Green protectionist racket incompatible with free trade
Following meetings with senior US officials recently, Emerson said he was "genuinely encouraged" by the support to conclude global free trade negotiations.
But the good faith needed to finalise these talks is being undermined by governments pushing green protectionism. Yesterday on the Australian Agenda program on Sky News, Emerson claimed the Gillard government wouldn't "cop [European] governments cloaking protectionism in this sort of green cloak of respectability, where it's just old protectionism". He's not in a position to lecture on protectionist policies gussied up as environmentalism.
During the election, federal agriculture, fisheries and forestry minister Tony Burke announced Labor "will implement a package of reforms to restrict the sale of illegally logged wood in Australia", including making it an offence to import illegally harvested wood. The same commitment was made by Labor during the 2007 election.
But instead of being a policy that would contribute to cutting illegal logging imports, the policy is protectionism disguised as environmentalism.
Earlier this year a government-commissioned report by the Centre for International Economics concluded: "Australia's imports account for about 0.034 per cent of global timber production, and 0.34 per cent of products incorporating illegally logged timber." The report concluded that trade restrictions would be ineffective and cost more than they are worth. Labor's policy was designed to bow at the altar of Greens voters and the Construction, Forestry, Mining and Energy Union, who want to stop competitive imports.
This wasn't the first time the Rudd-Gillard government cloaked ineffective protectionist policies in environmental garb. In 2008, Industry Minister Kim Carr established the $1.1 billion Green Car Innovation Fund subsidising foreign-owned car companies to innovate lower-emission, Australian manufactured vehicles. Coupled with a $35 million grant from the Victorian government, the federal government provided $35m to Toyota to develop a hybrid Camry. But with a target to sell 10,000 vehicles this year, Toyota has reported only 2960 have been sold, two-thirds of them to the government of Victoria. The scheme also provided a $149m subsidy for Holden to develop Australia's "most fuel-efficient four-cylinder car" in South Australia that's been ridiculed for delivering virtually no green innovation at all.
And in the ultimate demonstration of the futility of the fund, this year's budget papers included a $200m cut to the program in response "to lower than expected demand".
The Green Car Innovation Fund never lived up to its name because it was designed as a subsidy to the industry to mitigate the consequences from phasing out Australia's long-standing automotive industry tariffs. And this green protectionist racket is set to continue.
Labor's $394m Cleaner Car Rebate, or "cash for clunkers", will subsidise consumers to buy greener cars such as unwanted Toyota Hybrid Camrys and Holden fuel-efficient four cylinders sitting on the assembly line.
Ironically, given Emerson's announcement, the US implemented the same scheme to prop up ailing automotive manufacturers through artificially inflated demand for cars as a form of stimulus.
According to Emerson after his recent meetings, "the US sees benefits in using trade for job creation".
And the same should apply to the Australian government.
However, as long as protectionism is being adopted by the government to secure votes, job creation will always come second.
And the real cost of green protectionism will be worn by consumers.
According to Labor's election news release announcing its timber policy, there was no costing for the initiative because "there will be no impact on the budget".
They're right. That's because the cost flows through to consumers through higher retail prices as a result of reduced competition and the cost of regulation to enforce trade barriers.
Thankfully, Emerson has already rejected the Greens' more extreme trade policies.
They want to "remove Australia from existing bilateral free trade agreements where possible" and insert environmental and labour standards in agreements.
But to advance Australia's broad free trade consensus, Emerson's effectiveness won't be tested in rejecting bad Greens policies. It will be in educating his parliamentary colleagues to understand the costs of the green protectionist agenda they are pushing.
If he can't, he's unlikely to succeed in convincing Europe to do the same or, more important, advance the conclusion of global free trade negotiations.