House debates

Thursday, 23 August 2018


Joint Standing Committee on Treaties; Report

10:45 am

Photo of Ross HartRoss Hart (Bass, Australian Labor Party) Share this | | Hansard source

I rise today to speak on the report of the Joint Standing Committee on Treaties entitled, Comprehensive and progressive agreement for Trans-Pacific Partnershipthe so-called TPP-11. I was fortunate to be appointed to this committee to participate in its hearings and deliberations with respect to the review of this treaty. It is vitally important that the treaty-making power of the Commonwealth is undertaken in the very best interests of the nation. The Joint Standing Committee on Treaties has the responsibility to review treaties and proposed treaty actions. It is particularly appropriate, in this case, that the Commonwealth's treaty action with respect to this treaty, broadly described as a free trade treaty, was the subject of public hearings, the receipt of evidence and submissions and an opportunity for public comment.

It is important to note that the so-called free trade treaties are a misnomer. These treaties generally promote trade liberalisation, in goods and services and in some cases promote freer movement of individuals across international borders.

Labor has supported the recommendations in this report, but the Labor members of the committee have prepared substantial additional comments as to the areas of concern. Those concerns, in context, do not argue against trade liberalisation, but require governments to negotiate trade agreements with greater openness and transparency, with a particular emphasis on economic modelling as to the impacts of the proposed treaty. I will explain why that is necessary, not just desirable.

My electorate of Bass has been impacted historically as a consequence of the reduction of tariffs previously protecting the textile industry. The shockwaves that resulted from the reduction of protection saw substantial job losses in the reconstruction and, ultimately, closure in many cases of iconic industrial capacity within northern Tasmania—names like Coats Patons, Kelsall and Kemp, James Nelson and Waverley Woollen Mills, which would be familiar to every person in northern Tasmania over a particular age. Of these iconic businesses only Waverley Woollen Mills remain as manufacturers, with the industrial legacy of the other substantial weaving and spinning enterprises represented by, sadly, either vacant buildings or, in most cases, re-use of those buildings for other purposes.

This emphasises the challenges represented by trade liberalisation, particularly for this parliament. Trade liberalisation—that is, the promotion of greater trade and the free passage of goods and services—generally leads to benefits within the wider economy. However, the economic effects of trade liberalisation are not evenly shared. There are burdens as well as benefits. The dramatic changes within the Australian economy subsequent to the 1970s, including the significant reconfiguration driven by the Hawke-Keating governments and the subsequent Howard government, saw significant changes within the Australian economy.

It is vitally important to note that, without careful attention to the economic effects of trade liberalisation, including modelling as to the benefits and costs associated with trade liberalisation, government cannot fulfil its function to ensure that those who are adversely affected receive appropriate advice and assistance.

This is a very useful introduction—the first major theme I wish to explore within the additional comments made by the Labor members is economic modelling. What we have is a report which is effectively a supplement to the report that was prepared some two years ago with respect to the TPP. That report recommended that there should be some additional economic modelling surrounding the economic effect of the particular treaty.

The Labor members support that recommendation but, based upon the evidence that's been received during the course of the hearings, they submit that in future treaty negotiation more needs to be done with respect to economic modelling. In particular, in the interests of openness and transparency, economic modelling should be available to the wider community and during the course of negotiation.

It's my submission that it is wholly inappropriate for the Australian community to simply take on trust any government's assurances that a particular aspect of trade liberalisation, whether it's a free trade treaty or some other treaty that purports to liberalise trade or services, is overall in the benefit for Australia without identifying the costs that are associated with that treaty.

There was much evidence received as to what is best practice in other jurisdictions. In Europe it is suggested that, again in the interests of openness and transparency, the general public, and in particular industry and other affected parties, should have access to independent economic modelling during the course of the negotiation of treaties.

