Thursday, 1 December 2016
Joint Standing Committee on Treaties; Report
I am glad to have this opportunity to make some remarks about Report 165: Trans-Pacific Partnership Agreement of the Joint Standing Committee on Treaties. I am a member of that committee and I am a new member of this place. I begin by observing that the committee process was both instructive and constructive. I thank the Chair, the member for Fadden, for the way he guided us through the process and, of course, my fellow Labor members of the committee for the way they approached the evidence and the submissions that we received in hearings.
The report enables ratification of the TPP to occur, and that report was tabled yesterday. The timing is little bit strange, considering the circumstances that confront us. Since 8 November and the success of President-elect Trump, it has become clear that the United States has no present intention of ratifying the TPP, and without the United States in the TPP it will not come into force. On that basis, Labor members of the Joint Standing Committee on Treaties thought it would be prudent to move the reporting date to the new year so that those developments in the United States could unfold. They were also mindful that there is an inquiry afoot in the other place that does not report until the first week of the new parliamentary year. That was not the mood of the majority of the committee. Obviously the report has been tabled and presumably ratification will ensue.
On the TPP itself, Labor supports fair and free trade agreements. From the time of the Hawke-Keating government, Australia has looked to participate openly in the global market on the basis that free and fair trade is in our national interest economically, socially and often geopolitically. When free trade agreements work well and are constructed properly, they are supportive of developing nations, including developing nations in our region. Labor has pursued tariff reduction, the opening up of the Australian economy and the winding back of nontariff barriers. We have always recognised, and we continue to recognise, that multilateral agreements are preferable to a noodle bowl of bilateral arrangements.
The Trans-Pacific Partnership itself is a plurilateral trade and investment agreement. It is important to recognise that the scope of these agreements has grown over time and we now see trade, investment and other matters combined within international agreements like the TPP. The TPP joins together a not insignificant group of nations in our region and elsewhere. While the modelled aggregate benefit of the TPP is modest, there are some significant benefits to be had for certain sectors of the Australian economy—the dairy sector, wine producers, beef and sugar and so on—and those benefits are acknowledged. There are also some meaningful improvements within the TPP that go to issues like tariff reduction, manufacturing, general market access, regulatory harmonisation and the removal of nontariff barriers. It is also welcome that the TPP includes provisions on environmental and labour standards, but it is worth observing that the compliance and enforcement mechanisms around those standards are not as robust as the mechanisms that cover the more purely economic aspects of the agreement.
There are some aspects of the TPP, in process and in substance, that are less than optimal, and I will touch on some of those. Both hearings and submissions that were provided to the Joint Standing Committee on Treaties—in its 44th Parliament incarnation and in its present incarnation—went to the question of the way in which relevant sectors of the Australian community are consulted and enabled to participate in the treaty-making process. It was observed that, in the European Union and in the United States, there is greater opportunity for a range of stakeholders to be involved. That includes representatives of different parts of the economy—different industry and economic sectors, as well as groups representing civil society interests. I am glad that one of the recommendations in report 165 goes to that issue. Indeed, recommendation 1 states:
… the Australian Government should consider changing its approach to free trade agreement negotiations to permit security cleared representatives from business and civil society to see the Australian Government positions being put as part of those negotiations.
I think that would be a welcome improvement.
I moved a further recommendation in the last relevant meeting of the JSCOT, which went to the issue of economic modelling and analysis. Over a number of years, a range of people with interests in the treaty-making process have observed that the national interest assessment alone is not a sufficient basis on which to judge the economic value of a trade agreement and the balance between the benefits and any costs that might flow from such an agreement. I was grateful to the committee chair and the majority of the committee for accepting a further recommendation which goes to the process and states:
The Committee recommends that the Australian Government consider implementing a process through which independent modelling and analysis of a proposed trade agreement is undertaken by the Productivity Commission, or equivalent organisation, and provided to the Committee alongside the National Interest Assessment (NIA) to improve assessment of the agreement.
I am grateful that that became part of the majority recommendations.
In terms of the substance of the agreement, the two areas of concern to Labor members of the committee, and to the opposition generally, are temporary labour market access and the inclusion of investor-state dispute settlement provisions. There were concerns as well in relation to intellectual property and monopoly rights—for pharmaceuticals and biologics, in particular.
On temporary labour market access, it is important to recognise that the concessions Australia proposes to make under the TPP are lopsided. We are offering temporary labour market access on terms that are not reciprocated by other participant nations. It is important to remember that the United States never includes or offers up labour market access as part of its approach to trade agreements. That is just a no-go area for the United States. Yet the TPP will operate in such a way that, under our existing 457 visa system, labour market testing for contractual service suppliers will not apply for six signatory countries: Canada, Peru, Brunei, Mexico, Malaysia and Vietnam. It is worth highlighting that more than 650 professions are currently covered by the term 'contractual service providers'. There will also be a change to mandatory skills assessment, with the provision for contractual services providers to meet the assessment of their skills based on their accreditation in their home nation, rather than by an actual skills assessment. There are obvious concerns about that in relation to things like electrical trades.
I will finish with investor-state dispute settlement provisions. There really is no reason for Australia to enter into these arrangements. The TPP puts those arrangements between us and the United States, Canada, Japan and Peru for the first time. We already have ISDS between us and all of the other participant nations. It exposes us to an unnecessary risk. There is no evidence that shows ISDS increases or improves investor flows. And the Productivity Commission on multiple occasions has pointed out that the risks of ISDS in terms of costs and the impact on Australia's ability to make public policy in the national interest just override any suggested benefit that ISDS may have. I will finish with what the Productivity Commission said in 2013-14. It said:
The Australian government should seek to avoid the inclusion of investor-state dispute settlement provisions that credit foreign investors in Australia substantive or procedural rights greater than those enjoyed by the Australian investors.
