The theory behind free trade agreements is solid. The reality suggests something shakier.
Former US presidential candidate and well known protectionist Pat Buchanan likes to say there is a fine line between economic rationalism and economic irrationalism.
At Agitate! we are economic rationalists to our bootstraps, but there are also some instances where we concur with Buchanan’s view. This is particularly so when it comes to free trade agreements (FTA).
For all intents and purposes, FTA’s make total sense, the theory being that open and free trade borders will benefit those countries involved, including consumers, businesses and workers. This is the theory; the reality is something different, especially when the economy takes a turn for the worse.
Just the other week, Agitate highlighted that the Australia-USA FTA is not worth the paper it is written on, with President Obama happily breaching the FTA in order to protect the US steel industry.
Closer to home and the lesser known Australia–Thailand FTA is also causing problems. The agreement has led to the opening up of Australia’s car component manufacturing industry to cheaper Thai imports. The result of this has been the rapid decline of our car components industry. Just yesterday another components manufacturer from Albury, DSI, went into receivership. Up to 400 people may lose their jobs.
Although there has been no direct link to the Australia-Thailand FTA as being the reason for DSI’s collapse, it does highlight the danger of the proposed Australia-China FTA.
As Agitate! has previously noted, the Chinese want unfettered access to our car industry as part of the FTA deal. God help the Australian car industry and the $6 billion (and counting) in taxpayer subsidies being shoveled into the ailing industry at a rate of knots.
And where are the major political parties on this issue? Well the government is determined to fast track the Australia-China FTA and the opposition seemingly can’t be bothered to make any comment at all. Their silence can only be taken as a tacit endorsement of the government’s action.
It’s a pity because although there’s bound to be winners from an Australia-China FTA, there will also be many losers, and as per usual, it’s likely to be working Australians, their families and local communities.