"The problem is that Brown does not make the same noises about other foreign investors from other countries - after all, no nation has a perfect human rights record".

Greg, how about eleborating a bit on this point rather than suggesting Brown is a loony, when clearly this is a growing concern about China from many around the world.

And who is suggesting that Aust doe snot continue to accept important foreign investment, even from China? I say take their money, but never give them control of important assets.

You attack arguments as if they are extreme, yet offer the other extreme.

Do you also reject growing public concern about china?

Or are you another so-called policy elites calling on govts to ignore various public concerns?

Sorry Greg but your theory lacks the back drop of Australian history. I am kind of buoyed by your anxieties directed towards the actions of Australian politicians in protecting future interests and directions of the country.

Over the years Australians have watched helplessly as industries and jobs stampeded across the same oceans to China that now offer the return journey to their host to buy the total farm. If the limiting of foreign investment in Australia by necessary controls to such is seen as a threat to progress and growth, then I for one am all for it.

The free for all of foreign investment in this country has eclipsed the high tide mark; it is time for a rethink and reassessment of who are the winners and losers in the end game of the past policies of the Keating and Hawk years you apparently aspire to.

The great Globalism game is a failure to the masses. It has become the mount Everest summit of impossibilities it was always predicted to be, and if you believe Woolworths and Coles offer a panacea to cost containment you obviously don’t do your own shopping

Gee...how to win an argument without even trying - just used the words Pauline Hanson and xenophobia and no other discussion need be entered into.

Even Simon Crean (when Trade Minister) who is largely for Chinese investment in Australia and reducing free trade restrictions, argued that investment from China should be handled on a case-by-case basis (after the Rio Tinto concerns were raised).

"...deciding whether or not to allow forcing investment is simply a recipe...to vested interests like farmers and other protected species who think they have a right to an income."

It is not just about protecting Australian agricultural interests (which is important) but encompasses a number of concerns such as biosecurity and use of toxic chemicals at import point, labelling anomalies, lack of transparency in business negotiations.

Do we as a nation, purporting to stand for human rights, see our own agricultural industry decline in offering China opportunities - whose business rules are hardly transparent (eg. shadow factories), where there is no governance not only in relation to industrial relations, not to mention the human rights record. Australia placed trade sanctions on Iraq and South Africa during apartheid, but suddenly have become closed eyed on China.

There is nothing wrong with any nation setting their own rules as regards trade - even if it means a bit of give and take. Most countries do not have the climate to grow all varieties of produce - there is always room for export opportunities.

Nationalism is not a dirty word as you make it out to be - history shows 'nationalism' in various lights depending on the political agenda of the times. Nationalism is only a curse if it is used to bring hardship on another nation or to invade a country for no other purpose but self interest (Eg. Hitler's version of nationalism).

A bit of nationalism would go a long way in those developing countries who are at the mercy of corrupt governments and foreign investors who flaut the laws of decency just to make a buck.

I would agree with Pelican.

What an emotive and manipulative article.

We sell coal and iron ore to China, and currently we are in debt to China. The author also wants China to own more of our land and assets.

Maybe the author should live in China.

Australia also has pseudo economic growth. If it wasn't for the sale of coal and iron ore, Australia would be bankrupt.

I agree with most previous comments.The author's arguments seem remarkably naive, free trade requires all trading participants to play by the same rules.China is a mercantilist,authoritarian,state- capitalist society and certainly doesn't follow free trade principles,particularly in regard to foreign investment in China itself. So instead of the usual straw man arguments that scepticism in regard to the motives of the Middle Kingdom rulers is motivated by 'racism' or 'xenophobia' let's look at the facts.

Free trade is a Western fantasy, the Asian tiger economies were built on mercantilist principles not free trade. Perhaps one day China will be a liberal democratic society which follows the rule of law,until then, let's scrutinise Chinese investment proposals very,very carefully.

Mac

Free trade does not require everyone to play by the same rules, though it delivers the best outcomes in they do. Tariffs reduce living standards in countries that apply them by raising prices and diverting economic resources away from their most productive uses. So reducing protectionism raises living standards even if other countries don’t do the same.

Greg is right to point out that economic nationalism has long been a hallmark of the far right and far left in Australia. It has been confined to the ideological margins by a consensus in the political mainstream that deregulation and openness to trade has delivered stronger economic growth and resilience, to our great benefit. If economic nationalism gains ground it could do serious harm to our living standards.

