"...it is difficult to view this case in isolation from the tensions involving the iron ore negotiations."

Yes everything you say rings as possible and what pundits have summarised as being very much tied in with those acrimonious negotiations.

The thing is what is any government, Labor or Liberal going to do about it? What can they do? Both have always been too tentative about upsetting the Chinese apple cart including Mr Howard's refusal to meet with the Dalai Lama in fear of potential insult to the Chinese.

Perhaps we should rethink our trade arrangements with China, be more assertive about the terms of trade and in matters of foreign ownership/investment.

Wealthy Communists (is that an oxymoron?) are now buying up Australian residential properites at inflated prices impacting further on housing affordability and rentals.

Wake up Australia!

We introduced trade sanctions against Iraq and South Africa for humanitarian reasons, why do we not do the same with China?

We ignored Tibet, now we will ignore poor Stern Hu. What would the Liberals do?

The Chinese have as much to lose as Australia in trading agreements? Why are we so hesitant?

http://dictionary.reference.com/browse/hypocrisy

hy·poc·ri·sy
[hi-pok-ruh-see]
1.
a pretense of having a virtuous character, moral or religious beliefs or principles, etc., that one does not really possess.
2.
a pretense of having some desirable or publicly approved attitude.

..

I also take exception with this issue, but not that pm Wudd's influence with the Human Rights abusing butchers of beijing is limited. Afterall, what would one say about KRudd if he did have more influence with such a vile regime?

I also have seen interviews with scholarly Chinese types who testify that the chinese guvment and business system is fundamentally corrupt with bribes and corruption being par for the course.

Thus, for such individuals to dispense charges pertaining to same is laughable - a veritable farce.

..

Same goes for poor old Chanel Corby. Now, I know not the facts of the case myself however, I'll say this - whilst I do not personally frequent such places as Kuta or other such cess pits, I do see through the eyes and hear through the ears of those who do.

The trench coat druggies still deal on the beach, all manner of potentially dangerous concoctions are dealt from the dunnies of the discos, verily the bomb shrine itself is a popular place for deals to go down and all on security camera if you please, and yet the only people who ever get charged are those who do not have a "relationship" with the local constabulary, who in other parts can be seen making their monthly sojourn to the mafia pimp houses to collect their "contributions."

..

To apply for certain types of VISA's from Australia it is required to have a police clearance for this, and a police clearance for that.

At least "Auntie Sam" from the North American regime on their Consular Jakarta based web site says in relation to the Indonesian police and their "clearance certificates," DON'T bother, they're corrupt.

I respect that, and have little but contempt for the australian guvment approach.

Dear Julie,
Although I am now well and truly retired. In 1990 I worked for a time in North Asia for a large Australian company. I worked alongside the host country nationals whose engaged activities(employed duties)were to provide us with pertinent information on the North Asian governments business methods and translation duties as required.
These North Asian country's were totalitarian governed, of which daily we were very much aware, and more importantly, we Australians, respected the country's laws and customs in all out business dealings. We were also very much aware that if we transgressed these laws and customs we did so at our own risk and did not expect help from the Australian Government.

Contrary to your assumption that Mr Rudd had some influence with the Chinese Government, in the insight of my own experience, I would very much doubt that Mr Rudd, with his considerable experience of the Chinese Government, would even entertain such ideas.

Julie dear, please don't flog a dead horse, your article unfortunately does sound like sour grapes. In any country people who break the laws of that country must expect, if caught, to pay the penalty.

*We introduced trade sanctions against Iraq and South Africa for humanitarian reasons, why do we not do the same with China?
*

Pelican, because shooting ourselves in the proverbial foot, is
not a very good idea. China frankly matters, Iraq and South Africa
did not.

Julie is correct, it pays companies dealing with China, to be wary.
I gather that much of the iron ore negotiating is now done from
Singapore.

Asian Times Online published a comprehensive report on what was going
on behind the scenes in that case. There are 1000 steel mills in
China, but only 100 have iron ore import licences. So huge fortunes
have been made, buying Aussie iron ore at the contract price, then
reselling it at the daily spot price, to those who don't have
such a license.

Luckily the perserverance of Marius Kloppers at BHP has finally paid
off after all these years and from April 1, the contract price will
be more inline with the spot price.

The bloke they seemingly wanted to nail, was the billionaire who
was paying money to access that iron ore. His works is being
amalgamated with Govt steel works, so IMHO the 4 Rio employees
might well have accepted bribes to supply iron ore, but they were
mere pawns in a game being played out in China.

Many a Western businessman has been sunk by deluding himself that
the Chinese will play by our rules. Saving face matters in China
and Chinese self interest matters in China. The rest is about laws
of the jungle. Ignore them at your peril.

Yabby

I understand the need for companies to be wary when dealing with China. I just don't like the hypocrisy about human rights and sanctions when it suits us.

Why does China matter?

Coal is doing more harm to the environment than good and we would all be better off reducing coal for more environmentally sustainable energy options. (Did you see 4Corners last night about the effects on the Upper Hunter?)

