House debates

Monday, 6 March 2023

Private Members' Business

Trade

11:00 am

Photo of Kevin HoganKevin Hogan (Page, National Party, Shadow Minister for Trade and Tourism) Share this | | Hansard source

I move:

That this House:

(1) notes:

(a) the importance of providing appropriate protections for Australian businesses investing overseas; and

(b) that Australia has negotiated Investor State Dispute Settlement (ISDS) clauses over the past 30 years in investment treaties and free trade agreements;

(2) acknowledges that Australian companies investing in foreign countries have used ISDS clauses to protect their investments from being taken over by foreign governments;

(3) recalls that:

(a) free trade agreement negotiations came to a standstill under the Government of Prime Minister Gillard arising from the refusal to include ISDS clauses in these agreements; and

(b) it took the re-election of the Coalition Government to get Australia's trade policy back on track; and

(4) recognises that the current Government's decision to once again scrap ISDS clauses in new free trade agreements and renegotiate them in existing ones shows that the unions are controlling the Government and putting Australia's trade gains at risk.

Before I get to the specific things about ISDS clauses and why they're not scary things—they're things that we should be happy to negotiate with someone or another country when we are doing free trade agreements with them—I want to talk more generally about the golden goose that trade literally is and put that in the context of ISDS provisions and other things.

Deputy Speaker, you may be aware that global trade, measured in US dollars, has gone from something like US$6 trillion to the mid-20 trillions. So it has more than tripled over the last two decades. During the same time that global trade has taken off and many more countries have become involved, realised their specialty in trade and got into that world, the rate of global poverty has gone from 30 per cent of the global population to 10 per cent. I put it to you that those two are integrally related. As countries start to open up, they trade, work out what their natural advantage is—whatever it may be—and become more wealthy. That obviously is a good thing.

Why is it a good thing? It's obviously good financially for those communities, people, families and countries. But what also happens is that, as a country gets richer and gets to a certain level of GDP wealth net per person, they start to become more environmentally sensitive and more environmentally aware, and things like labour laws get better. If we go way back, a country like Japan, post World War II, started off with a low-wage advantage. But they have evolved, through being an open, trading economy, and their natural advantage is now high tech or whatever—not low wages. It's a good thing environmentally, and it's a good thing for employees, as a country gets wealthier and starts trading.

In relation to Australia—and I'll give a bit of credit here to the Hawke and Keating governments of the eighties, who started to talk the trade case—when we came into government in 2013, 20-odd per cent of our goods and services were covered by free trade agreements, and, over the nine years we were in government, that increased to nearly 80 per cent, with the deals done with the UK and India. What has that meant for Australia? That has meant a lot of positives. That has meant that one in four jobs in Australia is related to the export sector. Jobs in the export sector pay higher than more domestically focused jobs. So, in Australia, it has been a wonderful story as well.

The reason I put that forward, in explaining why I've brought this private member's motion today, is that there has been, probably in the last two or three decades, a similar theme from both sides of politics about the benefits of trade and the importance of trade. But where I think there's starting to be a bit of a discrepancy in that theme is in the statement by the new government that they would review the ISDS provisions in some of our free trade agreements. I'm going to go into that and some of the other things that they're starting to talk about, which I think put at risk the bipartisan agreement we have on some of this stuff, and, in some cases, I think they're putting the cart before the horse.

It doesn't happen all the time, but there have been a number of countries that have requested that an investor-state dispute settlement provision be put into a free trade agreement. For a country like Australia, it's not a big deal because we are a transparent country. We follow the rule of law and we're transparent in the way we do things in our legal system as well. I think there's been one court case where someone took us, as a country, through that process, and we won that case. Again, it wasn't necessarily a major deal. However, if we are to go to some countries and say, 'Those provisions need to be removed,' that puts at risk the free trade agreements we have with those countries. Some of them are major trading partners, and those free trade agreements have brought great benefits to our exporters. That's why this is an important point to talk about.

The other thing is that the new government is starting to throw in other things, especially in relation to some of the developing nations who need to get trading and who will then become more environmentally conscious and better with their labour laws. Some countries and the Labor Party are talking like this. They want to throw a whole lot of conditions on everything right now. They want all these environmental outcomes and all these labour law outcomes. There are some very important environmental outcomes that we as a globe have to achieve. That should be handled within COP and other environmental institutions and programs. That is the way you do that. There are also labour programs where you can talk about this thing. The Labor Party should not kill the trade goose that laid the golden egg.

