Current Account Deficit
Grows to $31 bn, seems unpayable -- Free Trade, WTO
My interest lies in the ongoing debate regarding free trade. Having
read publications from the USA, and followed the local debate for some
time, I have come to the inconclusive opinion that maybe free trade, as argued
back in the thirties, in its purist form, was a good idea. It was a
form of barter, your excess produce for goods you wanted and could not produce
yourself. While this was equal, it was equal.
However, as time went on Australia's export contracts would, increasingly,
be written in foreign currencies. So there was a need to sell to obtain
the required currency to finance import purchases. Had they been able
to write the export contracts in Australian currency our trading position
would have been one of strength. Our trading partners would have had
to sell to us, in order to gain Australian currency, to finance their purchases
from us.
14 Progress
July/August 1999
"Free trade"
Letter to editor, from Neil Forscutt, NSW |
47 <
< Free-Trade Slaves
CONTENTS Translate
Links Events
Books HOME Lamb tariff > > Foot
49
This was managed to a certain degree, but two other obstacles to good trading
emerged, even though our external trade is not in any serious imbalance.
The first of these was the floating of the dollar. No one ever
quite knows how much a currency fluctuation will effect a contracted
price. Not so long ago the "little Aussie battler," in relation to
the greenback, was worth twice what it is worth today.
Some time ago coal miners negotiated a 12% decrease in coal prices to Japan,
shortly afterwards the dollar was devalued against the Yen, which in effect
gave the importers an actual 17% discount. This was similar to the
devastation foreign currency loans from Switzerland caused when our currency
value was manipulated down in relation to the Swiss currency.
The second problem emerged when Australia's foreign currency reserves were
run down, if not depleted. This problem has been managed, incorrectly
as it turns out, by encouraging foreign investment.
As this foreign currency came into Australia it was immediately used to finance
some imports, and also to correctly finance funds exiting the country.
These included profits, dividends and interest. When Australia
expends these funds they have to resort to borrowing foreign currency, to
keep the lines of trade open and pay the above.
Hence, last year we had a current account deficit of about 31 billion dollars
and a frightening, unpayable, foreign debt. No matter what we do now, our
position can only get worse if we continue to push for more and more
international trade.
It is an incredible fact that if in one year we were able to trade equally,
we would still go further into debt because of the insatiable demand for
interest on the foreign debt as it now stands, repatriation of profits, dividends
and investments. If a solution exists it has not been published.
Our free trade has become anything but free. -- © Neil Forscutt, NSW,
in Progress, Melbourne, July-August 1999, page 14.
Progress (first published May 1904), Prosper Australia Inc., 27 Hardware La., Melbourne, Vic, 3000, Australia. Annual subscription $15. Tel. 03 9670 2754, Fax 03 9670 3063, E-mail:
mhassed@lexicon.net, Website
http://www.taxreform.com.au
Useful links about "Free" Trade:
International Labor Organisation - Report on Child labour
Human Rights for Workers - the crusade against
global sweatshops
Sweatshop Watch
Announcing Sweatshops.org
Suffer the little
children - a special series published by the Ottawa Sun
-- ©SBS, Australia's National Multicultural Television Broadcaster
Esperanto: Traduki, klaketu (premu)
