Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Innovation, Industry, Science and Research) Share this | Hansard source

The most important thing to understand about the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 and the related bill is that they are customs and tariff measures. They are not a ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, known as TPP-11, which the government signed in March this year. Australia's parliament is not given the opportunity to ratify trade treaties of this sort, which is why Labor is proposing that substantial reform of the treaty-making process is necessary. Our view of what must change is set out in a second reading amendment which I shall move later and in a private senator's bill which I shall introduce. TPP-11 replaces the former Trans-Pacific Partnership, or TPP-12, which included the United States. The other signatories to TPP-11 are Canada, Peru, Chile, Mexico, Japan, Vietnam, Malaysia, Singapore, Brunei and New Zealand.

Labor have always been absolutely clear that we have serious concerns about aspects of TPP-11, as we did about TPP-12. Supporting these customs and tariff bills does not amount to the full endorsement of the agreement in its present form. The agreement includes investor-state dispute settlement—or ISDS—provisions, which Labor opposes. ISDS provisions allow foreign companies to sue national governments. These provisions compromise Australia's sovereignty by limiting the ability of Australian governments to act in the national interest. In government, Labor will not agree to include such provisions in trade agreements and will seek to remove them from existing agreements. We note that the Ardern government has successfully negotiated the removal of TPP-11's ISDS provisions as far as New Zealand is concerned. So there is a precedent for the removal of these provisions. It's not a matter of being locked into them forever.

The agreement also waives labour market testing for contractual service suppliers for six countries—Canada, Peru, Mexico, Brunei, Malaysia and Vietnam. Labor believes that trade agreements must not be used to undermine Australia's immigration system, and the waiving of labour market testing contradicts the commitment of the former Prime Minister, Malcolm Turnbull, that testing will take place before applications for temporary skills shortage visas are granted. As Labor members of the JSCOT inquiry into the bill noted, more than 450 professions could currently be covered by the term 'contractual service supplier'. They include electricians, plumbers, carpenters and nurses. No other country has provided Australia with such generous reciprocal visa rights, and it is unclear why such concessions were offered by the government. Labor acknowledges that foreign workers play a role in the success of our economy, but it is a fundamental principle of fairness that Australians should be offered work first and that foreign workers be brought into Australia only for a demonstrated need. The temporary migration system is intended to supplement the skills of Australians. It is not meant to remove the ability of Australians to get jobs. In government, Labor will seek to reinstate labour market testing for contractual service suppliers and will not allow such concessions in future agreements.

There's also a concern that the ISDS provisions in the agreement will leave Australia vulnerable to protracted legal disputes with foreign owned corporations. Senators will recall that the global tobacco corporation Philip Morris used the ISDS provisions in early agreements to try to overturn the Australian plain-packaging legislation for cigarettes. They sued the Australian government in the Singapore register of the Permanent Court of Arbitration. Philip Morris was not successful, but it's idle to say, as some do, that the outcome of that court action shows that there is nothing to fear from ISDS clauses in trade agreements. It is outrageous that the case ever got to court in the first place, and there is no guarantee that future cases initiated under ISDS provisions would end successfully for Australia. That's why the former Labor government excluded ISDS provisions in early negotiations on the TPP. Remember that the Howard government also had such concerns and excluded ISDS provisions from Australia's free trade agreement with the United States. The present Liberal government evidently does not have the concern for Australia's national interest that John Howard did.

Warnings about the dangers of ISDS provisions in trade agreements have been issued by the Productivity Commission, an agency that could hardly be called a den of die-hard protectionists. In 2010, the Productivity Commission reported on bilateral and regional trade agreements and commented that the Australian government should:

… seek to avoid accepting provisions in trade agreements that confer additional substantive or procedural rights on foreign investors over and above those already provided by the Australian legal system.

The commission report also stated:

There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS provisions within agreements. Available evidence does not suggest that ISDS provisions have a significant impact on investment flows.

Experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions.

The Productivity Commission trade and assistance review of 2013-14 included the following observation:

The provisions depart from national treatment principles by affording substantive appeal rights to foreigners not available to domestic firms, risk impeding domestic regulatory reform …, include safeguards and carve-outs of uncertain effect, lack transparency and have inadequate parliamentary scrutiny.

The substantial scepticism about ISDS provisions from an agency that I think many in this chamber regard as an advocate for the free market should have been a wake-up call for this government. So Labor in government will eliminate the dangers posed by agreements with ISDS provisions and labour market waivers. We will follow the example of the New Zealand government and negotiate side letters to release Australia from those aspects of any agreement.

A Shorten Labor government will not stop there. As the member for Blaxland announced in his speech on these bills in the other place, Labor will introduce legislation prohibiting the inclusion of ISDS provisions or waivers of labour market testing in future free trade agreements. Labor will establish a system of accredited trade advisers from industry, unions and civil society groups to consult on the draft text of agreements during negotiations. Labor will legislate to require that an independent national interest assessment be conducted on every new trade agreement before it is signed. Labor will strengthen the role of parliament in trade negotiations by increasing the participation of the Joint Standing Committee on Treaties, JSCOT. JSCOT will also be provided with a statement of objectives for the negotiations for consideration and feedback, and will be briefed at the end of each round of negotiations.

Labor have already announced that in government we will introduce a science, medicine, academic, research and technology visa, or SMART visa, to remove the obstacles created by this government's clumsy draft temporary work visas. Although Labor supports labour market testing to ensure that Australians are not disadvantaged when employers seek to hire from overseas, we also understand that, for Australia to remain a world leader in innovation, science and medical research and in high-tech industries, we need to access the very best minds from around the world. The SMART visa will provide a path to permanent residency for educators, innovators and researchers of global standing. A Shorten Labor government will establish an Australian Skills Authority and will seek advice from this authority and from industry to determine the skills and the areas of specialty available for SMART visas. Also, the minimum level income for the visa will be set in consultation with industry.

So Labor's changes will remove the secrecy that surrounds the negotiation of trade agreements—for example, this government's refusal to commission independent economic modelling of the TPP-11, the agreement which is of course the subject of this bill, which I find incredible. In The Australian this morning, Senator Birmingham was reported as saying that failure to adhere to TPP-11 would cost Australia some $15.6 billion in export income. Now, he didn't acknowledge the source of this figure. In fact, he didn't say what projections he was relying on. They were in fact from a report that was commissioned by the Minerals Council and other groups, including the Business Council, the Australian Industry Group and the Food and Grocery Council. The government itself did not commission independent modelling that you would expect to be publicly available during the negotiation process—and that's one of the problems with the present treaty-making process, which Labor will seek to rectify.

The Victorian Labor government did commission independent modelling by the financial consulting firm Grant Thornton. That report concluded that participation in the TTP-11 would result in a modest initial gain for Australia primarily from agricultural goods. The analysis concluded that, although the TPP-11 would not benefit all sectors of the economy equally, no sector would be worse off. But that judgement should be qualified by other data in the Minerals Council report—data that Minister Birmingham did not cite in his media interview this morning. The report, prepared by Peter Petri from Brandeis University and Michael Plummer from John Hopkins University in the United States, states that adherence to the agreement would slightly reduce Australia's output of durable manufactured goods. That is because other countries participating in the agreement have comparative advantages. Petri and Plummer, like Grant Thornton in their analysis for the Victorian government, describe the benefit for Australia under TPP-11 as 'relatively modest'. They estimate it to be below one per cent of real income. And by 2030, Australia's adherence to the agreement would result in a two per cent fall in durable manufacturing. Petri and Plummer say:

… trade agreements that deepen economic relationships with Asia lead … to higher net imports of manufactured products.