Photo of Andrew WilkieAndrew Wilkie (Clark, Independent) Share this | | Hansard source

Is the motion seconded?

Photo of Rick WilsonRick Wilson (O'Connor, Liberal Party, Shadow Assistant Minister for Trade) Share this | | Hansard source

I second the motion and reserve my right to speak.

11:05 am

Photo of Josh WilsonJosh Wilson (Fremantle, Australian Labor Party) Share this | | Hansard source

I'm glad to speak to this motion on investor-state dispute settlement. I will help the member for Page with some key facts and even a little bit of relevant history. I'm actually going to talk about ISDS. First let me say very clearly that Labor has always supported fair, free trade and investment. The Albanese government has not wasted time in ratifying two agreements within the first nine months—namely, the Australia-UK Free Trade Agreement and the Australia-India Economic Cooperation and Trade Agreement. We are also now in a position to ratify the Joint Initiative on Services Domestic Regulation that applies common high-standard principles for managing trade and service export between some 70 countries. But we don't support the use of investor-state dispute clauses in trade and investment agreements, because they aren't necessary for enabling secure and fair treatment of Australian investment overseas and they do put at risk Australia's capacity to regulate in the best interests of our community.

For anyone at home who has never heard the term 'ISDS', these clauses allow companies to resolve a dispute with a foreign government using an international tribunal system rather than relying on the judicial review processes that exist in the given country or on country-to-country resolution mechanisms within trade agreements. To some extent they're regarded as a shortcut for companies to challenge obstacles to their operations or to overcome unfair treatment, particularly if that includes the expropriation of assets.

Over a period of time these tribunals have been found to have severe shortcomings in terms of their integrity. There have been numerous cases of large multinationals using ISDS to attack sensible public policy regulations in areas like environmental protection and workers' rights, simply because those regulations affected company profits. For example, ISDS cases have included the French Veolia company's action against the Egyptian government, seeking compensation for a rise in the minimum wage. In August last year the British oil company Rockhopper won 210 million pounds through an ISDS action against the Italian government because in 2015 the Italian government had the temerity to ban new oil and gas projects within 12 nautical miles of its coasts. Even when those ridiculous ISDS cases fail, they still impose significant costs on the countries that defend them and they have a chilling effect on countries contemplating the kind of regulation that has been challenged.

We have our own experience in Australia of being on the end of these dangerous dodgy legal actions. It wasn't that long ago that tobacco company Philip Morris used an ISDS clause in seeking to overthrow Australia's very effective plain-packaging reforms. That action ran for several years, it cost the Australian taxpayer tens of millions of dollars and it delayed other countries, including New Zealand, implementing their own plain-packaging reforms. We didn't win that case. Philip Morris only lost on a jurisdictional issue, so we don't know whether they would have succeeded if they had been able to use a more relevant agreement as the basis of their claim. Perhaps the shadow minister for trade will have a closer look at that, rather than claiming we won it, which is simply not true.

More recently it was argued that the Western Australian legislation used to ensure Clive Palmer couldn't sue the WA government for billions of dollars might be capable of being challenged through an ISDS mechanism and just last year there was interest shown by energy companies in Japan and Korea about using ISDS to challenge our regulation of domestic energy supplies and prices. That is what is at stake with ISDS clauses. They allow big foreign companies to challenge and obstruct good public policy and they detract from a sensible focus on supporting robust legal systems in developing countries and from strengthening country-to-country dispute resolution mechanisms.

We've already seen how ISDS clauses can allow foreign companies to interfere with Australia's sovereign capacity to regulate in our national interest. That is what those opposite would like to enable. They would like to enable foreign multinationals to interfere with Australian environmental and workplace laws and with Australian management of our own energy resources.

We're currently in negotiations on the settlement of an historic trade agreement with the European Union. Does the shadow minister for trade argue that we should be pursuing the inclusion of an ISDS clause in those negotiations? The EU will not accept such a clause and, indeed, is active in seeking to reform and move away from existing ISDS arrangements. That's because ISDS clauses are unnecessary and they're dangerous.

