Senate debates

Wednesday, 22 August 2018


Treaties Committee; Report

6:18 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

I present the 181st report of the Joint Standing Committee on Treaties, Comprehensive and Progressive Agreement for Trans-Pacific Partnership. I move:

That the Senate take note of the report.

Today I rise to make a statement concerning that report, which deals with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP-11.

The TPP-11 is the revived Trans-Pacific Partnership, and has been signed by all the original TPP parties except for 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 suspensions.

Even without the United States, the TPP-11 is one of the most significant international trade agreements since the completion of the World Trade Organization Uruguay Round 20 years ago.

TPP-11 will provide considerable opportunities to Australian businesses, such as:

            While the committee completed an extensive inquiry into the original TPP—and that was contained in report 165—a number of factors warranted an equally extensive inquiry into TPP-11, including:

                  One of the most interesting insights of the inquiry is that the withdrawal of the United States is actually likely to benefit the Australian economy. This is because US exports to Japan will still be subject to tariffs higher than those that will be applying to Australian exports.

                  The committee's inquiry benefited from extensive research into the TPP-11 conducted by the inquiry participants.

                  This has been particularly the case in relation to investor-state dispute settlement, commonly referred to as ISDS, and economic modelling.

                  The committee was presented with evidence drawn from over 500 examples of ISDS cases.

                  To date, Australia has been subject to only two ISDS cases.

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

                  TPP-11 also signals future improvements in ISDS processes, such as an appellant mechanism, a code of ethics for ISDS arbitrators and the introduction of precedent in ISDS cases.

                  The improved ISDS provisions in the TPP-11 mean that the Australian public should have confidence that the ISDS will not prevent the Australian government from regulating in the public interest when it is necessary.

                  The participants in the inquiry engaged in a lengthy debate about the outcomes of economic modelling performed on the TPP and TPP-11.

                  In summary, the debate about economic modelling was heated but not necessarily very 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.

                  A consequence of this is that outcomes from different types of modelling cannot necessarily be usefully compared.

                  In addition, modelling a complex agreement like the TPP-11 environment in a real-world environment imposes necessary limitations on the accuracy of the predictions.

                  The committee considers that economic modelling is useful as a tool, amongst others, to inform decision-making.

                  However, the committee believes that there are significant benefits to be had, especially in the public perception of trade agreements, if the Australian government commissions 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 the preparation of the national interest analysis, commission economic modelling of future trade agreements.

                  In relation to TPP provisions suspended in the TPP-11, the committee found that suspensions relating to intellectual property and copyright were widely though not universally supported as beneficial to Australians.

                  The committee also took evidence that reimposing the suspended provisions would have a significant impact on some sectors of the Australian economy.

                  The committee therefore recommends that a proposal to reimpose any of the suspended provisions should be considered a treaty amendment, resulting in a further inquiry by the committee.

                  The tendency towards protectionism in international trade has grown since it was first identified as a threat in the committee's report on the TPP two years ago.

                  Trade protectionism will have a significant impact on Australia's exports and consequently on employment here in Australia, if it continues to develop.

                  Against this, the 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 a rules based approach to global trade.

                  The committee recommends the ratification of the TPP-11.

                  On behalf of the committee, I commend the report to the Senate.

                  6:25 pm

                  Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party, Shadow Minister for Infrastructure, Transport, Cities and Regional Development (Senate)) Share this | | Hansard source

                  Fortuitously, I was reading some information that I've received on the TPP-11 as Senator Fawcett rose to speak. I will inform the Senate that I am not on the committee and I have not been to any of the meetings, but I've got some serious reservations about the TPP based on what has been put to me in what I was reading when Senator Fawcett first jumped up.

                  I'm told that, to date, the TPP-11 has not been subjected to any independently commissioned economic analysis. A research paper from Tufts University about the TPP suggests that Australia would experience a net loss of some 39,000 jobs as a result of the treaty. It should be noted that the paper adopted the United Nations global policy model for the basis of its estimations and was co-authored by Jomo Kwame Sundaram, a former United Nations assistant secretary-general for economic development. It goes on to say that the TPP-11 is not in the national interests for several reasons. Australia has bilateral or multilateral arrangements already with seven of the 10 partnership countries in question, and there is one pending with Peru, so it is no surprise that there is limited economic benefit for Australian exporters. In saying that, I'm told that the estimated loss of tariff revenue for Australia from the TPP is approximately $25 million in 2016-17 and $135 million over the forward estimates period. More concerning, however, are the provisions in the agreement about labour mobility and investor-state dispute settlement, or ISDS, procedures.

