US-Australia pact 'dangerous'

US agricultural aid has been a sticking point

Australia's drive to sign a free trade pact with the US could do more harm than good by undermining Australia's relationship with China, critics are warning.

The proposal, unveiled in November by US Trade Representative Robert Zoellick, reflects the increasingly warm relationship between the two countries built on Australia's unstinting support for the US "War on Terror".

I find it staggering that people are prepared to sacrifice benefits from other markets in favour of an arrangement with the US where we weren't expecting to get very much

Stuart Harris
Professor, Australian National University

But signing up with the US will simply close lucrative doors elsewhere to Australian trade, critics suggest.

At particular risk, they say, is the relationship with China and Hong Kong, which absorbed the second-biggest share of Australia's exports in the year to September.

Australia's former ambassador to Beijing, Ross Garnaud, has accused the government of pursuing the pact for political purposes in the face of economists' advice.

Seeking the free trade area (FTA), he said, "would discriminate against (Australia's) economically more important partners in East Asia", while the chances of wedging open still further the door to Chinese markets would diminish.

Two by two

The FTA proposals are part of a concerted US effort to get its allies in the "War on Terror" onside by whatever means seem appropriate.

They reflect a preference in the Bush administration for bilateral trade deals which can be made from a position of strength, rather than waiting for World Trade Organisation talks where Europe and Japan have equal sway.

That preference is part of the problem, critics say.

US policy - including its willingness to impose tariffs to protect domestic industries like steel and agriculture - risks sundering the world into trading blocs, rather than breaking down barriers across the board.

Policy reversed

The FTA concept is also a symptom of the marked change in Australian foreign policy under the conservative government of Prime Minister John Howard.

Throughout the late 1980s and 1990s, Australia did its best to shed its image as a European outpost in the Pacific, allowing more immigration from East Asian nations and wooing them politically.

During this period, Australia's inter-Asian trade soared.

But Mr Howard has instead looked to the US, especially since the 11 September attacks on New York and Washington DC in 2001.

Since the bombing of a nightclub in Bali killed dozens of Australians, the anti-terror rhetoric has stepped up, including suggestions of pre-emptive strikes on Asian neighbours should they be suspected of "harbouring terrorists".

Needless to say, the suggestions have prompted howls of rage from the likes of Malaysian Prime Minister Mahathir Mohamed, who said Australia was advocating acts of war.

'Running away'

Mr Garnaud is not alone in his criticisms.

Australian National University professor Stuart Harris told the Agence France-Presse news agency that other markets would "run away" from Australia.

"I find it staggering that people are prepared to sacrifice the benefits we get from other markets in favour of an arrangement with the US where I don't think we were expecting to get very much."