This Labor government will continue to pursue, settle and support fair and free trade agreements. But I can tell you we will not support a system that puts Australian sovereignty at risk—a system that subjects Australia to enormously expensive legal action in dodgy tribunals with no appeal processes, a system that could stop us from regulating to protect health services, safe workplaces and our environment. If the member for Page, the shadow minister for trade, thinks that that is a sensible and winning proposition to take to the Australian people, well, good luck to him.

11:10 am

Photo of Zoe McKenzieZoe McKenzie (Flinders, Liberal Party) Share this | | Hansard source

I rise to speak on this motion by my colleague the member for Page, the coalition shadow minister for trade, and, indeed, to support the coalition's remarkable success in the trade portfolio over the last decade, in which I've been proud to play a small part. It is worth remembering where we stood in global trade terms when the last coalition government came to power in September 2013. On election night, Prime Minister Tony Abbott declared Australia 'open for business', and he backed it up with the most aggressive and ambitious trade agenda of any Australian government. The Prime Minister set the mighty task of completing three free trade agreements within a year: the free trade agreement with South Korea, a free trade agreement with Japan and a free trade agreement with China. He gave that mandate—and that torturous time line, I might say—to my friend and then-boss the Hon. Andrew Robb AO, former member for Goldstein. I had the privilege of being Andrew's chief of staff and serving with him in the trade portfolio throughout his tenure.

Those first three trade agreements were concluded within 14 months, but the first agreement of the trifecta, with Korea, was completed quite quickly. Why? Because it had sat largely completed and yet unsigned, because an election was coming and the Australian Labor Party was not allowed by its union masters to ink the deal, despite five years of negotiating effort, almost entirely conducted under the former Labor government, going to waste. That delay had a real impact on Australia's exporters, who were held back from enjoying an eventual reduction of tariffs, of up to 300 per cent, on our Australian agricultural exports such as beef, wheat, sugar, dairy, wine, horticulture and seafood; the elimination of tariffs on resources, energy and manufactured goods; and new opportunities and avenues for Australian education services, but also telecommunications and a range of other professional services including financial, accounting and legal services.

Australia's union movement has always had a bizarre allergy to investor-state dispute agreements, and as we have seen so well here, as in other domains, the union movement is the tail that continues to wag the ALP dog. ISDS clauses provide a level of certainty and confidence for Australian businesses investing overseas. Equally, Australia is a highly attractive place for foreign investment, underpinned by our robust legal system and general protections for investors, under both contractual and consumer laws. But we understand that not all governments and not all countries and, indeed, not all subnational governments act as we do, nor do we always share the same legal systems and practices, nor do we necessarily share the same political and institutional cultures. ISDS clauses provide safeguards for investors against arbitrary government actions such as appropriating of property or property rights, discrimination and the denial of justice.

Australia has negotiated ISDS clauses for over 30 years, firstly in investment treaties and more recently in free trade agreements. There are ISDS provisions in our FTAs with China, South Korea, Chile, Singapore, Thailand, ASEAN, Peru, Hong Kong and Indonesia and, indeed, in the CPTPP. Australia has ISDS provisions in 15 investment treaties: with Argentina, China, the Czech Republic, Egypt, Hungary, Laos, Lithuania, Pakistan, Papua New Guinea, the Philippines, Poland, Romania, Sri Lanka, Turkiye and Uruguay. There have been barely a dozen instances where Australian companies have used ISDS clauses to bring a claim against other countries to protect Australian investments there. Importantly, an ISDS clause has been used against Australia on only one occasion: the tobacco plain-packaging case, which Australia won, perhaps, on a jurisdictional point but won nevertheless.

So why does Labor hate ISDS clauses? Because the unions tell them so. Until 2011, there had been a bipartisan approach on ISDS in this country, to provide certainty to Australian businesses investing overseas, but, strangely, in Gillard's trade policy statement of 2011, the ALP declared it would no longer include such clauses in our investment agreements. The ACTU asserts that ISDS provides an avenue for foreign corporations to threaten and lodge claims for actual or potential harm resulting from changes in policy and regulation in the country in which they are investing. This reminds me of the ACTU's vast nationwide scare campaign against the China-Australia Free Trade Agreement in late 2015 on the basis it would cause the loss of thousands of Australian jobs in favour of imported Chinese labour. The sky didn't fall in then, nor has it fallen in as a result of any ISDS clause.

