By Tom Kelly
Completion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) has brought agricultural trade into the agreement. This will further integrate Australia's food industry into the world market.
The implications of GATT for Australian agriculture are explored in the February newsletter of the Food Policy Alliance. The FPA brings together a range of farmer, consumer and trade union organisations with the aim of influencing public attitudes and government policy. The newsletter article, presented as a basis for discussion rather than a statement of FPA policy, points out some serious problems in this new world market for food.
The FPA newsletter says that "much of the agreement is welcomed by Australian farming and food industries. It ... will, over time ... bring down the level of protection of food markets and subsidisation of food trade which has disadvantaged Australia."
But it goes on to raise the concern that "elements of the GATT agreement could work against the kind of national food quality, industry development, high skill and quality employment strategies that [the FPA wishes] to see in Australia".
For example, the newsletter points out that GATT does not consider some areas of hidden subsidy as relevant to trade. Of particular concern is the fact that the GATT process and production methods (PPM) clause prohibits trade discrimination between like goods based on their method of production.
For instance, from an environmental perspective, the full cost of food production includes the renewal of the productive capacity of the soil, and the restoration of the environment to a healthy and balanced state. Where this is not done by the producer, the community is left to pay the cost or live with the degraded environment.
The FPA argues that this amounts to a subsidy for such producers which gives them an advantage over those who use sustainable production methods. Yet while the GATT is ostensibly opposed to the subsidising of food trade, the PPM clause rules out the imposition of anti-dumping or countervailing duties on cheaper imports that are produced by ecologically unsustainable methods.
Furthermore, the FPA points out that schemes like Australia's land care program, because they are government subsidised, could cause agricultural produce to be subject to a duty to reflect this subsidy. Thus the GATT promotes "free" trade in a way that protects those using unsustainable methods and, in addition, could penalise those involved in programs aimed at responsible environmental management.
Speaking to Green Left Weekly, Tony Webb, the FPA's research and project officer, argued that any subsidy gained by the use of unsustainable environmental practices should attract a countervailing duty. This, according to Webb, would create a strong incentive for the producer to devote the necessary resources to environmental protection.
In a similar vein, the FPA article argues that countries which suppress trade union activity are also subsidising the food they produce. Low wages and poor working conditions reduce production costs.
In addition, the article points out that transnational companies can further exploit these conditions by using these lower prices, based on low labour and environmental costs, as benchmarks for international competitiveness in wage and price negotiations with Australian unions and farmers, thereby exerting a downward pressure on Australian wages and prices.
As with environmental considerations, the scope for trade discrimination on the basis of the violation of trade union and basic human rights is severely restricted under GATT.
The FPA article argues that "a way has to be found under GATT to allow sensible discrimination against goods produced in countries which do not honour the minimum International Labour Organisation conventions on collective bargaining".
A third aspect of the GATT agreement that concerns the FPA relates to food quality. Countries that apply food standards above the GATT-approved international standards can be challenged for using these as a "non-tariff barrier" to trade. This undermines the ability of Australia to develop the "clean and green" marketing strategy based on high quality standards that the FPA sees as holding the best prospects for Australian agriculture.
The article explains that the only defence against the non-tariff barrier accusation would be to show that the higher standards are scientifically based on an assessment of risk to public health, and that they are consistently on the high side of the international range. Creating and enforcing a quality regime such as this would require, among other things, a complete overhaul of Australia's food inspection system, something that the FPA argues is in the best interests of the food industry nationally.
To summarise, from the FPA perspective the main drawbacks of the GATT are that repressive labour laws and a lower standard of environmental safeguards in some countries act as subsidies to agricultural producers in those countries, thereby undermining Australia's relative competitiveness. The need to compete on the world market exerts pressure on the Australian agricultural sector to lower domestic wage rates, working conditions and environmental standards. There is also the problem of higher food standards being open to challenge as a non-tariff barrier.
To counter this situation, the Food Policy Alliance article calls for the development of a national Fair Trade Coalition involving farmers and rural community groups, unions, consumers, aid and development workers and environmentalists. The ultimate aim would be to campaign for changes to national and international trading arrangements to reflect fair trade priorities. As the FPA article says, "international trade rules need to recognise that economics is the servant of humanity and not the other way round".
While one can agree wholeheartedly with the sentiment on economics, if a fair trade campaign is to have an impact, sooner or later it will have to address its chief adversary directly. That adversary is not just international trade rules, but the capitalist economic system. This system promotes the conditions that allow transnational companies to play farmers, workers, industries and whole countries off against one another, and it promotes the very same pressures within each country.
In Australia, as elsewhere, workers and farmers are manipulated by the highly monopolised agribusiness corporations that purchase the bulk of their produce. Farmers are under pressure to lower environmental standards and their own living standards in order to produce at a price that will find a buyer. Workers are under pressure to accept lower wages and conditions in order to keep their jobs, and in some cases to ensure the survival of their local agricultural industries.
No matter how "fair" the rules that govern trade actually are, competition on the world market necessarily produces winners and losers. Whoever is the loser at any particular time will be under nearly irresistible pressure to accept wage and environment outcomes that can be used to undermine standards elsewhere.
The only way this situation can be overcome is with a broader alliance that has no more respect for national boundaries than does transnational capital. Such an alliance would be based on the common interest in a sustainable economy with decent living standards shared by all the world's workers and farmers.
With regard to trade sanctions based on environmental degradation and the suppression of human rights, it is only when the people directly affected in the countries concerned call for such sanctions (as was the case in South Africa) that we can be confident that sanctions are not simply a means for one country's capitalists to gain an advantage over another's.
While it may sound like a daunting task, an international approach is the only viable option in a world dominated by transnational capital.
The experience of the diverse range of groups in the FPA campaigning together for "fair trade" may lead many of them to similar conclusions.
[The Food Policy Alliance can be contacted at Level 7, 191-199 Thomas St, Haymarket NSW 2000, telephone (02) 334 9242, fax (02) 334 9252.]