Free Trade/ Foreign Investment

Why I reject the idea of free trade

While the 21st century has largely seen a worldwide push towards economic globalisation, the recent emergence of alternative ideas bucked this trend.

As among the populist American revolt led by Donald Trump, the Brexit uprising, Pauline Hanson’s recent electoral successes as well as the heightening popularity of both Marine Le Pen and Geert Wilders, these figures all shared in common varying or similar levels of animosity, to the very idea of free trade and completely open markets.

The dramatic rise of these nationalistic politicians has made abundantly clear, that no longer will the peoples of the West tolerate economies bereft of borders, without a mighty backlash. Further, according to the doctrine of this anti- globalist surge, the interests of ordinary people within nation states are to be put first, ahead of foreign, corporate interests.

For me to personally observe this global phenomena in the past few years has been extraordinary, and I hope one day history reserves this era a special place.

However, this movement of which hostility to free trade is a core tenet, made be reflect upon my own beliefs. In Australia, the establishment of the political centre- right: the Liberal party, is the champion of free trade throughout the country. Not only did the party develop it in the post- war era, but it fervently defends its practice in the modern day.

Given I am certainly no left- leaning individual, it was only natural that I became a Liberal party supporter, and thus embraced its ideology on free trade.

And certainly there are merits to this position and its advocates. Undeniably, free trade aids exporters, furthers what a nation is most economically proficient at, while leaving costly, inefficient industries by the waste side. It ensures that local industries are constantly advancing, as if they cannot produce products the equivalency of foreign goods in terms of quality and pricing, they go out of business. Free trade can also have the impact of ensuring consumer goods remain cheap, which benefit Australians of all kind.

Whilst these perks to free trade should be acknowledged, its proponents often blindly ignore the costs.

The most obvious cost of free trade is the loss of local jobs, as industries are often shipped overseas. These consequences are particularly profound in the manufacturing regions of our nation, such as Victoria and South Australia. The ending of the manufacturing of Holden cars, has both directly and indirectly cost tens of thousands of jobs since 2013 and will continue to do so until operations end in 2017.  Additionally, hundreds have lost employment in the closure of varying steel works.

The mass displacement these job losses will inflict upon ordinary, blue collar Australians are immense, and will continue the pattern of the de- industrialisation of Australia.

In fact by 2017, there will be virtually no car manufacturing industry in our country, leaving behind an array of social issues for the thousands displaced, as has been in the case in the de- industrialisations of other comparable countries.

It is no secret that problems in competition with other countries in our region, particularly with developing Asian nations, make it virtually impossible for some Australian companies to compete and succeed. When the minimum wage of some Asian countries is non- existent or one tenth of our own, the task of Australian companies competing is so difficult it can become a hopeless scenario. As our trading circumstances with Asian partners has moved towards changing if not entirely removing tariffs, import quotas and export quotas, the death warrant for much of our local industry has been in effect signed.

But for supporters of free trade, the outsourcing of local industries for the price of global economic integration, is permissible. In this case, the jobs of workers are merely collateral damage in the progression of this master plan.

While I think this reasoning neglects the downtrodden, it certainly contains merit. A case can be made that no matter the cost in local jobs, so long as our exporters benefit from free trade, the continuation of this economic direction is desirable.

Still, this dilemma does not even delve into what the greatest problem with free and/ or freer trade is.

What I see as the greatest problem in our increasing trade with Asian countries (as consequence of more liberalised trade), is heightened economic reliance on these countries for our fortunes. This issue becomes more problematic not when we rely on trade with reasonable, decent- minded allies of ours, such as the United States and Japan.

Rather, the issue is made markedly worse when the basic economic well being of our nation, grows dependent on nations not so fond of Australia.

Clearly in the modern era, this nation that is not friendly to our own, is China.

China’s animosity to our longtime ally in the United States, is no secret. It seeks for global hegemony over the US via activity in the South China Sea and at the UN Security Council, as well as through intellectual theft, global investment and trade across the world, arms manufacturing, and even through diplomatically insulting the American President.

By extension of our alliance with the US we are clearly rivals to the Chinese, and our strong ties to Japan only worsens this predicament.

But through this period, Australian trade has only increased with China and has reached its all time high, of 137 billion dollars.

They are by far our largest trading partner, and due to the 2015 China- Australia Free Trade agreement, this trend appears set to continue.

Sure our exports with China are substantial, which delivers our nation definite economic benefits. But herein lies the problem of indistinguishable free trade with all countries and using markets for all decision making. Given the relative small nature of our nation, China has become economically indispensable to our economy. We are at levels of reliance in which any sudden change in trade relations would have enormous economic ramifications, and may put our nation at risk of recession.

Our country cannot afford drastic changes in this status quo, but most importantly from our perspective, we cannot afford to change much either in approaches to China.

This is a troublesome set of circumstances, when considering the situation before the South China Sea. While in its sphere of influence, China is clearly acting in a provocatory manner towards the United States and its allies. It is constructing and militarizing islands, threatening Japan, and has remained to do so, even in direct defiance of international law.

And yet as a nation, Australia find its hand tied. On one hand, it owes a great historical, cultural and ongoing allegiance to the United States.

But on the other, Australia has enormous trade with the rival of its top ally. As a result, our country cannot afford action that may seem imposing or aggressive towards China in the region. For regardless of China- US tensions, Australia is immensely reliant on China for its economic fortune, due to the practices of liberalised trade. As such, Chinese economic policies disproportionally affect Australia, and whose decisions we maintain no control over whatsoever. If our politicians ever made a move deemed by Chinese leadership to be inappropriate and in bad taste, should they decide, Chinese leadership has the capacity to plunge Australia into an economic depression. Therefore, our leaders are forced to govern carefully for fear of the consequences of a Chinese response.

Even if one was to argue for a reasonably pragmatic Australian approach towards tensions in the South- China Sea (which I do), the simple fact is that what our nation’s leadership desires is not the primary influence behind decision making on foreign policy in the region.

Instead we are beholden to walking this artificially contrived line between accommodating both the world’s superpowers, and who knows where this juggling act will have us in the future.

No one could deny that our economic fate will ultimately have some levels of dependence on that of other nations. Yet when reliance develops exclusively out of market- driven incentives, and little of the broader geopolitical consequences are taken into account, this is free trade gone rogue.

Furthermore, if this trend of  indiscriminate trade liberalisation continues, our nation’s sovereignty and independence seems set to further decline.

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