It is no surprise the coalition wears the crown for achievements in trade. Under coalition steerage, the share of trade covered by FTAs shot up from 25 per cent at the start of the last coalition government to over 70 per cent by the time the coalition lost government—almost 80 per cent if you include India and the UK.

11:15 am

Photo of Daniel MulinoDaniel Mulino (Fraser, Australian Labor Party) Share this | | Hansard source

Like occurs in this place occasionally on technical matters, we find ourselves immersed in rather dramatic, overblown, hyperbolic discussion with dark conspiracy theories. What we're talking about here is quite a sensible step forward in the way in which we're going to undertake free trade agreements.

Can I just say from the outset that my first job after finishing university was in the international trade law section of the Attorney-General's Department. I taught, after that, international trade law and the benefits of international trade in the Monash University economics department. So I'm someone who's been committed to the benefits of trade for a long time. It is something that has benefited the Australian economy and the Australian people for many decades—indeed, for longer than that.

On this side, we are committed to free, fair and inclusive trade. It's not free as in a free-for-all; it has to be done in a way that is balanced and that takes into account the overall benefits for the economy. Minister Farrell, in a speech in November, talked about the four overarching principles which are going to guide our approach: first, that deepening and diversifying our trading relationships is critical to ensure we have a more resilient nation; second, that we need to defend and reform the rules based multilateral trading system; third, that we need to invest in ourselves—and that has been an absolute priority of this government since it came to office; and, fourth, that the enormous benefits of open trade should accrue ultimately to the Australian economy. That is why, based on those four principles, we are not going to allow ISDS clauses in future trade agreements. They are not transparent, they threaten to impinge sovereignty and they hamper legitimate public policy in a number of instances which can be pointed to around the world.

We need to preserve this government's ability to govern in the national interest. Minister Farrell has already incorporated this new approach in negotiations in a number of free trade agreements, including the Indo-Pacific Economic Framework and, as the previous speaker on this side indicated, the European Union free trade agreement. That is going to be a significant agreement that will benefit our economy and our community more broadly, but it is with a party that has itself said it will not accept ISDS provisions in the future.

It's absolutely critical at this point to point out that the international community is moving away from ISDS clauses to more sustainable, sensible and holistic ways in which to protect the national interest in relation to international investment agreements. One example is to look back to the 2015 European Commission establishment of a multilateral investment court as a permanent body to decide investment disputes, which was one of its first steps in moving away from ISDS clauses. In November 2016 the European Commission signed the Comprehensive Economic and Trade Agreement, CETA, between the EU and Canada. This agreement included an investment court system. It was a very important step for both those economies in moving away from bilateral ad hoc arrangements in which, as the previous speaker on this side indicated, companies can take governments to court in ways that hamper their ability to deal with important public policy initiatives. The European Commissioner for Trade at the time noted that establishing CETA is a clear break from the ad hoc system of private arbitration known as ISDS which exists in many investment bilateral treaties. This is a move towards a system that I believe and that the Labor government believes will set up a much more comprehensive, sensible and appropriate way in which to govern disputes moving forward.

We've even seen this shift taking place in the United States. In May 2020, then presidential candidate Joe Biden committed that his administration would end the inclusion of ISDS clauses in future deals. We see the same with South Africa. We see the same with Brazil. What we see is a whole range of countries moving towards a desire to see investor disputes dealt with in a more rules based, multilateral system, rather than allowing individual corporations to take governments to court where they're trying to govern for the interests of their people. We remain committed to free, open, inclusive growth, but it has to be done in a way that is in the interests of the Australian people.

11:20 am

Photo of Rick WilsonRick Wilson (O'Connor, Liberal Party, Shadow Assistant Minister for Trade) Share this | | Hansard source

I can't commence a discussion on free trade today without mentioning the late, great Bert Kelly, a former member for Wakefield, who fought for free trade back in the days when it wasn't fashionable. I'm talking about the 1960s and 1970s, when he was a member of this place, and then, post his parliamentary career, with a column in the Financial Review known as 'Modest Member', which was required reading in my household. His son Tony has moved to Mount Barker, in Western Australia, and his family are great supporters and great friends of mine. So that's just a quick shout-out to Bert Kelly, who understood the importance of free trade, and the free flow of goods and services and capital as the most efficient form of return on that capital.

