John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

I am very pleased to bring forth the first of a series of fair trade bills before the Senate for debate. As senators are probably aware, the second free trade bill, the Free Trade (Workers' Rights) Bill, is currently before the Defence, Foreign Affairs and Trade Committee. The Fair Trade (Intellectual Property and Patent Protection) Bill and the Fair Trade (Biosecurity and Food Standards) Bill will follow in the coming months.

The basic intention of each of these bills is to look at our trade arrangements and the trade agreements we sign up to from a different perspective. Instead of placing so much of the onus of responsibility on Australian industry, Australian organisations and already overworked and underresourced Australian departments, we need to look at the responsibilities that should be placed squarely on the shoulders of our trading partners. As a small example, the Fair Trade (Worker's Rights) Bill simply states that when making trade agreements with other countries Australia should insist that the products we are getting are manufactured or grown in those countries by workers who receive basic workers' rights. We should not be trading with people who make their money from the blood, sweat and lives of oppressed workers. It is a simple suggestion and one that any Australian would agree with but which trade negotiators seem to overlook on too many occasions. Supporting the rights of workers, whether here or overseas, is supporting basic human rights. In so doing we are helping to improve the lives of people overseas and acknowledging the contribution our own manufacturers make to Australian workers and the Australian economy. Of course we cannot expect poorer countries to provide the same hard-won benefits and rights that are enjoyed by Australian workers, but there are International Labour Standards that are set out at varying levels depending on the economic status of each country and we should do our best to uphold those standards whenever possible. And what better time than when we are negotiating a trade agreement.

In its own way this bill, the Fair Trade (Australian Standards) Bill, hopes to do something similar by putting the onus back onto overseas companies to be more vigilant about their exports and in a small way helping Australian manufacturers to be that little bit more competitive in our own market. None of these fair trade bills is the complete answer to our manufacturing woes or to the imbalance in our trade arrangements, but I hope they will each take a small step on the road to improvement.

As every person here knows, I am passionate about Australian manufacturing and farming and anything that harms our manufacturers' and our farmers' future. Anything that can be done to ensure our trade agreements are more like a level playing field and less like a ski slope with us at the bottom is a step in the right direction. I hope this bill, simple though it is, will make a small step towards that goal.

In my opinion, one of the most damaging influences on Australian manufacturing and farming is ever-growing, unfettered and uncontrolled free trade agreements. Despite the rhetoric from both sides of politics and the big end of town that FTAs are great for the economy, I doubt you would get too many average Australians who share that level of enthusiasm, at least not in the way these FTAs seem so often to be heavily weighted in the favour of our trade partners. Do not get me wrong; trade is good. On that score, Australians would agree that we need to trade to survive, just as the rest of the world does. But in saying that trade is good, we cannot automatically assume all trade is good, fair or beneficial to our economy and to the Australian people as a whole.

I have been told countless times that FTAs are sacrosanct, they are the domain of the executive and they are never to be sullied by the rough handling of lowly parliamentarians, despite us representing the concerns of our constituents. As many of you would know, I am not one to worry about a bit of rough handling and, quite frankly, I think most of the trade agreements we have signed up to could do with a little less political rhetoric and a bit more rough handling by people and parliamentarians alike.

This bill is aimed at the rapidly increasing level of imported products that do not conform to Australian standards. Australian standards exist for every Australian industry, and in every one of those industries I could give you countless examples of product imported into this country that consistently fails to meet Australian standards and yet is allowed to access the marketplace and the worksite. Unfortunately, we often hear about these products after devastating results to life and limb of workers, consumers and companies as well as to the viability of our local industry and the economy itself.

I could tell you about the Australian companies who are going to the wall simply because we do not adequately enforce Australian standards on imported products and materials. Companies like Molnar Hoists in South Australia, who produce a superior hoist, are struggling to survive against a flood of substandard Chinese car hoists that have a nasty habit of collapsing without warning. Lives are at risk, profit is at risk and standards are not met, but the hoists still come into our country.

But instead of telling you about one company after another or one industry after another, let us simply take a look at one industry. There is one industry that exists around the country in every community and involves countless numbers of Australians every day, whether directly or indirectly. Let us use that as a litmus test for enforcing Australian standards on imported goods. The Australian building and construction industry is well known to many senators. In fact, I believe there has been a considerable debate about that industry of late and I am sure there will be plenty more. But for now, we are not looking at that side of it; we are looking at Australian standards and how they are or are not enforced in the building industry. We are looking at the impact inadequate enforcement of standards has on the workers, builders, homeowners, investors and general consumers who are part of that industry.

