What are free trade agreements and why are they bad?

I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crises. The great point is to bring them the real facts.

– Abraham Lincoln

There has never been but one question in all civilization – how to keep a few men from saying to many men: you work and earn bread and we will eat it.

– Abraham Lincoln

The price we pay for indifference to public affairs is to be ruled by evil men.

– Plato

It is not wisdom but authority that makes a law.

– Thomas Hobbes

All warfare is based on deception.

– Sun Tzu

In war, truth is the first casualty.

– Aeschylus, Greek Tragic Dramatist

Free trade agreements (FTAs) are deeply embedded in contemporary economics and politics, and are regularly discussed as a means for increasing growth and making economic relations between countries fairer and more ‘efficient’ (Baker, 2006). However, what they actually entail is rarely discussed, if ever, and any analysis of what FTAs mean for different people in society rarely goes beyond rhetorical flourishes about how wonderful they are and what an amazing world we’ll soon be living in with the arrival of new FTAs.

In reality, FTAs are devices for maintaining, expanding and deepening the economic supremacy of powerful nations and of the elites who dominate them (Baker, 2006; Chang, 2009, 2011, 2014; Stiglitz, 2002, 2012; Gilens & Page, 2014; Chomsky, 2005). This post substantiates this claim by doing three things. First, it discusses the propaganda which is often used to vaunt FTAs and pretend that they’re something other than a tool of economic domination used by elites. Second, it dispels these propaganda myths by outlining the way that economics works in the real world, which includes a brief discussion of capitalist (i.e., liberal/neoliberal) economics in general. Third, it ties these two things together by explaining the agenda behind people who use propaganda to cover up the true nature of FTAs – i.e., why they come to be proponents of this economic propaganda.

The purpose of this post is to summarise the facts about FTAs in order to help people to better understand the economic debates and the farcical lies told by proponents of FTAs so that we’ll be better able to resist them and their deleterious consequences. Both the Coalition and the Australian Labour Party (ALP), without at least one whom no federal government can be formed in Australia, support FTAs and subscribe to the propaganda on which they’re based, so understanding the reality of FTAs and what they mean for societies is not a trivial issue.

This post draws on work by economists Ha-Joon Chang, Joseph Stiglitz, Gar Alperovitz and Dean Baker, as well as Noam Chomsky, historian Eric Hobsbawm, and political scientists Larry M. Bartels, Martin Gilens and Benjamin Page. For a full list of the works used for this post, as well as further reading on the subject that people can pursue, see the reference list at the end. It should be noted, though, that the best and most concise source, and the one on which this post most heavily draws, is Dean Baker’s (2006) book “The Conservative Nany State: How the Wealthy Use the Government to Stay Rich and Get Richer”. It’s 108 pages long and provides an excellent analysis of how the rich use the government to meet their needs, including, but not limited to, the role of FTAs. The post will now follow the outline given in the paragraph above, and then finish with an example of a free trade agreement relevant to Australia – the Australia-United States Free Trade Agreement (AUSFTA).

How do governments lie in order to promote FTAs?

The standard argument for FTAs goes something like this. Trade between nations typically involves barriers (such as tariffs) that make importing and exporting goods more expensive. This is an impediment to trade and a disincentive for the businesses and states that want to trade with each other across borders. This has a negative impact on economies by reducing trade, thus reducing growth. Since growth produces jobs, generates wealth and thereby provides stability, it’s the foundation of a prosperous society, so anything which impairs growth is bad for everyone. Hence, barriers to trade ought to be reduced (or, ideally, removed) as much as possible. For this reason, FTAs are economically sound, and should be pursued as vigorously as possible, for the benefit of all. This is a complete and utter lie (Baker, 2006). It’s much easier to tell lies than to disprove them, so unfortunately the truth about FTAs isn’t quite as concise as the propaganda. However, it’s neither complicated nor laborious to understand – it just takes some time to get acquainted with the facts, to which we now turn.

What are FTAs and what do they really do?

The propaganda argument for FTAs outlined above makes two important assumptions. One, that FTAs do what the argument pretends they do. Two, that growth provides prosperity. Both are important for advocates of FTAs, as well as for capitalism more generally, which is predicated on endless pursuit of growth and generating wealth (Hobsbawm, 1996). Hence, because of ‘growth’s’ importance to both FTAs and capitalism at large, we should first have a quick look at the argument that growth equals prosperity before we get into the facts about FTAs.