There is of course always a need to tread diplomatically with China as with any nation, but not at any cost.

*Why does China matter?*

Sheesh Pelican, we will have to go back to basics here :)

Australians owe the world, not far off 1 trillion$.
Our monthly current account deficit runs at several
billion $ a month.

Somehow we have to pay our way in the world,
just like you have to pay your bills.

Most of our exports in $ terms are coal and iron ore
but China also takes a huge number of other minerals.

Basically, if China decided to stop Australian imports
tomorrow, we would become a banana republic facing 20%
interest rates, as nobody would lend us a dime.

You would most likely lose your job, as income to the
Govt would collapse and they could not pay their public
servants.

Mining is how we pay our bills Pelican. You should go
to the Pilbara one day, to see how its done. Not far
off 1 million tonnes a DAY, leaving on boats for mainly
China.

Yabby (my petal) :)

All that is very good if you are thinking in the old economic mindset. Let's try and look beyond the square we have imprisoned ourselves in.

But yes if we take your argument doesn't China need our coal and resources just as much as we seem hellbent on selling the stuff off? China also needs markets.

There is room for mutual negotiation including certain insistence on matters of human rights, blatant lack of transparency on the Hu case just for 'losing face'.

If China wants to play on the world stage it also needs to adapt and it won't happen if other nations are too timid to ask for certain assurances. Many countries like Venuezuela do quite well without pandering to other economic powers.

The only one consideration would be concerns about the build up of defence capability but this can be offset by our own and by close relations with our allies. We don't allow bullying by terrorists we shouldn't also accept it in our trading partners.

*Yabby (my petal) :)*

Sheesh, you made my day now :)

*All that is very good if you are thinking in the old economic mindset.*

Pelican, our economic mindset is reality, which does not go away,
when we dream. You can try it on an individual scale if you like.
Just stop paying your bills. Just borrow more to live. See how
long you last and what the ramifications are.

*Many countries like Venuezuela do quite well without pandering to other economic powers.*

Not so. Venezuela is slowly but surely going downhill, relying on
money from their nationalised oil industry, which they stole.
Result is no new oil wells, equipment slowly going downhill, production slowly sinking. Now they have a power problem, nobody
is investing in Venezuela. The longer they do it, the more they
will go downhill. Cuba tried the same thing 50 years ago, see
where they landed up over time.

*There is room for mutual negotiation including certain insistence on matters of human rights, blatant lack of transparency on the Hu case just for 'losing face'.*

Ah, but you want to put an economic gun to their head, to force them
to follow your cultural standards, taking no notice of their culture,
where "losing face" means everything. That is called Western arrogance. See the big picture here. See how much China has changed
in 30 years! Its been dramatic, but they have to do things at their
pace. You can by all means make your point, but trying economic
blackmail to force them, is the sort of thing over which wars are
started.

Note how upset the Chinese became, when some Americans tried to
force them to revalue their currency. Obama and Geitner both
understand the people skills required in this case. Giving in
to foreign pressure is a huge loss of face in China. They will
do exactly the opposite, just to be shown not to be conceding.

If an economic war broke out between China and Australia, China
would win hands down. Our 20 million market hardly matters to
them.

Heh heh Yabby.

Yabby do you think that Stern Hu should be sacrificed in order to sustain our markets with China? Should we ignore the whole matter and do nothing?

Yes you are right that the realities of our economic system dictate our actions or inactions, but why do we let it? It doesn't have to be so, my urging is for changing the way we operate within those economic systems. We did fine without the heavy emphasis on trade with China in years past.

We are about the 23rd biggest exporter in the world and the 21st biggest importer. The irony in that is we have to import stuff that can very well be grown or manufactured here just so we can export other stuff with this ridiculous pendulum swinging more or less around a substantial trade deficit.

We are currently looking at devastating our apple industry if we allow NZ imports. When does Australia start looking to protect some of its own producers. There is much risk in terms of biosecurity and food security when we continue to degrade and reduce our own production capabilities.

What is inherently wrong with countries having the freedom to make up their own minds what they wish to import or export. If we need widgets and cannot grow or manufacture them here then we import them, but if we have numerous citrus groves or a brilliant climate to be self-sufficient in oranges, we do not need to import oranges (for example). What we gain in exporting say, wheat, we lose in the markets lost for oranges both locally and OS.

It's all very well to proclaim the benefits of free trade but we are not operating on a level playing field in terms of subsidies, closed shop negotiations (eg. EEC) and wage/industrial relations disparities.

I don't want to get too much off topic about Stern Hu but I guess it's all related.

Back to the crux. What do we do about Stern Hu?

Pelican, I've read the best in depth analysis about the Stern
Hu case, on Asia Times Online. But I'll try to stick to the
core points.

There are two sides to it. The first is about taking bribes
to be able to source much cheaper iron ore. On those charges,
everone pleaded guilty, even Rio Tinto acknowledges that they
were guilty on those points. So a jail term on those charges
is in fact acceptable.

