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Why Trade Policy Should Matter In The Election

18 May 2022
By Dr Patricia Ranald
Prime Minister Boris Johnson and Prime Minister Scott Morrison speaks to members of the media in the garden of 10 Downing Street June 2021.
Source: Prime Minister's Office UK.

Trade policies are being ignored in the 2022 election debate. The pandemic has exposed the impact of trade policy on individual lives, and the differences between the parties’ platforms deserve critical scrutiny.

The COVID-19 pandemic revealed flaws in the one-size-fits-all conventional trade policy. When the pandemic halted imports, Australia and other countries were unable to produce essential medical products because they had followed the mantra that each country should only specialise in its most cost-competitive exports, import everything else at the lowest possible prices, and have no active local industry or government procurement policies for local products.

Shortages of facemasks, ventilators, and vaccines forced the Liberal-National (LNP) Coalition government to assist firms to make them in Australia, and to discuss the need for “sovereign manufacturing capability.” The Labor Party and the Greens have taken up calls by unions and environmentalists for more long-term local industry development and procurement policies both for essential medical and other products and for local renewable energy industries to address the climate crisis.

These policies are not the Donald Trump and Pauline Hansen simplistic yearnings for a return to high tariffs. Instead, they aim for more flexible trade policy, which helps, rather than hinders, local industry development. Such flexible policies can simultaneously decarbonise the economy and create local employment.

The pandemic also exposed World Trade Organization (WTO) rules which give 20-year monopolies on vaccines and treatments to pharmaceutical companies, ensuring that a handful of these companies control both quantities and price of vaccines and treatments during the pandemic. Most vaccines and treatments, developed with government funding, have been sold to high-income countries, where double vaccination rates are now 80-90 percent. Meanwhile single vaccination rates remain below 20 percent in low-income countries, and treatments are even less available. The move to third and fourth booster shots has compounded this inequity. Millions are dying while new variants spread and companies like Pfizer reap revenues of US $36 billion in one year.

Proposals in the WTO to waive these monopolies to enable expanded global production at affordable prices have been blocked by the UK, the EU, and Switzerland, lobbied by their powerful pharmaceutical industries. The LNP government has claimed to support the waiver, but refused to actively sponsor it. Labor and the Greens have called for active sponsorship of the waiver and criticised the government for its perceived inaction.

Trade agreements have also ignored the downward pressure of global competition on labour rights and the environmental standards, aided by a secretive trade negotiation process in which the agreements are not made public until after they are signed. In Australia, there is no independent evaluation of the costs and benefits of such agreements either. There is growing public demand for more transparency and accountability, as reflected in Labor and Greens recommendations in Senate and joint parliamentary inquiries. The EU now publishes negotiating texts, publishes the final text of agreements before they are signed, and conducts independent evaluations of the economic, social, and environmental costs and benefits of agreements.

In contrast, both the EU and the US have commitments in trade agreements to United Nations standards on labour rights and the environment, although these commitments are not yet as enforceable as other aspects of the agreements.

The LNP government has ignored these trends, rejecting the recommendations of the Joint Standing Committee on Treaties for the release of texts during negotiations and independent evaluation of trade deals.

Nor has the government supported commitments to labour rights and environmental standards in trade agreements. Instead, over the last three years, the government has negotiated as many trade agreements as possible, including agreements with Indonesia, Hong Kong, Peru, and the Regional Comprehensive Economic Partnership (RCEP) with 14 Asia-Pacific countries. There have been no independent evaluations of the economic or social costs and benefits, and no commitment to labour or environmental standards. All except the RCEP have included controversial special rights for foreign corporations to sue governments if they can argue that a change in law or policy would harm their investment. This inclusion is known as Investor-State dispute Settlement (ISDS), which was used by the Philip Morris tobacco company to try to sue Australia over its tobacco plain packaging laws. Labor and Greens both oppose ISDS.

Before the election, the LNP government rushed to sign agreements with the UK and India, and announced trade negotiations with the United Arab Emirates (UAE) and the Gulf Cooperation Council (GCC). The text of the former two agreements are now public, but they will not face any review or parliamentary scrutiny until after the election.

There are labour rights and environmental standards in the UK agreement, but not in the Indian agreement. The UAE and GCC are notorious because they have not signed international agreements on human rights or labour rights, operate the kafala system of bonded temporary migrant labour, and include Saudi Arabia, which recently conducted 81 mass public executions.

If there is no change of government, we can expect more of the same trade policies from the LNP. If there is a change of government, Labor and the Greens should implement policies that commit them to local industry development, and actively support a comprehensive waiver of WTO monopoly rules on COVID-19 vaccines and treatments. A new government must be held accountable for a greater level of transparency and independent assessments of trade deals, and for the inclusion of labour rights and environmental standards in such deals. This must include the critical scrutiny and amendment of the UK and India deals, and halting negotiations with the UAE and the GCC.

Dr Patricia Ranald is an honorary research associate at the University of Sydney and is the convener of the Australian Fair Trade and Investment Network.

This article is published under a Creative Commons Licence and may be republished with attribution.