Melissa Parke (Fremantle, Australian Labor Party, Shadow Assistant Minister for Health) Share this | Hansard source

As a member of the Joint Standing Committee on Treaties, I have a reasonable familiarity with the terms of ChAFTA and contributed to the dissenting report by Labor members that was tabled along with the report of the majority of the committee on Monday. I certainly support the amendments that are being debated here today, as they improve aspects of the operation of the agreement with respect to the necessity of labour market testing in relation to IFAs granted under the MOU with China. I remain concerned, however, about a number of aspects of ChAFTA that the amendments do not address.

Before talking about those matters, I note that there have been claims from the government that criticism of the agreement from the opposition, unions, academics and community groups are motivated by racism against China. Such claims are offensive. As my colleague the member for Wills detailed in his speech on the bill yesterday, this agreement goes further than any previous FTA in excluding labour market testing. There is also a distinct lack of balance in the agreement. As AFTINET's submission to the JSCOT inquiry notes:

Almost all Australian tariffs are reduced to zero, but Australia's market access to Chinese markets is much more limited, with selected gains for some farm products and service industries.

Furthermore, an MOU accompanying the agreement provides that Australia will issue young Chinese with 5,000 work and holiday visas each year, but there is no reciprocal right for young Australians to work in China.

I note that the Productivity Commission heavily criticised Australia's pursuit of FTAs in a 2010 report that recommended future agreements first undergo an independent cost-benefit analysis. The commission pointed to a lack of transparency and a lack of rigorous assessment of the provisions in recently signed agreements.

I would now like to turn to some of my other concerns about the agreement—firstly, the removal of labour market testing under chapter 10 of the agreement itself. Without amending the text of the treaty, this aspect of the agreement remains problematic, as it prevents Australia from imposing a cap on the number of Chinese 457 visa holders. As Dr Joanna Howe has noted in her paper, The impact of the China-Australia Free Trade Agreement on Australian job opportunities, wages and conditions:

This means even if the Australian Government wished to constrain the number of 457 visa holders more generally because local unemployment was high or to reflect changing economic circumstances, it could not do so with respect to Chinese citizens … The absence of a cap means that Australians employers can engage unlimited numbers of Chinese citizens on 457 visas.

This is completely contrary to the very purpose, the raison d'etre, of the 457 visa program, which is to meet skills shortages in the domestic labour market.

Secondly, it is clear that there is a lack of enforcement of requirements in the present temporary migration system, as evidenced in recent investigative reports by Monash University and ABC Four Corners reports which have exposed the exploitation of temporary migrant workers in agriculture, food processing, 7-Eleven convenience stores and other industries. It is significant that the government majority report of JSCOT also noted this problem and made a recommendation that government boost resources to the department of immigration to enable appropriate oversight in this area. The fact that this has been necessary only highlights the deep flaws that already exist in the present system, without adding unlimited Chinese migrant workers to the mix. The potential for exploitation of these workers is a significant risk under ChAFTA.

Thirdly, there is the issue of mandatory skills assessment. The side-letter to ChAFTA removes the requirement for mandatory skills assessment for Chinese workers in such trades as electricians, carpenters and mechanics. A number of my colleagues have canvassed this issue more widely, and I will leave it there.

Fourth, as with our FTA with Korea, the ChAFTA also contains ISDS provisions, which constitute a fundamental derogation of a country's sovereignty. ISDS clauses allow foreign companies to sue governments in private international tribunals for laws, policies and court decisions impacting upon their profits—for instance, health, environmental and labour regulations; food labelling or quality and safety standards. The presence of an ISDS clause was why the former Labor government was not prepared to sign an FTA with Korea.

The Philip Morris tobacco company is using an ISDS clause in an obscure Hong Kong-Australia investment agreement to sue the Australian government in relation to our plain-packaging reforms, despite the laws having passed the parliament with bipartisan support and having been upheld in our own High Court. Even if Australia ultimately wins the case, it will have to pay its own legal costs of millions of dollars, that so far have amounted to $50 million.