Australia has been a massive beneficiary, and I'll give a shout-out to the Hawke-Keating governments, who led on free trade and dismantling the tariff arrangements that this country had and that held us back for so many years, through to the most recent coalition government, who inked 10 of our 16 free trade agreements. Thirteen of the 16 free trade agreements have been implemented under coalition governments. I'm very proud of that record and look forward to, in the future, the coalition being part of the constructive discussions around many more free trade agreements—although there's not a lot of room left. Under the coalition government from 2013 to 2022, we lifted the amount of trade covered by free trade agreements from 27 per cent in 2013 to over 70 per cent in 2022. Of course, if you include the UK and India free trade agreements, that takes that number to over 80 per cent.

For those watching today who might wonder what an ISDS is, I have, for their convenience, a definition provided by the Parliamentary Library. Investor state dispute settlement is a mechanism included in some free trade agreements and investment agreements. ISDS provides foreign investors, including Australian investors investing overseas, with recourse to an independent tribunal if they believe their investments have been unfairly treated by the government of the host country. The aim of ISDS provisions is to protect foreign investors and thereby encourage increased investment flows between the signatory countries.

Why is this important? Some of the significant businesses across my home state of Western Australia, which is pretty representative of Australia both in the ag sector and in the mining sector, see diversification and investment overseas as a critical part of their business plans and the security of their businesses, going forward.

For example, Co-operative Bulk Handling, the largest grain handler in the country—handling a 26-million-tonne record crop this year—has significant investments in flour mills and maltsters in both Indonesia and Vietnam. These are strategic investments. They are very important not only to that particular business but to the Western Australian farmers who supply grain to those businesses and own it via the cooperative structure. The ISDS provisions provide security on those investments in terms of governments changing the rules midstream. That is why we include ISDS provisions in our free trade agreements.

The mining industry, which are currently paying the bulk of the bills in this country at the moment, once again, see divestment and investment in overseas mining projects as a key part of their business plan. Of course, investing in overseas countries in high-capital-intensive businesses like mining can be very risky when governments change the rules midstream, so that is why ISDS provisions are critically important for not only the free flow of trade but also the free flow of investments, and not only for countries investing in Australia but for Australian companies investing overseas.

As has been pointed out previously in the debate, there has been one example of a case being brought against the Australian government. That was the Philip Morris case. Yes, on a technicality it was jurisdictional, but I will note that that company has not tried, since that case was thrown out on a jurisdictional basis, to bring a case through the ISDS mechanisms.

11:25 am

Photo of Lisa ChestersLisa Chesters (Bendigo, Australian Labor Party) Share this | | Hansard source

This is a classic case of those opposite just trying to rewrite history on what has happened in relation to ISDS clauses. They're just trying to have a kick at the Labor Party and the union movement at the same time. For some time, Labor has held a position against having ISDS clauses in future trade and investment agreements. The reason we should not be opposed to this change comes out of exactly what those opposite are saying. The previous Labor government, under Julia Gillard, adopted this policy, and it's been our policy ever since. It came out of the fact that, for the first time in a very long time, a company—which those in this debate have cited, Philip Morris Australia, a tobacco giant—decided to sue Australia, over plain packaging for tobacco. The previous Labor government had made huge strides in terms of plain packaging for tobacco. That court case alone cost the Australian government $40 million—to defend our right to make decisions around plain packaging in the health interests of Australians. The Australian government received back only $12 million in costs. It was after that point that our party took a very different position on and approach to ISDS clauses.

It is our position currently that we do not support the inclusion of ISDS clauses in future trade agreements or investment agreements. Where they already exist and have evolved over time, we are saying that we will ensure that the government is able to preserve the right to regulate in the public interest of the Australian people, including for the environment and public health. The case with Philip Morris proved to us that we needed a change in policy. It wasn't just the unions calling for it. It was our own rank and file and a number of peak not-for-profit organisations and health organisations, all of whom believed that the Australian government should be governing in the interests of Australians and not be subjected to court cases from a foreign country like we saw with Philip Morris.

