logo logo

Democracy a loser in trade free-for-all

The Age | March 29, 2010

Democracy a loser in trade free-for-all

Kenneth Davidson

There is a crisis in global governance. The Westphalia system that emerged from Europe’s 30-year war in the mid-17th century saw the demise of the barons and the Catholic Church as global powers, replaced by the sovereignty of the secular nation state, which became the absolute reference point in global relations.

This came under threat during the 1980s when the spread of cheap communications and international transport allowed trans-national corporations to globalise the production of goods and services.

This dwarfed the impact of the earlier globalisation of trade in terms of its social and economic impacts. Importantly, the globalisation of trade enhanced the powers of governments while the globalisation of production enhanced the power of trans-national corporations at the expense of government.

Free trade in goods could be sold as a benefit to people. The new globalisation wave in the form of free trade in production, where even labour is treated as a commodity, is promoted by leading industrial nations — Japan, the US and Europe — according to how it advances the interests of their trans-national corporations.

The uneven development of the new wave of globalisation — fast in finance, technology transfer, skilled labour movements and international terrorism and slow in governance, social attitudes, international regulation and the fight against global warming, crime, terrorism and disease — has created winners and losers both within countries as well as between countries.

It is not surprising that the winners want to eliminate the old rules governing trade and commerce and replace them with rules that enhance market relations at the expense of government mediation.

The new trade agreements are fundamentally undemocratic. The negotiations are conducted in secret and the agreements are structured in a way that will make it virtually impossible for future governments to rescind agreements that are found to be unpopular.

Behind the mantra of the superiority of the market — reinforced by privatisation, low taxes and small government — is the aim of shifting the decision-making process from the one-person, one-vote democratic formula to the one-dollar, one-vote market formula.

Hence the secrecy surrounding the negotiations of the new Trans-Pacific Partnership Agreement (TPPA), which began in Melbourne two weeks ago. The agreement is designed to replace a number of individual bilateral free trade agreements with an agreement embracing Australia, the US, NZ, Chile, Singapore, Brunei, Peru and Vietnam.

As the Australian Fair Trade and Investment Network — which represents a wide range of union, church, health, environment and pensioner groups — points out, US business wants to dismantle the Pharmaceutical Benefits Scheme, local-content rules for the media, labelling of GE food, regulation of foreign investment and government purchasing policies that support local employment. They also want an investor complaints process that will give special rights to international corporations to sue governments for damages if legislation to protect the environment or human health undermines profitability.

The government says that all these issues ’’are on the table for negotiation’’. Why? Well, that’s a secret. Further, any agreement made under this process will be signed off by cabinet before it is presented to parliament as a fait accompli apart from ’’procedural’’ matters requiring parliament legislation.

The Howard government put Australian conditions restricting the right of employers to bring to Australia temporary skilled and semi-skilled workers on the auction block to be negotiated away in return for market access for Australian exports at the Doha round of multinational trade negotiations in 2005. These negotiations are now in abeyance.

Specifically, the official position is that Australia is prepared to remove the requirement for employers to search for skilled and semi-skilled labour before seeking 457 temporary visas for this kind of labour.

The unions justifiably saw this as a union-busting exercise and extracted a promise from the then Labor opposition to remove this proposal from the Australian offer to the stalled Doha round.

Prime Minister Kevin Rudd agreed to this request and it was written into the ALP platform before the election.

Under the influence of the Department of Foreign Affairs and Trade, the government has made a policy decision that it will not withdraw the offer on the grounds that it would amount to ’’bad faith’’ if it were to do so.

A former Australian prime minister, John Gorton, said that the department was infected by the puppy dog syndrome, that is: roll over and get your tummy tickled. It still is.

As this assault on national sovereignty continues, the question is whether the ’’market system’’ can fill the vacuum as the power of the state withers away. Certainly markets require the rule of law to function otherwise they become mafia systems, as has occurred in Eastern Europe.

Meanwhile, there’s an uneasy feeling that nobody is in charge. The global financial crisis occurred for this reason.

Kenneth Davidson is an Age senior columnist.

 source: The Age