Look to India if you want to see the effects of a controlled experiment in the costs of protectionism. Until the 1970s their governments were interventionist and protectionist, pursuing economic self-sufficiency behind high tariff barriers. The economy stagnated. Since India began to remove tariffs and deregulate its economy, growth has picked up.

I agree, however, that China does not follow free trade principles, and in particular it may pursue strategic objectives in acquiring and developing Australian assets that may not deliver the same economic benefits to Australia that a profit-maximising competitive business would normally do. Chinese investment merits more intense scrutiny by the Foreign Investment Review Board than investment from more open and less government-directed economies. But we need to keep a sense of proportion here. The paranoid talk about China is eerily similar to anti-Japanese sentiment 20 years ago. China holds a tiny proportion of Australia’s foreign investment and an even tinier percentage of its total assets

China today announced it would no longer accept rock lobster exports from Australia. Will decimate the Aust industry given high reliance on China, although prices will be lower for domestic consumers.

Anyone have an opinion?

Rhian,

Well, yes, I learned the economic theory of free trade many years ago, however economics is not a science and I found the study of East Asian economic history much more informative. The facile assumptions of economists in regard to the movement of capital and labour from declining industries to more productive ones is not as smooth as they imagine. That is, (1) political/social constraints are not given the proper weight and (2) I'm not denying the benefits of partial deregulation however, it is not free trade.

The remarkable economic success of Japan and South Korea was not carried out under free trade principles, those nations did rather well from intelligent economic nationalism.

The current percentage of Australian assets held by China is not relevant, future trends are, and the comparison of superpower,authoritarian China with democratic Japan is invalid. You should also consider US economic penetration of Latin America and its often brutal 'interventions' to protect its stategic interests there.
There are sound economic and political reasons to be wary of China,the attempt to portray all sceptics as 'paranoid' or 'racist' is offensive.

I've no objections to free trade---in the appropriate international environment.

Chris
The lower domestic price of rock lobsters due to this news, suggest that (contrary to common belief) FT does not mean lower prices for consumers. The same happened when Australia started exporting its best meat products, we paid more for lower quality meat. There is a lot of myth around FT.

Rock lobsters are like all marine animals, at risk of being fished out so reducing demand is not necessarily a bad thing long term.

It is interesting that China is restricting ONLY Australian lobsters but not NZ or South African. Australia will just do what everyone else does - sell it to another country who will onsell it to China. Not unusual seeing as currently without a FTA the lobsters were being sold via the back door so to speak.

http://www.abc.net.au/news/stories/2010/11/29/3079295.htm

*FT does not mean lower prices for consumers. The same happened when Australia started exporting its best meat products, we paid more for lower quality meat. There is a lot of myth around FT.*

Not so Pelican. It certainly does. You have to look at a whole
host of goods, not just pick out a couple, that suit your flawed
agenda.

There are a whole host of food products now available in Australia,
better and cheaper then ever before. I eat guavas from South Africa
and asparagus from Peru. That is just the start.

When it comes to meat, the reality is that you bought it far too
cheap for far too long, as many markets were closed to Australian
meat, so your cheap meat was off the back of Australian farmers.

Unlike your unions, farmers did not have the power to enforce a
reasonable price. Result was that in the early 90s, people like
me had to give sheep away for nothing, it was cheaper then shooting
them.

But today, you have available to you, some of the world's best
and cheapest meat. Australians get first pick, if they want it.
Hardly something to complain about.

Well flawed agendas are in the eye of the beholder. There are economists brighter than you dear Yabby (or I) that raise concerns about the lack of debate on FT and how political correctness is increasing the reluctance for anyone to raise concerns in the FT debate.

Rock lobsters were not raised by me but by another poster, I mentioned meat as the same outcomes were a result of your FT ideology often painted to be a friend of the consumer, but often just the opposite. FT benefits those with the commercial advantage, poor farmers in developing countries benefit very little and often face food shortages for the first time due to exports of local produce. More money for the mostly foreign owned agribusinesses but little for the people on the ground.

In this case the loss of a trading partner has worked to make lobster available to many Australians who previously could not afford to eat this particular delicacy. I can afford lobster but many cannot, why should it be only available to the rich.

