Since the rise of Bob Hawke to the Australian prime ministership in 1983, a bipartisan consensus has advanced free trade.
The late 20th and early 21st century was replete with expressions of this ideology, meaning Australia now has 14 such agreements.
Notwithstanding this accord within the Liberal-Labor duopoly, from an Australian first perspective, free trade has had a deleterious effect on the national interest. The fealty of our leaders to free trade has also been harmful in the sense that we have lost benefits, which would have otherwise accrued had Australia committed to a protectionist policy–placing tariffs and quotas on the importation of foreign goods.
Free trade leads to outsourcing
Particularly when free trade is undertaken between a wealthy country and a poor country, this leads to an outsourcing of jobs from the wealthy country–thereby affecting Australia.
The principles undergirding this proposition are simple enough; by way of example, consider our current free trade agreement with Thailand, effective from 1 January 2005.
The average monthly Australian wage is $6,000 per month; the average monthly Thai wage (once converted) is about $600 per month. If employees in Australia are 10 times more expensive than employees in Thailand–and open access to Australian markets can be established from Thailand–it will often be more profitable for production to occur in Thailand rather than Australia.
Because production is significantly cheaper in Thailand, it becomes difficult–if not impossible–for Australian based businesses to compete. As a result, an outsourcing of production occurs: either in the form of larger corporations relocating to access cheap Thai labour, or Thai businesses simply outcompeting those that remain based in Australia.
While this shift in production may benefit the uber wealthy that own the means of production, it harms workers whose jobs have moved overseas.
The loss of, say manufacturing jobs overseas is particularly profound when one considers the impending job losses in the coming decades: 800 million jobs are projected to disappear worldwide between 2017 and 2030.
Because of these anticipated losses to improved technology and automation, when jobs shift overseas–such as when Holden ceased manufacturing cars in 2017–there is absolutely no guarantee that those redundant employees will ever be able to regain employment. Moreover, the class of these permanently unemployed is (and will be) no small number: a 2014 study predicted that the end of Australia car manufacturing would cost 200,000 jobs.
Free trade undermines our sovereignty
When undertaken indiscriminately with any country willing to do business, free trade diminishes our capacity for independent action. There are a few ways in which this undermining of sovereignty can occur.
The first way relates to an occasion of crisis, such as war or the recent coronavirus. Because free trade leads to outsourcing, there is the potential of lacking immediate access to vital necessities of life in the event that supply chains are disrupted.
National COVID-19 Coordination Commission boss Nev Power said as much in April, raising concern over
Those things that we rely on so much from overseas at the moment, for example medical surgical masks.
Second, when free trade is undertaken with hostile or potentially hostile actors, it hands them a leverage over our government where none previously existed.
In most cases, the exporter has more leverage over the importer: it can impose quotas or cut off supply to vital goods, until the importer complies with whatever the particular diplomatic or political demand may be. As put by Patrick Buchanan, “who consumes the apples is less important than who owns the orchard.” Because of this dynamic, the $52.7 billion worth of Chinese goods imported each year should be of concern.
Having said that, the importer can also use trade as a means to exercise leverage, disrupting a status quo that may be advantageous to particular elements within the exporter country. Without question, China was seeking to exercise such leverage when it placed a 74 % tariff on Australian Barley in May, after Australia called for an independent investigation into the spread of coronavirus.
Protectionism would allow for a shift in the tax burden, increasing the competitiveness of local business
As in other countries, Australian production is taxed: the corporate tax rate being 30 %.
That corporations are taxed is reasonable enough: by selling their goods and services in Australia, they access a prosperous and reliable market–secured by government–from which to generate profit. If foreign or foreign-based companies are permitted to access the same market, it is only reasonable they are likewise taxed through tariffs.
The resulting revenue from these tariffs would be significant and could fiscally justify a reduction in taxes on domestic production. In turn, this would boost Australian economic activity and make Australian businesses more competitive within the global economy.
Protectionism would increase our interreliance on one another
As a country, we have gotten to a stage where less binds us together than ever before. In 2019, Scott Morrison denounced ‘tribalism’ along the following lines:
I want to remove the demarcation lines between Australians… I see every Australian as an individual, not part of some tribal group to be traded off against another. And I believe, not in a tribalism that divides, but in an ‘us’ that unites.
This nonsense begged the obvious then as it does today: what continues to genuinely unite Australians, other than our arbitrary sharing of a common land mass?
White identity has been discredited; God has been abandoned; our national mythos is under siege; a lessening percentage of people speak English at home. While these sources of shared racial, religious, national and cultural identity are receding in influence, protectionism and a return to local manufacturing would help by increasing our interreliance on one another.
Now of course, economic nationalism itself would be no panacea to the problems arising from a fragmenting nation–again, along lines of racial, religious, national and cultural identity. Nevertheless, if Australians were closer to and better understood where their goods were coming from, this could facilitate greater cohesion by boosting national interconnectedness.