Growth is the capitalist’s answer to the fact that populations grow, their needs expand and we need more material resources in order to sustain ourselves as these things happen. Advocates of growth therefore argue that we need to expand our economy by producing and trading more, both within and outside our borders, in order to create more jobs, generate more wealth and thus achieve a sustainable future. There are many problems with this argument. First and most obviously, growth can’t continue endlessly, so this approach is bound to fail sooner or later (Hobsbawm, 1996).

Second, it assumes that the jobs generated by growth are more or less stable over time, as opposed to temporary jobs which evaporate after a while and don’t provide long-term employment. It’s no secret that this isn’t true, especially in terms of lower-income jobs in construction and agriculture, for example. True, when there’s demand for construction workers due to large (often government-initiated) construction and development programs, like roads, bridges, tunnels, etc., this generates wealth, provides employment, and in the meantime increases prosperity. However, when that demand dries out, issues with employment return, the wealth gained by workers in that period only lasts so long, and the prosperity doesn’t endure for very long unless the demand returns. This is a very tenuous situation, since workers can’t depend on a consistent demand for construction projects. Indeed, demand for such projects is much too unpredictable to provide a serious source of long-term employment and thus stability, unless governments deal with this problem by ensuring a steady demand for construction projects at all times, which experience tells us is simply not the case. The same is also true for the agriculture industry, and other industries like it. Hence, the assumption about growth providing stability via employment sounds nice, but in reality is totally unfounded (Baker, 2006; Chang, 2009).

Third, in terms of fairness, the argument for growth assumes that the distribution of the wealth generated by ‘growth’, while of course not equal, is at least not intrinsically unfair. There is a strong element of trickle-down economics to this assumption, which has long been utterly discredited as nothing more than a farce designed to justify policies which make the wealthy wealthier by lying to the public (Baker, 2006; Chang, 2009; Stiglitz, 2013; Bartels, 2008). Indeed, even Bill Clinton, who himself legislated the North American Free Trade Agreement (NAFTA) during his time as president of the US, talked about the failure of so-called trickle-down economics when running for president against George H. W. Bush in 1992. In reality, the workers may receive some of the wealth generated by things like construction projects via whatever employment they gain, but, as outlined above, this will be temporary. What’s more enduring is the business that is established by the projects, such as farms, toll roads, electricity grids, and the myriad other infrastructure projects that can be privately funded and then owned, or publicly funded and then privately purchased later on, just as is happening to the electricity networks in NSW at the moment. The people who own the businesses therefore have a lasting supply of wealth being generated, while the wealth that the workers received is temporary (Alperovitz, 2011; Alperovitz, 2013). Incidentally, this is very typical of the way that the capitalist system works in general (Alperovitz, 2011; Alperovitz, 2013).

Furthermore, the wealth gained is radically disproportionate, as the people who own the businesses make tremendously greater fortunes than the people who work for them, even when the workers are paid very handsomely, as is the case with mining enterprises in Australia at present, such as Gina Rinehart’s and Clive Palmer’s, both of whom have deep political influence. Indeed, Clive Palmer even has his own political party – the Palmer United Party – which was important for passing legislation in 2014 to repeal taxes on mining companies that were designed to curb environmental damage and generate revenue for the state to use on behalf of the Australian population. Without dwelling on it, the corruption exposed by this example is jarringly ostentatious, even by the standards of capitalism. Hence, the assumption that the distribution of wealth is imperfect but not inherently unfair is just as unfounded as the assumption that the employment provided by projects designed to increase growth is essentially stable over time.

There are many other issues with the propaganda arguments for growth, but these are particularly significant ones and give a fair indication that the argument for growth as a means of providing long-term prosperity is totally absurd. There are some things which can address these problems and provide a greater degree of fairness, such as using fair tax systems to ensure that wealth doesn’t disproportionately go to the rich, but that’s a different discussion for a later post (Alperovitz, 2011; Alperovitz, 2013). For a more in-depth discussion of the way the system is rigged to provide unequal outcomes that benefit the rich and powerful, please see my prior posts on the origin and evolution of classes and class warfare, and the roots and realities of economic propaganda. They’re long, but if you want to hear more about these issues, they’ll flesh them out for you.

