House debates

Monday, 22 February 2016

Ministerial Statements

Trans-Pacific Partnership Agreement

4:47 pm

Photo of Terri ButlerTerri Butler (Griffith, Australian Labor Party) Share this | Hansard source

This regional preferential trade deal has attracted significant criticism here in Australia and also internationally. It seems to a lot of Australians that in doing this deal the Liberals have conceded a lot of ground without getting enough of a return to justify doing so. Take the investor-state dispute resolution provisions. The Liberals have agreed to include ISDS provisions in the TPP. If it comes into force, that will be the first time that Australia will have had an agreement with the US and Japan containing ISDS—yet we already have existing trade deals with both.

I have previously spoken about the concerns that I have with ISDS provisions, and I am far from alone. Last year the ABC's excellent journalist, Jess Hill, put together a package on ISDS provisions for background briefing. She interviewed George Kahale, one of the US's leading ISDS lawyers. I want to repeat some of his comments to her. He said:

These things can take place—

these things being arbitrations under ISDS provisions—

in any number of settings. Often they take place in hotels, or in conference centres at the World Bank for example. But it could take place anyplace. And what you're walking into is a temporary courtroom made up for a very intense usually a couple of days or perhaps a week.

And he went on to say:

Well, you usually have three arbitrators. You'll have the court reporter and you'll have counsel for both sides. You'll have the witnesses. These hearings by and large are private. So there are no cameras, there are no reporters, none of that.

And he went on to talk about the lack of reliance on precedent. He said:

Each one is basically free to view the law the way it sees it. So they're not technically bound by any precedent and if they wanted to be or even had a, let's say, higher degree of respect for precedent, you know, right now the precedents are all over the place, so they can literally find a precedent for anything.

He also said that litigation funders are sponsoring companies to bring claims against nations.

Of course, the ISDS provisions are not the only criticism of the TPP. There are equally, if not more, significant concerns in relation to labour standards, labour market testing, skilled migration, intellectual property and the effect on medicine costs and copyright. Nobel prize-winning economist Joseph Stiglitz has said the TPP was driven by the interests of corporations and will do little for the wellbeing of citizens. He believes it may turn out to be the worst trade agreement in decades.

Of course, it is not enough in assessing any trade deal to focus attention only on the negatives or, equally, it is not enough to focus attention only on the positives. Any deal will necessarily include compromises—that is the nature of deals—and the more parties you have the more difficult it will be to aggregate all the compromises and come out with something everyone can support. So it is intellectually dishonest to focus exclusively on negatives, just as it is to focus exclusively on positives.

An agreement has to be weighed carefully. An assessment needs to be made about whether, taking into account all the pros and all the cons, on balance it should be supported. The material from the government clearly seeks to demonstrate the agreement's upside. The government is an advocate for its own deal—that is hardly a surprise—but it is relevant and important to acknowledge the predicted benefits, as interested as the department may be in publishing the upside. As the department has noted, the 12 countries that negotiated the TPP—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam—represent around 40 per cent of the global economy and a quarter of world trade. Australia's exports of goods and services to these countries were worth $109 billion last year—one-third of our total exports. In 2014 Australian investment in the countries that will become TPP countries was 45 per cent of all outward investment.

In the material promoting the agreement the department notes the market access gains for Australian producers, especially in agriculture. Beef, sugar, rice, dairy and others are expected to reap the benefits of that increased access, both in countries where we have existing trade agreements and in the countries where we do not have existing deals, which is three of the TPP countries. We do, though, have those existing trade agreements in all but three TPP countries, as I said.

I have spoken already about my concerns about ISDS. The trade deals we have with two of our biggest trading partners in the TPP—the Australia-US FTA and the Japan-Australia Economic Partnership Agreement—do not have ISDS provisions in them. So you would think it would take a lot of economic upside for us as a nation to agree to give those countries' firms ISDS rights against our nation—in other words, the right for the firms to sue Australia in a private hearing in a private arbitration court run by private individuals, a sort of international arbitration club.

