FROM: Roger Raven, President
DATE: 18 June 2004
RE: Opposition to FTA.
Naturally the Friends of the ABC (WA) (FABC (WA)) are primarily interested in the impact of the recently signed Australia-U.S. Free Trade Agreement (FTA) on the ABC and on its capacity to buy, produce and encourage local content without limitation or penalty.
However, given the demand of the Federal Minister for Trade, Mark Vaile, that the Agreement be accepted as it is, we are fully entitled to have regard to the other impacts. Such a demand is in itself unreasonable and unjustifiable denial of parliamentary democracy. It is something for which the parties should have allowed when negotiating the Agreement.
Several economic forecasting bodies have assessed FTA impacts:
- Compiled by the National Institute of Economic and Industry Research for the Australian Manufacturing Workers Union, the report found the Australia-US free trade agreement would cost the Australian economy almost $50 billion and up to 200,000 jobs. We would effectively surrender our chances to expand into knowledge-based industries under the trade deal.
- Centre for International Economics predicts an economic windfall from the FTA of somewhere between $1.1 and $7.4 billion a year. According to the No FTA website, "what the modelling actually says is that more trade will be diverted away from Australia by this agreement than will be created. To disguise this fact, the government's models have assumed a massive increase in US investment resulting from the agreements". The report was completed in four weeks!
- IMF study of last year indicated " … slightly negative impacts on Australia …the United States is Australia’s largest partner in services and investment, and while they are not treated in the simulation exercise, these areas could possibly receive a stimulus from an Australia-U.S. FTA.".
- Philippa Dee of the ANU, in an analysis for the Senate inquiry, using a different model and assumptions, puts the annual gain at only $53 million. (On this model, the CIE estimates an annual gain of $359 million).
It seems that the chief US trade negotiator has told a US Senate committee that the FTA was the first step in a campaign to raise global pharmaceutical prices, obviously starting with Australians.
In contrast to Australian Government claims, the American government has claimed:
- This is the most significant immediate reduction of industrial tariffs ever achieved in a U.S. free trade agreement,
- In response to U.S. concerns about Australia’s agricultural state trading enterprises, Australia committed to working with the U.S. in the ongoing WTO negotiations on agriculture to develop export competition disciplines that eliminate restrictions on the right of entities to export.
- Australia will accord substantial access across to U.S. services suppliers, subject to very few exceptions, based on the so-called "negative list" approach.
- In the area of broadcasting and audiovisual services, the FTA contains important and unprecedented provisions to improve market access for U.S. films and television programs over a variety of media including cable, satellite, and the Internet.
- All U.S. investment in new businesses is exempted from screening under Australia’s Foreign Investment Promotion Board (FIRB).
- Australian central government will eliminate its industry development programs, under which suppliers have had to provide various types of offsets, e.g., local content or local manufacturing requirements, as a condition of their contracts.
- Digital products will receive non-discriminatory treatment and will not be subject to customs duties.
- Establishes that only authors, composers and other copyright owners have the right to make their work available on-line.
- Ensures extended terms of protection … for copyrighted works,
- An innovative enforcement mechanism includes monetary penalties to enforce commercial, labor and environmental obligations of the trade agreement.
Points 2 and 6 above are obviously relevant to other statutory authorities competing with the private sector, such as the ABC. Points 4, 7, 9, and 10 may harm the ABC.
Other points worth noting include:
- Now at least 55 per cent of the programs shown on free-to-air TV must be Australian. Under the new agreement, the Australian content quota cannot be increased beyond 55 per cent.
- Pay TV channels that screen drama must now spend 10 per cent of their total program budget on new Australian drama. Under the deal, this is expected to be capped at 20 per cent.
- The industry is worried the Government has made no provisions to regulate "e-cinema". In the future, films will be beamed directly into cinemas via satellite. With US films already taking 90 per cent of the Australian box office, there are fears that under a centralised digital delivery of film, Australian product could be locked out entirely.
As others have rightly pointed out: "the regulation of public broadcasting could be affected by the agreement because [of] the definition of what constitutes a public service – which excludes services provided on a commercial basis or in competition with other service providers. A similar definition appears to apply with GATS. The ABC is definitely in competition with other service providers."
Such a risk should not be treated casually. As it is, News Ltd, for instance, could use the FTA to justify pressure on the Australian Government to stop the ABC using public funds to compete with it. Once the FTA is in place, investor-government disputes procedures can be added.
There seems no good reason to accept anything that looks as much like a bad agreement as does this FTA. According, FABC (WA) urges Labor to oppose the enabling legislation.
Yours sincerely,
Roger Raven
President – FABC (WA)