All I can say is your continued efforts to throw insults at anyone who does not share your FT ideology only diminishes your own argument and suggests the merits of FT are on shaky ground. Otherwise it would be enough just to argue your position without resorting to personal attacks.

Aha Pelican, so if I disagree with you, it must be a personal
attack. I learn something new every day.

The lobster story has little to do with free trade, everything
to do with China making up the rules, as they go along. But then
that is how China plays the game, we know that.

The kinds of lobsters going to China/Japan live, are not really what
the Australian consumer fusses over. ie lobsters absolutaly perfect
in every way. Not a blemish, not a leg missing and lobsters have
lots of legs btw. They only make up a portion of the catch.

All the seconds, which taste just as good, are available to the
Australian public at a reasonable price.

As to the rest of your free trade claims, if third world farmers
had 1st world markets openened to them, clearly they would be
better off and if they are better off, they are unlikely to go
hungry.

Consumers and producers benefit from free trade. But I grant
you, lots of those who might want a free lunch for nothing,
might lose out

Mac

I agree that in the past we may have paid too little attention to the human and economic transition costs of structural adjustment. The fact is, though, that changes in the structure of the economy are inevitable in response not only to trade competition but also changing tastes, technologies, and resources. An adaptable and resilient economy is preferable to cope with these changes, and open economies tend to be more adaptable because they have access to the latest innovations, ideas and products.

If you’ve studied East Asian economic history you’ll know how important trade was to the economic transformation of Japan and the “tiger” economies. You’ll also know that there is serious debate about whether the role of government, especially MITI, in Japan helped or hindered its economic development. It is certainly blamed for Japan’s relative economic stagnation in the past 20 years, when other more nimble economies have been able to rebound from economic shocks.

Rhian,

I agree with your latest comments, but with some reservations. Trade and a flexible economy were certainly essential to Japan and S.Korea's economic success. You appear to be claiming that this is evidence of a free trade regime, however their trading policies were not 'free trade' on the Anglo-American model but more along mercantilist lines, in my opinion. That is, they took an industry/government based approach to development and trade. So the reasons for Japan's remarkable transformation are due to social/political factors and government policy (and perhaps a lack of natural resources).

As to Japan's stagnation, I suspect that this is a result of those financial policies that underpinned Japan's first 40 years of development. Japanese financial institutions lent at well above Western prudential levels, I wondered at the time ( the 90s) how long the country would be able to sustain this policy,now we know. 'Japan as #1' was the fashion at the time and we all wanted to learn from the master.
There's nothing unusual in Japan's relative decline, historically no nation has been able to dominate the world's economy for more than a century,Britain, the nation that invented industrial civilisation, was overtaken by Germany and the US by 1900.

I agree in regard to the very ambiguous role of MITI, there was no consensus amongst the experts as to its effectiveness at the time I took the course.

So,in summary I'd say that arguing that Japan's flexible and innovative industry is due to free trade policies is 'begging the question' in the philosophical sense of the term.

Yabby
My premise is simply this. If a nation is growing bananas and has enough to supply the domestic market and maybe export a few tonnes to nations who cannot grow bananas, why import more bananas that you don't need and put the local farmers out of business. The local farmers have to abide by the Australian laws in relation to tax, GST, wages, use of pesticides/chemicals etc.

Imported goods are a russian roulette - you don't know what you are getting and more importantly ignorance about the working conditions of the people employed in that industry.

I grant you that part of the problems with FT is the fact that it is a myth and hardly a level playing field in terms of wages, subsidies etc which distort the basis of FT. I don't think this situation will change and it will never be a perfect system while wage disparity remains at the heart of it. If the middle class is destroyed in the West because of pressure to lower wages to compete with developing countries, and a whole new class of poor is created, I cannot see that as being of benefit to anyone, including developing nations.

That is of course a worst case scenario. There is nothing wrong with trade per se only if we are importing stuff that we don't need to the detriment of our own farmers and consumers. Food imports have not made food cheaper at POS even stuff that has been shipped all the way from China.

Trade has in some cases improved the lot of a small group of people in pooorer nations, but it has not had the effect of overall improvements to living conditions and in many cases caused food shortages. Why sell to a poor local market when you can sell to a richer one for more money - and the wealth obtained by this transaction does not filter down to workers (there is no formal IR system).

