Josh Wilson (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I'm very pleased to make some remarks on the report on the second inquiry of the Joint Standing Committee on Treaties into the Peru-Australia Free Trade Agreement, or PAFTA. I say at the outset that Australian Labor have long supported fair and free trade. From the time of the Hawke-Keating government we've looked to participate openly in the global market on the basis that fair and free trade is in our national interest, economically, socially and geopolitically, and because it is supportive of developing nations in our region.

At the same time there are costs and impacts associated with trade agreements, and they can be analysed and negotiated with more or less rigour and quality. For that reason Labor has been clear in insisting upon the best process and the right substantial outcomes from the consideration and settlement of trade and investment agreements. It is important to note that PAFTA was negotiated on a track that ran in parallel to the process that considered the Trans-Pacific Partnership. When the government recognised the possibility that the TPP might fall over with the withdrawal of the US, and considering the fact that a key argument of the CPTPP was the consistency of arrangements delivered by plurilateral agreements within our region and the corresponding benefit of reducing the noodle bowl effect of multiple overlapping bilateral trade agreements, it is legitimate to ask why PAFTA continued to be negotiated once the CPTPP was back afoot. It's not entirely clear that some of the tariff and market access benefits in PAFTA could not have been incorporated through mechanisms that exist in the CPTPP.

At the public hearing for the second inquiry into PAFTA the Australian Chamber of Commerce and Industry on that point expressed concern that the added complexity of having potentially three or four trade agreements between Australia and Peru could lead to perverse outcomes and that such arrangements should be rationalised and harmonised. That is a matter of common sense. The noodle bowl effect refers to the circumstances where you get a whole series of bilateral agreements between countries within a region or more broadly and it becomes very difficult to understand how all of these agreements work with one another. It certainly becomes difficult for companies that are seeking to export. That's why there is a move towards or an argument for plurilateral agreements. That was something the government put forward as a driver for our participation in the CPTPP.

One of the reasons we had the second inquiry into PAFTA was to further interrogate that issue: how is it that, while going into the CPTPP, which includes Peru, we were at the same time negotiating PAFTA? As it stands, that means there will be four agreements: a bilateral investment treaty, a bilateral agreement here in PAFTA and two regional agreements, the CPTPP and, in prospect, the Pacific Alliance Free Trade Agreement. Labor committee members are disappointed that the government continues to negotiate trade agreements like PAFTA through a process that has some pretty obvious shortcomings—namely, the inadequacy of stakeholder engagement in the negotiation phase. The negotiations occur behind closed doors at the government-to-government level to the extent that affected stakeholders, whether they are exporting companies or sectors or civil society, are not brought in or given the opportunity to participate in that negotiation phase either at all or on a consistent and even basis, notwithstanding the fact that that occurs in other jurisdictions, including the United States. That's one of the clear shortcomings in the current approach.

The second very significant shortcoming is the absence of independent economic analysis or modelling of trade agreements. We have seen in the past that, in the absence of that modelling, predictions are made about the benefits and impacts of trade agreements, and in many cases those benefits are not delivered or there are impacts or other secondary consequences that are not anticipated. I think the average person would expect that, if we're going to enter into a trade agreement, someone outside of the negotiating party, someone outside the department of trade, would undertake some analysis that would give us a clear sense of what can be expected from a trade agreement and then, on that basis, the ability to track over time what in fact occurs so that we can refine our ability to predict the benefits and other consequences of trade agreements.

In the course of this, the 45th parliament, the Joint Standing Committee on Treaties, in recognition of the shortcoming when it comes to independent modelling, has recommended on several occasions that the Australian government introduce the practice of commissioning such analysis or modelling and providing it to JSCOT, if not making it available more widely. I have to say, with some disappointment, that, on this occasion in relation to PAFTA, the committee has departed from what has been its consistent approach in the course of the 45th Parliament and has chosen not to make that recommendation. I don't really know why. It's worth noting that Labor has committed to legislating a requirement for an independent national interest assessment to be conducted in future on every new trade agreement to examine the economic, strategic and social impacts before it is signed. That's an improvement to our process that would occur if a future Labor government were elected.

