The Guardian May 26, 1999
Editorial:
What is the Fifth Protocol?
The Australian Government signed the Fifth Protocol to the General Agreement on Trade in Services (GATS) earlier this month. There was little fanfare or fuss, just a one-page press release from the Minister for Trade, Tim Fischer, singing its praises. What is the Fifth Protocol? How many citizens were informed and asked their opinion on it? The GATS was negotiated as part of the the Uruguay round of GATT. It is part of the World Trade Organisation regime. Negotiations around financial services at the Uruguay round were not finalised until December 1997. Driven by US financial institutions, the Fifth Protocol to GATS relates to "trade" in financial services. It covers insurance, banking, securities and financial information. It is a sort of mini-MAI (Multilateral Agreement on Investment) but not as comprehensive as the MAI, being confined strictly to the financial sector. Fischer promoted the agreement as opening up foreign markets for Australian financial institutions. "It will mean the Australian financial sector will be able to invest more easily, with more confidence, and more security, in the Asia-Pacific region and across the world", he said. Australia, by signing the Protocol, has also agreed to open up its financial sector — banks, insurance companies, stock exchanges, etc — to foreign takeover and to give foreign investors in these fields exactly the same rights as Australian-based ones to extract Australia's wealth. But little is said about this. Fischer claimed that "For Australia, acceptance of the Protocol does not require any new legislative action", giving the impression little will change. Prior to signing Treasury had issued reassurances that the Fifth Protocol would not automatically allow foreign takeovers of the "big four" banks, the Commonwealth, ANZ, NAB and Westpac. At the time of its privatisation, the Commonwealth Bank was protected by restrictions on foreign ownership and takeover/control by financial institutions. But the Australian Government had, as far back as December 1997, agreed to remove restrictions on foreign ownership of these banks and breach government guarantees regarding the Commonwealth Bank. It made a commitment at the WTO to eliminate "a prohibition on the acquisition of control of any of Australia's four main banks" and eliminate "a measure which prohibits banks (resident or non-resident) from holding shares in the Commonwealth Bank of Australia ..." Now that the Fifth Protocol has been signed, Australia has surrendered its sovereign right to make decisions over ownership and control of its largest financial institutions. Any attempt by a government to breach this Protocol would bring Australia up against stringent enforcement measures, including the possibility of having to pay compensation to any investors claiming potential losses. A similar process is occurring with communications, shipping, airlines and other parts of the service sector. We are given little information of what other sovereign powers the Government has already committed to the dust bin. The first time most Australians heard about the details of WTO agreements was when the former Labor Government brought legislation before Parliament to bring Australia's laws into conformity with what had already been signed away. Fruit farmers, the Australian music industry and the environment are just three of the victims of these agreements. At the time the uproar over the secrecy surrounding the WTO resulted in the Coalition, then in opposition, giving a commitment if in government to bring any treaty before Parliament before signing it. But when it came to the MAI, which was shrouded in secrecy, the Government did not keep Parliament informed, claiming it was not a treaty! It took a broad anti-MAI campaign and the leaking of details on the internet to force the Government to accept a parliamentary inquiry. The Government has committed itself to a number of agreements that have similar objectives: removing "barriers" to profit-making and the global expansion of transnational corporations. These "barriers" include restrictions on foreign ownership and capital flows, government regulations (health and safety standards, licensing, etc), taxation, national borders and customs, social spending by governments and public ownership. They go hand in glove with the offensive against workers' wages and conditions and attacks on the Australian trade union movement. The bottom line is that the people of Australia are being subjected to phony inquiries and consultations which come up with recommendations on international trade treaties that in some instances the government has already committed itself to in iron clad agreements. Without such secrecy the Fifth Protocol would have met the same fate as the MAI.