Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

This legislation deals with tariff changes that form part of the Korea-Australia Free Trade Agreement. Those tariff changes are critical to the agreement and are matters that both sides of politics have been pursuing for some time. Whilst I note that the government takes credit for having delivered this agreement, the truth of the matter is that most of the groundwork for it was done by the previous Labor government. The work was led for much of that time by the former member for Rankin, Craig Emerson, in a process which I understand began in 2009. So there had been already some four-plus years of negotiations and work carried out by the former government. Nevertheless, the current government did finally sign off on it.

I understand the agreement was not concluded by the previous government because there were matters within it that were simply not acceptable to the government. But they are, from all accounts and judging by the fact that this government has signed the agreement, acceptable to the current government. I believe those components of the agreement that were not acceptable to the previous Labor government are still not acceptable to many people throughout Australia—they are certainly not acceptable to me—and that is why Labor is putting forward some amendments to this legislation. It is my view that the Abbott government has been prepared to sell Australia short in order to rush the agreement through and chalk up a so-called win.

With all agreements there are winners and there are losers, and that is very much the case with the Korea-Australia Free Trade Agreement. The government and the Minister for Trade and Investment have been very quick to talk up the benefits of the agreement but have been silent on the downside of the agreement and silent about those sectors of the community that will either lose out or get absolutely nothing. It is expected that the net effect of this agreement will be that Australia will be a minuscule .04 per cent of GDP better off after 15 years. It does not give me much confidence looking at that figure, if it is projected correctly, that this agreement will make a lot of difference to the future of Australia one way or the other. Indeed, the aspects of it that concern me may well make a difference in a negative way for the future of our country.

Claims of significant benefits to Australia were also made about other free trade agreements in the past at the time that those agreements were entered into. Years later, there is no clear evidence that any of those agreements have resulted in a net benefit to Australia. In fact, there are suggestions that in some cases we are worse off because of them. It is a matter that I believe ought to be properly investigated because it is a matter of national interest. I therefore believe that this agreement and any future agreements should be subject to a much more thorough and independent net benefit analysis before they are agreed to. It seems that, whilst Australia enters into agreements in good faith and then honours the intent of those agreements, the same cannot always be said of all other parties, who, if it suits their purpose, find alternative mechanisms to continue to place import barriers on Australian products. We have seen that with regard to the agreement with Thailand and the ability of Australia to export cars to that country. The tariffs may not have changed, but other criteria in turn put barriers on exports to that country were introduced by that country.

Bilateral agreements can, in my view, also lead to backdoor methods of getting goods into a country, usually via a third country. In a globalised world where multinationals operate from several countries, that is becoming increasingly difficult to police. It is a matter that we have been grappling with in one of the committees of this parliament with regard to food labelling. It also seems to me that free trade agreements are often driven by a specific industry sector that lobbies very well—I will give them credit for that—and are prepared to advance their own interests at the expense of other industry sectors.

Free trade agreements also result in what some have referred to as a race to the bottom, where countries compete against each other in order to increase market access. Of course, a better outcome would be to work through the World Trade Organisation and have all countries deal with each other in an even-handed way. But I understand how difficult that is to achieve when individual countries want to establish a competitive advantage. There is also a fundamental difference between free trade and fair trade; and, regrettably, free trade agreements do not necessarily result in fair trade.

It is interesting that we are debating this legislation when, under Australian arrangements, free trade agreements can be entered into by the government of the day without the approval of parliament. I see no justification for that. The process is, in my view, wrong, and all free trade agreements should be subject to parliamentary approval before they are signed off. It should not be simply those sections of the agreement that require legislative change such as that which this legislation deals with. In fact it is not the case in all other countries that agreements are entered into by the government of the day without reference to their parliaments, so I see no reason why that could also not be the case in Australia. Indeed, when I look at how this process began—where Australian governments have been able to enter into agreements without having them signed off by parliament—it seems a little grey to me where the authority for the government to do that actually lies. But, nevertheless, that is the way it is, and my view is that that in itself is a matter that should be reviewed by the parliament.

I note that the inclusion of the investor-state dispute settlement provisions are not subject to parliamentary debate or approval, but I nevertheless make it clear that I do not support the inclusion of ISDS clauses in free trade agreements. I commend my colleague and friend the member for Wills, who spoke at length about this in his contribution to this debate just a moment ago. As paragraph 4.12 of report 142 of the Joint Standing Committee on Treaties reveals that, as of April this year, there were 568 known ISDS cases worldwide, of which '43 per cent were decided in favour of the state and 31 per cent in favour of the investor with approximately 26 per cent settled out of court.'