Before going into what FTAs really do, it’s important to briefly note one last thing. Endlessly pursuing growth and the wealth it generates as a means for stability are the only things which advocates of the current capitalist economic system promote, but there’s a much simpler and much more effective way to provide sustainable prosperity. While growth tries to meet increasing demand by increasing wealth, the simpler and more effective thing to do is lower the cost of life so that, as our population and its needs increase, the costs associated with this increase are offset by reductions in the price of products and services, meaning that no additional growth is required in order to sustain ourselves. In other words, reducing the cost of life allows us to be sustainable without us having to endlessly pursue growth, which, as an approach, is inevitably bound to fail, as growth simply can’t continue forever, since markets aren’t infinitely large, and never can be. They depend on workers to produce products and provide services, but there are only so many workers, and they can only produce and provide so much, far from an infinite supply of both.

Clearly, then, endless growth is unsustainable, while finding ways to reduce the cost of life is a much better and viable long-term solution. For example, the three main necessities we currently require are food, water and power. As the population grows, the cost of generating more power, providing more water and producing more food grows with it, the typical response to which is to push for more growth to counteract the increasing costs. However, if instead we invested heavily in renewable energy, which would in turn enable us to provide people with energy more cheaply, this would be another way of counteracting the costs of needing to meet the increasing needs of a growing population.

Furthermore, it would be indefinitely sustainable, meaning that by lowering the cost of power you could provide long-term stability. Indeed, as time went by and technology improved, the cost of obtaining, storing and distributing power would continue to decrease, possibly until it no longer costs anything at all. If you then used that power to run homes, hospitals, street lights, trains, cars, schools, research facilities, trams, irrigation systems, desalination plants, factories, etc., the cost of life in general would also decline, including the cost of providing the other two main basic necessities: food and water. This would fundamentally change the way our economy works, making our society more stable for the foreseeable future. And, what’s more, the technology to do so is right within our grasp, waiting to be used.

This is obviously a much better solution than appealing to endless and inevitably untenable growth to solve our problems with sustainability. Consequently, the fact that this solution isn’t being talked about, particularly since we know that ‘growth’ disproportionately benefits the wealthy, who have by far the most political influence, speaks volumes about the corruption inherent to our political system. Of course, the reason that the wealthy have the most political influence is that we have a political system in which political parties depend on capital to survive, which automatically gives the most political influence to the people with the greatest access to capital – the wealthy, nowadays typically members of the business community. Therefore, it’s unsurprising that we pursue policies that most benefit the rich and don’t even discuss policies that would most benefit everyone else, particularly the poor.

Indeed, since our political system is essentially the same one that every other ‘democratic’ nation in the world also has, this explains why, with very few and extremely limited exceptions, the wealthy are the ones most benefitted by government policies everywhere throughout the world (Gilens & Page, 2014). However, fully discussing this issue and ways to address it is also a different subject which deserves a later post of its own. For now, it’s enough, in summary, to note the discussion above and to understand the reasons why growth is advocated and why much more sensible policies are neglected. With that background covered, we can finally move on to what FTAs really do.

Fundamentally, the role of FTAs is to remove barriers to trade so that businesses, corporations and states can more easily trade with each other across borders (Baker, 2006; Chang, 2009). The purpose of this is proclaimed to be to increase growth for the benefit of all, but, as we’ve seen above, this is a complete fabrication. In reality, the point is to do two things. One, to put downward pressure on the wages of low-income people like dishwashers, taxi drivers, and factory and construction workers, and to put upward pressure on the wages of high-income people like lawyers, doctors, university lecturers, economists, and so on (Baker, 2006). Two, to enable businesses in wealthy countries to crush competition in foreign markets so that they, in turn, can increase their share of global markets and increase their profits (Baker, 2006). The next section will explain why FTAs are used in this way, but first we’ll look at how exactly FTAs achieve these two objectives, using NAFTA as an illustration.

