Thursday, 13 September 2018
Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018, Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018; Second Reading
Labor will support this legislation, the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 and the Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018. This legislation implements the tariff cuts that the government agreed to maker earlier this year when it signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—otherwise known as the CPTPP. The CPTPP is a trade agreement signed by 11 countries in Chile in March this year. It replaced the TPP that was signed by 12 countries in New Zealand in February 2016. That agreement had a clause in it which required countries representing 85 per cent of the combined GDP of that agreement to ratify it before the TPP could come into effect. That clause meant that when President Trump pulled out of the TPP it killed that agreement signed in New Zealand and forced the other 11 countries back to the drawing board.
This agreement is different to the TPP in two substantive ways. First, the economic scale of the agreement or the percentage of the world's economy that it affects is much smaller than the TPP. The TPP covered 40 per cent of the world's economy; this agreement covers about 13 per cent. Second, it's also smaller in scope. Twenty-two provisions that were in the TPP have been suspended in this agreement. They include many of the more controversial sections of the TPP, including the sections on copyright and biologic medicines. The agreement itself eliminates more than 98 per cent of tariffs between signatory countries. For Australian farmers, it will reduce and eliminate tariffs on beef, sugar, cheese, wheat, barley, wine and seafood and expand quotas on rice, butter and skim milk. In mining, oil and gas it will eliminate tariffs on iron ore, copper, nickel, butane, propane and LNG. For Australian manufacturers, it will eliminate tariffs on iron and steel products. It will also give Australian universities the opportunity to expand or open new campuses in Brunei, Japan, Malaysia, Mexico and Vietnam. They are some of the economic benefits. I'll talk about the overall likely economic impact of the agreement in a moment.
It also has potential strategic benefits. Building an overarching set of trade rules for our region and building stronger trade ties between the countries of the Asia-Pacific is very important. This is where we already sell most of the things that we make. Two in every three dollars we make from trade come from Asia, and this is only likely to increase in the years ahead. It is in our interests for the region to be stable and secure, and trade can help with that. This is not an Asia-Pacific-wide free trade agreement, but it has the potential to grow over time.
I have said many times that our long-term ambition should be a regional trade agreement that includes all the countries of APEC. That is the Holy Grail. That's the sort of agreement that could help to ensure that potential trade wars like we are seeing at the moment don't erupt in the future, and could increase stability and security in our part of the world. That is the stated ambition of APEC—an organisation that Bob Hawke helped conceive and Paul Keating built into a meeting of regional leaders.
It was under Bob Hawke and Paul Keating—with extraordinary union leaders like my friend and mentor Bill Kelty—that we ripped down tariff walls here at home. The big changes Labor made in opening up the economy in the 1980s and 1990s have helped create now 27 years of uninterrupted economic growth—27 years without a recession. We've helped to create more businesses and jobs. According to work done by the Centre for International Economics last year, the average Australian family's real income today is $8,448 higher than it would have been otherwise because of those Hawke, Keating and Kelty trade reforms. We tend to look back at that time and think what was done then was easy—but it wasn't. Cutting tariffs was important but it wasn't popular. It helped create new businesses and new jobs, but all of that took time. And, while some parts of the economy grew, other parts shrank.
It is important that we understand as we are debating this legislation that free trade agreements and cutting tariffs are not overwhelmingly popular. There is a lot of scepticism and concern about agreements like this out there. There are a lot of people who think that all of this is great for big companies but not for ordinary workers. A recent Essential poll found that only about one in five Australians think that trade creates more jobs for Australians. That's a very scary statistic given how dependent we are on trade. You see the same sorts of results in the United States.
Trade wars don't just pop out of thin air. There has to be something that fuels them. In the United States at the moment, there are a lot of people who feel like their lives are getting tougher, not easier, and one of the things they blame is trade. That's particularly true in places like Michigan, Ohio and Wisconsin, where wages are flat and jobs have gone overseas. As Thomas Friedman said in his book, 'If people don't have floors under them they will reach for walls,' and that's what they have done in the United States. It helps explain what's going on right at this moment with the threat of another $200 billion in US tariffs being imposed on Chinese goods and potentially another $267 billion more. This is having a real effect already on us with the drop of the Australian dollar.
There is also a lesson for us here. We don't have anywhere near the gap between rich and poor that you see in the United States, but it exists and it's substantial. Just like America, there are parts of Australia doing it tougher than others. Look at parts of North Queensland, where youth employment is 17.6 per cent. Look at my own electorate in Western Sydney, where unemployment is double the national average.