ISDS gives additional special rights to foreign investors that enable them to sue governments for damages in an international tribunal if they can show that a change in domestic policy has harmed their investment. ISDS clauses provide greater rights and protections to overseas companies than the rights offered to Australian enterprises. That is discriminatory and wrong and, as evidence clearly shows, is proving to be bad, costly policy. Nor are my concerns about ISDS eased by the so-called protections written into the Korea-Australia Free Trade Agreement, because the reality is that, whenever a matter goes to court, it is never black and white. It always becomes complicated. There are always arguments that are difficult to clearly define and ultimately they are determined by whoever sits on the bench at the time.

Interestingly, the Howard government did not include ISDS provisions in the US-Australia Free Trade Agreement in 2010 and the Productivity Commission found that there were no economic benefits from ISDS and no evidence of market failure resulting from political risk to foreign investors. I repeat that: there was no evidence that, by not having ISDS provisions in one of these agreements, it changed at all the investment by other countries in Australia.

Equally concerning is the fact that the ISDS proceedings are not public, there is no independent judiciary and there is no system of precedents or appeals. Not surprisingly, I note that countries around the world are now rejecting ISDS provisions and walking away from them. That does not surprise me at all because—and the member for Wills quite correctly pointed out some of the cases—it is simple to see that what governments are simply doing is putting at risk their sovereignty.

Labour mobility is also a matter of concern to me and many people I have spoken with about the Korea-Australia Free Trade Agreement. The concern is that the agreement may provide easy access for Korean workers to come to Australia and take jobs at the expense of Australians looking for work. The government has already taken steps to make it easier for foreign workers to take up Australian jobs by easing restrictions in respect of 457 visas, but I understand that provisions within this agreement may make it even easier for foreign workers to come to Australia from Korea because of the easing of what we refer to as labour market testing provisions. In fact, I am not even sure that they will apply at all if this agreement comes into effect. That in turn means that there is no security when Australians are competing for jobs with people from Korea. It makes sense that Korean businesses setting up here might want to bring their own workers over, but that is not in Australia's interest. The whole intent of having investment in Australia is because it generates productivity and jobs here in this country for Australians.

I note that the Australian government is right now negotiating a free trade agreement with China. I hope and trust that this Korean agreement does not form the template for the agreement with China. Our trade relationship with China is indeed very strong and I expect that any concerns that arise from this agreement, particularly the concerns relating to labour mobility and to the ISDS provisions, would be magnified if they also formed part of an agreement with China.

Whilst none of us have a crystal ball and circumstances may change in the future, the current economic modelling predicts that as a result of this agreement there will be job losses in the textile, clothing and footwear industries as there will be in wood, paper products, chemicals, rubber, plastics, motor vehicles, metal products, electronic equipment and manufacturing more broadly. Indeed, my recollection is that the car makers cited free trade agreements as contributing to their exit from Australia when making their announcements to end manufacturing here. My concern is that the Korea-Australia Free Trade Agreement will hasten the wind down of the Australian automotive sector. I note that there is already talk in my home state of that occurring. I note that only last week there was an announcement that 300 workers at the GMH plant in Elizabeth will be made redundant earlier than previously expected.

This kind of agreement, in my view, will hasten the closure of the car-making industry in Australia. My concern about that is compounded by two factors. Firstly, the Abbott government has made very little provision to assist workers who lose their jobs as a result of car making this country. We are talking about possibly up to 50,000 people across the country who are directly affected, and maybe another 200,000 that are indirectly affected. I am not prepared to say whether the total quantum of jobs is going to be specifically this much or that much, but we do know that it is going to run into the tens of thousands and the government has put on the table a miserable $100 million to assist. At the same time, I understand that the money has been put on the table in a way that makes it very difficult and unattractive for anyone affected to access it. In fact, the money that been put on the table is of little use to those people who are going to be made redundant.

Compounding that, we now have a situation where the government is likely to walk away in a substantial way from naval shipbuilding for our Defence forces in this country. Again, particularly for South Australia, that is a critical matter, because it was the building of naval ships and submarines that offered some hope and provided some light at the end of the tunnel for those people who are likely to be made redundant from the end of car making at Elizabeth—so that they could go into a different sector to continue employment. These are matters that truly concern me.

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