The second point is about "industrial espionage" and was
the one conducted in secret. This is the one that business
is now nervous about, for what is a common business tactic
of gaining information and what is a state secret? That
remains obscure and will in fact cost China a great deal,
if they continue to play their present game. Companies will
simply base their people offshore, to protect them and
ultimately China will lose out on business.

Its already happening. I note that Dell computers are looking
at India to source their components, for many companies
are sick of the Chinese laws of the jungle.

In fact its about to cost China billions! The reason that
Vale of Brazil have finally accepted BHPs argument about
iron ore pricing, to change it to market base, rather then annual
cheap contracts, is this very reason. For when the contract
price for a short time during the GFC was higher then the
market price, the Chinese refused to honour those contracts
and there will little that Australia or Brazil could do about
it. So now the boot is on the other foot. Kloppers of BHP
was correct all along and even though BHP are only the number
3 player, he finally got his way, by pure intelligent
reasoning! The net result is that China will have to
pay twice as much for their iron ore from April 1.

So China was so smart that she just shot herself in her
foot and even China will have to accept Klopper's reasoning.

Interesting about Dell, maybe there will be some justice in the market afterall.

The espionage aspect of the trial was closed to any scrutiny and we don't know the facts or the charges. The Chinese know a bit about espionage and bribery too.

The Chinese have only shot themselves in the foot if other nations react with action. Australia hopefully will consider this in further negotiations with China.

If Dell is now to use India in preference and other companies make similar choices that is exerting some sort of economic pressure on China.

On that we do agree. :)

It will be interesting to see how vigilant the legal case will be against the Chinese boat crew on illegally entering the marine park and environmental damage to the Barrier Reef.

China may have shot themselves in the foot regarding international legal and diplomatic negotiations although the one big difference will be transparency.

*The Chinese have only shot themselves in the foot if other nations react with action*

Pelican, its more about how large companies react. They make less
noise then politicians, but it costs China a great deal more money.
Corporations are very wary of investing where there is no transparency. I also think that corporations are learning.
My Sanyo video camera which arrived last week, is made in Vietnam.
My Samsung LED tv is made in Malaysia.

Every time a large corporation now thinks of employing people based
in China, they will think twice and maybe station them in Singapore
and elsewhere.

I know that you are against globalisation, but I think you have
never thought it through properly. We could make just about anything
in Australia, but at what cost? See the two sides of the coin.
Let me take an example. I can buy a standard fleecy cotton shirt
from China for around 7-8$. If the same was made in Australia,
it would cost 40$. Do you think that the poor in Australia,
should all be paying 40$ for their shirts?

Next point. The lamb that I produce is cut up and lands up going
to around 50 countries, including China. The flaps go to South
Africa, the loins go to the US, the legs to Europe etc.
Do you think that all these countries should stop buying my lamb,
to protect their own sheep farmers?

"Do you think that all these countries should stop buying my lamb to protect their own sheep farmers?"

Yes I do Yabby. Why would you import lamb that you didn't need? Why not import goods that you do need, if a small country can only produce a small amount of lamb given limited arable land use, then yes obviously there will be a need to import more. Many contries which are largely desert, cannot produce all their food so they will import.

Trade should be about need, not some superpower telling the rest of the world what they should buy or not buy in terms of trade.

The poor in Australia will only become poorer if jobs, including agricultural livelihoods, are lost to other nations.

The cost of importing food is not just about money but the use of strong pesticides and poor inspection of pesticide residues and microbiological contamination such as E.Coli prior to release.

It is a myth that imported food keeps the prices down, since importing food the prices have gone up for the most part with some fluctuations as is expected. The middlemen make more money that is the only difference.

*Why would you import lamb that you didn't need?*

Who said that they don't need lamb? Why not let the consumer
make that decision? Take the case of the USA. Its a huge
country, 300 million consumers, with hardly any sheep.
They eat very little lamb as its hugely expensive.

Give me a good reason why US consumers should be denied
the choice of top quality Australian lamb, at an affordable
price. Or do you want to force people to eat beef of pork?
Should not the consumer make that decision?

*Trade should be about need*

So Pelican, our poor clearly need to wear shirts. You did not answer
the question. Are you going to force them to pay 40$ for their
shirts and make them even poorer?

*The poor in Australia will only become poorer if jobs, including agricultural livelihoods, are lost to other nations.*

But there is a huge shortage of labour in Australia. Building companies, trades, mining companies, farming industries, all
clamouring for labour which is not there. Just ask Jullia Gillard,
she got a real shock when she came to WA last time and was shown
what is actually going on.

So now lets say I am entrepreneurial and Pelican is our new PM.
Australia only has 20 million so I figure out that if I open
a computer factory, nobody else will bother. Due to economies
of scale and the high cost of the machinery, per unit will cost
Australians 8000$ per machine. But they then won't need to import,
for PM Pelican will make sure that they can't. Are you going
to force them to buy my 8000$ computers?

.

