Wednesday, 8 February 2017
Treaties Committee; Report
When I first rose in November last year to begin this speech on the report on the Trans-Pacific Partnership the world was a different place. Donald Trump had just been elected President, but there was a view that perhaps the TPP would survive. However, even then, many of us believed the TPP was already finished, and I quoted a colleague who said that it was as dead as a dodo. I think it is important as I speak on the Joint Standing Committee on Treaties report on the TPP to highlight the issues that I think we should be very careful with as we negotiate trade agreements going forward. In fact, I believe we may well have had a lucky escape from some of the provisions of the TPP. Of course, for some agriculture and service sectors the agreement had the potential to boost their trade, but not without cost to the wider economy. I want to ensure that some of the concerns I and other Labor MPs had are on the record.
There is no doubt that the TPP was an ambitious project. It was a proposed deal between 11 countries: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, the United States, Singapore and Vietnam. The pact was aimed at deepening economic ties between those nations. While the aim was to boost investment flows between the countries and further boost their economic growth, I cannot describe it as a free trade agreement. It actually puts in place complex rules that govern the relationships between these countries, and I have concerns in five areas: the lack of independent analysis, the so-called ISDS provisions, the impact on workers' rights, the safe harbour copyright provisions and the secrecy with which the deal was negotiated.
To the first one, the lack of independent analysis: there is a total absence of independent economic analysis around the benefits and concessions contained in the TPP. This was identified time and time again in public hearings. The best data we had was that there would have been a 0.7 per cent increase in GDP by 2030, based on a World Bank analysis. I had to look twice at that figure. It is not a lot, given what we are giving up. While the committee can hear a lot of expert witnesses, it is not the same as independent analysis, and most people recommended someone like the Productivity Commission. I think those sorts of reports should be made available to parliament not just before this committee considers the agreements but before they are signed and certainly before the legislation is endorsed. As the Australian Chamber of Commerce and Industry told the committee:
There is little academic study of the technical components of what is being negotiated, nor study of the outcomes of past negotiations to ensure their intended goals were achieved.
So I am pleased to see that recommendation in the final report.
Along with this, I would urge for greater transparency on the negotiation of these treaties. This is reflected in recommendation 1, where we call on the government to consider changing its approach so that security-cleared representatives from business and other organisations can see the positions that Australia is putting. There is no doubt that negotiations are done in a much less inclusive way here than in, for instance, Europe.
Where the committee did not agree and therefore we have a dissenting report is on the investor-state dispute settlement provisions. These are designed to give some protections for investors and provide a mechanism for resolving disputes. To bring an ISDS case, a foreign investor must believe that an arbitrary or capricious action of the government has caused them to lose their investment. However, effectively what ISDS does is allow private, non-Australian-based companies to take legal action against the Australian government, action that Australian businesses do not get to take. So it tilts the playing field away from Australian businesses. It also exposes the Australian government to potentially large, unfunded liabilities, depending on the decisions that an international tribunal makes about laws that have been passed in Australia. You have to wonder why we need ISDS in treaties with countries that have a strong rule of law, like the US. In June 2016 Labor said that a Labor government would not allow ISDS in future agreements, and that position has not changed.
I turn to the issue of workers' rights and safety. The TPP allowed a free flow of workers from countries which are signatories to the treaty. I note that there was vigorous questioning of both union witnesses and departmental officials about the level of skills testing that would be required for, for example, electricians. There were no assurances that satisfied me. While a shortage of certain workers is a legitimate reason for bringing in foreign workers, standards must apply. On that point of market need: the TPP gave access to temporary foreign labour without market testing. These temporary workers, brought in by contracted service providers, could be accredited by overseas processes rather than through mandatory skills assessment here in Australia. I personally would have liked our concerns to have been more firmly articulated in the final report because it has the potential to be yet another undermining of workers' health and safety, of community safety and of the wages system.
They are some of the issues that were heavily talked about during our hearings on the joint standing committee. Another issue that absorbed a lot of time was discussion around safe harbour legislation and provisions. The committee report recommended that the government progress safe harbour amendments in the proposed copyright amendment bill. This is an area where I fear the consequences of an ill-considered set of rules. They could be disastrous for Australian writers and creators.
