It was the free trade protesters that finally tipped me over the edge.  An edge that, to mangle the metaphor, had started as a slippery slope with the word “Hopenhagen”.

There I was reading The Guardian website yesterday about events in Copenhagen, mainly because, apart from the honourable exception of The Australian, our mainstream media aren’t providing much in the way of detailed coverage.  That’s where I read about the anti-free trade group Attac being present at what was portrayed variously as “street violence” or policy thuggery in Copenhagen.  “The police said demonstrators had been throwing stones, but my friends were in a cow costume, they wouldn’t have been able to throw stones,” one British protester told The Guardian, aptly summing up this and many other protests.

Attac resists “neoliberal globalisation” and, its website says, stands “for the regulation of financial markets, closure of tax havens, introduction of global taxes to finance global public goods, cancellation of developing countries’ debt, fair  trade rules and limits to free trade and unregulated capital flows.”  I thought the presence of Attac protesters at a climate change conference, doubtless urged on by the group’s official People’s Poet, bespoke either a decidedly holistic attitude toward the issue or too much time on their hands.

But what Attac had realised and I hadn’t was that Copenhagen is operating exactly like a trade round, and if you happen to believe that free trade is evil, that countries such as China have magically achieved extraordinary economic growth in spite of, not because of, liberalised trade, then Copenhagen is the place to be to dress up as a cow.

To get the economics strictly correct, a global carbon price would indeed be a free-trade mechanism, because currently most of us are subsidising the cost of carbon in our economies, and more carbon-dependent economies, such as Australia’s, are subsidising it more heavily.  Putting a price on carbon would remove an effective subsidy for our exports and import-competing products, forcing their producers to pay for costs they have traditionally inflicted on the community.

What’s happening in Copenhagen, though, is an extended negotiation over the right to cling on to as much of that carbon subsidy as possible, in the same way that the traditional approach to trade negotiations is to minimise the amount by which one’s own protectionist measures are reduced in return for a maximum reduction in measures by other nations.

It’s an inherently logic-defying negotiation, as that bald summary indicates, but it’s the basis for the global trade system.  It’s illogical even on the mercantilist assumption that trade is a zero-sum game.   In fact, the majority of the benefits of reducing protection accrue to the country lowering its trade barriers, not its trading partners, as resources flow to more competitive industries away from those that needed protection.

For proof, look no further than the long, sustained and now-renewed period of economic growth enjoyed by Australia since the early 1990s recession, which unfortunately coincided with the impacts of the Hawke government’s dramatic reductions in manufacturing protection.

As any trade negotiator will tell you, there are tariff barriers and there are non-tariff barriers.  The latter are far more iniquitous, being less visible.

Australia’s insistence on trying to incorporate the carbon-reducing aspects of changed land use practices, without accepting the carbon-increasing aspects of land use (either intended — such as pastoral industry emissions — or unintended, like bushfires) is only a more complicated version of the non-tariff barriers for which we like to criticise the more protectionist of our trading partners.

What’s being ignored, as is ignored by advocates of protectionism everywhere, is the economic gain from the unilateral removal of protectionism.

This was best put by Queensland Senator Sue Boyce, whose speech when she crossed the floor to vote for the CPRS deal was ignored in the focus on her decision to side with the government.  Boyce preferred a straight carbon tax, but she argued the case for unilateral action strongly.

I am very much aware of the argument that has been put by many people that this must be a global agreement and it is ridiculous for Australia to act first.  My own background is as a manufacturer. In that sphere, I know the benefits of early adoption. I would just like to point out to the Senate that it was the Shergold task force, commissioned by the Howard government, who said, long before we got to this place, that Australia should not wait until a genuinely global agreement has been negotiated, because there are benefits which outweigh the costs in early adoption by Australia of an appropriate emissions constraint.

If one accepts that eventually the world will have to move to a low-carbon economy — if not by 2020, then by 2030, as the reality of climate change begins to worry even the most foolish policymaker and those businesses with the most to lose from climate change begin to campaign far more aggressively — and if one accepts, as perhaps even the most bone-headed denialists might, that there are substantial benefits to moving away from energy dependence on a declining resource controlled by some of the world’s most disgusting regimes, then the benefits of moving “early”, or at least less belatedly than we might, become clear.

The costs of transitioning to a low-carbon economy are spread over a longer period, and the first-mover/early adopter advantages in energy technology — reinforced by Australia’s natural advantages in renewables — more realisable. They are the benefits being pursued by China, which, despite its recalcitrance in Copenhagen, is investing heavily in solar and wind technology.  They’re the benefits being pursued by several countries trying to accelerate viable low-emission vehicle technologies.  Meantime, we’re trying to prop up our coal industry.

Clinging to a minimalist position on emissions targets, buttressed with scams based on land use management, is the equivalent to Australia clinging to its cosseted manufacturing base into the 1990s and beyond, putting off the benefits that flowed through the economy once we cast off protectionism.  It’s based on carbon mercantilism, the conviction that there are only costs involved in removing the carbon subsidies we currently pay, not benefits.

The industries that benefited from our shift away from protectionism — the services sector, resources, finance, the areas of manufacturing where we were competitive — had no one to put their views in the 1980s, while those threatened by change were heavily represented.  Nevertheless, the Hawke government — aided by an economically rational Opposition — had the vision and courage to commit to reform.

It’s the same this time around, only those industries threatened by change have been given a prime position to influence policy.  The result is plain to see, and Australia will pay an economic cost for decades to come, regardless of what happens to our climate.

Peter Fray

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