Yabby I wouldn't force anyone to buy anything. If a company was foolish enough to sell computers at overly inflated prices they won't get a sale.

The US will have access to Australian lamb if they do not produce enough for themselves or don't wish to. Why would they have to eat pork or beef instead if there is US lamb on the menu?

I am not against trade per se, only at being dictated to by global interests that might not always be in any particular nation's interest.

The poor in Australia will always have access to affordable shirts, an entrepreneur will see a market and fill it. When I was a child my parents were not rich but we managed okay and not once did my brother and I think we were poor.

We still managed to buy clothes for affordable prices despite an era of protectionism. And strangely food was not as dear nor was housing and we did not have the same level of debt.

Do you really think that designer shoe makers like Nike and Reebok who moved offshore from the US (I think) to manufacture in Indonesia have dropped their prices for the Western consumer?

Guess what - no they didn't.

If you read Naomi Wolf's 'No Logo' it is an alternative view to the free trade activists and a bit of an eye opener, (but not the only one) about globalisation, free trade, advertising and corporatisation.

I'm interested in the background to this comment of yours, pelican.

>>I am not against trade per se, only at being dictated to by global interests that might not always be in any particular nation's interest<<

I'm not sure I understand whom you have in mind.

We are a free country, and have the option to manufacture or produce our own goods and services, if we can do so at a competitive price.

Which global interests are dictating to us? Not China, surely?

*If a company was foolish enough to sell computers at overly inflated prices they won't get a sale.*

But there is your problem Pelican! You state that we should only
import what we need. Who is to say that my computers are overpriced?
Clearly consumers need them, I make them here. So your argument is
that there would be no need to import them.

The same goes for lamb in the US. US lamb costs twice what Australian
lamb costs (or it used to, until the recent price spike) Reason
being they hobby farm them at great expense. All very sweet, but
hardly fair to a US consumer who likes lamb. So why not let
the customer decide?

*We still managed to buy clothes for affordable prices despite an era of protectionism.*

Ah, the good old days, when people worked hard, with few Govt rules,
with few Govt imposts, with low rents as there was lots of land
and few people. When there was no super levy, migrant women worked
in sweatshops in Melbourne, to make them for you. Times have changed.

Indeed people like Nike make money from snob value, as do Rolex,
Hermes and a host of others. But you can also go to Target and buy
a pair of similar shoes for a third of the price. The poor benefit.

The poor also benefit from lower food prices. Where do you think that
Aldi source most of their products from? They operate globally so
shop globally, with huge buying power. Woolies and Coles are midgets
by comparison.

Ah, Aldi. Thanks for bringing them up Yabby. Their story does indeed show up some holes in pelican's theories about supply and demand.

I recommend you take a quick look at Aldi, pelican.

http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article5438532.ece

http://www.bettermanagement.com/library/library.aspx?l=14226

Their entire focus is on providing quality at the lowest cost. If you look at their roots you'll get an idea of why they have that as their mission.

You will also see that in order to follow those principles, they cannot be fussy about jingoistic "grown here" ideas. Their focus is on the consumer: is it good enough? is it cheap enough?

When I was briefly associated with the retail trade in the eighties, any conversation on business models inevitably included Aldi. Equally inevitably, there were "a friend of mine" stories of dealing with the Albrechts themselves.

Quite possibly they were all apocryphal. But I particularly enjoyed this one.

A manufacturer of Landjäger had finally managed to get his sausages onto Aldi shelves, and do extremely well in the first nine months. So it was time for the sales manager to call on Karl, and renew the order for the following year.

Problem was, the prices had been cut to the bone in order to get the business. If the business was to expand, they would need a higher price. In fact, even to maintain the price at current volumes would be a problem - they just weren't making a profit.

Karl of course had the numbers in front of him. "I would like to increase our order with you..." he said.

"Great" replied the sales manager "but..."

"...but we would need a reduction in price, given the higher volumes will be good for your business"

"I'll have to discuss with the plant manager" says the poor sausagemaker rep "and get back to you"

As he reached for the doorhandle, Karl reaches for the phone.

"If you leave this room without an agreement" he says "I shall call your competitor with the same offer..."

I used to use this as a case study for would-be salespeople, asking them whether they would open that door.

Pericles
I am not sure why you accuse me of jingoism, which implies I am some sort of extreme nationalist without any care or concern for other nations. I am equally concerned for other nations in regard to the negative effects of free trade.

Why would a poor country who has up until now produced their own oranges (just for example) suddenly be inundated with oranges from a wealthier nation where often it is a case of surplus oranges being dumped at lower prices usually with the benefit (like the US/UK/Europe) of subisdised agricultural propping up the price at the farm gate.

Free trade agreements are not usually fair trade agreements. Poorer nations do not have the luxury of subsidised agriculture and the labour force is often uneducated and have no power to negotiate fair and safe working conditions.

Free trade is a misnomer - how can trade be free if the playing field is not level. Wages, work conditions and OH&S are ignored in this free trade euphoria. We seem to ignore those human rights issues for the furphy of cheaper goods for Western consumers.