And it made the point it has a clear potential to impact our public policy making ability.
I am delighted to speak on this document of the Joint Standing Committee on Treaties that has been tabled, not because I am a member of the Joint Standing Committee on Treaties—because I am not—but because my background is very much in international trade. I believe the TPP is a core, vital potential instrument for the international community and that is important for Australia's ongoing prosperity. I think there is no secret that the world is currently amidst an enormous amount of volatility and uncertainty. At times like this, we need to ensure that the architecture across the international environment is one that reconciles with Australia's values and indeed with the existing open trade arrangement that has persisted post-World War II.
There are three reasons why I stand here today to talk in support of the TPP. Firstly, it does reinforce a positive international trading environment. Secondly, it is especially good for Australia. And thirdly, I believe it is good for the Sunshine Coast, where the seat of Fairfax's is based. If I could start with the bigger picture global architecture, those students of history, particularly economic history, will understand the importance of the Bretton Woods discussions post-World War II that saw the likes of the International Monetary Fund, the World Bank and the General Agreement on Tariffs and Trade being established.
At that point, we were looking at a global political economy that was not only just recovering from war but was also looking at a depression. The integration that the Bretton Woods discussions gave rise to has been very much to our advantage as a country. We had then the Western Allied Forces establish a network structure globally that reconciled with Australian democracy and Australia's liberal economic approach. In other words, we now have the predominant approach to global trade that reconciles with our own approach as a country.
There has been a proven correlation over hundreds of years now between economic integration and peace. That correlation is not ironclad. There was a time in the lead up to World War I where people suggested the world had never been so integrated yet a war eventuated. Nevertheless, I think most economists would agree that the tighter different economies are integrated, the more likely it is that peace and prosperity will exist.
So as we discuss the TPP here in this country and elsewhere, I think it is worth remembering that these large international multilateral agreements actually do an enormous amount of good also from a strategic perspective. The great thinkers of economics, be they Adam Smith or John Stuart Mill, did not really differentiate that much between politics and economics, quite frankly. They saw philosophy, politics and economics as so closely interwoven that it suggests, even today, that what is good from an economic perspective is also good from a political perspective. It is for that reason, too, that I disagree with the former speaker from the opposition, who suggested that multilateral agreements—as much as the TPP is one—are always preferable over bilateral agreements or regional agreements. I disagree entirely with that. Based on my own background, not just by studying these matters but as a practitioner in international trade, I would encourage opposition members to not be so ideological on issues of international agreements. We need to be more pragmatic. We need, basically, to make whatever agreements are in the best interests of our country—because more FTAs mean more trade; more trade means more jobs. If we take an ideological position on any of these matters, then we risk jeopardising the opening up of new markets for Australia.
On the first point: indeed, the TPP reconciles with the existing international trade architecture. That architecture is one in which Australia has prospered enormously. That takes me to my second point: the TPP is very good for Australia. I think anybody who has worked in business before knows that the first point of a growth strategy, whether you are a small business or a large multinational—or, indeed, if you are a country—the first step is to leverage and exploit your own strengths. We see in the TPP an opportunity where over 98 per cent of the tariffs in the region that the TPP covers will be eliminated or reduced. We see an opportunity for those things which we are strong in—not just agriculture and resources but also services. We now have an opportunity, through the TPP, to provide more market access to some of our largest trading partners. As a country, therefore, as we go forward and grow our economy, and as we leverage our strengths, a lot of those strengths need to be exported—and the TPP plays in perfectly with that. Where there is some confusion in the international market, with different bilateral or regional agreements, the TPP also plays an additional role in harmonising some of that confusion. That, again, brings greater certainty to Australian companies that are trading internationally.
When it comes to what is, of course, the greatest part of Australia, Mr Deputy Speaker, the Sunshine Coast and the seat of Fairfax, deals like the TPP are good for companies in my local area, too. If you look at some of the sectors that the TPP covers, they include horticulture, beef, seafood and dairy; these are areas that are enormous strengths for the Sunshine Coast. Five years ago, we were nearing $200 million in just the agricultural sector in our region. Any region of Australia is not unlike Australia itself: growth potential lies in exporting; investment relies on importing. And the more we can be exposed as a region—the Sunshine Coast region—the more we can be exposed to markets where we can export more seafood, more beef, more horticulture and more dairy and, I have to add to that, more organic foods, where we have a deep expertise, then the more jobs we will be creating on the Sunshine Coast. It is for that reason that I am more than happy to stand here today to put my support behind the TPP.
I rise to speak on the Joint Standing Committee on Treaties' report on the TPP. I think it is a pity that the member for Fairfax has probably not checked his facts about it. The increase in GDP that Australia will get from this treaty is 0.7 per cent—let me will repeat that: it is 0.7 per cent—by 2030. In fact, the countries that will benefit from this treaty are those outside Australia—countries like Vietnam and Chile—who will have access to our markets. But the only independent analysis we have comes from the World Bank, and that is one of the issues that I have with this treaty. I must say that, before entering this parliament, I did not know a lot about the TPP. But, having done days and days of hearings into it, and listened to expert evidence, I am more concerned now than I was before about some of the impacts of this so-called free trade agreement. Having said that, there is a view that the whole TPP, to quote one of my colleagues, is 'dead as a dodo'.