In the last month, the Australian Industry Group released its comprehensive report entitled The quest for a level playing field: the non-conforming building product dilemma. The report revealed widespread use of nonconforming products across the building and construction sector. Ninety-two per cent of companies that responded to their nationwide survey reported nonconforming products in their supply chain. I will repeat that: 92 per cent of the responding building and construction sector companies reported the use of nonconforming products in the construction industry. That figure alone ought to send shivers down the spine of every occupational health and safety officer in this country.

The results of this report prompted Ai Group Chief Executive, Innes Willox, to comment that:

This raises important questions about quality and safety and it poses serious commercial challenges for the businesses that do play by the rules.

The report also found that almost 45 per cent of those companies surveyed in the steel, electrical, glass, aluminium and engineered wood sectors reported lost revenue, reduced margins and lower employment numbers due to nonconforming products. Most of these products do not meet regulatory Australian or industry standards. Others are not fit for their intended purposes, are not of acceptable quality, contain false or misleading claims or are straight-out counterfeit products.

The Ai Group report findings are backed up by a Customs and Border Protection report stating that in 2008 to 2009 the Australian industry suffered reduced revenue, reduced sales volume, price undercutting, price suppression, reduced profits and profitability, reduced production volume, reduced employment, deteriorating returns on investment and reduced attractiveness to reinvest, with imports from Chile, China, Brazil and Malaysia being a significant contributing factor.

Prior to the September election, the Australian Forest Products Association surveyed the ALP, the coalition and the Greens on matters of concern to the timber and forestry industry. While there were plenty of stock standard election made answers, a few stood out. The question was asked:

Do you support strengthening measures to avoid import of substandard quality forest products?

The coalition answered that they support:

… the enforcement of measures to avoid importation of sub-standard forest products. If necessary, we will also consider the strengthening of these measures. It is important that materials used in the Australian construction industry meet Australian Standards.

In October last year, the then opposition spokesperson Ms Sophie Mirabella stated in parliament that the coalition would:

…ensure that imported products better comply with the mandatory…standards imposed on locally made goods.

I am glad that the now government felt that way in opposition. I look forward to them doing all they can to fulfil those desires now that they are in government. I hope that supporting this bill and its small effort towards improving the situation related to nonconforming products is on their list of things to do, not only for the economic benefit it brings to Australian manufacturers and businesses but also because of the significant costs imposed on Australian workers and families due to injury and death caused by the widespread use of nonconforming products.

Naturally we would assume that any government, whether the current government or the previous ALP government, would want to guarantee that the appropriate bodies were given adequate powers and resources to ensure these measures were enforced. However, according to Mr Willox, Chief Executive of the Ai Group:

… there is significant confusion among companies about how to identify non-conforming products and who to report them to.

He states quite blatantly:

Non-conforming products are allowed onto the market due to inadequate surveillance, audit checks, testing, verification and enforcement.

This seems to be backed up by the Engineered Wood Products Association of Australasia, who in 2010 cautioned Australian timber importers against imported timber products. The association had completed laboratory tests on Chinese structural LVL beams entering our markets and found they failed the Australian standards on bond, grade type, formaldehyde emissions and preservative penetration. The government's own National Industrial Chemicals Notification and Assessment Scheme stipulated that only low-formaldehyde-emitting pressed wood products should be used, as required by the Australian standards for formaldehyde emission limits.

Recently, plywood and veneer wardrobe and joinery items imported from China and installed in a multi-unit building project in northern New South Wales were condemned after the department of housing found emission levels had, in their words 'soared through the roof' and that the health and safety of occupants was at risk.

The President of the Furnishing Industry Association of Australia, Mr Fred White, said he was not surprised at these outcomes if imported Chinese products were used. He said that he had advised project builders:

If they install imported materials that fail Australian Standards for emissions and safety then they have to cop it sweet if these products cause an illness or a death, and that this could go as high as a Royal Commission.

I would hope we could avoid anything like a royal commission by simply enforcing the standards now in place.

Mr Simon Dorries, General Manager of the Engineered Wood Products Association of Australasia, stated that:

… the bottom line is that this imported product is threatening the lives of builders and homeowners and we fear some has already been installed.

But of equal concern to Mr Dorries is that:

Standards Australia does not licence or police the use of Australian Standard numbers on products.

And in a statement I find to be utterly damning of our current controls, he stated:

Any manufacturer in any country can brand an Australian Standard without any testing or checks by anyone.

I know many of you will say; 'We have Customs, the ACCC or Standards Australia to oversee these problems. Surely they can handle it.' I have put a number of questions to the ACCC over successive Senate estimates and, quite frankly, the answers have raised serious concerns.

In late 2011 and early 2012, allegations were made to the ACCC that a specified trader had sold plywood of a certain grade which allegedly did not meet the requirements of that grade. Following approaches from the ACCC, the trader ceased the sale of the plywood in question and conducted an internal investigation. In the ACCC's own words, the trader under investigation was the one who investigated the allegations against themselves. Following this, the trader provided the ACCC with certification of the products, which indicated that the products met the grading requirements. Despite this, the trader withdrew the products from sale and regraded the plywood.