We know that the CPTPP, the plurilateral agreement that covers our region and also covers Peru, will undermine Australia's temporary foreign labour visa system as it currently stands, because we negotiated it on the basis that labour market testing would not apply for contractual service suppliers in relation to six of the signatory countries. One of those was Peru. Again, on that question of consistency and multiple overlapping arrangements, what is interesting is that, with PAFTA, the government has included the requirement that labour market testing occur in relation to contractual service providers, but—and this goes to the heart of that issue of inconsistency—evidence to the JSCOT inquiry on the PAFTA was that Peruvian contractual service providers would be able to choose the more permissive option that's provided to Peruvian companies under the CPTPP.

So the Australian government and the Peruvian government have negotiated two trade agreements within roughly the same period. In one trade agreement, we have signed away what would ordinarily apply, which is labour market testing for temporary foreign labour—a perfectly sensible thing that allows us to have access to temporary foreign labour when it's required but makes sure first that Australian workers are not available for those jobs. We've signed that away under the CPTPP. Yet, when we negotiate PAFTA with the same government, we again require that labour market testing occur. But, because you've got these two provisions and because of the way that international trade law works, Peruvian companies can essentially choose which one they like, and I think it would come as no surprise that they are more than likely going to choose the one that doesn't require any labour market testing. It begs the question: why would the Australian government, in negotiating the CPTPP, make these lopsided labour market concessions? They're not concessions that were uniform across signatories to the CPTPP. We made those concessions unilaterally to six signatory countries. Why would we think that that's a good idea under the CPTPP but not under PAFTA? It's hard to understand. On that basis, obviously the labour market testing in PAFTA is meaningless; it's a hollow gesture. It really does beg the question as to what the government is thinking on that particular issue.

It is particularly concerning that the proposed PAFTA includes an investor-state dispute settlement mechanism—again, not least because it is different to the ISDS mechanism in the CPTPP. Yet again, we're giving foreign companies the opportunity to sue the Australian government in relation to laws that we in this place choose to make, if they feel that they have been hard done by. When they might otherwise have access to our judicial system, we're giving them the opportunity to go off to a questionable international tribunal and take the Australian government to court. Not only are we doing that, we're giving them two different, inconsistent mechanisms through which they can take that action. We say that no good explanation has been given as to why two such mechanisms should co-exist. Indeed, we say there is no good reason why ISDS mechanisms should exist at all.

In conclusion, there are some beneficial tariff reductions and some market improvements in the PAFTA—a treaty with a country with which we don't do very much trade—but it's disappointing that the negotiation occurred through a suboptimal process and included harmful labour market testing and ISDS provisions.

John Alexander (Bennelong, Liberal Party) Share this | Link to this | Hansard source

Free trade is good. This should not be a controversial statement. Free trade brings openness, trust and economic prosperity. The more nations we trade with, the more nations we can export to and the more goods and services we have access to. Free trade also fosters friendship between countries because, as history has taught us, countries that trade with each other don't fight with each other, yet parts of the world are retreating into protectionism and antagonism. We are seeing on a global scale the tensions that arise when countries retreat towards protectionism and the damage that this can do to all parties. We must stand up for the principles of free trade and openness.

This government has made free trade a priority, and Australia has grown as a result. Since the coalition took office in September 2013, our trade ministers have done what many previous trade ministers have tried but failed to achieve. We have signed free trade agreements with Japan, Korea and China, not to mention Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Singapore and Vietnam through the Trans-Pacific Partnership. Agreements with India and Indonesia are also, hopefully, to be agreed soon.

Trade has contributed one-quarter of Australia's economic growth over the past five years. The TPP will usher in a new era of economic growth and opportunity across our region. We are witnessing significant economic transformation across the Asia-Pacific, and these agreements will allow us to harness these enormous opportunities whilst also strengthening our economy to face future challenges.

