Move to scrap tariffs "sooner rather than later"
by Kerry Ans Both Labor and Liberal governments have pursued the "free" trade mantra and "competition policy". This has resulted in the substantial lowering of tariffs which, in turn, has led to the dismantling of many of Australia's former manufacturing industries. It is this which Mr Doug Cameron, the National Secretary of the AMWU complained of at the recent ACTU Congress — 300,000 jobs gone in manufacturing industries. However, the recently released Productivity Commission's draft report states that most general tariffs are now fairly low and that there would still be some benefits to the Australian community from their complete removal. The main tariffs the report refers to are in the manufacturing sector, which are currently set around 5 percent. The higher tariff levels still in place in the passenger motor vehicle and textiles, clothing and footwear sectors were not part of this report. The main arguments used for the conclusion that manufacturing tariffs should be removed next year are that even low tariffs add to the prices paid by consumers for manufactured goods and they reduce the international competitiveness of Australian firms. The claimed benefits from the complete elimination of remaining tariffs are improved purchasing power for households, removal of an area of complex and unwanted legislation on firms, and a strengthened international trade negotiating position for Australia. In the international negotiations at the Uruguay round of the General Agreement on Trade and Tariffs (GATT) and then in the World Trade Organisation (WTO) which grew out of GATT, many governments (including Australia's Keating administration which signed the final agreements) were convinced by the ideology of the "free" market, the so-called "level playing field" and "competition". Unfortunately, for the ordinary people these free market notions hide the reality of the powerful capitalist interests that lie behind the agreements. The agreements are used to dismantle and deregulate many institutional forms and enterprises which have been constructed over time to meet the particular economic, social and cultural needs of countries. Whether or not "free trade" will suit a country depends on the circumstances of that country. Australia, for example, has a large land mass, most of which is marginally productive except for some coastal fringes and has huge communication and transport distances to overcome. These challenges were, to a great extent, overcome by particular institutional (including public sector) arrangements. Many of these arrangements were designed to deal with inequalities between people and regions, following successful campaigns by unions, small farmers, and progressive political parties and organisations. They gave our country a degree of economic independence in times of war and economic crises in other parts of the world and built Australia's economy to a high level. The so-called "level playing field" of "free trade" is basically about dismantling and deregulating these arrangements with disastrous consequences for the manufacturing and clothing, textiles and footwear sectors of Australian industry. Job losses Between 1974 and 1999 there was a reduction in employment numbers in textiles, clothing and footwear by 53 percent, in transport equipment and machinery by 39 percent, and in metallic products by 29 percent — an overall reduction in employment in the manufacturing sector of just over 22 percent. Whereas just under 24 percent of the workforce were employed in manufacturing in 1974, the figure was down to 12 percent in 1999. This is not because of a decline in productivity in the manufacturing sector. Productivity levels have increased as have the profits in the sector but this has not been shared with the wage earners in the manufacturing industries. Eighty two percent of Australia's workforce is now engaged in the service sector. The social and economic dislocation caused by the decline of manufacturing employment has not been accounted for in the Productivity Commission's statement of costs faced by the sector. The report claims the main costs relate to "labour market adjustments" which will "peak" at $90m (don't you love the doublespeak!). The unemployment costs of which the report speaks, mainly includes the direct cost of unemployment benefits (for a minimum period of time) and re- training. Full costs The full costs in terms of social dislocation, loss of consumer demand in urban and rural areas with higher than average unemployment rates, the long term effects on people's health, the stress of losing one's job and facing a very difficult over-50s labour market, and the loss of manufacturing capacity, are ignored in the report. Consequence The decline in the country's manufacturing base, results in a reliance on imports, which not only means loss of economic independence, but also means an escalating current account deficit as we import goods formerly made in Australia. This problem worsens when the exchange rate of the Australian dollar slides, as it has of late. It means we have to pay out more Australian dollars to purchase the same volume of imports. The decline in the manufacturing sector is a big contributing factor to the current crisis in the countryside. Enterprises that formerly provided employment in country towns have closed. Local people and local Councils have attempted to compensate by building up the service industries, particularly tourism and hospitality. These industries, however, are very reliant on good economic conditions in the region and in the rest of the world. Overall, country towns have suffered badly and as manufacturing enterprises contract, banks, telecommunications, Medicare centres, hospitals, etc also close. Major reason The major reason for the elimination of tariffs are made clear from an analysis of the Productivity Commission's claims — to enable finance capital a freer hand in restructuring those historically developed institutional arrangements in a way which better suits their purpose. The Productivity Commission's task is to legitimise the process as it carries out the work of the WTO and global capital. A more socially conscious industry policy would rebuild those components of the manufacturing sector which are necessary to Australia's economic independence, keeping in mind the ecological effects and keeping these to a socially-agreed minimum. Such an industry policy would need to develop strong ties with democratic groups in other countries, notably in the Third World. This would recognise the right of industries and countries to trade protection where they have recognised the rights of labour to organise and raise living standards.