We know, because of what Hawke and Keating did, that the way to create jobs is to tear down tariff walls, not build them. But we also know not everyone benefits equally from free trade; some do better than others. Part of our job here is to understand that and put into place the sorts of policies that help to make sure that, as we open up our economy, we don't grow apart. That's why when Hawke and Keating were cutting tariffs, they also set up Medicare and compulsory superannuation. If we win the next election, we will do the same sorts of things such as making our tax system fairer by giving bigger tax cuts to workers on modest incomes and by putting more money into our schools, our TAFEs and our universities so that more Australians get the skills they need to work in this big, open and fast-changing world.
But if we want more people to support free trade, open markets and agreements like the one we are debating here, we've also got to be more open and more honest with the Australian people. That's why I've been calling on the government to conduct independent economic modelling of this agreement. I'm not the only one who has been calling for independent economic modelling of trade agreements, so have the Australian Chamber of Commerce and Industry, the Minerals Council of Australia, the Harper review, the Productivity Commission, the Joint Standing Committee on Treaties, the Senate Standing Committee on Defence, Foreign Affairs and Trade, and the Joint Standing Committee on Trade and Investment Growth. But despite all of this, the government belligerently has refused to get this agreement independently modelled. Fortunately, though, someone else has.
The Victorian Labor government has commissioned an independent economic analysis of the CPTPP and so have a number of Australian business groups. They've all reached the same conclusion: that the agreement will provide relatively modest economic benefits in the short term, and there is the potential for more significant economic benefits in the longer term if more countries in the region sign up to the agreement. The analysis commissioned by the Victorian government concluded that while the agreement does not benefit all sectors equally, no sector would be worse off as a result.
The analysis commissioned by a number of Australian business groups—including Ai Group, ACCI, the BCA and the Minerals Council of Australia—estimates that by 2030 the agreement would increase Australia's national income by $15.6 billion, boost exports by $29.9 billion and lift investment in Australia by $7.8 billion. It also concludes that the economic benefits of this agreement are about 25 per cent less than the original TPP. This sort of independent economic analysis, I think, is really important. It doesn't over hype the potential benefits or the potential impact of an agreement like this, like some have, but it does show a positive impact. That's important given the scepticism that a lot of people have about deals like this. That's why I've been calling on the government to do it, and why, if we win the next federal election, all trade agreements will be subject to an independent economic assessment.
There are two parts of this agreement where Labor would have done things very differently. The first is the inclusion of an investor-state dispute settlement section, and the second is the waiver of labour market testing. As part of the CPTPP, the government has agreed to waive labour market testing for six countries: Canada, Peru, Mexico, Brunei, Malaysia and Vietnam. This means that an employer will be able to bring in workers from these countries without first checking if there's an Australian who can do the job. Frankly, this is the sort of thing that makes Australians very angry. It's not protectionism to say that before a company brings in an electrician or a carpenter or a mechanic from overseas, it should first have to check if there is an Australian who can do the job. It's just common sense.
Ironically, at the same time as it's removing the requirement to advertise jobs in Australia before advertising them overseas, the government is doing the opposite when it comes to agricultural land. In February the now Prime Minister announced that before agricultural land could be sold to foreign investors, it first had to be offered for sale to potential Australian buyers. If it's good enough for land to have to be advertised here first, it's good enough for jobs. If the Prime Minister and this government were really serious about being on the side of Australians, they'd understand this. They shouldn't have waived labour market testing in this agreement or the others that they've signed.
If we win the next election, we will not waive labour market testing in the trade agreements we sign. We'll also work to reinstate labour market testing for contractual service suppliers in the countries where the Liberals have agreed to waive it. We'll take the same approach when it comes to ISDS. Labor does not support the inclusion of ISDS clauses in trade agreements. That's because these provisions provide foreign corporations with increased legal rights and can be used to sue governments for legitimate policy decisions. The EU is changing its approach here, and there are reports that the United States is considering removing these provisions from NAFTA.
This agreement extends our ISDS obligations to one country, Canada. If we win the next election, we will negotiate with the Canadian government to remove the application of this clause between our two countries by way of side letters. That's what the new New Zealand Labour government has done. It has signed side letters with four countries that are part of the CPTPP. The effect of these letters is that the ISDS clause in this agreement does not apply between New Zealand and these countries. Australia has also signed a similar letter with New Zealand. This shows that it's possible to set these clauses aside, and that is what we will seek to do. To his credit, the former minister for trade, Steve Ciobo, also acknowledged that this was possible in his speech introducing this bill.