We should also note the independent economic analysis of the original Trans-Pacific Partnership agreement, the TPP-12, the forerunner of the agreement that is the subject of these bills. This agreement is sufficiently close to the TPP-12 for it to retain the provisions that would be activated should the US choose to join. So the independent modelling that was done for the early agreement continues to be relevant for the present one. And, under modelling for the World Bank, the projected economic benefits for Australia under the TPP-12 were very modest indeed. The World Bank projected a 0.7 per cent increase in GDP to 2030. That amounts to a 0.07 per cent increase in GDP per annum. An increase on that scale is nothing more than a minor blip.

With the new agreement, the TPP-11, nothing much seems to have changed. And I have noted that the evidence of the independent analysis prepared by Grant Thornton for the Victorian government also projects very modest economic benefit for Australia. So what is it that the Australian government has given up in exchange for this modest benefit? It's given away labour market testing that protects Australian workers' rights. It has agreed to provisions under which a future Australian government could be sued by foreign companies. It has made decisions which it presumes are in the strategic interest of the country. And, therefore, we'd argue that, on balance, Labor supports this agreement.

The absence of the US in this agreement means that some of the odious aspects of the TPP-12 have been suspended. This agreement suspends contentious provisions in the original agreement related to biomedical products, copyright and some aspects of ISDS. Australian farmers, manufacturers and exporters of services will gain increased market share and tariff reductions in economies with nearly 500 million consumers. In 2016-17, nearly a quarter of Australia's exports, worth $88 billion, went to countries participating in this agreement. The agreement will remove 98 per cent of tariffs in a trade zone spanning the Asia-Pacific region with a combined GDP of $13.7 trillion. The agreement creates Australia's first agreements with Canada and Mexico. For the first time, Australian exports will gain preferential access to two of the world's top 20 economies. For these reasons, and acknowledging the modest economic benefits estimated by the modelling commissioned by the Victorian government, Labor supports these bills. But it would have been better if there had been Australian government modelling to demonstrate independently the benefits of these arrangements.

We stress, however, that these trade agreements can't be changed through this process. It will require a change of government to change that process. There must be an end to the secrecy. Before an agreement is signed, a net benefit must be demonstrated for Australian participation in the agreement. Provisions in the existing trade agreements that undermine Australia's sovereignty or conflict with the principles of our migration system must be removed. To rely on assurances of economic benefit that have not been demonstrated, whilst surrendering the basic rights of Australians, is an affront to democracy. The democratic principles that should guide any future trade agreements between Australia and other nations are set out in the amendment standing in my name, and I urge all senators to support that vision. Accordingly, I move:

At the end of the motion, add ", but the Senate:

(1) acknowledges that this preferential trade agreement cannot be amended by these bills, only accepted or rejected;

(2) is of the opinion that:

(a) the way Australia negotiates trade agreements of this type needs to change,

(b) the role of Parliament in trade negotiations should be strengthened by increased oversight of trade negotiations by the Joint Standing Committee on Treaties, including providing the committee with:

(i) the government's statement of objectives for negotiation for consideration and feedback, and

(ii) regular briefings at the conclusions of each round of negotiations; and

(3) calls on the Australian government to:

(a) seek to remove Investor State Dispute Settlement (ISDS) mechanisms and reinstate labour-market testing for contractual service suppliers in existing trade agreements,

(b) ensure that future governments are prevented, by legislation, from including ISDS mechanisms or waiving labour-market testing in future trade agreements,

(c) establish an accredited trade advisers program to allow industry, unions and civil society groups to provide real-time feedback on draft trade agreements during negotiations,

(d) subject all new trade agreements to an independent national interest assessment to examine economic, strategic and social impacts before they are signed,

(e) enforce mandatory skills testing in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and all future trade agreements, and

(f) fix the problems in the existing skills testing regime by ensuring that the skills of foreign workers are tested by qualified professionals and required to meet current Australian standards and not by immigration officials."

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