The outcome was that the trader who was selling the allegedly substandard products found, after self-investigation, that there was no problem with the product but that despite there being no problems they had withdrawn the products from sale and regraded the plywood. Self-regulation can be a wonderful thing if you are the beneficiary of it.

The ACCC said it was satisfied with this outcome in the circumstances and closed its 'investigation', if you could call it that. I would like to thank the ACCC for providing us with the solution to the increasing crime rate! Simply have the suspects investigate the allegations and before you know it we can close the jails and disband the police force! How much confidence can we have in the Australian standards of these or any other products entering this country if the agency charged with ensuring these standards are met simply hands all responsibility on to the allegedly irresponsible party?

However, it does not stop there. The ACCC has taken the word of the trader that the products are fine and accepts that, despite having no apparent reason to do so, he will withdraw the product from the market and do a regrade of the suspect plywood. But did the ACCC issue a public statement about the investigation, or about the regraded plywood, or about the withdrawal of a product from the market? No, they did not. So what happens to the product that is already out there? What happens to the product that was sold under an F14 stress grade that should actually have been, at best, an F8 stress grade? Basically, absolutely nothing.

And what happens to the builder or homeowner who purchased and used this product in good faith? We can only hope and pray that nothing happens. But for those of us who have worked in manufacturing, in the building industry, in metal fabrication industry and many others, we know what happens in far too many of these cases where a nonconforming product finds its way onto the job: workers are injured or killed, consumers are put at risk, production is lost, profits decrease and it all ends up in a law suit.

Before people think I am on an ACCC-bashing exercise, I must state that I do not believe the ACCC deliberately intend to let these products enter the marketplace. Frankly, no-one can examine everything that comes into this country; that would be a physical impossibility. In fact, I doubt the ACCC or Standards Australia have ever been adequately resourced. Nevertheless, even though I do understand how it comes about, that does not mean I approve of the way these investigations are handled.

In the end, though, the buck must stop with the government, whether this or the previous one. Consistently Australian governments have failed to ensure Australian standards are being met and Australian industry and consumers being are protected from substandard imported products that have taken everything from Australian jobs to Australian lives. This government has said it 'will consider the strengthening of these measures'. Now we have an opportunity to take a different approach to this and other problems associated with imports. The Prime Minister has already stated that he is giving top priority to the completion of a free trade agreement with China and with numerous other countries through the Trans-Pacific Partnership. So now is a good time to start toughening up our stance when it comes to Australian standards.

Simply put, every trade agreement signed between Australia and any other nation or nations should put the responsibility for conformity with Australian standards back on to the exporting company. While we cannot expect that every product exported to Australia will meet Australian standards, the exporter must ensure and guarantee that their product will not be used or onsold until it meets with the appropriate Australian standards.

At present any product brought in may be expected to meet Australian standards before being used but all the onus is on the importer and far too many times importers fail to bring these products up to standard. They fold up, move on and the consumer is left with no recourse to recover damages. In the meantime the original exporter simply supplies their product to another importer and the cycle continues.

By insisting the exporter guarantee their product meets Australian standards before sale or use they will be more inclined to verify that the importer is reputable and unlikely to cause them loss. As well, should an exporter fail to guarantee their product they would be in breach of our trade agreement and can be refused permission to trade until they comply with that requirement. Local manufacturers and suppliers, as well as reputable importers, would benefit from a decrease in the amount of non-conforming product on the market and an increase in the integrity of their competition.

As I said at the start, this bill is not the whole answer but I believe it goes a small way towards improving the situation. I urge senators to support it.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fair Trade (Australian Standards) Bill presented to this chamber by Senator Madigan and I acknowledge his work and endeavours to ensure that the integrity of everything coming to this country is maintained to a standard which we expect in our business community and, indeed, the broader community.

I will address a number of things Senator Madigan raised. I too have an aspiration to ensure that the people from whom we import goods enjoy a reasonable workplace and a fair day's pay for a fair day's work. But to sanction them would be to prejudice them and I fear we have to try to find a balance in there that would give them the opportunity to rise above their Third World status and ensure that we can provide them with trading opportunities which would change their fate more in accordance to what we aspire for them.

Free trade agreements in the context of the society in which we live are good things. I know from my background—the wine industry—that we aspire and seek a speedy resolution as to the trading agreements with the Trans-Pacific Partnership. These are going on and will provide us access to those Asian markets from which we have been denied. We have been shown by our cross-Tasman partners in New Zealand the benefits of free trade agreements with those big trading nations. I would say they are probably flogging us in that particular area—but not only with the wine industry; from where I come from we have just seen a resumption of trade in kangaroo meat to Russia. That also was a sensitive negotiation but an essential one.

