Senate debates

Thursday, 19 March 2015


Foreign Affairs, Defence and Trade References Committee; Government Response to Report

6:05 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

In the government response to the report on the Korea-Australia Free Trade Agreement by the Foreign Affairs, Defence and Trade References Committee, we have quite a different story. There are a number of issues which the government does not agree with and has seen fit not to accept. I want to touch on a few of the areas of difference. I want to say at the outset that there is no in-principle problem with this free trade agreement or with free trade agreements in general. For the last 40 years, Labor has recognised that trade liberalisation can boost growth, create jobs, forge more competitive industries and give consumers greater choice and lower prices. So we are fundamentally in agreement with the government about free trade agreements.

What has been highlighted in these negotiated outcomes is that, despite the fundamental agreement about trade, there are significant differences between the Labor outcomes and the coalition outcomes. They go to matters like investor-state dispute settlement procedure. We heard in evidence that Korea has a mature legal system, and we would certainly hope that Australia's legal system is up to the standard where an international company could bring a claim in the Australian jurisdiction and get satisfaction. If there were an Australian investor in Korea, we were advised through evidence to the committee that there is a system of law in Korea. So we are a bit at a loss to know why the investor-state dispute settlement procedure has been included in this agreement. Apparently, it was a precondition set by Korea, and, in the judgement call that all governments have to make with respect to agreements, this government chose to accept it and leave it in there. Only time will tell whether that was a good, prudent move or a decision which will have untoward consequences.

We know that there is a difference on labour market testing. Our position is that, if you want to bring people in, you test the market and see whether there are Australians here to do the job. When witnesses were pressed about these matters, some of the evidence was that Korea is not a low-wage economy; Korea is a reasonably high wage economy. I think it is in the order of US$38,000 a year. So, for the Koreans to bring someone to Australia, they have to pay them a respectable wage. They have to put them in somewhere to live. They probably have to take them home occasionally. And it is probably economically beneficial to employ an Australian. But there is no guarantee on that, and there is no labour market testing—or at least it has been wound back.

What concerns me in the examination of this treaty is: what is the precedent it sets for the China-Australia free trade agreement? What does it do? Does it set a precedent by which they can also insist on no labour market testing? Can they also insist on ISDS? We know that China are not at US$38,000 a year in terms of labour outcomes in their country. We know that their judicial system is not as recognisable as the Australian judicial system. What would the position be if these were to simply flow through into the China-Australia free trade agreement? In the Trans-Pacific Partnership, what would the position be? Are we setting ourselves up for a precedent?

Very clearly, the committee deliberated, took evidence and made a substantial number of recommendations which the government has seen fit not to accept. It simply means that we need to be forever vigilant with respect to investor-state dispute settlement inclusion and labour market testing.

Intellectual property in trade agreements is also an emerging area. It is a completely ever-changing environment. These have all been highlighted in the Foreign Affairs, Defence and Trade References Committee report. As I have said, the recommendations we put up have not been accepted. We are in opposition, I suppose, in some of these areas and would like to see some of these matters revisited over time. But we will be vigilant about testing what the outcomes are and whether there are any untoward or unintended consequences of the rapid signing of the Korea-Australia Free Trade Agreement.

Some people would say that is probably a little bit of a misnomer because it is more like a bilateral agreement than a free trade agreement. We know that the Koreans are going to continue to put an impost on their citizens for the consumption of beef, for argument's sake, for quite a number of years. We will not see a zero tariff on beef into Korea for a very long time. When I asked the Koreans why they tax their people on protein and have an impost on beef, there was quite a long answer. It basically revolved around the fact that they can still remember famine. They have an industry they want to continue in. Lots of those farmers have political clout.

Anyway, I think our decision was made basically on the fact that we were competing mainly with the Americans, and if we did not get this through we would be at a commercial disadvantage, so the beef industries and other industries have seen fit to come out in support of this agreement. But it is not a perfect outcome. As I restate: the references committee has put some recommendations up which have not been accepted. I will leave it at that. I seek leave to continue my remarks later.

Leave granted; debate adjourned.