This is just one article on the effects of FT/globalisation on poorer countries.

http://www.helium.com/items/140623-the-devastating-effects-of-free-trade-policy-in-mexico-and-china?page=2

Pelican, your banana story happened to Australian farmers, but in
terms of lamb and in reverse.

American farmers are pretty hopeless lamb growers, unlike Australian
farmers. Americans used your justification to deny Australian farmers
access to their lamb market.

The net result was that lamb was so expensive in the US that consumers hardly bought it, eating pork, chicken and beef instead.
American lamb consumption dropped to below 1 pound/ head per year.
Eveyone lost. Luckily our free trade agreement has changed all that.

Third world countries have indeed lost in international agriculatural
trade. As have Australian farmers. Because farmers were not competing with other farmers, but with the treasuries of the US,
EU, as they dumped hundreds of billions of $ of subsidised crops
onto world markets, for their own internal political reasons.

That is not free trade and the problem is not free trade, but
politics and political pork barreling.

Greg Barnes is looking at this problem through the lenses of an obsolete political view.

He said:
If the Greens and the xenophobes in the major parties are allowed to
set the rules on foreign investment then Australia can kiss goodbye
to the days of sustained economic growth.

He has not realised that that economic growth is ending.
The Europeans and the US have been struggling with their low growth
for sometime and now even Australia's growth is sagging.
It has finished and globalisation will go with it.
However the Chinese are still buying up all the land and oil fields that they can lay hands on.
They are not doing it for our benefit but to ship the production back
to China.

The time has come to think of number one as everyone else is doing just that.
Export of natural gas should be either wound back or stopped.
In a very few years our oil import bill will exceed the cost of the
NBN EVERY YEAR !
We import around 500,000 barrels a day at US$85 (current) price and
our local production is falling at 4%. You work it out, we just cannot keep it up.

Considering how anti competitive China is, I really do shake my head in sorrow when I read these kinds of articles. Just look at the financial services sector in China to see how anti competitive they are.

The big Government connected companies in China dominate their industries.

I'm sorry, but part of me feels we should be applying the same rules to Chinese companies as is applied to Australia companies in China. I don't see the communist party allowing 100% of any resource project by a foreign company.

Add in China's woeful record on IP protection, the opaque rules that bestow favour on the select few.

Maybe it's time Australian's started to invest more at home and have a greater say in our future. What's the point of having the 4th largest investment pool in the world if we don't use it for our long term benefit.

Not only is the current globalised economic system not sustainable, as Bazz has pointed out, it has little or no benefit for ordinary people in developed countries. The people at the top in government and industry are primarily concerned with overall GNP, which indeed is increased by globalisation, because their own wealth and power depend on it. The Premier of China counts for far more on the world stage than the Prime Minister of Denmark. The wealth and power of the elite also insulate them from any downside, at least until the whole society hits limits to growth and collapses.

The ordinary person cares little about the size of the whole pie if his own slice has grown no bigger, may even be shrinking, and no longer has a cherry on top. The bulk of Americans have experienced stagnant real incomes since the 1970s, with all the benefits of economic growth and increased productivity going to to top. See

http://www.epi.org/analysis_and_opinion/entry/jobs_with_good_benefits_increasingly_scarce/

For Australia see

http://vinnies.org.au/files/VIC/SocialJustice/Reports/2005/2005May30-IncomeInequalityReport-National.doc.pdf

http://www.bnetau.com.au/blog/aussierules/yes-the-rich-are-getting-much-richer/5879

Australia is still a less unequal place than the US, but a modest rise in income and cheap manufactured goods don't make up for skyrocketing utility bills and housing costs in the cities (nearly tripled since 1973 in terms of the median wage), shrinking block sizes, permanent water restrictions, more crowding and congestion, overstretched infrastructure and public services (due to the enormous population growth forced on us by the globalisers, together with their reluctance to tax), more casualised and precarious work, etc.

When Bob Hawke and Paul Keating were introducing their reforms, they used to talk about "bringing home the bacon", that the reforms might be painful, but would pay off for ordinary people in the end. Politicians can no longer talk that way with a straight face. The previous era of globalisation in the early 20th century ended with a popular backlash. Lets just hope that this time, it won't take bloody rioting or Anarchist bombings.