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Thursday, 2 June 1994
Page: 1225

Senator MARGETTS (4.33 p.m.) —The terms of reference of this study, AFTA: Trading Bloc or Building Bloc?, look mainly at the economic impact on Australia, and generally at some of the wider questions of the direction of trade in the region. As stated in the summary, AFTA's principal objective is to boost ASEAN's attractiveness to foreign investors as a base for export production. This is more or less the goal of most nations who feel the wish or need to participate in a deregulated global economy.

  The impacts on Australia are expected to be minimal. In part, this is because the primary products that are a major component of our exports to the region are excluded from the agreement, so there will be almost no change there. The negative aspects of the preferential system are expected to be balanced by increased demand as the ASEAN economies grow. A sub-note here is that minimal impact and a balancing of factors does not augur well for a massive expansion in our food exports.

  The area that is expected to be hit most heavily by the preferential tariffs is on elaborately transformed manufactures or ETMs. This is the area the government has said it wishes to be growing in, since it involves high levels of value adding and the use of technological skills as an alternative to simple food processing. I note that AFTA does not seem to hold out any great hopes of massively increased exports, and further note that in this area we are in direct competition with Canada and the USA, both of which are members of APEC.

  The flow of investment was considered difficult to quantify. If we look at chapter 5, we see something of the trends relating to TNCs or transnational corporations—and I use the Australian acronym rather than the US MNCs or multinational corporations. Chapter 5 says that TNCs:

. . . agree that Asia would be the primary new investment site for their companies in the 1990s

The report goes on to highlight some of the positive and negative factors on investment. Due to shortage of time I will call attention to only some factors. One of these, on page 78, is the absence of suitable acquisition partners. I note the statement that there are only a few good partners out there and everyone of them already has multiple tie-ups with other transnational corporations.

  I note this as part of our general concerns about economic deregulation and so-called free trade. It is clear from this that a major impact of transnational corporation investment, to the extent that it becomes a problem for TNCs themselves, is the creation of an elite and the support of elites in ASEAN.

  It is easy to do what most of this book does and take the economic interests of the nation as equivalent to the interests of the people of that nation. While there may be some benefits that trickle down, there is significant evidence that the consequence of development has often been a trickle up—sometimes even a flow up.

  What becomes clear in reading this study, and other studies like it, is that the primary factor here is corporate profitability. Where there is under-utilised plant in developed countries, transnational corporations will use that if it is cheaper. If it is not, they will move. There is no responsibility to anyone, and corporate decisions respond as much to corporate factors as to incentives and disincentives set up by nations.

  Nowhere in this study or others like it is there any question or term of reference about the impact of leading national economies waiting on the will of transnational corporations. Nowhere are social or environmental impacts mentioned at all.

  We see in ASEAN a vast expansion of wealth, and the creation of a very rich elite. We see workers in nations like Thailand working for $20 a week. We see the need for competitiveness translate in nations like Thailand to moves to hold wages down, so they can compete against Vietnam. There are huge disparities of wealth and poverty in these nations, and peace is often kept through the use of military and paramilitary force, and the stringency of need. Free trade exacerbates this as long as social and environmental impacts are excluded from consideration.

  The freer our trade the more directly we compete with these nations. Without any social and environmental frameworks, we compete on the basis of exploitation of people and the environment. We may have a big future as a food provider to Asia, although this report casts some doubt about the prospects for this short term. Already technological goods are being produced in these nations. Korean-made electronic goods have largely supplanted Japanese ones except at the top end of the market. The Chinese have already taken the bottom end of the electronic market.

  This report is another question mark hanging over our future. There is nothing wrong with trade, except when it allows the rich and powerful to circumvent a nation's attempt to look after the welfare of its population. Without regulation, free trade does this. As mentioned in the MPI, there is a growing gap between rich and poor here. It is largely due to unregulated economics and social irresponsibility. We do not see AFTA as any benefit to the people of any nation unless the nations within it take their responsibilities to their people and the environment seriously. I seek leave to continue my remarks later.

  Leave granted; debate adjourned.