Safe harbour provisions are designed to protect rights holders and internet service providers by stopping internet service providers from being sued for hosting illegally uploaded copyright content if they remove that content. Until now, our policies in Australia have made a distinction between organisations that provide the facilities for online services and those that actually provide the content itself. I think it is really important to keep this distinction, as content services have a different level of control than those entities that merely act as a conduit. So I worry about the consequences of proceeding with the proposed copyright amendment bill. I am concerned that disrupting an existing commercial environment which today allows content owners and creators to enter into commercial agreements for the use of the content. That is what they do now. Not only will these changes reduce the incentives for content providers to enter into agreements for the licensing of their services; they will also reduce incentives for those who are creating new content. I think a more holistic approach is required in reviewing the safe harbour scheme. We need to be very careful that decisions made in these agreements do not lead to a dimming of Australian voices and cultures.
The TPP is a bit of a moot point. We know the TPP is absolutely dead. We know that it is not going to proceed. But what is a concern is that the findings of our committee may be used as an excuse to proceed with other similar agreements. Some of the agreement was great, and the committee agreed on many things. We know the dairy industry would benefit. We know the cattle industry would benefit. We know the wine industry would benefit. But I think we always have to ask: 'At what cost? Who is the loser?' When you have a GDP improvement of 0.7 per cent over 15 years you have to wonder if maybe there is not a better deal that could be done for Australia. After all, we are in there negotiating. If we allowed Australian businesses, farmers and producers of all types to be more involved in the behind-the-scenes negotiations with the appropriate security clearance as they do in the European Union then we would no doubt get a much better result with far fewer downsides. The one area where there cannot be negotiation is on ISDS. That should not ever be part of any of the deals that we do.
I rise to speak on the report of the Joint Standing Committee on Treaties on the Trans-Pacific Partnership, which was released on 30 November last year. In its report the committee recommends that Australia ratify the TPP. That is a view that is welcomed by the coalition government. There are another five recommendations made in the JSCOT report which are currently being considered by government.
There is no denying that the TPP has been a hot topic over past weeks and months. Whilst it is disappointing that President Trump has withdrawn the US from the TPP at this time, we of course respect the decision of the new US administration. But the TPP is too important as a driver of more Australian jobs not to do all that we can to lock in the benefits of the agreement. The TPP is an agreement of unprecedented scope and ambition. It promises to deliver many benefits for Australian businesses. It will create new market access for Australian exporters and investors, providing preferential access to some of the world's largest economies. It would support the growth of trade in the region additional to Australia's existing FTAs and contribute to economic growth and new jobs. Commonly agreed rules would provide greater certainty for business, reduce costs and red tape, and facilitate participation in regional supply chains. It would also address contemporary trade challenges important to business, such as e-commerce and transparency, in ways that they have not previously been addressed in Australian FTAs.
It is indisputable that trade delivers more opportunities for business and more jobs. I am sure it is the case in many regional electorates throughout Australia just as it is my seat of Hinkler that more trade means more jobs. My colleague the Minister for Trade, Tourism and Investment, Steven Ciobo, has been speaking at length with his TPP counterparts on ways to lock in the benefits of the TPP without the United States, if need be. That has included discussions at the World Economic Forum with trade ministers from Japan, Canada, Mexico, Singapore, New Zealand and Malaysia.
Paths for locking in TPP outcomes will be the subject of discussion over coming months. There are a number of options which are open to us, and there is a shared determination to ensure that the benefits of the TPP are not lost, despite the objections of the opposition—even though the former Minister for Trade, Simon Crean, in 2008 actually said:
Our announcement to join negotiations on the trans-Pacific Partnership is perhaps the most important initiative the Rudd government has taken to fulfil that aim.
Australian farmers and business groups support the government's efforts not to abandon the TPP as the opposition has. The National Farmers' Federation chief executive, Tony Mahar, said:
… the benefits of the landmark deal were too significant for Australia's farming sector to give up.
The opportunities presented by the TPP have the potential to be transformational for our already-strong export industry.
… Commodities across-the-board stand to gain including red meat, dairy, fruit and vegetables, cotton, wool, sugar, grain and seafood.
In a media release dated 20 January, Mr Mahar said that, if the US pulled out of the TPP, it 'was not necessarily dead in the water'. Mr Mahar said:
There's more than one way to skin a cat. While it would be preferable to have the US remain a party the most significant gains for Australia lie with the deals struck with Japan, Mexico, Argentina and Canada.
