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A heavy-duty vehicle for colonisation

A heavy-duty vehicle for colonisation

Evan Jones

The Canberra Times

11 August 2004

JOHN MAYNARD KEYNES once reflected that his upbringing presumed free trade to be part of the moral law. More, he regarded departures from it as being ’’an imbecility and an outrage’’.

Yet by 1933, Keynes’s world view had altered, his reflections perhaps resonant for our own generation. ’’But it does not now seem obvious that a great concentration of national effort on the capture of foreign trade, that the penetration of a country’s economic structure by the resources and the influence of foreign capitalists, that a close dependence of our own economic life on the fluctuating economic policies of foreign countries, are safeguards and assurances of international peace.’’

World War I had shattered Victorian provinciality. Upstarts Germany and Japan were stealing British markets. But the greatest upstart was refashioning the free trade catechism to suit its own ends.

The US Secretary of State, John Hay, articulated the Open Door doctrine in 1899. Self-determination and the open market place were the underlying principles.

Francis Thurber, president of the US Export Association, was at the right hand of Hay. ’’I do not believe in imperialism ... but I do believe in a policy of expansion which will give us the control of some markets which will be a stepping stone to others in a wider zone of influence which such control would enable us to exercise’’.

Self-determination was fine for excising the European powers from their colonies, but the Americans immediately blotted their copybook in Cuba, Hawaii and the Philippines. Each opening of a marketplace necessitated the shelving of the principle of self-determination. The battering ram of rhetoric complemented the hypocritical practices from the start.

One hundred years later, under the refurbished rhetoric of freedom and democracy, the United States is still at it.
On September 19, 2003, the Coalition Provisional Authority overseeing the occupation of Iraq issued Order No 39 on foreign investment. Conditions were imposed on Iraq regarding the rights of foreign investors that have been fiercely resisted by governments and social movements when articulated elsewhere - at World Trade Organization conferences, but particularly in the blocked Multilateral Agreement on Investment. The Order met with no resistance because, as a military official noted, ’’At this point we’d be negotiating with ourselves because we are the government’’.

Free trade agreements with the US are best understood as driven by US geopolitical interests. They serve the interests of American corporations and of a bipartisan foreign policy. The two interests are inseparable, if not congruent. Jeffrey Garten, an establishment figure in both political and financial circles, declaimed in a 1997 issue of the prestigious journal Foreign Affairs: ’’Throughout most of American history, commercial interests have played a central role in foreign policy, and vice versa’’. You couldn’t get more straightforward than that, and from the horse’s mouth.

The press release from the office of the US Trade Representative for the recently finalized Moroccan FTA mentions only gains for American exporters and leverage over North African governments. The Moroccan FTA is a potential disaster for Moroccan farmers, for the Moroccan services sector and for indigenous health, with the generic medicines industry under threat.

The eminent pro-multilateralist economist, Jagdish Bhagwati, had this to say before a Congressional Committee on April 1, 2003: ’’The bilaterals, between us and small countries like Jordan, Singapore, Chile and Morocco cannot be judged on the basis of trade alone. They are increasingly used to establish ’templates’ by different lobbies.’’ The templates are then used as a ’’divide and rule’’ strategy against developing countries in other forums. The Jordanian FTA is used as a decoy for labour and environmental standards which are fast-tracked into other FTAs; the Chilean FTA is used as a decoy for restrictions on the host country’s use of capital controls; and so on.

Current negotiations with Columbia are instructive for the Australian situation. A Columbian industrialist, Emilio Sardi, has strongly criticised the process, characterised by secrecy and undue haste on the part of the Trade Ministry negotiating team, and lack of consultation with affected parties. Sardi notes a substantial inequality in the bargaining capacity of the two teams. Australians might reflect on the capacity of the Australian bargaining team under the affable Trade Minister Mark Vaile, an ex- stock and station agent utterly out of his depth.
Sardi claims that the Columbian FTA will ’’impose legislation on all Columbia’s economic life’’. He continues: ’’These rules could finish off the nation’s food security and put at risk access to health for the majority of Colombians. If they are accepted they will have a supra-constitutional character - coercive and irreversible’’.

A foretaste of the future was embedded in the 1993 North American Free Trade Agreement treaty signed by Canada, the US and Mexico. Chapter 11 gives companies the right to sue governments if their programs threaten the loss of potential future profits. A company suit is presided over by an unaccountable tribunal, with proceedings secret and involving no right of representation by the government concerned.

Thus, the Canadian Government has reversed an import ban, made on environmental and health grounds, on a gasoline additive made by US-based Ethyl Corporation which sued the Government under Chapter 11. The State of California has been sued by Canada-based Methanex for legislating to phase out Methanex’s gasoline additive MTBE on similar grounds.

As of September 2001, damages claimed by foreign companies were estimated at $US13 billion, of which $US11 billion has been claimed from the Canadian Government.

Fast forward to the US-Australia FTA, over which doubting Thomases have been berated by officialdom and the media. There has been much hand-wringing about divergent estimates of the net benefit to Australian residents of the FTA by various econometric model-builders. But this is all diversionary.

The important lessons are to be found in the Twentieth Century history of American foreign and trade policies. The US-Australian FTA is simply a vehicle for further colonisation.

The dearth of intelligence in the official pursuit and defence of the FTA is a scandal. Truly, Australia is a banana republic.

Evan Jones lectures in Political Economy at the University of Sydney.