17 February 2004

This trade deal could have been better. But Howard blinked

In reality, FIRB is no barrier, and lifting its threshold for approval in non-sensitive areas will have little effect. There is no way we will attract the US manufacturing investment that poured across the border into Canada and Mexico.

The view that a bad deal was better than none implies that if this deal collapsed, the US would never offer the same concessions again. It implies that the US industries that stand to gain so much from this deal - manufacturers, drug companies, service industries, Hollywood - would give up and walk away, rather than pressure the next US administration to produce a comprehensive offer.

I doubt that too. Last year in similar circumstances, the Mexico-Japan trade deal broke down when Japan refused to open its market to Mexican pork exports. Mexico's gutsy President, Vincente Fox, refused to blink. Back in Japan, the impasse whipped up pressure for farm reforms, and now the Japanese are back to the table.

That is what I suspect John Howard should have done: stood tall, and let it be seen that the sugar lobby was blocking the US from a deal that would have benefits for its wider economy.

That would have increased pressure for farm reforms in the US, preserved Australia's credibility as a global fighter for free trade in agriculture, and allowed us to come back in a non-election year to finish the deal.

Hear, bloody hear. But that course would have required a certain amount of political courage and meant starting an election year with a foreign policy defeat. It would also have fed back into the war. As the Miami Herald said, the US has no better friend than Australia, and if that is less important than the US sugar, beef and dairy lobbies it rather weakens the obsessive bowing and scraping that Howard thinks is foreign policy.

The government can easily answer this argument. It can publish the treaty now.

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