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Tuesday, 4 October 1983
Page: 1273


Dr THEOPHANOUS(5.28) —I begin by thanking the Minister for Trade (Mr Lionel Bowen) for the excellent work he is doing and the effort he is making to protect and preserve Australian industry. His record in relation to that is commendable; he is setting an example that ought to be followed by others. We have just heard from the honourable member for Dawson (Mr Braithwaite) about some of the contradictions within the coalition parties. The honourable member for Dawson spoke about how we ought to get tough with the European Economic Community. I do not know how one gets tough with the EEC without, at some stage, being prepared to carry out protection measures. Similarly, he talked about the need for more protection for the sugar industry. Obviously he has not read--


Mr Braithwaite —I didn't say protection.


Dr THEOPHANOUS —The underwriting program is a form of assistance which involves protection.


Mr McGauran —Rubbish! You don't know much at all.


Dr THEOPHANOUS —The honourable member will get his chance to speak later. It is quite clear what is happening. When it comes to protecting the rural industries honourable members opposite are very protectionist, but they are prepared to let all the manufacturing industries go to the wall. This was a clear sign from the meeting of the Federal Council of the Liberal Party held last weekend. If honourable members opposite do not believe that they should read the details because it is quite clear that members of the National Party of Australia and members of the Liberal Party have different views. There is a huge gap between them.

Let me talk in serious terms about the problems of protection. Unfortunately, of course, debate on protection, generally speaking, tends to be put in very simple terms such as: 'Well, it's a matter of ideology-free trade or protection. That is the end of the matter'. It is not like that at all. Obviously, there is a world which we would like and which we would all desire, that is, a world in which there is more freedom of trade and in which there is fair and balanced trade between countries. But the fact of the matter is that that world does not exist today. Because that world does not exist today, we have to look at Australia's national interest. We have to ask ourselves what are the appropriate measures that we must take to protect Australia's industries against unfair and iniquitous competition.

Of course we have responsibilities in the international arena. The Minister for Trade, who is at the table, has a wonderful record in understanding those matters. But it is one thing to talk in terms of our international responsibilities as if they exist in an ideal world and another to talk about them in the real and concrete world. The fact of the matter is that, if one looks at the real and concrete world, if one looks at what is happening to world trade, one sees that, in fact, increasingly more and more countries are becoming more protectionist and are taking advantage of those countries which, for ideological or humane reasons, are prepared to open up their doors to other countries. That is clearly the case; it is one of the things that is happening. The other thing that is happening in relation to this matter-something that is rarely referred to but is extremely important-is the control which certain multinational and transnational corporations have in world trade. It appears that we have trade between nations but, in fact, we have trade between arms of the same or related corporations. In regard to that, let me quote no other authority than the United Nations itself in a study it did on the matter. The Secretariat of the United Nations Conference on Trade and Development stated:

The bulk of the international commodity trade, particularly in agricultural products, is in the hands of about 50 large trading conglomerates of developed market-economy countries . . .

The major manufacturers of consumer durables and capital goods are often transnational corporations which are vertically integrated and which are also diversifying their activities. Increasingly, manufacturing TNCs are establishing separate trading entities controlled by the parent for the purpose of undertaking all international marketing activities; these affiliates are often responsible for international sales of all the corporation's product lines;

The most significant impact on the structure of marketing and distribution channels in international trade during recent decades and on the operations of the main trading agents has been the 'relentless process towards concentration of economic power and the strengthening of dominant positions'-through mergers, takeovers, joint ventures, joint selling and buying arrangements, etc.

Possibly 30-40 per cent of all international trade is on an intra-firm or related-party basis, 30 per cent is likely to constitute 'State trading', and ' further share' of international trade is captive in nature as a result of sub- contracting or long-term and medium-term contractual arrangements;

Three-quarters of foreign investment by TNCs in the world manufacturing sector is in other DMECs; a significant proportion of their sales are made through and to subsidiaries; the bulk of technology transferred by manufacturing TNCs-in terms of equipment and knowledge-is channelled through subsidiaries, including transfers under licensing agreements or direct sale.

That is the concrete situation. The concrete situation is that a pseudo scenario is presented where there appears to be either a conflict between nations or an agreement between nations, but in fact it is those huge multinational conglomerates that are benefiting through the world trading arrangements that are put forward at present. If there is to be a sensible policy on trade and protection, it has to take this extremely important point into account and make much of it. Without doing that, we will have pseudo debates about pseudo matters rather than a real debate about the real economics that exist.

What are some of the sorts of things that we ought to be looking at? Obviously, we ought to be looking at overcoming arrangements such as transfer pricing and various sale arrangements that are made by these transnational corporations, by working directly with other nations and their governments. We need more organised arrangements. The honourable member for Dawson mentioned the EEC. One of the things that we need in relation to the EEC-and I would agree with any program that the Opposition wants to put up to increase the penetration of Australian primary products into the EEC-is an orderly and worked out arrangement between its member countries. The idea that one can leave it up to so-called free market forces-'so-called' because they do not exist-is nonsense. What really exists is a small set of corporations that has a tight grip on the trade situation.

There also needs to be more planning at our end of the process. Various reports which have been produced clearly indicate that we are becoming increasingly dependent on foreign imported products in a wide range of areas and that we are not producing sufficiently, especially in new industries and in high technology industries, about which my colleague the Minister for Science and Technology (Mr Barry Jones), who is present in the chamber, has spoken a great deal. I might say that the Government is working through a regulated program to try to increase Australian production in such high technology industries. We have put forward proposals in that area. But these proposals can only get going with sufficient support in the area of protection. One cannot simply have a situation where high technology products produced in Australia can be expected to automatically compete with some of the vicious processes that are being used by some of our foreign trading partners at present.

The Deputy Prime Minister (Mr Lionel Bowen) has mentioned on several occasions that Australia is a naive country in relation to protection in the way that we do not have the large number of non-tariff measures that many other countries have. Some countries go to the point of absolute absurdity in relation to their non-tariff protection measures. There are sensible, non-tariff measures that we ought to be thinking about and looking at in terms of what we can do for our industries. It is not a matter of protecting every enterprise, no matter how inefficient or no matter what its position. That is not the issue at all. The issue before us is to select; but, in selecting, we have to be careful that we establish efficient industries which will receive due protection until they mature so that they can compete with other countries. I think that is the sensible approach. I am sure that the Minister and his Department will continue with that approach. Let me say that the Caucus and the Caucus Industry Committee -


The CHAIRMAN —Order! The honourable member's time has expired.