Also any nation should have the right to refuse goods that require vast amounts of pesticide merely to get them safely through quarantine, or issues of governance (melamine in milk), provenance and food miles.

Do you see something hypocritical in global leaders discussing free trade and climate change in the same political rhetoric. How can transporting tonnes of food all over the world be assisting with reducing carbon when there is capacity for locally produced food.

In other words corporations are more interested in low wage countries to make higher profits - not usually to share this largesse with the consumer in any case.

I am not sure why you bought Aldi up - I did not mention Aldi.

Some light reading. :)

http://www.epi.org/publications/entry/briefingpapers_bp147

There is plenty more if you Google 'free trade' or 'problems with free trade'.

Not sure where to start, pelican. Colour me confused

In one breath you have poor countries oppressed by rich countries selling low-cost products...

>>Why would a poor country who has up until now produced their own oranges (just for example) suddenly be inundated with oranges from a wealthier nation...<<

And in the next, you argue that low wages should not be exploited either...

>>Wages, work conditions and OH&S are ignored in this free trade euphoria. We seem to ignore those human rights issues for the furphy of cheaper goods for Western consumers.<<

I wholeheartedly agree that there should be anti-dumping laws, with teeth, that prevent rich countries from altering market conditions in the way you describe.

But anti-dumping laws work within a free trade environment, not a protectionist one.

Dumping produce into someone else's will distort the price.

But if I set up a protective tariff, I will also distort the price. Upwards. A seller in a protected market will always try to maximise his margins.

>>I am not sure why you bought Aldi up - I did not mention Aldi.<<

I was responding to Yabby. Who did bring up Aldi. But they would make a very good case study for you.

Incidentally, a more recent study on NAFTA's impact (2009) stated:

"NAFTA's impact on North American companies is clear. NAFTA was designed to promote economic growth by spurring competition in domestic markets and promoting investment from both domestic and foreign sources. It has worked. North American firms are now more efficient and productive. They have restructured to take advantage of economies of scale in production and intra-industry specialization"

http://www.cfr.org/publication/15790/

>>How can transporting tonnes of food all over the world be assisting with reducing carbon when there is capacity for locally produced food<<

Local produce will invariably be selected if it is price-competitive for the consumer. A carbon tax that exposes the extra cost of transport would highlight the "hidden" costs, and affect the end price accordingly.

There is already far too much trade regulation that disadvantages poor countries, without encouraging them to ring-fence their weak economies.

Pelican, I mentioned Aldi for good reasons. Your claim earlier in
this thread was that importers simply pocket extra profits from
imported food, rather then pass it on to the consumer. That is
clearly not the case, just ask Aldi.

In fact Coles and Woolies pass on lower costs too, but just in
ways you might not think. Long story, but its all about average
net margin, not one particular item.

The EU and US dumping, has little to do with free trade and everything
to do with their domestic politics. Under WTO rules, dumping is
illegal.

*How can transporting tonnes of food all over the world be assisting with reducing carbon when there is capacity for locally produced food.*

Oh that is quite possible! You forget that much of Europe and parts
of the US are snowed in for a part of the year. Stock need to be
kept indoors, flowers are grown in hothouses, burning oil and gas.
I read a study somewhere which showed that a leg of lamb grown in
NZ, where sheep eat pasture, even if carted half way around the world,
is far more c02 friendly, then one produced in Britain.

Global shipping is an incredibly efficient way of carting goods. If
you convert it back to c02 per kg, it is bugger all. That is why
we can ship a tonne of iron ore to China for around $14.50 a tonne,
which is what I would burn in fuel, if I carted it from here to Perth by 8 tonne truck.

By far the largest waste of fuel is housewives going down to the
shopping centre, to buy dinner for tonight. You might buy 2kg
of food and burn 2litres of fuel to do it.

As I pointed out earlier Pelican, you are an intelligent lady
Pelican, but you have simply not thought this topic through very
well :

Yabby
I don't think Australians buying garlic from China is assisting with carbon reduction when our climate zones allow us to produce garlic year round? If hothouse tomatoes were to consume more carbon than importing tomatoes from warmer climes then of course the argument for imports would be valid if one could prove that the energy from transportation is less than that of hothousing.

Or we could try something novel along the lines of eating seasonally (very 'Animal, Vegetable, Miracle' by Barbara Kingsolver). In Australia we don't have this problem having a large continent spread over a number of climate zones, but yes other countries may have issues with supply.

As I said I am not arguing against trade only that nations should be able to dictate their own terms not the terms set out by, in the main the bigger and wealthier nations. Each nation can negotiate on their terms to the mutual benefit of the importer and the exporter. Can there be a balance between free trade and protectionism to the mutual benefit of both parties? I believe there can.

"As I pointed out earlier Pelican, you are an intelligent lady
Pelican, but you have simply not thought this topic through very
well."