We in Australia have to do something about the previous government's free trade agreements. It isn't just in the area of ISDS clauses that they have failed the Australian people. There was their overpromising on the China free trade agreement. You have to say, in retrospect, that what we're seeing through that agreement is failure in a number of areas that they were saying were a success. For example, they said that we should support this agreement because of the support it would give our wine industry. That alone was a clear example of deliberate overpromising. They promised that it would be more attractive for the industry to invest in the China market. They said that, five years after the agreement came into action, there would be zero tariffs for Australian wine exporters. This is true, but, right on the eve of those zero tariffs kicking in, China shut the door to Australian wine. The trade was stuck on pause. Small producers in my electorate lost hundreds of thousands of dollars, with wine stuck in ports. The previous government failed to address those classic non-tariff barriers that free trade agreements don't deal with.

The wine industry was not the only one to be burnt by the China free trade agreement failing to deliver what it promised. Beef, coal and other major exports to China suffered the same. What did we get in return? The loss of more jobs. Economic modelling proved that the gains under the China free trade agreement were grossly overestimated by the previous government. It's not just the China free trade agreement; other free trade agreements have failed to deliver the jobs that they promised. Yes, we need to do better when it comes to free trade agreements, but we also need to do better when it comes to the non-tariff barriers. We need to do better when we're talking about engaging with countries and how they treat our imported products.

Increasingly, under the previous government, free trade agreements also included a number of side agreements around visas and labour mobility—again bringing in workers only for them to be exploited here in this country because of the unscrupulous nature of the treatment of migrant workers. These are all failures of the previous government. I am proud to be part of a team that is trying to address one area in which the previous government failed and trying to improve the existing ISDS clauses that we have. We stand strong in saying future trade agreements will not have these clauses. We need to modernise and have modern agreements that do not involve these clauses.

11:30 am

Photo of James StevensJames Stevens (Sturt, Liberal Party) Share this | | Hansard source

I rise to speak in favour of this motion. I actually agree with the previous speaker's critique of elements of the China-Australia Free Trade Agreement. One might proffer that a robust investor-state dispute mechanism would be helpful to address some of those criticisms that were made around the way in which our producers and our companies have been appallingly treated through non-tariff activities at the border.

In my electorate and indeed in yours, Deputy Speaker Sharkie, many industries have been impacted seriously by that. That's why I embrace, and we in the coalition embrace, the most comprehensive rules-based system to assist us to engage with the rest of the world, particularly in economics and in trade. The concept of investor-state dispute mechanisms within these agreements enhances that. It gives an opportunity for Australian businesses, through an agreed mediation process in those agreements, to deal with instances where they feel unfairly treated by a particular government in a way that is outside the spirit of a free trade agreement that we might have. If the position of the now government is that they want to weaken the standing of Australian exporters in their dealings with foreign governments in their export markets, then we will absolutely stand up against that.

I've had a lot of experience, not just in China but in many countries, in dealing with governments at a border level and with circumstances where a business has very diminished influence or power against, say, a customs agency or against measures that a government might put in place. We have to be honest: everyone loves free trade agreements in principle, but all nations work to limit the benefit for the other nation within that free trade agreement against their own domestic producers.

The World Trade Organization dispute resolution process is littered with examples of measures that many, if not most, nations within the WTO framework take to try and disadvantage someone exporting into that country versus a domestic producer, despite the fact that they want the access for their own export industries into other markets. That's why the dispute resolution process is in place under the WTO framework—because it is almost always a situation of a country putting measures in place that disadvantage businesses, including investors.

At the moment it's usually at the nation-to-nation level. Australia, on behalf of our businesses and our industries, very regularly takes actions through the WTO, and, in the examples related to China, we did that with barley, wine and other things. There are many examples where our businesses that are investing in other markets appreciate the added protection of having an avenue to litigate a dispute that they might have with another government.

Let's not forget that the sort of investment we're really talking about is supply chain investment. Our exporters investing in supply chains in other countries want protection over those investments, and it's actually enhancing and expanding the export capability and potential for producers in our nation. The government's attitude is, 'We want to make it harder for people to export, and we want to reduce the confidence that our businesses have to undertake investments and have a proper resolution process in place.' If the rules and the goalposts are moved on them by the government in situ that they're investing with, that is only going to disadvantage production and export from our own country.

