House debates

Wednesday, 22 August 2018


Joint Standing Committee on Treaties; Report

9:52 am

Photo of Stuart RobertStuart Robert (Fadden, Liberal Party) Share this | | Hansard source

On behalf of the Joint Standing Committee on Treaties, I present the committee report incorporating a dissenting report entitled Report 181:Comprehensive and progressive agreement for Trans-Pacific Partnership.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—I rise to make a statement concerning Report 181:Comprehensive and progressive agreement for Trans-Pacific Partnership or TPP-11 for short. This is the revised Trans-Pacific Partnership and has been signed by all the original TPP parties except the United States. The active provisions of the TPP-11 are the same as those in the TPP, with the exception of a handful of provisions.

Even without the United States, this is one of the most significant international trade agreements since the completion of the World Trade Organization's Uruguay Round 20 years ago. It is quite an extraordinary agreement. In that light, Mr Speaker, it is wonderful to welcome to your gallery this morning His Excellency Mr Miguel Palomino de la Gala, the ambassador of Peru. Of course we had the Peru-Australia Free Trade Agreement tabled in this House to allow ratification last week. Sir, it is wonderful to see you. I welcome His Excellency Patricio Powell, the ambassador for Chile. Australia has a longstanding free trade agreement with Chile. It is wonderful to see that reaffirmed here in TPP-11. And I welcome His Excellency Eduardo Patricio Pena Haller, the ambassador for Mexico. It is superb to see Mexico, one of the world's great economies, the 10th largest country in the world, now involved in TPP-11.

So many of those countries are also involved in the Pacific Alliance Free Trade Agreement that we are currently working through. We're looking forward to bringing that completed trade agreement to the House. I think there will be a very strong association between Australia and Ibero-America going forward. I think there are great opportunities for us—for trade, commerce, education and cultural exchange in that part of the world. TPP-11 is a key plank in that area.

There are considerable opportunities for Australian businesses as well as for businesses of the other signatories to TPP-11. The TPP-11 will provide considerable opportunities for Australian businesses, such as providing preferential access to the Canadian and Mexican markets for the first time and reducing or eliminating tariffs on beef, sugar, cheese, wheat and seafood exported to Japan. Mechanisms to minimise the impact of non-tariff barriers will be key across all TPP-11 countries. There will be a framework to standardise technical barriers to trade across all countries and, of course, improved access for Australian technical expertise to all countries in areas such as minerals exploration and technology services by ensuring an easy movement of professionals, reducing barriers to transfer of software and reducing barriers to businesses wishing to establish a presence in the TPP-11 countries.

While we considered and did an extensive inquiry into the original TPP—which was report 165, which I tabled in this House—a number of factors warranted an extensive inquiry into TPP-11. These included: the withdrawal of the United States, which is disappointing; the additional research that has been conducted into potential impacts of the TPP-11 since TPP was tabled a number of years ago; and, of course, the impact of the suspended provisions.

One of the most interesting insights of the inquiry is that the withdrawal of the United States is likely to benefit the Australian economy. Who would have thought! That is because the United States's exports to Japan will still be subject to tariffs higher than those applying to Australian exports. It just goes to show that international trade and a country's GDP rise when we move to freer trade.

The committee's inquiry benefited from extensive research conducted by inquiry participants. This was particularly the case in relation to some contentious issues like investor-state dispute settlement, or ISDS, and economic modelling. The committee was presented with evidence drawn from over 500 examples of ISDS cases. To date, Australia has only been subject to one or two such cases.

The improved ISDS provisions in TPP-11 should prevent foreign investors from bringing ISDS cases against Australia in relation to income, social security, welfare, public education, public training, health, child care, public utilities, public transport, housing and the environment—key areas of public policy debated often in this place.

The TPP-11 also signals future improvements in ISDS processes, such as appellate mechanisms, a code of ethics for arbitrators and the introduction of the construct of precedent within those cases. The improved ISDS provisions mean that the Australian public can and should have great confidence that ISDS will not prevent the Australian government from regulating in the public interest when necessary in this place.

Participants in the inquiry engaged in lengthy debate about the outcomes of the economic modelling performed on the TPP and TPP-11. In summary, the debate about economic modelling was at times heated but not particularly illuminating. Economic modelling takes a series of assumptions about an economy based on previous evidence and casts that forward to predict outcomes in a limited range of fields. To quote—heaven forbid!—the previous member for Groom, Mr Macfarlane, he says that economists are there to make astrologists look good. I'm not saying he's being unkind; I'm simply pointing out that there are limits to modelling that we should all understand.

A consequence of this is that the outcomes from different types of modelling at times cannot usefully be compared. In addition, modelling a complex agreement like TPP-11 in a real-world environment across 11 different countries imposes necessary limitations on the accuracy of what are, at times, predictions.

We as a committee believe that economic modelling is useful as a tool but amongst a range of tools and is only useful to inform decision-making. However, the committee believes that there are enough benefits to be had, especially in the public perception of trade agreements, if the Australian government commissioned modelling as part of the national interest analysis for future trade agreements. Because of this, the committee has recommended that the government, as part of preparation of an NIA—a national interest analysis—should commission economic modelling of future trade agreements.