Me and thousands of others it seems Yabby. :)

http://www.tradewatch.org.au/

http://www.ifg.org/analysis/wto/cancun/mythtrade.htm

Pelican

I have been following this thread and have to say - excellent work! Despite the deliberate misunderstanding on the part of Pericles and the usual obstinance of Yabby, you have maintained a level of patience, logic and perseverance that I can only admire and envy.

To claim the 'free trade' is a fair and equal playing field between nations and corporations is equivalent to claiming that the local footy team has the same chance at winning the AFL Grand final as premier team Geelong. But that is only sport. Trade for goods, food and other produce is the right of all nations. In an ideal world poor nations would be able to self support rather than grow mass crops like palm oil for wealthier nations. The concept of 'Fair Trade' is an attempt to address these issues, however there remains far more 'back-room' dealing between nations like Australia and China or the USA and any of the Middle Eastern countries.

Pelican you have explained all this far more eloquently than I. Have you read much of Nobel Laureate, Elinor Ostrom's work on 'cooperative economics' (doesn't have to be an oxymoron)? Worth checking out.

Regards and admiration.

But Pelican, nothing is stopping anyone in Australia from growing
garlic. Those who do, have a ready market for it. In fact the
Australian garlic that I buy at Coles is commonly not available,
due to lack of supply. Consumers too, have a choice, as they should.

Food miles in garlic is a non issue, for sea transport is so efficient
compared to land transport and the tonnage of garlic is insignificant.
They grow some garlic in Esperance, but it would use more fuel
to truck it to Sydney, then carting it by sea from China.

The problem with every nation negotiating every item, is that politics
and lobbying soon overtake the more general interest and
big picture. For every bit of tariff protection for one select
group, is a cost to another group. Big business is far better at
lobbying then the public, so deals are done which cost everyone.

That is exactly why you have the debacle of Europe and agriculture,
or the hopeless situation we had in Austrlia, when we had huge
tariff barriers. All did was cripple efficient industries even
further, through even larger costs.

To understand free trade Pelican, you and Serverin need to get away
from the touchy feely websites and understand the fundamentals.

Why I am saying that is because of your examples of Nike, or
US/EU subsidies etc. They have little to do with the concept
of free trade, but are constantly raised by the touchy feely
brigade, who mix the whole lot into one large pot. They are
seperate issues.

Thanks Severin - I value your contributions always to OLO and often see much of a kindred spirit on many issues. Your eloquence is evident in your own writings. I have heard of Ostrom but will follow up your recommendation further.

Yabby and Pericles, I acknowledge some of the issues with protectionism but free trade is unfortunately as you yourself put it - we have to deal with the real world - is tied up with unfair practices that bedevil what probably the purists might seek.

Despite anti-dumping laws it is very difficult to prove. How does one argue that a lower than normal price is not due to other factors? The fact that anti-dumping laws exist is to protect countries from unfair competition in the form of dumping, which implies that free trade itself is not always a positive thing given there is huge disparity in the playing field - dumping or no dumping.

It is unfair that some nations are being bullied into free trade to their own detriment.

My biggest concern is that superpowers like the US or China can influence and affect Australia's (and other nations) laws and policies relating to issues of quarantine, GE labelling and other matters once considered the right of a sovereign nation to determine how it is governed. It is a slippery slope.

The problems you speak of with protectionism can be dealt with by good governance and indeed good government with appropriate regulation that does not strangle freedoms/enterprise within economies but allows some flexibility given the inequities in the playing field. No system will ever be perfect or to the satisfaction of all players where vested interests outweigh other considerations.

Pelican, you need to get back to fundamentals, then you will
understand it. Now its a fact that the biggest beneficiaries of
free trade, are in fact consumers. That is the reality of it.
You, who make the case for the poor, would have to agree that
if their Dollar stretches further, then they are better off.

I see this all the time. Pensioners off to Bunnings, to buy some
cheap power tool to do their handycraft, something they could
never have afforded back in the days of high tariffs. Clothing,
kids clothing, the list is endless. I myself benefit, when
I buy electronic stuff on the internet, direct from Hong Kong,
America or elsewhere.

The losers of lowering tariffs have in fact been large corporations,
who can't hide behind tariff walls anymore, as they used to.
There was no need for them to be efficient, they simply jacked
their prices up every year, as in a country with a low population
like Australia, it was easy to have a local monopoly.

The whole concept of free trade is that things are produced where
there is a clear comparative advantage, so that long term everyone
benefits.

*The problems you speak of with protectionism can be dealt with by good governance*

Welcome to the real world Pelican :) What are the main impediments
to free trade? Political pork barreling. Look at the examples you
yourself have raised, USA dumping, EU dumping and subsidies etc.
The list goes on. Govts will nearly always put winning the next
election ahead of what is best in the longer term and
pork barreling works like a charm, so they have done it forever.

Next we have political agendas. When for instance Saudi Arabia
decided that they would grow their own wheat, to be self sufficient,
they paid 5 times the world price to grow it locally. Now its
occured to them that they have drained huge underground water
storages for irrigation, water totally wasted, when the same
wheat ban be grown far better in Australia and elsewhere, using
natural rainfall. Its also 5 times cheaper.

