Thought for Thursday
My opinion piece in today’s Fin (subscription required), amplifies some themes that have been discussed earlier in blogs, notably mine and Kim Weatherall’s. Given the push towards effectively infinite copyrights and other forms of monopoly privilege for owners of “Intellectual Property” the traditional arguments for (and against) free trade aren’t particularly relevant in the debate over a Free Trade agreement with the US. The Americans don’t want us to remove trade barriers, they want us to adopt the policies dictated by their lobby groups in areas like IP, GM labelling, privatisation etc.
If the official negotiating stance of the US government contains some unappealing items, the demands that US lobby groups would like to push in subsequent rounds are even worse. The pharmaceutical industry wants to kill the Pharmaceutical Benefits Scheme. The Recording Industry Association of America would like to ban parallel importing.
These groups have promoted their interests, with much vigour and few scruples, through their Australian hired guns, but have so far had limited success. Under the kind of agreement that is being contemplated at present, the US lobby groups would have as many second chances as they need. Far from promoting free trade, they want to turn Australia into a monopolists’ playground.
Update Jason Soon responds, quoting Henry Ergas on the benefits of regulatory harmonization. I will first observe that my piece opposed ‘ the kind of agreement that is being contemplated at present’ , rather than any agreement. I agree that, done right, a bilateral trade agreement could produce benefits.
But Ergas’ argument raises more concerns for me. The US is currently negotiating a string of these agreements on a bilateral basis. If they include regulatory harmonization, this can only mean that the other party adopts the US model, since otherwise the agreements would be inconsistent. Since I’m distinctly underwhelmed by US models of regulation, corporate governance and so on, this enhances my concerns rather than allaying them.
And I think the experience of NCP suggests the dangers of using an agreement negotiated in secret to ‘jumpstart the micro-reform process’. The bitter hostility to NCP that people like Pauline Hanson tapped into was as much due to the process by which it was presented as a fait accompli as to the actual content of micro-reform.