To this end we were buoyed by discussions between Prime Minister Turnbull and his Japanese counterpart Prime Minister Abe last weekend on how to progress negotiations.
… We particularly welcome Prime Minister Turnbull's commitment to ratifying the deal – despite the uncertainty following the result of the US election …
The wine sector said we 'must do everything in our power to ensure the agreement comes into force'. That is a quote from Tony Battaglene, the Chief Executive of the Winemakers' Federation of Australia, in a media release just two weeks ago. It said:
Despite President Trump's decision not to ratify the TPP at this time, the agreement provides such great opportunities for the Australian wine sector, that we must do everything in our power to ensure the agreement comes into force.
Mr Battaglene said:
The TPP offers tremendous opportunities for our sector and the promise of wealth creation in regional Australia as well as to the national economy …
He went on to say:
This is the first agreement to specifically address significant non-tariff trade barriers restricting our export growth as well as promoting significant opportunities within the region. It also provides a template for future agreements.
The media release said:
The worst thing for the prosperity of the Australian people will be to embrace protectionism. We need strong export growth and trade liberalisation through Free Trade Agreements is key to our success.
Further support comes from the Export Council of Australia, which said:
Australia … cannot afford to go backwards on trade.
The following lines are from its media release on 24 January:
In Australia, jobs are best created and protected over the long term through an open and competitive economic system.
Further increasing opportunities for Australian companies to trade and invest around the world is crucial to unlocking our economic potential, and to ensuring jobs for Australians today and tomorrow.
Australia simply cannot afford to go backwards on trade.
… … …
In the current international environment, the lack of support for agreements such as the Trans Pacific Partnership … from the new US administration does not have to mean the end of the agreement. Rather, this can present a new opportunity for Australia and other like-minded nations to take the lead on creating new market openings for our companies, and ensure the jobs and prosperity of tomorrow are as secure as possible.
Australia must therefore continue to pursue new liberalising trade deals, as well as other international agreements that prioritise the interests of prosperity-creating SMEs.
On behalf of all SMEs, the ECA stands behind the Australian government's focus to pursue an alternate agreement under the TPP framework.
Finally, the peak sugarcane farming group CANEGROWERS said:
… growers were disappointed that US President Donald Trump had chosen to formally withdraw from the 12-nation trade agreement process.
The big prize that we have lost is an improved framework for selling sugar in the Asia-Pacific for the foreseeable future and the opportunity of moving towards selling up to 500,000 tonnes to the US in the future.
CANEGROWERS is urging the Australian Government to continue to work to close the TPP deal with the 11 other Pacific nations involved.
… We have been encouraged by the discussions between Australia and Japan recently and the Prime Minister's talk of a revised TPP…
… This US decision puts greater importance on the other avenues Australia is negotiating for improved trade access – a stronger deal with China, the Asia-focused Regional Cooperative Economic Partnership and free trade agreements with the European Union and United Kingdom.
It is important to remember that uncertainty around the TPP has not stopped the government taking forward its trade agenda.
The Indonesian and Australian governments have agreed to conclude the Indonesia-Australia Comprehensive Economic Partnership Agreement by the end of this year. Australia is pushing for an ambitious Regional Comprehensive Economic Partnership—the RCEP. Like the TPP, RCEP is a megaregional trade agreement involving 16 countries, including China, Korea, Japan, India and ASEAN countries. It includes nine of Australia's 13-largest trading partners. The RCEP countries account for around half the world's population and a third of the global GDP. A successful RCEP has the potential to boost regional economic confidence and integration. ASEAN, which celebrates its 50th anniversary next year, is at the centre of the RCEP negotiation. Australia wants to reach a successful conclusion with ASEAN and the other major regional economies of the RCEP agreement: China, Japan, Korea, India and New Zealand. Concluding a comprehensive, forward-looking RCEP agreement will send a strong signal about the economic future of the region.
Considerable progress has been made on the trade and services agreement between 50 economies, with 23 parties, including the EU, and 28 WTO members. The government have also made clear our intention to broaden and deepen our trade and investment relationships with both the EU and the UK. We are continuing to work on a free trade agreement with India. The government will also seek to make the most of the valuable agreements already in place, including the trade agreements with Korea, China and Japan.
