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FTA vs Kyoto

June 24th, 2003

I’m planning on putting the following argument in a piece on the proposed Free Trade Agreement with the United States. Can anyone confirm or refute my understanding of the implications of the FTA?

Under the Bush Administration the United States has, to an ever-increasing extent, rejected the whole idea of multilateralism on the basis that it fails to recognise the special position of the United States. In place of multilateral negotiations in which the United States is, at most, first among equals, the Administration has pursued bilateral agreements on a wide range of issues. The most notable case is that of the International Criminal Court, where the United States has pursued bilateral agreeements exempting Americans from prosecution.

Inevitably these agreements involve an element of ?pattern bargaining?. The United States proposes the same set of terms to each of its negotiating partners, generally on a ?take it or leave it? basis. While adjustments may be made in particular cases, the end result is inevitably that the terms of such agreements are those set by the more powerful party.

The most important multilateral agreement to be boycotted by the United States is the Kyoto protocol on climate change. It is noteworthy that the most prominent advocate of the FTA, Alan Oxley of AUSTA, is also a leading critic of Kyoto, and bases his arguments against Australian participation primarily on the argumentthat Australian industries will lose competitiveness against non-signatory countries such as the United States.

It is easy to foresee the possibility of the Kyoto agreement coming into conflict with an FTA. For example, an effective emission credit trading system will require some form of taxation of carbon dioxide emissions embodied in imports from nonsignatory countries. Applied by Australia to imports from the United States, this would, on the face of it, conflict with the requirements of the FTA.

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  1. Bon Scott
    June 24th, 2003 at 09:56 | #1

    That sounds about right.

    The rejection of multilateralism seems the key element – it’s a plank in the neoconservative agenda that sees the US as the sole remaining source of real power remaining in the world after the collapse of the Soviet Union. (Hey, it’s not called the Project For The New American Century for nothing…)

    Another interesting example of US bi/unilateralism is the shenanigans around the establishment of the International Criminal Court, which the US is end-running around through a series of bilateral agreements. (The US had the bilateral clause in the ICC treaty inserted in the first place, if memory serves correctly.)

  2. Factory
    June 24th, 2003 at 10:08 | #2

    Hmm it really depends on the FTA. Does it set minimum standards that the participating countries must abide by, to make sure that certain undeireable activities do not take place? This is prolly likely.
    And it’s prolly likely that the minimum standards will be that of the country that wants the FTA the least.

    Erm, but neither countries governing parties like the Kyoto agreement all that much, so it looks pretty unlikely that Kyoto will be part of the FTA.

  3. June 24th, 2003 at 12:40 | #3

    John,

    A good point that I hadn’t previously considered. Almost certainly any FTA would prohibit both signatories from imposing any discriminatory import duties on imports from the other. While Kyoto doesn’t itself mandate a carbon emissions trading system, it’s certainly potentially one of the most effective methods of achieving emissions targets (because of the price signals such a system creates). Any such emissions credit trading system would almost certainly put Australia instantly in breach of the FTA. Thus the Howard government could, by signing and ratifying the FTA, significantly constrain the ability of a future Australian government to accede to the Kyoto Protocol.

  4. Tim Dymond
    June 24th, 2003 at 13:14 | #4

    So essentially we can sign the FTA with the USA, or sign the Kyoto protocol, but we can’t do both! Maybe the point to be made here is that there is not, never has been, and never will be, really ‘free’ trade. Freedom is supposed to enhance – not restrict, one’s actions.

    Incidently – Alan Oxley appears to be virtually a unilateral disarmer when it comes to protection measures. I remember when unilateralists on nuclear arms control were derided for wanting negotiators to go to the table without wearing trousers.

  5. John Quiggin
    June 24th, 2003 at 13:46 | #5

    Thanks for your analysis, Ken.

    On blogging generally, it’s great having free advice on tap, even if a large proportion of that advice concerns my beard.

  6. June 25th, 2003 at 09:20 | #6

    Not advice, comment. But if you want beard advice, why not try a compromise? Larry Niven’s “known universe” SF stories include a culture which practises asymmetric half beards (one side of the face shaved), as a form of conspicuous display of wealth and leisure by aristocrats (and their decayed descendants).

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