You would want something pretty good in return for selling out our sovereignty when we already have the benefit of a lot of existing trade deals and a lot of existing trade. But even with the increased market access, which is a benefit that should not be disregarded—and I do not seek to downplay it—the World Bank says that this deal will deliver less than one-half of one 10th of one per cent in additional growth for our economy annually. Every bit helps, and I am not dismissing the additional growth—far from it. Nor am I seeking to downplay the benefit to Australian farmers and other Australian producers. But if you set the benefits and the compromises on a scale, would a balance be struck? And if not, what would outweigh the other? Would the pros outweigh the cons, or would it be the other way around? I am also not saying that we should consider only the direct benefits to Australia. We are part of a region and part of the world, and we should consider the benefits to both. For example, the World Bank says that Vietnam and Malaysia will benefit in the order of 10 per cent and eight per cent GDP growth, respectively, to 2030. It also says that there might be spillover positive benefits to the world generally and there may be positives for some individual countries that are not members of the TPP. But the World Bank also says the trade diversion and erosion of preferences could result in GDP losses for Korea, Thailand and possibly other Asian non-member countries. These impacts, both positive and negative, should be considered when deciding whether Australia should be part of the TPP. I also think that most people would be hard-pressed to tell you how the operation of the TPP will be affected if and when the other big regional deal is done—and of course I am talking about the negotiations for the Regional Comprehensive Economic Partnership Agreement, the RCEP Agreement. Nine out of 12 of our top trading partners, including China, are participating in those negotiations and together with the other six participating countries account for almost 60 per cent of Australia's two-way trade and 70 per cent of Australia's goods and services exports.

Given the situation where we have one big regional agreement that we are being asked to support and we have another big regional agreement on the horizon, it is hard to see how those two are going to interact, how that is going to happen if and when the latter is actually concluded. But most importantly, given the seriousness of the concessions we are being asked to make—the concession that says that a US firm, a Japanese firm, a Chilean firm or a Canadian firm should be able to sue the Australian government; that is a big concession that relates to our sovereignty as a nation and the ability of our courts to make their own decisions about the rights of companies that do business here—you would think that the government would want some independent analysis of the text of the TPP now that it has been finalised, released and signed.

Obviously, the government is giving itself a pat on the back for the agreement, and equally obviously, the Joint Treaties Committee will consider the agreement. The process will get underway as it always does. Members will remember, I am sure, that the government gave itself a very similar pat on the back in 2005 when another treaty was concluded. I expect that the government will continue to give itself pats on the back for the TPP, but we should be careful of having the Australian government tabling glowing endorsements of trade agreements that the Australian government has done.

We should think about getting some evidence based independent analysis through the lens of Australia's national interest commissioned, and we should think about hearing from such independent sources before we make a decision about whether to support the TPP. There are options for a more independent form of scrutiny that should be considered, given the scope and seriousness of this agreement. For example, the Productivity Commission has offered to do an analysis, but the government do not want its help. Maybe because they know that the Productivity Commission thinks pretty poorly of bilateral and regional preferential deals like this one. The Productivity Commission sees them as being preferential trade deals than rather free trade deals, that divert trade and investment rather liberalise trade for the good of the world and our own domestic economy.

In relation to the TPP, the commission's trade and investment report last year reminded us of its previous warning against ISDS provisions and its previous conclusion that there was 'an absence of an identifiable underlying economic problem on market failure grounds that necessitates the inclusion of ISDS provisions'. What they are saying is they considered the argument mounted in favour of ISDS which was that because it will comfort investors when they invest here, it will drive more investment into Australia. In other words, they considered whether or not there is an empirical basis for ISDS provisions based on the argument that is mounted, and they said that if you are going to have these sorts of interventions in the market, there should be an underlying market failure ground to justify that, and they said, as I said before, that there was 'an absence of an identifiable underlying economic problem on market value grounds that necessitated the inclusion of ISDS provisions'.

Assessing this agreement is not about whether we support free trade or not. Being a supporter of free trade does not require mindless acceptance of any and every trade deal. It certainly does not require uncritical acceptance of preferential regional deals that divert trade and have, at best, uncertain consequences. The Turnbull government should swallow its pride and get this deal independently assessed.

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