This is why historically Australia as a
relatively small economy in the global context has relied on multilateral rather than
bilateral negotiations. In relation to the Australia-United States Free Trade Agreement,
the Australian economy is only 4% of the size of the US economy. A bilateral negotiation
places therefore places Australia in a very weak bargaining position.
Despite the differences between bilateral and multilateral trade
treaties, certain features can be identified which should be common to Australia’s
negotiations in all international trade agreements. Trade negotiations should not be
undertaken so as to subvert important principles of democracy and sovereignty.
Features that support principles of democracy are:
- Wide consultation and public debate about the issues, including a range of
non-government community-based organisations,
- Transparency in the manner in which decisions are made that will affect public policies
and public policy-making, and
- Parliamentary debate and voting on all agreements prior to ratification.
Features that support principles of sovereignty are:
- The maintenance of the capacity governments at all levels to make laws and regulate,
- Australia’s social and cultural policies and identity are not eroded by the effects
of a trade agreement, and
- Australia holds an independent foreign policy.
The processes of the negotiations and specific proposals in the GATS
and USFTA negotiations could undermine both democracy and sovereignty principles. These
issues are discussed in detail in Sections Two and Three of the submission.
Recommendations regarding the GATS negotiations
We welcome the release of the government's initial offers in the GATS
negotiations, in response to community pressure. This is a welcome step towards greater
transparency. However, this offer can be changed at any time in the negotiations.
The government should:
- Develop a full community consultation process before any changes are made to the initial
offer which it published on April 1,
