Mere words won't save free trade

Despite Labor's posturing;  the evidence is mounting that the party's free-trade credibility is weakening.  Last month, the NSW government introduced budgetary measures giving local industry preference in major projects.  Foreign Minister Stephen Smith said the commonwealth wouldn't be following suit.

Yet on Tuesday, Industry Minister Kim Carr released his "Boosting Australian Industry Participation" policy that requires tenderers for government work to outline their use of Australian suppliers in every bid.  Carr's policy may not be all-out protectionism, but it is by stealth, by requiring tenderers to declare their suppliers and suggesting bids that don't use local industry will be subject to hazing.  Even the Australian Industry Group is backing Carr's latest plan, claiming it will "boost" local industry.

The announcement was made to appease the union movement, which wants "Buy Australian" provisions in government procurement, and to stop a fight on the ALP National Conference floor this weekend.

In a bid to affirm his free-trade credentials, Victorian Premier John Brumby said recently he "strongly opposed" the NSW regime.  "If you want more growth opportunities in the future, more job opportunities in the future, the answer to that is not to put up trade barriers," he said.

But Brumby isn't practising what he preaches.  In November, similar measures to give local producers a 10 per cent advantage for Victorian government projects were introduced.  The measures appear to be in breach of Australia's obligations under its free-trade agreement with the United States.

And in the ALP's draft national platform to be debated this weekend is consideration of whether "appropriate mechanisms are introduced to prevent environmental dumping".  That's code for supporting an Australian carbon tariff.  The only clear saviour in the government is Trade Minister Simon Crean, who is prepared to rail against any protectionist sentiment from the union movement or inside the government.

Over the past 30 years, Australia has benefited enormously from a bipartisan consensus supporting free trade.  Australia is a free-trade country because it serves our economic interests.  We cannot produce everything, and if we try the cost would be so outrageous it would reduce our bang for buck.

But recent action coupled with reducing migrant intakes earlier this year, suggest the government espouses open markets and borders but behind closed doors is turning the clock back.

Prime Minister Kevin Rudd said last year he had "a low tolerance threshold for importation" in relation to goods purchased with government stimulus money.

Rudd has previously argued that protectionism "brought on the Great Depression" and "throws a spear at the heart of the economy because so much of our jobs, so many of our jobs are generated by the trading sector of the economy".  He clearly understands the cost of protectionism, but it hasn't prompted him to stop the current course being set.  But to stop it and Australia's consensus for free-trade from crumbling, Labor needs more than words -- it needs uniform action to support free trade.

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