The providores of game meats in South Australia are looking for opportunities to send game to all parts of the world, and free trade agreements are good for that. There is even a dearth of camel meat around the world and Australia has some opportunity in that respect which would be ably assisted by free trade agreements being concluded as quickly as possible. Senator Madigan spoke of the South Australian firm that builds car hoists and that, indeed, is an issue which they will have to face from the point of view of innovation. I also take him to that icon of Australian backyards: the Hills hoist. Mr Acting Deputy President Gallacher, as a South Australian you would be well aware that the Hills hoist has had to reinvent itself somewhat. That business's manufacturing is largely domiciled in China and it is now an importer of products of that icon. Therefore, innovation is essential to remain relevant in the marketplace of a global nature.

The other thing that this bill implies is that we have some influence on regulation by governments in other countries when their regulations do not apply to their industrial sector. I understand the sentiment, Senator Madigan, and I think it is a noble one but I know from my dealings prior to coming to this place that trying to impose our level of regulation on other countries meets somewhat with bemusement. But I agree the aspiration should be there.

In short, I know and understand the problem you are looking to address but this bill in every respect sends the wrong message to the world and right now it is a blunt instrument. I hope that the work that both you and I continue to do in the foreign affairs, defence and trade committee—more particularly, with trade—in the inquiries that we have coming up means that we can address the issues which you are looking to essentially set in stone here. This bill—'A Bill for an Act to provide for certain minimum standards for products imported into Australia under a trade agreement'—I contend is probably an unnecessary burden on the current series of Australian trade negotiations.

All Australians benefit from trade. An increase in trade creates more Australian jobs and delivers more opportunities for Australian businesses. Australia has a two-way trade in goods and services and that trade was worth $616 billion in 2012. It is a vital component of Australia's economic prosperity. Last week it was mentioned that within five years the Asia-Pacific region would be the world's largest producer and consumer of goods and services. By 2030, the figure of 500 million people now located in the region's middle class is expected to grow and reach a staggering 3.2 billion souls. Exporting to Asia is a highly competitive environment and the opportunities will not just fall into our lap. We need to do all we can to support our developing and thriving international trade industry, not only in the Asia-Pacific region but worldwide. We need to be innovative and we need to be responsive to emerging needs. However, the bill does not best place us to be at the forefront of facing current trade challenges.

We have many success stories of Australian businesses, something we should celebrate and continue to maintain. Especially with so many hindering factors contributing to trade negotiations—cultural and language barriers, different regulatory systems and ways of doing business combined with the problem of accessing finance and finding distribution channels—we do not need further red tape making way for unnecessary barriers that hinder Australia's economic prosperity. If we talk about free trade agreements, they should be recognised for what they are. They are agreements about making international trade easier and more efficient while preserving the ability to regulate domestically. This bill certainly does not do that.

Across the globe, there is an expanding network of free trade agreements and they play an important role in supporting global trade liberalisation. Through engaging in free trade agreements Australia enters into legally binding commitments to liberalise access to other markets for goods and services and further address issues such as intellectual property rights, government procurement and competition policy. Of course, such agreements fit within the boundaries set by the World Trade Organization to support global trade liberalisation. Free trade agreements help Australian exporters access new markets and expand trade in existing markets.

However, this bill would require Australia to provide less favourable treatment to goods imported from free trade agreement partners than the treatment given to the goods from the other countries. This would have a huge effect on the Australian economy as Australia currently has seven free trade agreements in force. These are with New Zealand; Singapore; Thailand; the US; Chile and the Association of South-East Asian Nations, ASEAN—and that is with New Zealand and Malaysia. These countries covered by these free trade agreements account for 28 per cent of Australia's total trade.

Australia is also currently engaged in nine free trade negotiations. There are five bilateral free trade agreement negotiations—with China, Japan, Korea, India and Indonesia—and four plurilateral free trade negotiations with the Trans-Pacific Partnership Agreement, the Gulf Cooperation Council, the Pacific Trade and Economic Agreement, and the Regional Comprehensive Economic Partnership Agreement. You must admit that is a very busy space. I know that the Abbott coalition government has given this the priority it deserves after six years of its collecting cobwebs.

The countries covered by these negotiations account for a further 45 per cent of Australia's trade. The last thing Australian business needs is an unnecessary roadblock to trade negotiations. It is vital we continue to take into account those rules established by the World Trade Organization to ensure that we do not face issues arising from political and protectionist pressures in other countries. We must ensure that internationally agreed standards are encouraged, that products from complying countries are not discriminated against and that unnecessary barriers to trade do not develop. Furthermore, we must ensure that importers are not exposed to legal burdens in their own jurisdiction. I spoke about that earlier. Rather, the current status quo should remain and be maintained to ensure that the onus is placed on the importer operating within Australia.