Downward and upward pressures on wages are largely determined by supply and demand. When the demand for goods and services exceeds the supply, their value will increase, as sellers don’t need to compete with each other as much and thus don’t need to lower their prices in order to remain competitive. But when the supply exceeds the demand, their value will decrease, as sellers may need to reduce their prices in order to remain competitive, and indeed often do. Hence, in order to put downward pressure on wages for low-income people, FTAs increase the supply of available workers by making it legal and profitable for businesses, corporations and even states to ship their work overseas to take advantage of cheaper foreign labour (Baker, 2006). This of course provides a way to increase profits for the owners and shareholders, but also pits Australian workers in competition against workers in places like India, the Philippines, China, and so on, where workers are willing to accept obscenely low wages. Consequently, the threat of losing their jobs to foreigners weakens workers’ ability to negotiate decent wages, forcing them to accept salaries that they might otherwise flatly reject and resort instead to forms of collective negotiating such as striking and unionising (Baker, 2006). Thus, undermining the ability of workers to unionise and strike is also often stressed in FTAs, as this reduces low-income people’s ability to meaningfully resist these attacks on their livelihoods (Baker, 2006).

This is also particularly important when FTAs include provisions to make it easier for foreigners to come and work in Australia, which is another way of increasing competition and putting downward pressure on low-income wages. Allowing foreigners to come to Australia is of course a totally reasonable thing to do, particularly if they’re asylum seekers and refugees, in which case, as signatories to the UN Refugee Convention, we’re in fact legally obliged to allow them to come – which, incidentally, makes Australia’s barbaric and racist treatment of refugees over the last 10-15 years utterly reprehensible. However, governments dedicate significant resources to racist and xenophobic campaigns designed to vilify and demonise ‘immigrants’ and ‘foreigners’ so that, rather than looking at the government-created FTAs which put downward pressure on low-income wages and thus undermine working people’s financial security, people are encouraged to racistly and prejudicially blame foreigners, however they come to Australia, for the attacks on wages that’re in fact launched by wealthy capitalists in the ruling class. This propaganda tactic is used here and elsewhere all over the world, and continues to be met with overwhelming success.

This is of course done because, if the foreigners came and instead joined unions and got involved in action to prevent attacks on wages, this would be counterproductive for wealthy elites who want to maximise their profits via endless and unsustainable ‘growth’ (Baker, 2006; Chang, 2009). Hence, this option has to be closed, which is why savage attacks on, and bitter propaganda campaigns against, unions have been and continue to be a mainstay of contemporary politics, dominated as it is, and in truth has always been, by the ruling class (Chomsky, 2005; Hobsbawm, 1962, 1994, 1996; Bartels, 2008). However, this, too, is another discussion in its own right, with different arguments to refute and solutions to propose, so for now I’ll leave it alone. Suffice it to say that, on the whole, this, in all its cynicism and turpitude, is the way that downward pressure is put on low-income wages.

The way that upward pressure is put on high-income wages is very simple: do the opposite to what you do to put downward pressure on low-income wages. People with high incomes, such as doctors, journalists, economists, university lecturers, etc. are protected by FTAs which ensure that the degree of competition they face from foreigners who share their occupations is as low as possible (Baker, 2006). An obvious example of this is the fact that many people who go to university overseas won’t have their credentials recognised in Australia, meaning that high-income people don’t have to compete with them (Baker, 2006). This is why you get examples of nuclear physicists driving taxis, doctors mopping floors, and so on. Limiting the supply of technical professionals means that their supply is lower than the demand for their services, increasing their value.

This strategy will typically be accompanied by some rhetoric suggesting that educational standards here are superior to those elsewhere, particularly in poorer countries, so the credentials that foreign professionals have simply aren’t valid (Baker, 2006). Setting aside the fact that this argument doesn’t withstand scrutiny when, for example, comparing the quality of scientists from different countries around the world – poor and rich alike – even if this argument were valid the problem could be easily fixed by establishing internationally-recognised tests to verify people’s qualification to do the jobs for which they’re trained (Baker, 2006). The fact that such options, straightforward and commonsensical as they are, either don’t exist or do exist but aren’t taken into account gives a clear indication of how weak this propaganda really is, and what reality truly lies behind its thin veil. Thus, the approach, broadly speaking, is very simple, but extremely effective.