                  I've also been told, very clearly, there are many in the community with the view, which I share, that the government's contemporary approach to trade negotiations treats workers as a commodity. We cannot agree to that; I cannot agree to that. It's a very firm view from many that labour mobility must not be used as a bargaining chip in trade arrangements. These policies must be set by immigration agencies and ministers in light of broader questions of justice and national interest. This position is held by many in the community. Of course, it is not incompatible with many unions' support for migrants and migration, which I share and which, until the 1980s, was based largely on state-sponsored permanent skilled refugee and family reunion—which remains the preference of many—rather than temporary and employer-driven migration.

                  Earlier this year, the minister for trade and investment, Mr Ciobo, was on the front foot about the TPP-11 falsely claiming on the program Insiders, in regard to waiving of labour market testing:

                  … this doesn't apply to unskilled or low-skilled workers. It is not about bringing in cheap labour. What this is basically aimed at are senior managers, executives who work within often multinational corporations who need to be able to transfer between companies as part of that particular company's operations.

                  He then goes on to say:

                  That's where this applies. It is not about cheap labour or unskilled labour as the unions would have you believe.

                  He also said:

                  … anything we—

                  that's the government, not me—

                  have done, we have done on a reciprocal basis meaning we make it easier for Australian workers to go overseas as well.

                  I'm told both these claims by Minister Ciobo fail the test of scrutiny. The National interest analysis put out by the Department of Foreign Affairs and Trade, DFAT, states:

                  A Ministerial determination will need to be made under section 140GBA of the Migration Act 1958 to exempt from labour market testing the intra-corporate transferees, independent executives and/or contractual service suppliers of those TPP-11 Parties to which Australia extended temporary entry commitments.

                  This makes it clear that the TPP-11 temporary entry provisions include contractual service suppliers and removes the requirement—this is what grieves me—for labour market testing to establish whether there are Australian workers available. So, under the treaty, visas can be provided to workers in no fewer than 435 occupations. The broad definition of 'contractual service providers' in labour mobility chapters in Australia's trade agreements is not designed to facilitate genuine trade in services but to undermine local wages and conditions by providing greater freedom for employers to import labour on less favourable conditions without the need to undertake labour market testing.

                  That is also my view, and I will share that with our unions and with our communities, because I'm on the record many, many times as saying I have no problem with skilled migration—this nation was built on skilled migration—but I have a massive problem with trade agreements being used to ram down wages and conditions at the expense of Australian workers. Our kids need to be given the opportunity to do these traineeships and apprenticeships, and it is our kids who deserve to be employed in our nation. We should not be making it easy to bring in foreign workers on far worse conditions of employment than Australians can get. But, apart from that, Aussies must come first.

                  6:31 pm

                  Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

                  I rise to distance the Australian Greens from the recommendations in this report. Just to be absolutely clear, an administrative error has meant that my name is on this report along with everybody else's. I do not support the recommendations outlined in this committee report, and the Australian Greens are on the record as having been consistently opposed to what we see as the very negative impacts and very few benefits of the TPP mark 1 and, now, the subsequent TPP mark 2.

                  This report recommends that the Trans-Pacific Partnership agreement proceed. The view of the Australian Greens is that it should not. We believe that the economic benefits outlined have been grossly exaggerated and the costs downplayed. We believe the agreement represents an affront to our democratic sovereignty and should be rejected in the strongest possible terms. Of course, having this committee look at this and report is effectively a formality. The real test will be when the initiating legislation comes before this house. That is going to be the test of how people on all sides of politics view the TPP and vote in relation to it.

                  One of the gravest concerns that the Australian Greens have in relation to the TPP is the inclusion in this agreement of investor-state dispute settlement provisions, the ISDS clauses. We've heard quite a bit about these clauses in the past. We know that, in the United States, there has been an incredible debate about this. We also know that, in Europe, there has been a much bigger debate about the impact of ISDS clauses in trade negotiations, and I note that, in the EU negotiations that Australia has started to participate in, it has already been made very clear that, from the European perspective, ISDS provisions are not to be included. I think that, in itself, sends a warning sign: why on earth would Australia be signing up to something that includes these provisions?