The Abbott government agenda is clear. It is an agenda to promote and assist strong trade negotiation mechanisms. The Minister for Trade and Investment, the Hon. Andrew Robb, is participating in the ninth Ministerial Conference of the World Trade Organization right now in Bali and he is continuing this with advanced high-level Trans-Pacific Partnership negotiations in Singapore. These are very important meetings for Australians.

The 38th Cairns Group Ministerial Meeting in Bali is a coalition of 19 agricultural exporting countries committed to agricultural trade reform, including the elimination of trade distorting subsidies and tariffs. Those are the types of negotiations that Senator Madigan should be encouraged by. Minister Robb will have those at the forefront of his thinking and negotiations on behalf of Australian agricultural industries. Agriculture is a key contributor to the Australian economy.

The Cairns conference supports the growth and advancement of Australia's agricultural trade policy interests and provides a means to influence policy reform. It will consider a package of reforms around agriculture, including components relevant to developing countries, as well as trade facilitation, which has the potential to reduce total trade costs for exporters.

Minister Robb and the coalition are committed to resolving trade issues and market access throughout the Asia region. The Trans-Pacific Partnership is the most comprehensive free trade agreement currently under negotiation and involves 12 countries responsible for 40 per cent of global GDP, and all trade policy must be developed to support growth through trade. Policy must provide and support opportunity for Australian businesses and exporters, including farmers, manufactures and service providers. Minister Robb has stated that the government is committed to:

…a very ambitious trade and investment agenda and while these areas of policy are indeed international, they are also of course intrinsically linked to our domestic economic fortunes in terms of supporting sustainable growth, businesses, both large and small and most importantly jobs

That is very different to the rhetoric we heard during those six chaotic years of the previous government around free trade agreements, our trading partners and our export opportunities in general.

As I conclude, trade is vital to our national interest and economic prosperity. While I understand the sentiment behind Senator Madigan's bill, it does not advance the interests of Australian consumers or the economy at large. The increasing burden of red tape as a result of poor Labor policy is placing Australian business and our trade sector in a vulnerable position. Regulators must understand that the cost on business of meeting the ever-increasing red tape burden is crippling and singularly the biggest issue I hear at the business forums I attend around this country.

Those on this side of the chamber are working hard to ensure that Australian businesses and the trade sector at large are not hindered through more unnecessary and problematic regulation. Australia has an established regulatory regime to manage product standards and product safety, and any new legislation should only sit in support of helping our economy grow and prosper so that we can remain strong players in an international trade market. This bill has the effect of obliging Australia to adopt import requirements that will place further unnecessary obstacles in front of potential trade opportunities.

Joe Ludwig (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Fair Trade (Australian Standards) Bill 2013. What struck my interest with this was to go back and look at where this journey on trade started for me. It started some years ago now, though sometimes it feels like yesterday, with the work of the Joint Standing Committee on Treaties, where significant debates occurred about free trade agreements and trade liberalisation, and there was a particular focus on the World Trade Organization. Not everyone will recall this but there were significant debates then about trade, culminating in a range of protests and the like that centred around 2001. I do not want to go to that specifically; I want to take the Senate to the Treaties Committee report entitled Who's afraid of the WTO? In essence, it set out the framework that we have continued on with. Looking across the table, I recognise some senators who may have been in that committee at that time.

That reports says that Australia is a medium-sized economy and our dependence on exports has meant that successive Australian governments have embraced trade liberalisation as a means of securing export trade. In the inquiry, the committee considered how effectively Australia is using the multilateral trading system and asked if we could do better. The report examined the multilateral trading system managed by the WTO and brought out some differing views—differing views on the impact of globalisation and the benefits and costs of trade reform. An understanding of these issues is vital to encouraging and informing debate amongst all Australians about trade policy. The report also examined specific issues, including Australia's interaction with the WTO, challenges for the future operation of the WTO and a range of other matters.

It is not my intention to restate that report, but it does highlight that over that whole period from 2001 we have continued to have a focus on why we trade, why we progress multilateral trade and why we advocate Australia as an open market economy. I went on to look for more committee reports in this area to see how we are progressing as parliamentarians in making that case. Unfortunately, there is a dearth of committee reports in this area. I think it is an area where the Treaties Committee or another committee—and far be it for me to suggest more work—could examine some of these issues. Senator Madigan has referred his bill to a committee, but the broader aspects of why we continue to have an open-market economy, why we continue to progress global trade and why we continue to press for particular areas could be referred.

The most recent work is in two parts. The first part culminated in then Minister Emerson presenting the government's trade policy statement. That statement, in shorthand, ultimately came in part from the Productivity Commission's report on bilateral and regional trade agreements in November 2010. I encourage those with an interest to go back to that Productivity Commission report and the Labor government's trade policy statement for the basis of where trade policy stands. It was and continues to be a defining moment in how to advocate in this area.