Just this morning, in another committee—that is, the Joint Standing Committee on Trade and Investment Growth—evidence was given as to the desirability of the involvement of industry and other affected interest groups in trade negotiation, particularly with respect to electronic commerce. Keeping the government's cards close to their chest with respect to the positive effects of trade liberalisation, without identifying the costs associated with trade liberalisation, may have the effect of significant groups within our communities being adversely affected and the government not being in a position to respond as it should to ameliorate those effects.

The second issue that I want to deal with is an issue of concern with respect to the effect on the labour market of these free trade agreements generally and in particular the TPP-11. There are some concerns that've been expressed in the additional comments made by the Labor members as to whether the proposed treatment of labour market services, and in particular whether there should be testing of the labour market, is sufficiently robust. Indeed, it's probably the case that the legislation, which gives effect to this treaty or subsequent legislation, should take into account the strong desirability of there being adequate labour market testing, because we do not want Australian workers to be subject to the risk of loss of their jobs because of the inflow of overseas workers, particularly where the labour market has not been adequately tested.

There are also significant concerns being expressed, by people giving evidence to the hearings, as to the inadequacy of the arrangements within the TPP-11 as to skills testing. There are particular occupations—for example, electrical contracting and other highly skilled occupations—where skills testing is not just a question of ring-fencing a particular occupation. There are real interests of public safety and good governance involved in ensuring that we maintain the high standards that we have within Australia, particularly in building and construction.

The final issue that I want to deal with as part of this address is the very much vexed area of ISDS, or investor-state dispute resolution, which is incorporated within the TPP-11 treaty. I must say, and this is borne out in the additional comments made by the Labor members, that this goes against the general flow of negotiation of treaties elsewhere, particularly in the EU and a very significant trading partner the United States. The government should look at ISDS with great concern and ensure that Australian policy objectives—legitimate Australian policy objectives—are not curtailed by application of ISDS. I commend the treaty and the report to the House.

10:55 am

Photo of Susan TemplemanSusan Templeman (Macquarie, Australian Labor Party) Share this | | Hansard source

In rising to speak on the report and the additional comments that Labor has made about the report, I would particularly like to record my thanks to the member for Bass for his contribution to the process of interrogating this treaty. He has made an enormous contribution in the short time that I have worked with him on the Joint Standing Committee on Treaties, and I would like that commitment recorded in Hansard. It's lovely to be able to speak directly after him.

It is well established that Labor has a long history of support for free trade. The reforms of the Hawke and Keating governments included a really big reduction in tariffs. I was fortunate enough to be a journalist in that era and to report it and talk to people about the consequences that that might have. I don't think that anyone back then realised that it would be a key contributor to the record 26 years of continuous economic growth that Australia has experienced. Of course, when Labor was last in government three trade agreements were signed and negotiations were begun on seven others, including the former Trans-Pacific Partnership, the TPP. We obviously support high-quality free trade agreements, because trade does encourage greater economic activity and lead to the creation of jobs. Trade and open markets have lifted millions of people out of poverty globally and provided consumers with cheaper products. International trade has also lifted Australia's rate of economic growth and productivity.

I rise, though, with some reservations about the TPP-11, this newest version of a trans-Pacific partnership, known fully as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, but colloquially known as TPP-11. It is a new and different agreement to the one signed in February 2016. The original agreement included 40 per cent of the world's GDP, whereas the current one, TPP-11, includes only 13 per cent. TPP-11 also suspends 22 provisions of the original TPP and features additional side letters, many of which we are very pleased to see. I think the concern about the side letters—there are 10 new side letters between Australia and other signatories alone and many others—is that at what point will those matters that have been set aside come back into active play. I think this parliament will need to look very closely should that point come.

The independent economic modelling of the finalised TPP-11 has been conducted not by a federal government supported organisation to see that happen but on behalf of the Victorian government. It indicates that the TPP-11 will actually deliver very modest initial gains to Australia, predominantly for agricultural goods. That will certainly be good for the agricultural sector, but they are very modest gains. The things that seem to make the biggest difference will be the preferential access to Mexico and Canada. There is potential for more significant gains, but we would like to see very close scrutiny and monitoring to see what gains can be put towards this agreement: what can we actually say is a direct result of this sort of agreement? That would help with future modelling of other agreements of this nature.