Australians might be surprised to know that these cases are not heard by respected independent panels of judges but by panels of corporate lawyers who can be advocates for multinationals one day and panel members adjudicating cases the next. Their decisions are not transparent, they apply no precedent and they cannot be appealed.

Juan Fernandez-Armesto, an arbitrator from Spain made this observation: 'When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all. Three private individuals are entrusted with the power to review, without any restrictions or appeal procedure, all actions of the government, all decisions of the courts and all laws and regulations emanating from parliament.'

The Chief Justice of the High Court, Robert French, gave a speech last year in which he raised concerns about ISDS and its implications for Australia's judicial system. He referred to the case of Eli Lilly, the US pharmaceutical giant that sued Canada under ISDS after the Canadian Supreme Court ruled two of its medicine patents invalid. The chief justice quoted Professor Brook Baker of Northeastern University law school's assessment of that case:

After losing two cases before the appellate courts of a western democracy should a disgruntled foreign multinational pharmaceutical company be free to take that country to private arbitration claiming that its expectation of monopoly profits had been thwarted by the court's decision? Should governments continue to negotiate treaty agreements where expansive intellectual property-related investor rights and investor-state dispute settlement are enshrined into hard law?

The United Nations Independent Expert Alfred de Zayas recently raised serious concerns about the inclusion of investor-state dispute settlement clauses in free trade and investment agreements, saying:

In the light of widespread abuse over the past decades, the Investor-State Dispute Settlement mechanism, which accompanies most free trade and investment agreements must be abolished … because it encroaches on the regulatory space of States and suffers from fundamental flaws including lack of independence, transparency, accountability and predictability …

Nobel laureate for economics Professor Joseph Stiglitz has said this is a 'new private judicial system, only available to foreign corporations.' It is notable that ISDS may not be used by governments, civil society or domestic companies. I note that the Productivity Commission also raised ISDS as another reason why these agreements are of dubious benefit to nations.

Some more recent trade agreements have attempted to improve ISDS processes. For instance, the Korea-Australia Free Trade Agreement requires ISDS hearings and documents to be made public. However, such improvements have not been included in ChAFTA. Moreover, important matters, such as the definition of indirect expropriation and the minimum standard of treatment of foreign investors, are not complete and have been delegated to a committee to review in three years time. The Labor members of the treaties committee noted that this foreshadowed future review may present an opportunity for wholesale revision of the ISDS mechanism under the agreement.

Fifth, unlike KAFTA, ChAFTA does not contain chapters on labour and environment, which means neither government has made any commitments not to reduce labour rights or environmental standards, nor to implement ILO rights or international environmental agreements. AFTINET noted in its submission to JSCOT that China is listed as one of the world's 10 worst countries for labour rights. Recent strikes and protests by Chinese workers have been met with police repression. Violations occur not only in locally owned enterprises but in those under contract to global corporations like Apple and Walmart. Thus, it says, ChAFTA, in effect, 'rewards violations of labour and environmental standards by granting preferential market access to Australia' for goods produced under these conditions in China. And there is no mechanism to ensure that imported products are of an appropriate standard. The Australian Industry Group in October last year reported that a survey of its members found that many manufactured goods coming from China do not meet Australian safety and quality regulations, including dangerously faulty electrical cables which could have affected up to 40,000 homes and businesses.

Sixth, given the recent imported frozen berries scandal, it is also extremely concerning that, while KAFTA excludes ISDS from application to such matters as the technical barriers to trade chapter which includes food labelling, ChAFTA does not. The DFAT officers at the JSCOT hearing stated that this was because in ChAFTA ISDS only applies to the investment chapter and not to any other chapter. I have not been able to verify that this is the case, but I certainly hope so.

In sum, I support the amendments being introduced today that will improve the outcome for Australian workers, and I congratulate Labor's shadow ministers on this achievement. However, as I have set out, I have a number of concerns that remain, and I hope future Australian governments will ensure that there is an independent assessment of such agreements before they are entered into.

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