I won't relitigate points that have been made about why the unions want this, and I don't dispute that, obviously, like any judicial process, there are examples you can cherry-pick where most of us would agree there has been a disappointing outcome through that system. That's like saying, if someone we think is guilty of murder is acquitted, we should junk the whole judicial system because it didn't achieve the outcome we wanted in that one particular case. That's obviously completely ridiculous. The coalition are going to stand up for exporters and growing our economy through export at every opportunity.

11:35 am

Photo of Kate ThwaitesKate Thwaites (Jagajaga, Australian Labor Party) Share this | | Hansard source

Australia's trade and investment relationships are, of course, critical, and they're something that our government takes very seriously as we work to further Australia's prosperity, both here and abroad. As this motion notes, investor-state dispute settlement, or ISDS, clauses have been a part of investment treaties and free trade agreements in recent decades. But, like many things, over years and decades there are changes in how we do things. This is a good thing. As we practice, as we learn from experience, we necessarily update the way we operate, and this is absolutely the case with ISDS clauses.

ISDS is a mechanism that is outdated. It gives power to foreign investors over communities and over governments here in Australia. In fact, it gives foreign companies the right to sue Australian governments—federal, state and local—for introducing laws that they argue have harmed their interests. These clauses can put taxpayers at risk of significant payouts. They can be used, in fact, against legitimate government policy. It is entirely possible for us to negotiate trade agreements that are beneficial to Australian businesses, that are beneficial to our country, without needing to include ISDS clauses. So our government does not support the inclusion of ISDS clauses in future trade and investment agreements. This place here, our parliament, is the law-making body of this land, and we should be free here in this parliament to respond to the needs and the views of Australians as they arise and as they change. That is exactly what is happening here.

This parliament should not be swayed on the basis of threats of being sued if changes are made to laws that affect foreign investors. When, for example, our parliament wants to legislate to protect the environment, we should not have a concern about being stopped in our tracks because an ISDS clause may mean we have to pay compensation to a foreign company who believes that their interest may be damaged by that case.

As I said, we've been really clear that trade agreements can be successfully negotiated without these clauses and in our interests. If we look at the two most recent free trade agreements that our country struck, with the United Kingdom and with India, we see these do not include ISDS clauses. In fact, the beginning of those negotiations were undertaken by those opposite while they were in government; these negotiations do take some years to conclude. It does seem strange that we're now here debating a motion where the opposition are in fact saying these clauses are essential when, while they were in government, they negotiated trade agreements that support our country without including these clauses. I shouldn't be surprised that the opposition are once again backflipping on what they did while they were in government. It does seem to be a current theme of what they're doing. But it is worth noting that that is what they're doing.

This focus that the opposition are bringing to ISDS just doesn't make sense. Both the ACCC and the Productivity Commission have highlighted their concerns with ISDS clauses, suggesting that they risk impeding domestic reforms that are actually in the public interest. The Productivity Commission has said that evidence shows that ISDS provisions do not have a 'significant impact on investment flows.' The Productivity Commission went on to say that Australia seeking to insert ISDS clauses through trade negotiations and in doing so also trying to seek rights that might be held over foreign governments is just not worth our while and that, instead, there are other avenues that Australian investors could make use of or have in their back pocket rather than ISDS.

We know where clauses like this have been used in the past. It is important that those opposite and those on this side remember the case that Philip Morris brought against Australia over plain packaging of cigarettes. It was a four-year case that, thankfully, ended with that company being put back in its place. But it is a demonstration of how ISDS clauses can be used to interfere with the work of parliament and the intentions of parliament. The disruption that ISDS enabled Philip Morris to cause to a health measure that was supported by experts, was nondiscriminatory and was based on substantial research goes to show how these clauses can be used against the interests of government, parliament and, in fact, our country. We shouldn't see further actions in this vein.

This government is absolutely committed to supporting Australian businesses and trade. It is vital to our national interest. We will continue to do that while also working to avoid empowering foreign companies who might try, just as Philip Morris tried, to get in their way to the detriment of Australians and the public good.

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

There being no further speakers, the debate is adjourned and the resumption of the debate will be made order of the day for the next sitting.