*Despite anti-dumping laws it is very difficult to prove.*

Not really. If a company is selling into another market, cheaper
then they are charging on their home market, then they are
dumping. That is the way I understand it, but there are well set
out rules on all this.

*My biggest concern is that superpowers like the US or China can influence and affect Australia's (and other nations) laws *

Well that is why you need a global body like the WTO, to have
rules which all countries agree on, not just USA or China.
AFAIK those rules are fairly well established and based on
science.

Yabby
You are assuming I am the one not living in the real world - have you thought that you might be wedded to the wrong end of the stick on this one? Just a thought.

Re dumping, it is not just about selling cheaper than at home it is about selling way under the cost of production. US companies are always getting into trouble with the WTO but nothing changes - wheat, soy and other products are being sold overseas at prices under the cost of production sometimes by as much as 47% (in the case of US cotton in 2005) but generally around 28% under.

You can understand why US food companies are apt to do it - how can they expect an African consumer to pay as much for soy, wheat or cotton than an American consumer.

The distortions in trading are there because the premise is wrong - no level playing field - means you cannot compete particularly on wages, IR and OH&S.

Why do you think countries like Australia, UK and the US have such strong 'buy at home' campaigns. It is worthy of satire that we are all pushing for free trade yet encouraging consumers to buy local - the US is big on this at the moment with good reason given the GFC has meant unemployment (sitting around 10%) has far greater impact.

No-one wins except a few vested groups in the free trade debacle in my view.

Let nations maintain a sovereign right to trade whatever with whomever.

The consumers are not always winners if FT means job losses (in the worst scenario). It is all very well to say we can provide new job niches in the technology or education sector but it means we lose out on food security and the like. The risks are too great with little benefits and a failure to ensure safe and fair working conditions in poorer nations over the making of a bigger profit.

But I think Yabby we will alwasy disagree on the fundamentals no matter how you define them.

:)

Pelican

I have been wracking my brain for the name of the following person you might be interested in reading: Riane Eisler. Author, sociologist and attorney, she has written books on reforming our current economic system into something that, if given the chance, could work:

http://www.rianeeisler.com/rwon.htm

I don't expect anything will cause Yabby et al to reflect and rethink their world views - which is why I haven't bothered with this debate - I need all the energy I can muster. However, I so admire your arguments here, I didn't want you to think that you are alone. There are many who think as you do.

Cheers

Posted by Yabby, Saturday, 17 April 2010 4:00:35 PM
" ... I myself benefit, when I buy electronic stuff on the internet, direct from Hong Kong, America or elsewhere. ... "

Aah yes, it can be beautiful can't it *Yappy?* I have a pearler of a supplier in Beijing at the moment whose selling quality electronics for .. well .. here, see for yourself Poppet.

http://www.holanfa.com/index.asp

I have an item currently on order, so the proof remains to be seen, but I do have one Gay friend in France who has already ordered and received one genuine 8GB iPhone for $US265 + $US25 for DHL delivery.

I should be pleased to see any contribution that you may care to make.

..

Thereafter, I think both *Yappy & Peli* both make some valid points. The best solution for societies as a whole I believe requires a hybrid system, or a mix of free market, regulation and micromanagement as and when required.

..

Re: this thread, I know very little about Stern Hu, but I would imagine that he was an astute bi/multilingual operator who learnt the Red China game and did everything right except for one fatal exception - that being he went in to bat for Australia and not Beijing.

..

Thereafter, as said and in my view, the whole thing is a joke in extremely bad taste and the Chinese administration should be heavily penalised for it.

*You are assuming I am the one not living in the real world*

Pelican, well I did show you that the Western world's so called
greatest countries, are unable to govern without pork barreling.
So where does your assumed "good governance" fit in?

*No-one wins except a few vested groups in the free trade debacle in my view.*

So you claim, despite the evidence right under your nose, staring
you in the face, of all those millions of Australians who benefit
from cheaper imported products, every day.

*no level playing field - means you cannot compete particularly on wages, IR and OH&S.*

You don't need to compete on those things, as a country like
Germany shows. Up until now they have been the world's largest
exporter by value, with high wages and all the rest of your concerns.
For the playing field is made up by all sorts of comparative
advantages, so its simply different. As long as all abide by the
same WTO rules. If there is a problem with the rules, as you claim
about dumping, then fix the rules, not abandon free trade.

When Australia had high tariffs, some of the biggest losers were
in fact farmers. For they had to pay overinflated prices for
machinery, chemicals and other inputs, whilst competing on world
markets with their exports. In fact you discouraged all kinds of
new exports, by inflating their costs. No wonder we don't have
a competitive manufacturing industry like Germany!

