OneWorld.net (U.S.)

CANBERRA, July 23 (IPS) -- The prospect of a free trade agreement between the United States and Australia, which would give corporations the right to sue governments over regulations and could reduce trade with Asia, is drawing opposition from free-trade supporters and community groups alike.

The convenor of the Australian Fair Trade and Investment Network (AFTINET), Dr Pat Ranald, is alarmed at the prospect of governments coming under challenge from corporations, arguing that state rules adversely affect trade and must therefore be set aside.

''If an Australia-U.S. Free Trade Agreement is to include provisions similar to those of the North America Free Trade Agreement (NAFTA), the almost inevitable outcome will be a reduction in the capacity of all levels of Australian government to regulate,” she submitted to an Australian Senate Committee on Foreign Affairs and Trade on Wednesday morning.

The proposed free trade deal--scheduled to be completed by the end of the year--was made a high priority for the two governments when Australian Prime Minister John Howard met with U.S. President George W Bush at his ranch in Texas in May.

This week, approximately 100 U.S. and Australian trade negotiators are meeting in Hawaii to exchange their wish lists for the proposed agreement.

But some say the idea of a U.S.-Australia deal could reinforce perceptions in the Asia-Pacific that the region is being left at a time when Australia needs to cultivate ties with the countries in its own region.

Ross Garnaut, a supporter of multilateral free trade deals and economics professor at the Australian National University Research School of Pacific and Asian Studies, believes that a bilateral deal with the United States could sour relations within the Asia-Pacific region on issues such as preventing terrorism, for instance.

”There is a danger that at this time, when more than ever we need trust and cooperation across the civilizations of the world to defeat the scourge of terrorism, that we will entrench important divisions in the international community in our region,” he told a Australian Senate Committee on Foreign Affairs and Trade on Tuesday.

The most optimist economic assessment on the proposed free trade deal estimated a 2.5 billion dollar gain annual gain to Australia, but only if the most protected U.S. agricultural sectors--beef, dairy and sugar industries--were completely liberalized.

Garnaut believes there could be major adverse economic impacts if Asian governments respond by excluding Australia from regional trade agreements.

”In our region there is a danger that we will end up à not tomorrow, over time, with a division down the Pacific with us being part of a bloc with the United States but with most of East Asia having discriminatory arrangement amongst themselves that leaves us out,'' Garnaut added.

''That will obviously have horrific economic consequences for us, (but the) economic consequences are much smaller for the U.S. and Europe,” Garnaut said.

Dr Dorothy Broom, senior fellow at the National Centre for Epidemiology and Population Health (NCEPH), told the committee that an agreement may force the opening of markets to products that the state has endeavored to be careful about, such as tobacco products.

”It would be paradoxical, in our view, if the effect of a trade agreement was cheaper cigarettes and more expensive pharmaceuticals but both of these are likely outcomes,” she said, saying that this free trade concerns may eclipse health concerns and undermine the country's health care system.

Broom and other public health academics from the NCEPH warned in their submission to the committee that ”free trade entails the potential to challenge and ultimately dismantle the current cornerstones of Australian health provision.”

Of particular concern is the pressure from the drug industry in the United States and Australia to challenge key provisions of the Pharmaceutical Benefits Scheme (PBS), an Australian government program that regulates and subsidises pharmaceuticals.

”However, because the PBS is a system of government regulation and subsidy, it flies in the face of the principles that underpin trade agreements such as GATS,” they warned.

They urged senators to ensure that the PBS should be declared ”off limits” in any free trade agreement. Without the PBS to control prices for new drugs, they warned, the cost of prescription drugs would increase to more closely match the costs in the United States, which are as much as 250 percent higher than in Australia.

”We do not want to see Australia develop health care like that in the United States, which has among the worst medical services arrangements in the developed world,” they wrote in their submission to the inquiry.

At a media briefing earlier, Australian chief trade negotiator Stephen Deady revealed that this week's meeting would see each side table its formal offers.

While Australia is focusing on seeking gains to the U.S. market for the farm sector, there will be no discussion of the U.S. government reducing subsidies to domestic producers. ”The primary focus of bilateral free trade agreement negotiations is market access; other aspects of the U.S. support arrangements for agriculture are beyond the scope of FTA negotiations,” Deady said.

Even farming trade groups, initially the strongest lobby pushing a free trade agreement, are nervous about the proposed trade deal.

Ben Fargher, the senior policy manager on trade for the National Farmers Federation (NFF), warned the committee they would ”strenuously and publicly oppose any approach, and outcome, which compromises the interests of Australian agriculture”.

What exactly is up for negotiation between the two governments is not clear so far.

Of the secrecy that surrounds the negotiations, the executive director of the Public Health Association, Pieta Laut, said: ”I think this is clever politics but basically it is a means of advancing what is a potentially unpopular policy...without the benefit of democratic debate,” she told the committee on Tuesday afternoon.