Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

Yesterday in the Federation Chamber I raised the concern of a range of national trade unions about the impacts of the China free trade agreement on their members and on working people more broadly.

I have to report to the House that the concern expressed by representatives of Labor is also matched by concern expressed on behalf of business. Indeed, no lesser body that the Productivity Commission has launched what has been described as a 'scathing' attack on Australia's latest series of free trade agreements, saying that they grant legal rights to foreign investors not available to Australians, expose the government to potentially large unfunded liabilities and add extra costs on businesses attempting to comply with them.

The Productivity Commission has devoted a special chapter of its trade and assistance review, which was released yesterday, to the agreements and it describes them as 'preferential' rather than 'free trade' agreements. I have to say that I have always had that view myself, that they were not actually free trade agreements and might more properly be described as bilateral trade agreements. But I am happy to embrace the expression used by the Productivity Commission, that they be referred to as preferential agreements.

The Productivity Commission goes on to say that by favouring some countries over others and excluding firms from sourcing substantial inputs from other countries from special treatment, they:

… add to the complexity of international trade and investment, are costly and time consuming to negotiate and add to the compliance costs of firms and administrative costs of governments.

According to the Commission, the Japan and Korean agreements were concluded without a rigorous and independent assessment of whether costs would exceed benefits and that there was also no mechanism in place to monitor the outcomes of the agreements after they come into force. In the trade review the say:

Without such a detailed assessment it is not possible to form a view as to whether the aspirational goals typically ascribed to the formation of preferential agreements are commensurate with real-world impacts.

It is an important point because we have entered into trade agreements with a range of countries over the years and at the time all manner of glowing accounts are given of what their benefits will be for Australian business, for Australian workers and so on, but we do not often come back to find out what the outcomes of these agreements have been in practice. Indeed, in relation to many of the countries with whom we have engaged in trade agreements, we have in fact found an increasing trade deficit and some negative impacts on the Australian economy and on Australian workers as a consequence. So they make a very important point about the lack of mechanisms in place to monitor the outcomes of these agreements once they come into force. The Productivity Commission also notes that:

The history of intellectual property arrangements being addressed in preferential trade deals is not good.

It has been noted not so much about the China free trade agreement but about the Trans-Pacific Partnership that the leaked text suggests it will:

… include obligations on pharmaceutical price determination arrangements in Australia and other TPP members of an uncertain character and intent'.

This is an important point as well. We have both in the Korean and Chinese agreements investor state dispute settlement clauses which:

… depart from national treatment principles by affording substantive appeal rights to foreigners not available to domestic firms.

he Productivity Commission warns that this could create the risk of regulatory chill where Australian governments will be cautious about enacting new laws for fear that they are challenged in foreign tribunals. That is a very important point. It is most unsatisfactory that we have a potential situation where Australian businesses are in a poorer situation than overseas businesses that are able to take advantage of the ISDS provisions in the China agreement. There have been objections to this from a whole range of experts and I urge the government to have greater regard to them.