My main concerns about the agreement are not the trade aspects of it but are more about the non-trade-related aspects. You have to wonder why a trade agreement has non-trade things in it, and that is probably a pretty good question to be asking. In any case, the Labor members of the committee have particular concerns about the aspects of TPP that are not essential to the trade benefits of the agreement. These include the lopsided concessions on temporary labour market access, with a weakening of regulations that cover labour market testing and skills assessment. There is what we would consider to be unnecessary and risky exposure to investor-state dispute settlement arrangements, which I will speak about shortly, and a lack of modelling.

Let me speak about the labour market testing. There are some provisions of the TPP-11 with which we have particular concerns. The TPP-11 waives labour market testing for 'contractual service suppliers' for six signatory countries. This will mean that jobs in Australia will be able to be filled by workers from Canada, Peru, Brunei, Mexico, Malaysia and Vietnam without first being offered to Australians. This comes at a time when many in Australia are concerned about employment and low wages. More than 450 professions could currently be covered by the term 'contractual service supplier', and they include electricians, plumbers, carpenters and nurses. No other country has provided Australia with such generous reciprocal visa rights, and it is still unclear why such concessions were given by the government.

While Labor acknowledges that foreign workers do play an important role in the success of the Australian economy, it is fundamental that Australians are offered employment first and that overseas workers are brought into the country only once there is a demonstrated need. The temporary migration system is supposed to supplement the skills of Australians, not replace them. A Shorten Labor government will not waive labour market testing as part of any free trade agreement that it signs going forward and will seek to reinstate labour market testing in existing agreements as part of the scheduled reviews.

Skills testing is also an issue. We are concerned about the erosion of skills testing in the TPP-11. We have the best-trained tradespeople in the world, and this standard must be protected. I'd like to acknowledge the submissions, particularly from the ETU and the ACTU, that raised concerns and gave us some detail about how less-qualified and inexperienced tradespeople could be working in Australia without being subject to the current rigorous testing processes. I think that is something we need to keep a very close eye on. The consequences of employing electricians without sufficient standards can be fatal. Certainly in Sydney we are already seeing incidents of poor work practices. I think this is something the parliament needs to be very mindful of.

It is very interesting to see that the ISDS provisions have remained in this new agreement. They were excluded by the former Labor government in the early negotiations for the original TPP. The former Howard government shared Labor's concerns and did not include ISDS in Australia's free trade agreement with the United States. We are deeply critical of this aspect of the agreement. It is the view of Labor members that, because of the many concerns that we took evidence on, ISDS should not be part of this agreement. The example that really rings true is the Philip Morris case, where they used ISDS provisions to attempt to take action against the Australian government. Australia would have been faced, if Philip Morris had won their case, with abandoning the public health initiative of plain packaging for cigarettes or paying a huge amount of compensation. That would have been the consequence. The fact the claim wasn't successful in some ways is almost irrelevant, because the cost of any ISDS claim will be borne by the government and the taxpayer, notwithstanding whether that claim is successful.

The TPP introduces an ISDS mechanism between Australia and three other countries—namely, Japan, Canada and Peru—for the first time. Under the TPP, an ISDS arrangement between Australia and New Zealand will be excluded by a side letter agreement. Of course, between the signing of the first TPP and the TPP-11, there was a change of government in New Zealand. The current New Zealand Labour government doesn't support the inclusion of ISDS provisions and was able to remove ISDS provisions, through four additional side letters, with Brunei, Malaysia, Peru and Vietnam. A future Labor government in Australia will not agree to ISDS provisions and will seek to remove those provisions from existing trade agreements as part of scheduled reviews.