I think we can go further and do more than just that. There is more that we need to do to make sure that the trade agreements we sign are subject to the proper scrutiny of this parliament, that they have the benefit of more input from business, unions and other organisations as they're being developed, that they're subject to comprehensive independent assessment at arm's length from government and that they don't include the sorts of clauses I've just talked about—ISDS and the waiver of labour market testing. That's why I'm going to move, as part of this debate, the following second reading amendment that's been circulated in my name. I move:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House notes that:
(1) the Coalition Government has waived labour market testing for contractual service suppliers for six new countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership as well as including investor state dispute settlement mechanisms which Labor does not support; and
(2) Labor believes the way Australia negotiates trade agreements needs to change, and a Labor Government will:
(a) seek to remove ISDS provisions from existing free trade agreements and legislate so that a future Australian government cannot sign an agreement with such provisions;
(b) seek to reinstate labour market testing for contractual service suppliers in existing free trade agreements and legislate so that a future Australian government cannot waive labour market testing in new agreements;
(c) legislate that all new free trade agreements would be subject to an independent national interest assessment before it is signed to examine the economic, strategic and social impact of any new trade agreement;
(d) legislate to create an Accredited Trade Advisors program where industry, union and civil society groups would provide real time feedback on draft trade agreements during negotiations; and
(e) strengthen the role of the Parliament in trade negotiations by increasing the participation of the Joint Standing Committee on Treaties (JSCoT) by providing:
(i) the Government’s Statement of Objectives for Negotiation to JSCoT for consideration and feedback; and
(ii) JSCoT with a briefing at the end of each round of negotiations".
This represents the next tranche of Labor's plan for trade. In October last year, I announced the first tranche of our trade policies. This is the second and more will follow. If we win the next election, we will introduce legislation that prohibits the sorts of clauses that we are concerned about here in the CPTPP. It will prohibit a future government from signing trade agreements that waive labour market testing or include ISDS clauses. We will also fix the way the trade deals are developed, negotiated and assessed. At the moment, the parliament only gets involved in assessing and scrutinising trade deals once they're done. In other countries, this is done differently. The legislative arm of government gets involved at the start and is kept involved throughout the process. I think that's very useful. That's why we will expand the role of the Joint Standing Committee on Treaties, so that members of that committee are consulted at the start of the trade agreement process, are provided with a statement of the government's objectives at the start of the negotiations and ask for feedback. In addition to that, JSCOT will be provided with a briefing by DFAT after each round of negotiations. This will provide valuable input for the team negotiating the trade agreement and will help ensure that, when a trade deal is completed, it's scrutinised by legislators who are familiar with it.
We'll also create an accredited adviser program based on the cleared adviser program in the United States. At the moment, DFAT consults informally with business and other organisations in developing its objectives in a trade deal and trying to implement it. This will formalise and expand this process. Accredited advisers would be security cleared and provided with access to draft texts after each round of negotiation. Like the system in the United States, accredited advisers will represent the full span of community interests, including manufacturing, agriculture, digital trade, intellectual property, services, small business, labour, environmental, consumer, public health organisations, and state and local government. We'll also provide public updates on each round of negotiations and will release draft texts during negotiations where this is feasible.
I made the point earlier how important it is that trade agreements like this are subject to independent economic analysis and I committed Labor to doing that in the first tranche of reforms I announced last year. Today, we take a step further. At the moment, DFAT provides the parliament with what it calls a 'national interest assessment' of the signed agreement. DFAT is full of exceptional people who do extraordinary work on our behalf, but getting the same team that negotiated a trade agreement to provide a report outlining why it is in the national interest is a bit like marking your own homework. If we win the next election, we will subject all trade agreements to an independent national interest assessment that includes independent economic modelling and looks at the social and the strategic impacts of the agreement. These reforms were announced by me on Tuesday, but they've already been backed by organisations like the Export Council of Australia, the National Farmers' Federation, the Australian Chamber of Commerce and Industry, the Australian Fair Trade and Investment Network and the Australian Council of Trade Unions.
Both major parties support free and fair trade. We all realise that we are a trading nation. We rise and fall on what we sell to the rest of the world. The opening up of our economy over the last four decades has made us a stronger and wealthier country. It's also made the things that we buy cheaper and the average Australian family something like $8½ thousand a year, on average, better off. In an age of rising doubt and scepticism about the impact of globalisation and free trade, we have to get better and be more open about the way we do this. And we have to listen to what the community is telling us. The reforms that I have announced today are part of that. Doing better trade deals, though, is not enough. It's the start. Trade agreements can open doors, but more Australian businesses still need to walk through them. That is where even more work is needed.