In relation to the TPP provisions suspended in TPP-11, the committee found that the suspensions relating to intellectual and copyright were widely, though not universally, supported as beneficial to Australia. The committee also took evidence that reimposing the suspended provisions may have an impact on some sectors of the Australian economy. We therefore recommend that any proposal to reimpose any of the suspended provisions should be considered a treaty amendment resulting in an inquiry by the committee. Oversight is always a good thing.

The tendency towards protectionism that we have seen over the last 18 months or so in international trade has certainly grown since we first identified it. Trade protectionism will have a significant impact on Australia's exports and, consequently, employment if it continues to develop and will have an impact on the other 10 TPP-11 countries, as we all progressively move towards more open trade for the benefit of all involved.

Against this, TPP-11 provides an important positive example of international cooperation, promoting rules based trade and investment liberalisation. Ratification would be an important contribution towards stabilising the trade environment, reinjecting momentum into cooperative trade liberalisation and rules based approaches to global trade. Therefore, the committee recommends the ratification of TPP-11. On behalf of the committee, I commend the report to the House. I thank the other TPP-11 countries for their cooperation, willingness and speed to which we can get this agreement done. To the ambassadors in the gallery: thank you, sirs, for all of your hard work ensuring this comes to fruition. It's with great pleasure that the committee tables its report.

10:00 am

Photo of Michael DanbyMichael Danby (Melbourne Ports, Australian Labor Party) Share this | | Hansard source

by leave—I welcome the tabling of this report and I join the member for Cowan in welcoming the excellencies from the Ibero-American bloc, who are so much a part of this proposed treaty. Negotiations on the original Trans-Pacific Partnership, as we know, began under Labor in 2010. As we're all aware, the United States withdrew from the agreement, which was signed in March this year. This is a new agreement and against the tide of opposition to free trade around the world. That's why it's so important.

There are modest economic benefits for Australia in this agreement, and it will remove 98 per cent of tariffs in the region. According to independent economic modelling, of which the member for Cowan spoke so fondly and which was commissioned by the Victorian government, Australia gains market access and eliminates tariffs on Australian goods, including nickel, iron ore, copper, steel, auto parts and machinery. Open markets lift people out of poverty and create higher-paid, more secure jobs. There is also a strategic benefit to Australia in being involved in this regional agreement after the US withdrawal. It just shows that all of the countries who participate in this do understand that democratic cooperation, including in economic areas, is very important. Multilateral agreements like the CPTPP or, as it's better known, the TPP-11 establish the rules of the road for trade within our region. Deeper engagement in our region is key to securing Australia's economic future. Tying the economies of the region together also makes us more secure in this country.

The opposition has long recognised that it is in Australia's national interest to engage more and play a bigger role in our region. That is why Labor has announced a suite of policies under the Future Asia banner in recognition that it is in Australia's economic and strategic interests to deepen engagement in the region. There are issues with the agreement that Labor members raised in our additional comments presented with this report, a particular focus on the investor-state dispute settlement arrangements and the waiver of labour-market testing, which I will come to in a minute. I also want to draw attention to the prospective benefits of this agreement for Australia's universities. As Gabriele Suder, a professorial fellow at Melbourne Business School, argued recently:

Free-trade agreements linking Australia to south-east Asia, Latin America and the European Union will help break our reliance on international students from China—

and lead to prospective benefits of the treaty:

… greater access to overseas students and smoother facilitation of international research projects.

On their own, the agreements won't necessarily lead to a shift in the number of international students studying in Australia, but they could dramatically change where they come from – alleviating … over-representation of Chinese students in local classrooms.

Let me say something quickly about the investor-state dispute settlements. The opposition is reluctant, if it becomes government, to sign an agreement that includes ISDS provisions. We have already committed to negotiating to remove these clauses from existing agreements in government. This was a commitment made in the 2016 election and recommitted by the current shadow minister for trade in October 2017. If we look to New Zealand, we see that Prime Minister Jacinda Ardern was able to remove this clause by signing side letters with four countries with whom the previous conservative government had negotiated ISDS clauses.

On labour market testing, the opposition agrees that the waiver of labour market testing in trade agreements does not make sense. We agree that, before any employer brings in a worker from overseas, the employer should be required to first check and see if an Australian can do the job. As with ISDS, Labor in government also does not want an agreement that waives labour market testing for contractual service suppliers. In addition, a Shorten Labor government—which seems more likely by the day—will strengthen existing labour-market-testing provisions. We've already been successful in forcing the government to adopt several of these measures.

The opposition is also committed to improving the way that trade agreements are negotiated, by commissioning independent economic modelling for each new free trade agreement before it's signed and after an agreement has been in operation for 10 years. Labor supports quality trade agreements that benefit Australia.

Although we're a large economy, we are—many Australians are too modest and forget this—the 12th largest economy in the G20. With a population of only 25 million, we are an economy larger than Russia, with 140 million. It's very important that we be involved in free trade because we are relatively small, and trade with the rest of the world helps benefit the people of this country and raises their standard of living.

I commend Japanese Prime Minister Abe on his initiative in reviving this treaty after it seemed sunk by the current President of the United States and the current US administration. I commend this report to the House.

10:06 am

Photo of Stuart RobertStuart Robert (Fadden, Liberal Party) Share this | | Hansard source

I move:

That the House take note of the report.

Debate adjourned.