The independent modelling has been much talked about, and the whole committee agreed that it is absolutely basic that independent modelling of trade agreements is provided to the Joint Standing Committee on Treaties, but, more importantly, done well before an agreement is signed. That has been recommended by other parliamentary committees, as well as the Productivity Commission, the Harper review, the Australian Chamber of Commerce and Industry, the Minerals Council of Australia and the Australian Council of Trade Unions. So there's a pretty strong across-the-community view that we should get modelling and information before we sign up to something.

I'd like to thank Pat Ranald, of AFTINET, who particularly focused on this issue in her evidence, as did Alan Kirkland, the CEO of CHOICE. I think both of those resonated with the committee. I commend this report to the chamber.

11:05 am

Photo of Pat ConroyPat Conroy (Shortland, Australian Labor Party, Shadow Assistant Minister for Infrastructure) Share this | | Hansard source

I will begin by commending the contributions from the members for Macquarie and Bass both to this debate and on their work on the Joint Standing Committee on Treaties. Those two members, alongside the member for Fremantle and the other Labor members, have done a sterling job trying to hold the government to account to inject some transparency and objectivity into the debate around TPP-11. So I commend them for their fine work.

I am, on the surface—unless someone convinces me otherwise—firmly opposed to TPP-11. I'm firmly opposed to it, because it undermines Australia's sovereignty. It gives away too much of Australians' sovereign powers for very little in return. Unfortunately, this is the case history when it comes to this government and trade agreements. They sell away Australia's rights, Australia's freedoms and Australia's legislative authority in return for trade access. In some cases that may be justified, but my strong view is that, when it comes to the TPP-11, it most definitely is not. This trade agreement is not about trade. The name is a misnomer. It is deceptive. This is an agreement about deregulating Australia's economy and undermining the sovereignty of this parliament. That is why I am opposed to the TPP-11.

The first reason I'm opposed to it goes to investor-state dispute settlement clauses. These are a cancer in trade agreements. These clauses undermine the sovereignty of duly elected parliaments to legislate for the welfare of their own people. That is what ISDS does. It grants rights and powers to foreign corporations that Australian companies don't have, that the Australian people don't have. You only have to look at the case that Philip Morris waged against the federal government around plain-packaging laws, where they had the hide to use an arcane clause in the Hong Kong trade agreement to undermine a great Labor government initiative to do plain packaging of tobacco, which is having a real impact in reducing smoking rates and therefore saving Australian lives. ISDS undermines that. ISDS potentially would cause more Australian deaths by cancer.

This agreement has ISDS clauses in it. It has clauses that undermine our sovereignty, and it goes completely against the tide of what is happening in other nations. Even the United States, that supposed bastion of free trade, is seeking in its NAFTA renegotiations to remove ISDS. The incredibly progressive and visionary New Zealand Labour government has successfully removed ISDS clauses from four existing free trade agreements. And there's a recent case in the EU courts which found that any trade agreement that has ISDS must go through each national parliament for approval because ISDS involves the removal of sovereignty. That is why it should not be in this trade agreement. That is why I was so proud at the last Labor Party national conference to move an amendment to the platform, committing Labor to never negotiate a trade agreement with ISDS in it and, furthermore, when in government, to remove ISDS clauses through renegotiation. So that's the first reason that I am opposed to the TPP.

The second reason goes to immigration policy. This agreement, sadly, like the China FTA, reduces the sovereignty of the Australian parliament to regulate our immigration system. The great irony of this government is that it's supposedly strong on border protection, but it signs up to and negotiates trade agreements that deregulate our immigration system.

This was demonstrated in a testimony from the department to JSCOT in a hearing earlier this year, where, under expert cross-examination by the member for Macquarie and other Labor members, they admitted that this agreement will prohibit labour market testing for six countries under the TPP. We will not be able to perform labour market testing against six countries' applications for visas, particularly Brunei, Canada, Malaysia, Mexico, Peru and Vietnam. This doesn't apply to a few narrow ranges of categories; it applies to 400 occupations under the TSS visa, which replaced the old 457 visa. This agreement removes our right to test whether Australians can fill those jobs; it places an obligation on us to treat visa holders from those six nations equally to Australian workers when it comes to filling those jobs. That is unacceptable.