The new trade strategy progressed by then Minister Emerson embraced five principles. First, ongoing trade related economic reform should be pursued without waiting for other countries to reform their trade policies. Second, there should be no discrimination in trade negotiations. Third, foreign policy considerations should not override trade policy. Fourth, there should be transparency in free trade negotiations. Fifth, trade policy and wider economic reform should be seamlessly executed. Countries applying these principles champion ongoing multilateral trade liberalisation as a preferred vehicle for non-discriminatory trade between nations.

If we fast-forward a fraction to look at Senator Madigan's Fair Trade (Australian Standards) Bill 2013, it has the essence of many issues we have grappled with since 2001. It does not encompass all of them, but in his opening remarks Senator Madigan mentioned four types of fair trade bills he was progressing to deal with Australian standards, workers' rights and the International Labour Organization conventions on employment. They all touch on multilateral trade and trade liberalisation in an global economy. The bill's key objective, as outlined in the explanatory memorandum, is higher standards for imported goods by restricting the terms under which the Commonwealth can enter into trade agreements relating to compliance with domestic and foreign product standards. The bill seeks ultimately to impose certain obligations on foreign corporations with respect to the importation of goods. It also seeks to impose certain obligations on domestic corporations with respect to the export of goods.

Senator Madigan, in my view—and I do not seek to put words in Senator Madigan's mouth—seems to be seeking to address concerns about the quality of imported goods that have been introduced into the Australian market. While I share Senator Madigan's concerns about the reliability and safety of goods, I am not convinced that trade policy is the mechanism to enforce appropriate standards. That is why I took some time to go back to some fundamental documents that have progressed and continue to underpin trade from parliament's perspective: the Productivity Commission's report, the World Trade Organization, the Joint Standing Committee on Treaties, all of which have spoken about trade.

Debate on the bill presents a timely opportunity to outline Labor's approach to trade, including with respect to upcoming trade negotiations. Labor recognises that reducing barriers to trade can boost our economic growth, create more competitive industries and give consumers access to a wider range of goods and services at lower prices. The pursuit of these objectives drives Labor's support for a more open global trading system. Labor's achievements in office included the establishment of the Cairns Group, as a vehicle to promote our interests in multilateral trade negotiations, and the Asia-Pacific cooperation forum, to strengthen our economic and political ties within the region. The former Labor government placed the Asian century at the centre of the national debate. We included the national food plan, which focussed on our immediate neighbours. We opposed protectionist responses to the global financial crisis, both at home and abroad. Labor had an ambitious agenda for trade and will maintain this position in opposition.

Our assessment of the government's trade performance will be informed by clear-sighted assessment of our national interest. As I understand, next week trade ministers will meet in Singapore to continue negotiations on the Trans-Pacific Partnership agreement, the TPP. Twelve countries accounting for 40 per cent of the global GDP are party to the Trans-Pacific Partnership talks. Potential benefits for Australia include market access for our goods and services to countries with which we do not have an existing free trade agreement. Real regulatory reform and lower behind border trade barriers will be key issues. The TPP could also be an important stepping stone to closer economic engagement across the Asia-Pacific region.

The test for the government in the TPP, and in all other trade negotiations, is in ensuring Australia's national interest is not traded away. It would not be in the national interest for Australia to sign up to the TPP if it undermined the integrity of the Pharmaceutical Benefits Scheme or affected the ability of Australians to access affordable medicine, nor would it be the national interest for the government to sign up to the TPP if it mandated a radical shift in the legal balance between creators and users of protected works. Because the outcomes of trade negotiations can have both far-reaching and long-lasting consequences, the government should not readily sign up to a TPP deal that constrains the ability of future governments to make laws on social, environmental and economic matters where those laws treat domestic and foreign businesses equally. The risk that the Productivity Commission, as I mentioned earlier, identified previously in 2010 from investor-state dispute settlement clauses cannot be ignored either in the pursuit of an announcable from next week's ministerial meeting.

There is a national interest in the government providing the transparency that enables Australia to understand what trade agreements mean, what benefits they bring and what compromises we are being asked to make, and the TPP is no exception. Labor believes the full text of any TPP should be released well before it is signed. This is the commitment that the United States trade representatives have given to Congress, and the Australian parliament and people are entitled to no less. That is what the Senate demanded earlier this week when it ordered the production of the final text well before signing.

The outcome of the TPP talks will be an early demonstration of whether the government can achieve trade reform without trading off our national interest. With the approaching self-imposed deadline for concluding FTA negotiations with China, it will not be the only test in this government's first year in office. It is worth looking again at the issues that have been difficult to include in bilateral trade agreements such as some of the issues that Senator Madigan touches upon.

