Australian Businessmen, Workers Fight Tariff Cuts

Unions, industry fear recommendations will spark large scale unemployment

Australian unions and employers joined forces on Monday to attack a government report that urged dramatic cuts to textile, clothing and footwear tariffs, warning of massive jobs losses and wrecked business.

The governments key industry adviser, the Industry Commission, recommended in a report published on Monday that textile, clothing and footwear (TCF) tariffs be cut to five percent by 2008 from current levels near 40 percent to force the industry to be more competitive and efficient.

Unusually high protection for the sector cost Australians A$1.94 billion a year, held back living standards, eroded economic growth and failed to protect jobs, the commission said.

 

But unions and industry warned the recommendations would fuel already high unemployment and threaten the sectors future.

The Industry Commission has no idea of the needs of ordinary working Australians and once again had shown contempt for them by recommending further job losses in its report, TCF Union national secretary Tony Woolgar said.

The Council of Textile and Fashion Industries warned the commissions plan would boost imports and throw at least half the industrys 96,000 employees out of work, particularly in country areas already badly hit by unemployment.

It is simply an exit strategy for the industry, council president Robert Hershan told reporters.

In the short term it will consign up to 50,000 jobs, half the industry, to the dustbin.

Under an existing programme, TCF tariffs will be cut to 25 percent for clothing and about 15 percent for footwear and textiles by 2000, compared with general tariffs of about five percent by 2000.

The commission recommended further gradual cuts in TCF tariffs to a uniform five percent by July, 2008, with no pause in reductions and no further review of protection.

The move comes as Canberra, until recently a leading force in the international push for free trade, shows an increasing reluctance to make unilateral cuts in trade barriers, discouraged by slow reforms elswhere and troubled by unemployment approaching nine percent.

Prime Minister John Howard this month rejected similar recommendations to slash car tariffs, citing a need to protect the industry and jobs.

But he said Australia remained committed to an ambitious regional pact to axe trade barriers early in the next century.

Howard said on Monday his conservative Liberal-National administration would make a balanced response to the commissions draft report.

He added that his recent decision on car tariffs should not be seen as an indicator of his likely response.

The commission will consult industry, union and other groups before preparing a final report for the government in September.

High unemployment and a perception that Australia has dismantled its own trade barriers too quickly while other countries lag behind has eroded political support for tariffcuts among the major political parties.

But Canberra remains bound by the 18-member Asia-Pacific Economic Cooperation (APEC) forums free trade pact that commits its members to abolishing all trade barriers by 2010 for developed nations such as Australia and 2020 for developing countries.