If this was the only clause in the agreement that I opposed, it would be sufficient for me to oppose the TPP and vote against it in the Labor Party caucus room. Unlike those on the other side, I stand up for the sovereignty of our immigration system. I stand up for the right of Australian governments to implement labour market testing. What is so radical about saying that we should establish whether an Australian worker can fill a job before we open it up to foreigners? That is not radical. It is not racist; it is just sensible policy saying that Australian jobs should be filled by Australian workers when they can. If they can't, if there's a genuine short-term skills shortage, let someone come in under a TSS. But, until that has been established, we should not be going down this slippery path, and for that reason I oppose this agreement.

The next one that I'm greatly concerned about, which has been put aside unless the US re-enters the TPP, goes to the treatment of pharmaceuticals, and in particular biologics. Despite the government's protestations, this part of the TPP, if enacted, would extend the patent protection for biologics from five years to eight years. They do it in a sneaky way, but it remains there. That will cost hundreds of millions of dollars, if not billions of dollars, to the PBS. It will reduce the ability to spend money on pharmaceuticals that sick Australians need access to, so the biologics clause is of great concern as well.

In conclusion, this agreement, the TPP-11, is not about trade access, it's not about reducing tariff barriers. It is about diminishing the sovereignty of the Commonwealth parliament. It is about deregulating our immigration system. It is about deregulating the broader global economy through the ISDS. It is about attacking our Pharmaceutical Benefits Scheme. I will not support it for those reasons. Clear and simple: anything that diminishes our sovereignty, I will not support. I stand opposed to the TPP-11.

11:12 am

Photo of Rebekha SharkieRebekha Sharkie (Mayo, Centre Alliance) Share this | | Hansard source

I rise to briefly speak on the Joint Standing Committee on Treaties' report No. 181: Comprehensive and progressive agreement for Trans-Pacific Partnership, more commonly known to the public as the TPP treaty.

I, like many Australians, am concerned with a number of aspects of this treaty, which the Australian government signed up to on 8 March 2018. I want to make it clear that I and Centre Alliance are not opponents of free trade, but we do recognise that there are legitimate public interests that need to be balanced against free trade. We all want to see a more prosperous and inclusive Australia, but free trade is a means to an end. It is not an end in itself.

The issue that most Australians are concerned about is the investor-state dispute settlement clause, which would give unprecedented power to corporations to sue national governments and undermine our democratic sovereignty. That sovereignty and integrity of our democracy should not be delegated lightly. I'm concerned about the implications for food labelling, and that labour market testing provisions negotiated by Australia are significantly weaker than those negotiated by other countries in the treaty negotiations. I'm perplexed as to why our government would do that.

I recognise that international analysis of the benefits of signatory countries has been undertaken, and that a publicly available summary of the national interest analysis has been undertaken by the Department of Foreign Affairs and Trade. However, I am deeply concerned that we are yet to see the publication of the comprehensive modelling and related analysis from government, and my team would certainly be expecting to see that.

If the Australian parliament is to support the enabling legislation of this treaty, we need to be able to understand the full suite of costs and benefits that are attached to this agreement before we vote on it. I do recognise that there may be sensitivities in the modelling that require confidentiality. But now that the treaty has been signed, there is no good reason to withhold that analysis from the parliament.

As a related point, I'm concerned at the lack of detailed post analysis undertaken by the department on previous preferential trade agreements. In summary, although I reserve my position on the enabling legislation, the Customs Amendment (Trans-Pacific Partnership Implementation) Bill 2018, I request that the government provide the modelling and analysis that would allow me and my team at Centre Alliance to make a fully informed decision on the value of this treaty to Australia.

Debate adjourned.