I have seen and heard firsthand many of the success stories due to the free trade agreements which we have already signed. In Western Australia, I visited the world's biggest exporter of rock lobsters: the Geraldton Fishermen's Co-operative. Australia's free trade agreement with China saw the tariff on fresh or chilled rock lobster cut to nine per cent in 2016, and it fell to six per cent on 1 January this year. For the first nine months of 2016, direct Chinese imports of live, fresh and chilled Australian rock lobsters almost trebled compared to the same period last year, reaching $28 million. On 1 January this year, further tariff cuts on more than 7,000 Australian products came into effect, creating more export opportunities for Australian businesses.
These wide-ranging tariff cuts are continuing to deliver a competitive advantage for businesses, including those in my electorate of Hinkler. Bundaberg, in the northern part of my electorate, is now the largest macadamia-growing region in this country. The tariff on shelled macadamias was 30 per cent before KAFTA. It was cut to 12 per cent, and it is now being cut further to six per cent. Almost $10 million worth of macadamias were exported to Korea between January and September in 2016, with Australian exports now triple those of two years earlier. These are just a few of the many benefits Australian businesses are seeing from FTAs. The coalition government will continue to advocate for what is in the national interest; the benefits of the TPP are no different.
I stand to discuss the report of the Joint Standing Committee on Treaties into the Trans-Pacific Partnership Agreement. I want to clear up a couple of the previous speaker's misconceptions. I congratulate him on his promotion, but you can be in favour of free trade and oppose a dud deal. You can be in favour of trade liberalisation and say that a deal has to deliver for all Australians, not just narrow sectarian interests. Unfortunately, this TPP does not do either. It is a dud deal that delivers for certain sectors at the expense of the whole nation. I will get to the substance of the deal in a minute.
I find it ridiculous that we are debating this report and engaging in this discussion about whether we will legislate in support of the TPP. The TPP is dead. It is deader than the parrot in the Monty Python sketch. It is deader than the Black Knight that the Prime Minister seems to do a great impersonation of. It is dead because the US have very clearly said they will not support it. This is not just a blow in terms of removing a major player. The way the TPP is constructed around ratification by member nations means that, without the US ratifying this treaty, this treaty cannot come into force. Other countries like Japan have said that very clearly. It was interesting that the previous speaker applauded the efforts of the Prime Minister in trying to get Japan to continue this deal. He was well and truly leading with his chin because Japan has said that, without the US, there is no TPP. It is a gross waste of Commonwealth time and it is a gross waste of parliamentary time to even be discussing ratifying this agreement because it is dead.
Even if the US had supported this agreement, I think that we should be opposing the Trans-Pacific Partnership Agreement because it is not in the interests of Australia as a whole. It is in the interests of certain sectors; I do not pretend otherwise. It will benefit the agricultural industry, and that is great—good luck to those farmers who can export more under that agreement. But it is at a much greater cost for the Australian nation as a whole.
And it is at a much greater cost because of five key areas. First off: selling out Australian sovereignty through the investor-state dispute settlement clauses: clauses which give foreign multinationals, foreign companies, the right to sue the Australian government when we make laws in this country that affect their profitability. It has been called out by the Productivity Commission and it has been called out by the Chief Justice of the High Court—neither of those are renowned left-wing radicals! It is a fundamental attack on the sovereignty of our nation, and we have seen that already with the Hong Kong arm of Philip Morris challenging our plain-packaging tobacco laws, laws that are cutting smoking rates right now and laws which are reducing the cancer rates in this country. We are being sued by the Hong Kong arm of Philip Morris because the Australian arm could not take the action.
The safeguards that are supposedly in the TPP are very weak. We have seen similar safeguards completely undermined in court actions. We have seen an ISDS system where tribunal judges one day are then lawyers for the corporations the next day. It is a system without transparency and it is a system which needs massive reform. I am proud that Labor has said it that when in government we will not agree to treaties that include ISDS.