The second objective of FTAs is to enable businesses in wealthy, powerful countries to crush their competitors in weaker, poorer nations in order to expand their international market share and thus increase their own profits (Baker, 2006; Chang, 2009; Hobsbawm, 1962, 1994, 1996). NAFTA provides an excellent example of how this works. Among other things, NAFTA allowed US agribusiness to more easily export its products to Mexican markets than had previously been the case. The argument behind this was that US agribusiness was far more developed, wealthy, sophisticated and better subsidised by the state than Mexican agribusiness, meaning that US agribusiness could provide superior products at lower cost, which would benefit Mexican consumers. This would also benefit US agribusiness, since it opened up greater access to markets and provided a greater level of potential profits than was previously possible. Hence, it was a win-win situation for everyone involved. However, as you’d expect, all isn’t as it seems, and when you descend beneath this propaganda the situation’s much more cynical and pernicious than advocates of NAFTA, and of FTAs more generally, would suggest.

In reality, this enabled US agribusiness to flood markets such as Mexico with their products. While it’s true that these products were of better quality and lower cost than Mexican products, this meant that, although Mexican consumers could save some money by purchasing US goods, Mexican agribusiness was put under increasing pressure, since it couldn’t compete on an even playing field. This meant that Mexican agribusinesses could be weakened and even forced into insolvency, with serious negative consequences for the people who’d been employed in this industry and the ones relevant for it, including, for example, people involved in transporting, storing and selling Mexican products in their own domestic markets (Baker, 2006; Chang, 2009; Stiglitz, 2002). Overall, the significant damage done to Mexico due to this arrangement was far greater than the benefits it received by having cheap US agricultural products to purchase.

This is the standard way in which powerful countries impose FTAs, knowing full well that the businesses in the poorer countries can’t compete on a level playing field, in order to provide their own companies with the opportunity to crush competitors in other nations and seize a share of the market for themselves. Further, once the domestic industries have been sufficiently crushed, and thus opposition to US agribusiness, for example, is too weak to seriously compete, American corporations can ratchet up the prices of US goods and services with total impunity in order to further increase the profits they can generate, and consumers in, say, Mexico have little they can do about it other than suffer and complain in dismal neglect. This is because FTAs typically include rules that states can’t intervene to control prices, usually argued under the cynical guise of fairness by not interfering with ‘free trade’ and the ‘laws of the free market’, which means that the much more powerful American businesses and corporations can’t be held to account (Baker, 2006; Chang, 2009). Thus, FTAs are designed to take advantage of the fact that industries in powerful countries tend to be too much for industries in poorer countries to compete with, and therefore devise rules which seem fair on the level of propaganda, but in reality automatically give a deep advantage to wealthy countries and their better-developed, more mature domestic industries. NAFTA is an example involving the US, but the same is true for any powerful state which imposes FTAs on weaker nations.

You might ask why Mexico would possibly accept such a deal if it was going to have such detrimental consequences. The answer is simple – it doesn’t have much of a choice. Especially in situations like Mexico and the US, where a poorer country depends on trade with, and aid from, a wealthier one, the fact is that weak countries aren’t in much of a position to dictate the terms of trade, and must accept deals that they know are unfair. As Thucydides said roughly 2,500 years ago, “the strong do what they can and the weak suffer what they must.” Clearly, the reality of power hasn’t changed much, and what is true for Mexico and the US with NAFTA is essentially true for powerful and weak nations in general. That covers the two objectives that truly lie at the heart of FTAs and how they are meant to achieve them. The next section explains what drives governments to pursue this agenda.

Why do governments make FTAs and lie about their actual goals?

The answer to this is simple, and was even touched on briefly above. In any political system like ours, where political parties depend on capital to survive, the greatest amount of political influence is automatically given to the people who have the greatest access to and control over capital. In the past, this would have meant monarchies and the aristocracy more generally. At present, this means wealthy and powerful elites, typically prominent and influential members of the business community. The mechanisms by which they shape and influence government policies is a longer and more complicated discussion than we’ll get into at present. For now, however, it’s enough to point out that, due to the fact that the wealthy are expected to have the most political influence, it’s no surprise that policies such as FTAs, which heavily favour the rich and undermine everyone else, particularly the poor, are enthusiastically pursued in Australia by both the Coalition and the ALP, despite the known and easily-predicted negative consequences they’ll bring upon everyone except the rich.