We do have a strong desire to progress agricultural trade. If you look around the Asia-Pacific region and the world, the ability of our agricultural products to meet markets is being constrained by high tariff barriers in other countries. We have one of the best agricultural products. It is both clean and green, is of exceptional quality and would meet all of Senator Madigan's criteria. What we have not been able to do from the overseas perspective is to get them to include those products in their negotiations on bilateral free trade agreements, more specifically FTAs, and progress them to the benefit of our agricultural sector. It is a task that this new government, I suspect, will have to take up the challenge to try to achieve. All of that will not be easy given the many disparate economies not only in our close region but further too.

If you look at what we have done, Australian governments have entered into a range of bilateral and regional agreements and have done that typically seeking to reduce trade barriers. Of course, trying to include the broad issues that Senator Madigan raises is no mean feat in those negotiations. I do understand that we do have within the Department of Agriculture a strong biosecurity focus. It is one area where many hours are spent ensuring that our borders are secure from foreign incursions of disease, pests and weeds. To date, from recollection, its record has been exemplary. In trying to achieve outcomes across industry as well, we do have domestic standards that we require and we do have strong compliance frameworks in place in our regulatory framework. All of that is, in my mind, where the focus should be.

If we want to talk about how we progress trade agreements, I think there is ultimately great opportunity for this parliament to revisit how we can continue to have outcomes. I note that in July 2011 there was an inquiry into Australia's trade and investment relations with Asia, the Pacific and Latin America. Again, it did not focus on the issues more specifically that Senator Madigan raised but it did—as you see if you have an opportunity of going to that specific document—outline quite easily not only some of the challenges that are before us but ultimately the benefits. It is about where Australia is keen for APEC to intensify work on regulatory form, competition policy and regional economic integration through structural reforms at the border—for example, in Customs, procedures, standards, conformance and business mobility across the border by improving supply chain connectivity; and behind the border by reducing regulatory burden and squeezing the transaction costs. These are the rub areas where more work needs to be done to ensure that the outcomes that Senator Madigan seeks are achieved rather than perhaps the way you are seeking to achieve it.

As the report says, Australia is working with Singapore, Hong Kong, China and other APEC members on a framework on supply chain connectivity to identify choke points that impede trade logistics in the Asia-Pacific region and to assess measures currently in place to ameliorate some of those issues. (Time expired)

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens are very sympathetic with the details of the Fair Trade (Australian Standards) Bill 2013 proposed by Senator Madigan. We have not yet made a decision as to whether we will support the bill, and we would certainly be interested in a referral to an inquiry to further explore the issues around the bill—or, as Senator Ludwig suggested, possibly even a larger inquiry into areas surrounding free trade in general, in light of the significant activity in free trade deals that we are currently experiencing particularly with the recent change in government.

I want to start at the beginning where it is really simple with this concept of free trade. We heard Senator Edwards talk about why free trade is good and certainly, according to the high-profile statements being made by the Abbott government in the media, free trade agreements are something that they are hoping to hang their hat on as a significant achievement in their term of government in the next three years, and they will be pushing through free trade deals and negotiating as many as they can as quickly as they can—with the assumption, and it is a flawed assumption, that free trade deals are always good.

I used to teach this theory to first-year economics students, and I have got to say that free trade is real and it does exist, but it only exists in textbooks. It is a good process to learn when you are looking at two countries negotiating with each other to see how they could perhaps integrate their economics systems—the assumption that perhaps one country might have a specialisation in an area and that they could sell a product at a competitive advantage to another country and vice versa. The theory tells you that both countries would be better off under a simple free trade arrangement. As Senator Ludwig mentioned in his speech, our free trade deals are a lot more complex than that. More fundamentally, the assumption that free trade deals are always good is also wrong because the theoretical assumption underpinning it is that the comparative advantage leads to a greater level of wealth—what we call aggregate wealth for all countries involved in a free trade bloc. But what theory does not tell us—and this is essentially what we are arguing in the chamber today around the issues with free trade, fair trade or trade in general—is how that wealth is distributed in any nation.

I turn back to the theory again. If I were speaking to students about this, I would say, 'In theory, the sectors that gain from free trade would quite simply compensate those sectors that do not gain from free trade.' Of course, the criticism that is often levelled at economists is: the world in economics is based on simple assumptions. The way I see free trade, and trade deals in general, is perhaps not the way the majority of Australian people see it. When they watch TV and they see our leaders at big conventions, wearing colourful shirts and doing the right thing by the nation, I have no doubt that the front end of these free trade deals—as with a lot of international cooperation—is done by government; but what is behind trade and trade activity is corporations. It is business activity, it is investment, it is production, it is the search for profits. That is what drives our economy.