The TPP also does not guarantee ILO convention labour rights. All it provides are weak commitments to enforce existing national labour laws. That means that if the labour laws are weak there is no protection for workers under this agreement. In terms of labour movement, this agreement removes labour market testing for temporary skilled visas from five nations. Let me repeat that, Mr Deputy Speaker: if the TPP came into force there would be five additional nations where the Australian government could not apply labour market testing to guarantee that Australians would get the jobs first. That is really worrying.
In terms of the environmental conventions, there is a failure to guarantee that environmental conventions would be enforceable. And perhaps the biggest concern of this agreement is an extension of protection for biologics within the pharmaceutical industry. Currently, there is a five-year protection for patents pertaining to biologics in our pharmaceuticals. This agreement guarantees an equivalent of another three years of protection. To give some context to this, the 10 most expensive biologics cost the PBS around $1.2 billion per annum. So a three-year extension by definition will increase the cost to the PBS by a very considerable amount.
These are all reasons why the TPP is very flawed. And what is the supposed benefit of it? The government's own, very dodgy, modelling says that there will be a 0.1 per cent benefit to GDP per annum. Now a 0.1 per cent benefit within modelling is near imperceptible. It is almost certainly overstated and it is potentially overwhelmed by the biologics and the change to intellectual property. That is why, if this agreement ever reaches the legislation stage—if this legislation is ever presented to the Labor caucus—I will proudly vote against it, because it is not in the interests of Australians.
I am pro-trade liberalisation, but it must be done in a way that supports the Australian economy and which does not undermine the Australian economy to advance the narrow interests of one particular sector. Unfortunately, at the moment that is what the TPP is, and it continues the appalling trade record of the coalition government.
They brag about the Japanese and South Korean FTAs. Well, they could only do these deals because they killed the Australian automotive industry. They killed the Australian automotive industry, which destroyed 50,000 direct jobs and imperilled another 200,000 indirect jobs. The automotive industry was the main stumbling block to getting these free trade agreements up when Labor was in power. That, in conjunction with the ISDS clause in the South Korean agreement, was why Labor did not sign these agreements while in government.
The coalition government took care of this by destroying the automotive industry. When they were last in government, in the Howard era, they had a similar appalling record on trade agreements. The Thai FTA was supposed to be the saviour of the Australian automotive industry. It was going to lead to exports of tens of thousands of Australian cars to Thailand—particularly the Ford Territory. What happened was that the agreement was signed, reducing tariffs on Australian car exports to Thailand to zero over a period of time. Immediately, the Thai government put up the registration fees for large vehicles, basically ruling out any chance of the Ford Territory being competitive in the Thai market, a behind-the-border move that meant that this agreement was completely ineffective for supporting Australian automotive exports.
The US FTA agreement—something the other side of politics is incredibly proud of—has been in operation for over 10 years now, and what does the evidence show? A recent ANU study—ANU, a bastion of free trade economic theory—has found that the agreement was trade diversionary. Australian and United States trade with the rest of the world fell. What is even more interesting, and probably more worrying, is that trade also fell between the United States and Australia. Let me repeat that: since the beginning of the operation of the US free trade agreement with Australia, trade between Australia and the United States actually fell. It is less now than when the trade agreement came into operation.
This government has an appalling record on trade liberalisation. Government members like to wave pieces of paper in the air. They are almost like Neville Chamberlain, in that they sign an agreement for having an agreement's sake while they sell out the future prospects of the Australian economy and the workers that depend upon it. As I said before, trade should be in the interests of all Australians, not just one sector that employs around 300,000 people. Trade is about all of us and not just farmers—as important as that industry is. I have to applaud the National Party, because they truly are writing the economic policy of this government. If it is good for farmers, it generally gets through this government. But, if it is good for farmers at the expense of the rest of the Australian economy, it should not be supported. Unfortunately, that is what we have got under this government, which has all the hallmarks of 'Black Jack' McEwen.
I have no doubt that I will be accused of being anti free trade, of being an economic dinosaur. Nothing could be further from the truth. I recognise and support the powerful impact trade liberalisation has in our economy and that it does generally, when done right, improve the allocative efficiency of this country: getting resources where they can do most good. But a spaghetti framework of preferential trade agreements—because that is what these agreements are—does not do that. It distorts trade, it distorts the allocative efficiency of our economy and in the end it distorts the economic structure of our country while giving up massive rights around sovereignty, ISDS, intellectual property and the PBS, and that is why I oppose this agreement.