There’s more to this that a more in-depth discussion would elucidate, but the fundamental question that needs to be answered is this – to what degree are the politicians responsible for FTAs cynical liars, and to what degree are they simply ignorant ideologues? It’s hard to say for sure, and the answer would most likely vary from politician to politician, but in general, at least at the party level, it’s probably a bit of both (Baker, 2006; Chang, 2009; Hobsbawm, 1962, 1994, 1996). For now, setting aside any long analysis of that question, this is probably the best answer we’re going to get, though there’s certainly more to this question that ought to be considered, such as the role that educational institutions and corporate media play in promoting commitment to ideologies such as ‘free trade’ and ‘growth’ (Herman & Chomsky, 1988). These are important considerations, but for now are beyond the scope of this post and have to be left alone. Hence, in summary, governments and politicians make FTAs and lie about their actual goals because it’s in the interests of the wealthy people in society who have real political power and influence (Gilens & Page, 2014; Hobsbawm, 1962, 1994, 1996).

What was AUSFTA and what did it mean for Australia?

To finish this post, we’ll have a brief look at AUSFTA and what consequences it engendered for Australia compared to the US. In the previous example above with NAFTA, the US was the powerful country imposing itself on Mexico. In this example, the US remains the powerful country, though now against Australia, no doubt a weaker country, but one significantly stronger than Mexico. It’s interesting to note that the same relationship between exploiter and exploited remains, but that the consequences of a FTA with the US were not as dire for Australia as they were for Mexico. The information below comes directly from an online article about the AUSFTA, which can be found here. It goes through the history, details and consequences of the AUSFTA, and what follows below is an excerpt from the article, which can be found under the heading “Some impacts of the AUSFTA”. These consequences are meant to capture the fact FTAs are the savage tools that this post has tried to show that they are. Hopefully the following substantiates that.

  1. Australian domestic sugar prices will rise by 13 per cent,[6]while prices to the consumer in the USA will fall.
  2. Australian agriculture would be subjected to potential takeover by US-based agribusiness companies and a systemic challenge to the less intensive farming methods in Australia.
  3. Genetically modified crops will be introduced progressively over the next few years following on from the Office of the Gene Technology Regulator’s approval of GM canola on 25 July 2003. To refuse to grow GM crops could be considered a trade barrier under the rules of the WTO.
  4. The Pharmaceutical Benefits Scheme (PBS) is under threat because US drug manufacturers regard the PBS as a trade barrier. The cost of prescriptions for non-concession cardholders could rise from $23.10 on average to a whopping $64.[7]
  5. Women will bear the brunt of free trade especially as care-givers, as cleaners and caterers in hospitals, as teachers and social service providers in the community. In the UK six out of ten of the health workers in the National Health Scheme (NHS) are women; while eight out of ten of the non-medical staff – administrators, clerical staff, cleaners, caterers – are women.[8]Australia’s health system has similar trends.
  6. The cost of higher education will rise. Access to education for women returning to study, for people on low incomes, and for Indigenous peoples will be increasingly more difficult while an excess of ‘choices’ will be available to those with the resources to pay for education.[9]
  7. Indigenous ownership of knowledge of biological resources will be threatened even more than it is now. US-based companies with bioprospecting interests and US-style patents will create profits for US corporations while simultaneously further dispossessing Indigenous peoples. The US National Cancer Institute, the Western Australian state government and the Australian Medical and Research Development Corporation (AMRAD) have been involved in commercialising the Western Australia smokebush.[10]Merck Sharpe and Dohme is among the companies with whom they have entered into exploratory contracts. Merck is a ‘recent new member’ of the American-Australian Free Trade Agreement Coalition (AAFTAC).
  8. Australian intellectual property in the arts and culture industries is under threat even if Australia accepts the USA’s standstill position. Such a position means that Australia loses the possibility of setting its own funding agendas according to the needs of the day. Australian content quotas, however, are regarded as a trade barrier.[11]
  9. The weightless economy, an economy based on the appropriation of intellectual property rights, such as patents and copyrights, will be opened up to US entertainment moguls who will buy up cheaply produced great ideas and inventive artistic, scientific or industrial products and sell them at greatest profit to themselves.
  10. Water and other utility services will be increasingly privatised, compromising water quality and the maintenance of utility infrastructures.[12]With the world’s three largest water companies coming out of Europe – Suez Lyonnaise des Eaux and Vivendi Environment both based in France and Britain’s Thames Water owned by German company RWE AG – the battle between the US dollar and the Euro will be fought through Australia’s water utilities.[13] The person needing a free glass of water might not be able to find a place willing to serve it.
  11. Detention centres will become an increasingly lucrative area of investment for US-based correctional services companies. George Wackenhut, owner of Correctional Management Australia who has run Woomera Detention Centre, has been accused of transporting ‘raw materials for chemical weapons to Iraq’.[14]Stricter border controls for people go hand in hand with borderlessness for capital.
  12. Australia’s military security will be increasingly in the hands of the USA. The combination of security issues being tied to trade is a new direction for federal government policy. In a world where the USA is by far the largest military power, intelligence has a high priority and Australia’s location at the base of a potentially volatile part of the world remains crucially important.
  13. USAID in April 2003 was offering web conferences to Australian companies on issues such as ‘primary and secondary education service opportunities ä electricity and water systems ä public health ä local governance ä and seaport and airport administration’.[15]
  14. Finally, the Australian constitution allows, under the foreign affairs power, the Commonwealth parliament to pass laws consistent with a particular treaty – in this case the AUSFTA – which over-rides state powers otherwise protected b y the Australian constitution. One impact of this would be the potential for an agreement resembling the Multilateral Agreement on Investment (MAI) to be brought in. Such laws could threaten many state-based public services because under the MAI companies can sue for loss of future profits in the event of a trade barrier including such socially beneficial barriers as environmental safeguards, banning of carcinogenic substances, or the non-provision of subsidies for foreign companies on an equal footing.[16]