For twenty years we've heard all these screams about job losses
from imports, yet Australia is so short of workers we have to
import them by the tens of thousands! Forget food security,
unless you live on a small farm, with a cow and some chooks.
For if the diesel supply chain breaks down or the machinery
parts supply chain breaks down, or a host of other supply
chains break down, city consumers are stuffed. The
best guarantee of food is diversity of supply and diversity
of supply chains.

*Yappy* national security in part rests upon the cornerstone of being able to manufacture. The development of the national consciousness also depends on us being able to create. And in that regard, what don't we have that we need? Surely we have most if not all of the raw materials and expertise, (though the expertise bit concerns me a bit) with all that we are lacking being the political wisdom to drive the agenda to reform the economy so we can have the best of both worlds, our cake, cream and the cherry too.

In fact relative to others in the international community, the average ozzie is pretty useless really, living well by virtue of the fact of a big g.d.p., low population and a relatively equitable distribution of wealth. (far from ideal I would add but better than a lot of other countries undoubtedly)

You talk about the need to import labor when we have a huge unemployment problem. How do you reconcile these things?

God's, Australia knows little about self reliance and independent operating, being infested and riddled with all manner of parasitic agents from those who administer the law, to medicine to real estate etc

And real estate, houses mostly being comprised of dirt, with the absurd laws in this place leaves most people either not being allowed or not being capable of fixing or renovating themselves.

Laughable .. oh, and as for fruit and veg and certain other food types being trucked around I would suggest, don't waste your money. From a scientific medical perspective the healthiest, cheapest food comes out of your own back yard or nearby wherever that may be.

From the examples you give, pelican, it would appear that most of your concerns about a "level playing field" stem from abuse of Free Trade principles, rather than from adherence to them.

>>US companies are always getting into trouble with the WTO but nothing changes - wheat, soy and other products are being sold overseas at prices under the cost of production sometimes by as much as 47% (in the case of US cotton in 2005) but generally around 28% under.<<

Which is why I disagree with your statement that...

>>The distortions in trading are there because the premise is wrong - no level playing field - means you cannot compete particularly on wages, IR and OH&S.<<

The "premise" of Free Trade is fundamentally the simple and straightforward concept of comparative advantage. Used properly, it benefits both parties, big or small, rich or poor.

http://www.commonsenseeconomics.com/Readings/Comparative%20Advantage.CSE.pdf

http://arnoldkling.com/econ/GMU/lectures/compadv.html

http://www.netmba.com/econ/micro/comparative-advantage/

Surely, "Free Trade" itself should not be held accountable for the actions of countries that ignore, flout or bypass the rules that stem from it?

It's a bit like holding the passport office regulations responsible when their citizens' passports are forged, and used as part of an assassination.

Pericles and Yabby I am not completely oblivious or closed minded to the valid points you make but overall I still believe in a nation's sovereign right to trade as they see fit. And I don't believe FT is the panacea it is made out to be particularly for developing nations.

Your arguments about my concerns being about the flouting of the principles of free trade are correct but that is not the only concern. On that though, flouting is inevitable because while some countries play the game of FT or speak the rhetoric there will always be self interest. And the flouting will inevitabley be thus, particularly with those who wield more power and believe themselves to be less accountable.

This argument is equally valid for those who flout competition law in more protectionist systems. Both systems are not infallible but I think for many nations free trade is the least desirable of the two. Both need oversight and some regulation otherwise it will be a cowboy affair.

DreamOn's perspective is one that I believe can work and is a mix of 'free' trade with some regulation and protections as might suit a particular time and place, where one or more factors might influence the swinging of the pendulum from one side to the other.

Severin
Thanks for the links. I think I might give up on this one too, there is not much more to add and Yabby and I always go over the same ground but he is at heart a gentleman I think. :)

Pelican, I accept that the whole trade, free trade story is
counter intuitive. For that very reason, the majority of
the public will not even bother to try to understand it.
The public just look at the short term, ouch, there goes
my job etc, not the big picture and how things interlink
in the longer term.

Its a bit like evolution theory really. You need to get
your mind around it and its complex, believing "god did it"
is the easy mental option and does not require much thinking.

You clearly have the intelligence to get your mind around
the trade story, perhaps not the will, but that is your choice.

But the evidence is overwhelming. Far more people have been
dragged out of poverty by trade, then development aid can
ever dream of.

Just go back in history and see where Japan, South Korea,
Taiwan, Singapore, Hong Kong were, in the 60s. Look where
they are now.

China and India both refused to accept the evidence for years,
so their people continued to starve. It was only when they
finally conceded to the reality, that their economies took
off, along with the benefits to their people.

The wheel of course turns full circle and today, all these
nations are some of Australia's largest customers, to our
benefit.

What amuses me is that you and I have similar aims in life,
yet went about achieving them in such different ways.
I moved to the bush 30 years ago, with the idealistic
dream of building my old MacDonalds farm, to live the
country life etc. Yet that lifestyle requires that
bills are paid, that is the reality. It took me years
of struggle to figure it out and achieve it, but in the
end I did. Guess what. Free trade globally was how
I did it! But that is another story.