I have no doubt that the negotiators at DFAT, for example, with current free trade deals, are all good people doing fantastic jobs in what they see as the national interest. But you really need to strip that back to its more simple foundations. It is the interests of Australian corporations, and not just Australian corporations but multinational corporations. This is the last time I will mention that I have taught something, but I can tell you, having taught international finance: it is very difficult sometimes to work out where multinational or transnational corporations are actually domiciled. But that is what the world has become. There is no doubt that global integration of our economies, in the last 30 years especially, has led to a concentration of business activity and wealth in a small number of very large companies right across all sorts of different industries and sectors. So when we think about a free trade deal like the Trans-Pacific Partnership or the RCEP deal or even simple unilateral, bilateral or multilateral deals, it is the special interests—that employ people, that produce—that are driving these deals. It is the special interests that are behind these. And they are corporations.

I think what we really need to look at is whether the interests of these corporations are also in the interests of our nation, the general public and, of course, the Australian voters. The Greens have long been very strong and fierce advocates for fair trade. There is a fundamental difference in theory and in practice between fair trade and free trade. Let us just look at what is in the national accounts—our current account and our financial account. That is where trade and investment activity is buried. That is where we go every quarter when we want to look at the activity to do with exports, imports and direct foreign investment. That is all good stuff, but that is all measured in monetary terms. When we think of fair trade, we think of those things external to purely monetary measurements. We think of the impacts on existing industries—for example, workplace standards and fair work standards. We think about the environmental aspects of trade and production and whether we are creating any externalities in the products that we may be trading in. Exporting coal to the world is one really good example where we are exporting an externality—probably the biggest externality that has ever factored into our modern economic system. It has been there since the beginning: the creation of the gases that lead to global warming. These are issues, and we could think of a lot of other examples where trade and business production activity do not necessarily reflect these externalities, and it is exactly the same in trade deals.

So the idea of having stronger standards in general is certainly something that our party supports. Of course, across the chamber the most common argument we will get against that is increased cost of doing business and putting imposts on companies and businesses that may lead to the erosion of profits and ultimately to lower employment and the reduction of other activities. But there are also benefits in putting better standards in place—for example, certification schemes on a whole range of products.

I was very pleased earlier in the year that the Senate unanimously passed a motion following the very tragic Rana Plaza collapse in Bangladesh, where 1,200 people were buried alive while working in a factory with appalling labour conditions and safety standards. We later learned, following an expose by Four Corners and significant international attention on the rag trade coming out of a country like Bangladesh—and it is not just Bangladesh—about the conditions that workers in foreign countries were subjected to to produce what are essentially throwaway goods for us—the $5, $10, $15 and $20 garments that we take our kids to buy down in the local shop. There is a price to be paid for having cheap garments in this country made in appalling conditions in foreign countries, and that price of course is the misery and death of human beings.

So what can we do about this? Obviously there is a lot we can do by letting Australian consumers know so that they can make a choice between buying goods that are produced unethically under appalling conditions and buying goods from those companies that do the right thing. I respect that it may cost a little bit more to put in place a certification program that simply has a label or a tag on a product made in a country like Bangladesh that says that that particular item of clothing has conformed to minimum standards and those standards have somehow been verified. This has actually developed from voluntary schemes around the world, and I really think it is something this country needs to face up to.

I understand the focus of Senator Madigan's bill is on import standards, which I will get to in a minute. We need to be very careful about what we import into this country, not just in terms of ethical considerations but also with agriculture: standards around quarantine, MRLs and the conditions under which food has been brought into this country. When I speak to people in the agricultural sector—farmers in Tassie—it is fascinating. Being an economist, I had always assumed that low prices mean low inflation and low interest rates, maximise economic growth and are good for the economy. But I really wonder sometimes whether we should look at the concept of fair prices for products that are produced in this country and the fact that our farmers, for example—I know it is the same for manufacturing industries in this country—cannot compete effectively with international competition. This is classified as competitive disadvantage. There are some reasons why Australian businesses cannot compete on a level playing field against foreign countries. Of course, the low cost of labour in these countries is one of the most common things that we talk about, but there is also a lack of standards and verification processes in, for example, agriculture—a whole range of different issues that relate to other countries' rules and regulations or lack of rules and regulations.

So the simple question is: is the constant focus in our society on low prices necessarily sustainable in the long term and is it necessarily a healthy thing? We all want to lower our cost of living and there is no problem with that, but at some stage—maybe it will come if our dollar ever depreciates—we will have to start paying more for cheap imported products, allowing more of a level playing field. But it is absolutely essential that we start questioning these issues, and I am very pleased to hear Senator Ludwig say that Labor is open-minded about exploring a broad range of issues around free trade—no doubt about the positive aspects of trade, but free trade certainly comes with costs.

John Hogg (President) Share this | Link to this | Hansard source

Order! The debate is interrupted, as the time for the debate has elapsed.