                  Why are they so bad? These measures advance the interests of corporations over the interests of governments and the citizens to whom they are accountable. We may pass a law in this place that we had promised to pass, the passing of that law by this house having been pushed and argued by the public and our constituents. Yet, if that law were to impact on a company that wanted to invest in Australia in some ways through this trade agreement, that foreign entity would be able to sue the Australian government and, therefore, the Australian people. That is why I believe it is fundamentally undemocratic.

                  The ISDS provisions expand the legal rights of multinational corporations based on legal concepts not even recognised in national systems and offer advantages not available to domestic investors. Why on earth would we be handing, on a silver platter, to multinational corporations—who, let's remember, have to be begged to even pay their taxes in this country—provisions to sue the government, whether federal, state or local government, and therefore the Australian people, particularly provisions that are not even available to Australian companies here on domestic soil? These provisions are unfair, they are unrepresentative and they are unnecessary.

                  We don't need them in order to develop and agree to various trade negotiations. We know that because they have been ruled out of our negotiations, as I mentioned, in relation to the EU. The fact that they are unnecessary is upheld by the recent decisions of the Court of Justice of the European Union. These decisions, made in 2017 and 2018, found that ISDS is fundamentally incompatible with national sovereignty. That is what the EU Court of Justice has said. As a result, the EU is not proposing any form of ISDS in its negotiations, including in the Australia-EU Free Trade Agreement negotiations currently underway.

                  The New Zealand government, as we know, has made it very clear throughout its negotiations that it does not support ISDS provisions as part of the TPP, and as a result it has negotiated to remove the ISDS provisions through four supplementary, legally binding side letters with Brunei, Malaysia, Peru and Vietnam. If it's good enough for New Zealand to do—to get out of being impacted by ISDS clauses—why on earth didn't Australia try to do it? Why wasn't Minister Ciobo making sure, at the negotiating table, that Australia was looked after and the Australian people were looked after? To give credit where credit is due, kudos to the Prime Minister of New Zealand, Jacinda Ardern. She deserves a big tick for standing up for her nation, her people and her companies and making sure that sovereign risk is looked after from the New Zealand perspective. Those side letters commit New Zealand and these other countries to not applying ISDS provisions to each other. But Australia absolutely missed the boat when it came to being able to do that.

                  These ISDS provisions are routinely used by multinational corporations to attack governments for doing what governments are supposed to do—namely, regulating in the interests of their communities and their citizens. Let's have a few quick examples of this. In 2016, Swiss pharmaceutical company Novartis filed an ISDS dispute against the government of Colombia over the government's plans to reduce the price of patented treatment for leukaemia. So a big pharma multinational went and sued the Colombian government because the government wanted to make medicine cheaper for their citizens who are suffering from leukaemia. How on earth is that reasonable, just or fair? It is not, yet these are the types of provisions and behaviours that are being endorsed by the Australian government, the Turnbull government—the current, Turnbull government—and their Minister Ciobo in signing Australia up to these dangerous agreements under the TPP. We are opening ourselves up to big multinational companies coming after us.

                  Senator Sterle talked about the provisions in the TPP that have carved out big slabs from countries that will be exempt from labour-market testing. These are the same big multinational companies who don't just want to bring in their own workforce—to push down wages, to push down conditions and to take jobs away, particularly from young Australians—but they also want to hand these big multinational companies the opportunity to sue the government and to hold the Australian people to ransom. There is no need or reason for ISDS clauses. When they went back in to negotiate the TPP, the government should have used the opportunity to stand strong, to have the ISDS clauses withdrawn—they're not necessary—and to stand up for the rights of Australians and the sovereignty of a nation. This TPP arrangement is a deal for multinational corporations at the cost of local communities and governments. They've handed these big corporations everything they want on a platter, and now the Turnbull government want a big pat on the back and want us to say: 'Job well done.' Well, it was a terrible job, terribly done, and it should be rejected.

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

                  Order! Senator Hanson-Young, your time has elapsed.

                  Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

                  I seek leave to continue my remarks later.

                  Leave granted; debate adjourned.