Indeed, it’s interesting to read this list, compiled in 2003, and to see that many of its predictions have since been proven correct. I thoroughly encourage anyone interested in the details of the AUSFTA to read the article for themselves, which also discusses the role that imperialist wars, like the 2003 US invasion of Iraq, play in promoting the economic agendas of powerful states and the elites who control them. Otherwise, we’ve reached the end of this post. The point of this post was to expose and dismantle the propaganda around FTAs and to show them for what they really are – tools of domination and repression in the hands of presiding economic elites – so that people understand how they ought to regard FTAs and what they therefore ought to do about them. Hopefully it’s achieved these goals. If anyone would like to know more about them, the books included in the reference list below are excellent sources, particularly Dean Baker’s (2006) short book titled “The Conservative Nany State: How the Wealthy Use the Government to Stay Rich and Get Richer”. It also contains other works relevant to FTAs in general but not specifically about them, mostly because they focus on economics, history and politics more generally, and only mention FTAs in that broader context. Thank you for your time and I hope this post was helpful.


Alperovitz, G. (2011). America Beyond Capitalism. Takoma Park: Democracy Collaborative Press.

Alperovitz, G. (2013). What Then Must We Do? White River Junction: Chelsea Green Publishing.

Baker, D. (2006). The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (1st ed.). Washington, DC: Center for Economic and Policy Research.

Bartels, L. M. (2008). Unequal Democracy: The Political Economy of the New Gilded Age. Princeton: Princeton University Press.

Chang, H.-J. (2009). Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (1st ed.). New York: Bloomsbury Press.

Chang, H.-J. (2011). 23 Things They Don’t Tell You About Capitalism. London: Penguin Books.

Chang, H.-J. (2014). Economics: The User’s Guide. London: Penguin Group.

Chomsky, N. (2005). Government in the Future. New York: Seven Stories Press.

Gilens, M., & Page, B. I. (2014). Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens. Perspectives on Politics, 12(3), 564-581.

Herman, E. S., & Chomsky, N. (1988). Manufacturing Consent: The Political Economy of the Mass Media (Updated ed. of 1st ed.). New York: Pantheon Books.

Hobsbawm, E. (1962). The Age of Revolution. London: Abacus.

Hobsbawm, E. (1994). The Age of Empire. London: Abacus.

Hobsbawm, E. (1996). The Age of Capital. New York: Vintage Books.

Stiglitz, J. (2002). Globalization and its Discontents. London: Penguin Books.

Stiglitz, J. E. (2013). The Price of Inequality. New York: W.W. Norton & Company.


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