The Korea-Australia Free Trade Agreement has already delivered 84 per cent tariff reductions on Korea's imports and will eventually lead to 99.8 per cent of Australia's goods exported to Korea being duty free. The Japan-Australia Economic Partnership Agreement will provide improved access to Japan's growing markets, with more than 97 per cent of Australia's exports receiving preferential or duty-free access when fully implemented.

The free trade agreement with China, our country's largest trading partner, will deliver economic growth and increased investment that will improve the life of every Australian, from the ports of Western Australia to my electorate of Bennelong. Many times in this place I've spoken of my very good fortune in representing a community with a large, vibrant and engaged community of Chinese Australians. At many local events, we have discussed the importance of building bridges between our two nations to allow even stronger linkages as partners in trade, business and culture. This free trade agreement cements those bridges and will create many business opportunities and employment opportunities for Bennelong residents.

With one in five jobs trade related—export and import—the government will continue to pursue its firm commitment towards a free trade environment that has helped to deliver an enviable record of economic prosperity and growth, job creation and higher standards of living. Our existing free trade agreements are helping our economy to be at its strongest since the mining boom. They have been excellent investments by this coalition government.

That brings me to the Peru-Australia Free Trade Agreement, or PAFTA. Peru has an economy similar in size to Vietnam's and larger than New Zealand's, and a growing middle class, and there is significant scope to quickly grow Australia's economic linkages with Peru. Under PAFTA, Peru will eliminate 99.4 per cent of its tariffs. In a time of drought, PAFTA upon entry will eliminate tariffs on beef within five years, to ensure that Australian beef farmers will have duty-free access to the Peruvian market. There will be more sugar market access for Australian sugar farmers than Peru has provided to any sugar-exporting country in the last 20 years. Dairy farmers will be able to compete with competitors, and outcomes on certain dairy products, such as butter, will exceed outcomes provided to the EU and New Zealand. There will be immediate duty-free access for Australian wine; sheepmeat; most horticultural products, including almonds; kangaroo meat; and wheat. There will be immediate duty-free access for pharmaceuticals, medical devices, paper and paperboard. There will be the best services commitments that Peru has offered to any country, which will create new opportunities for Australian mining service providers. And there will be recognition of Australian degrees in Peru.

I am a member of the Joint Standing Committee on Treaties, JSCOT, and we saw PAFTA come before us just four months ago. At the time, the agreement was agreed by both the coalition and Labor. This was a bipartisan policy, as it should be, because it is also good policy. I like bipartisanship. We work best when we work together, and people turn off politics when we play political games. Together we looked at the evidence and together we agreed that this agreement is in the interests of the Australian people. It seems that the unions have got to the Labor Party and forced them to change their minds. This is sad.

Unions have a strong history of protectionism, going back over a century—a history which has hampered our growth from time to time. Everyone will remember the, frankly, xenophobic campaign by the CFMEU against the Chinese free trade agreement, which did enormous damage to our relations with China and even to the harmony in electorates like my electorate of Bennelong.

In fairness to our colleagues, the Minister for Trade, Tourism and Investment, Simon Birmingham, at the request of the Labor Party, referred PAFTA back to JSCOT for a second hearing, which we have just had in the last few weeks. It's disappointing to see that Labor now state that the implementing legislation should be postponed until the government renegotiates ISDS out of PAFTA. As evidence presented to the inquiry confirmed, PAFTA has a strong investment chapter with broad safeguards that preserve the right of the Australian government to continue regulation in the public interest, including in the areas of health and environment. This is a significant improvement over the existing ISDS arrangements which were signed by the Keating government in 1995.

Unsurprisingly, JSCOT recommended early ratification of PAFTA in its current form. Thankfully, this is where the committee's deliberations will end, and there is nothing now preventing this agreement being ratified by Australia. I look forward to this happening and to all the broader benefits that this agreement will give to thousands of Australian businesses and families.

Debate adjourned.