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Issue #1754      October 26, 2016

Editorial

Background to plunder

In 1999 the Howard government signed the Fifth Protocol to the General Agreement on Trade in Services (GATS). There was little fanfare or fuss, just a one-page press release from the then Minister for Trade, Tim Fischer, singing its praises. What is the Fifth Protocol? How many citizens were informed and asked their opinion on it?

The GATS was negotiated as part of the Uruguay round of GATT. It is part of the World Trade Organisation regime. Negotiations around financial services at the Uruguay round were finalised in December 1995.

Driven by US financial institutions, the Fifth Protocol to GATS relates to “trade” in financial services. It covers insurance, banking, securities and financial information. Fischer promoted the agreement as opening up foreign markets for Australian financial institutions: “It will mean the Australian financial sector will be able to invest more easily, with more confidence, and more security, in the Asia-Pacific region and across the world”, he said.

Australia, by signing the Protocol, also agreed to open up its financial sector – banks, insurance companies, stock exchanges, etc – to foreign takeover and to give foreign investors in these fields exactly the same rights as Australian-based ones to extract Australia’s wealth. But little was said about that.

Fischer claimed that “For Australia, acceptance of the Protocol does not require any new legislative action”, giving the impression little would change. Prior to signing Treasury had issued reassurances that the Fifth Protocol would not automatically allow foreign takeovers of the “big four” banks, the Commonwealth, ANZ, NAB and Westpac. At the time of its privatisation, the Commonwealth Bank was protected by restrictions on foreign ownership and takeover/control by financial institutions.

But the Howard government had, as far back as December 1997, agreed to remove restrictions on foreign ownership of these banks and breach government guarantees regarding the Commonwealth Bank. It made a commitment at the World Trade Organisation to eliminate “a prohibition on the acquisition of control of any of Australia’s four main banks” and eliminate “a measure which prohibits banks (resident or non-resident) from holding shares in the Commonwealth Bank of Australia ...”

With the signing of the Fifth Protocol Australia surrendered its sovereign right to make decisions over ownership and control of its largest financial institutions. Any attempt by a government to breach this Protocol would bring Australia up against stringent enforcement measures, including the possibility of having to pay compensation to any investors claiming potential losses.

A similar process occurred with communications, shipping, airlines and other parts of the service sector.

The Howard government had committed Australia to agreements that have the objectives of removing “barriers” to profit-making and the global expansion of transnational corporations. These barriers included restrictions on foreign ownership and capital flows, government regulations (health and safety standards, licensing, etc), taxation, national borders and customs, social spending by governments and public ownership. They go hand in glove with the offensive against workers’ wages and conditions and attacks on the Australian trade union movement.

The bottom line is that the people of Australia are being subjected to phoney inquiries and consultations which come up with recommendations on international trade treaties that in some instances the government has already committed itself to in iron clad agreements.

Free trade and protectionism

The use of tariffs, subsidies and other protective mechanisms such as quotas, are typical methods used by capitalist economies to regulate trade and protect domestic industries. All of these methods result in raising prices to the consumer but they can be used to defend jobs.

“Free trade” is being strongly pushed by the big corporations because it permits them to undercut domestic manufacturers and growers, to drive them out of business or take them over. “Free trade” is really anarchy and the law of the jungle by which the stronger drive all others to the wall and into bankruptcy, with workers left on the scrap heap.

A struggle between supporters of “free trade” and “protectionism” waxed and waned in Australia for the whole of the 20th century. One of the early political parties in Australia went by the name of “Free Trade” and won over 35 percent of the vote in the 1901 elections.

The alternative to these methods of trade is the adoption of the principle of “mutual benefit”. “Mutual benefit” trade means that the buying and selling of goods between countries is carried out with an eye to the benefit of both countries – not just one. It means the widespread use of trade agreements which set out the terms and conditions and quantities of goods to be bought and sold. It introduces a planned approach to trade and industry development.

It involves the public ownership of major trading organisations so that the national interest can be effectively protected while taking into account the interests of a trade partner.

See page 7: the CPA’s draft submission to the Department of the Senate, Foreign Affairs, Defence and Trade Committee, on the current proposed Trans Pacific Partnership trade agreement.

Next article – Revolutionary solidarity

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