Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

The Greens are very sympathetic with the details of the Fair Trade (Australian Standards) Bill 2013 proposed by Senator Madigan. We have not yet made a decision as to whether we will support the bill, and we would certainly be interested in a referral to an inquiry to further explore the issues around the bill—or, as Senator Ludwig suggested, possibly even a larger inquiry into areas surrounding free trade in general, in light of the significant activity in free trade deals that we are currently experiencing particularly with the recent change in government.

I want to start at the beginning where it is really simple with this concept of free trade. We heard Senator Edwards talk about why free trade is good and certainly, according to the high-profile statements being made by the Abbott government in the media, free trade agreements are something that they are hoping to hang their hat on as a significant achievement in their term of government in the next three years, and they will be pushing through free trade deals and negotiating as many as they can as quickly as they can—with the assumption, and it is a flawed assumption, that free trade deals are always good.

I used to teach this theory to first-year economics students, and I have got to say that free trade is real and it does exist, but it only exists in textbooks. It is a good process to learn when you are looking at two countries negotiating with each other to see how they could perhaps integrate their economics systems—the assumption that perhaps one country might have a specialisation in an area and that they could sell a product at a competitive advantage to another country and vice versa. The theory tells you that both countries would be better off under a simple free trade arrangement. As Senator Ludwig mentioned in his speech, our free trade deals are a lot more complex than that. More fundamentally, the assumption that free trade deals are always good is also wrong because the theoretical assumption underpinning it is that the comparative advantage leads to a greater level of wealth—what we call aggregate wealth for all countries involved in a free trade bloc. But what theory does not tell us—and this is essentially what we are arguing in the chamber today around the issues with free trade, fair trade or trade in general—is how that wealth is distributed in any nation.

I turn back to the theory again. If I were speaking to students about this, I would say, 'In theory, the sectors that gain from free trade would quite simply compensate those sectors that do not gain from free trade.' Of course, the criticism that is often levelled at economists is: the world in economics is based on simple assumptions. The way I see free trade, and trade deals in general, is perhaps not the way the majority of Australian people see it. When they watch TV and they see our leaders at big conventions, wearing colourful shirts and doing the right thing by the nation, I have no doubt that the front end of these free trade deals—as with a lot of international cooperation—is done by government; but what is behind trade and trade activity is corporations. It is business activity, it is investment, it is production, it is the search for profits. That is what drives our economy.

I have no doubt that the negotiators at DFAT, for example, with current free trade deals, are all good people doing fantastic jobs in what they see as the national interest. But you really need to strip that back to its more simple foundations. It is the interests of Australian corporations, and not just Australian corporations but multinational corporations. This is the last time I will mention that I have taught something, but I can tell you, having taught international finance: it is very difficult sometimes to work out where multinational or transnational corporations are actually domiciled. But that is what the world has become. There is no doubt that global integration of our economies, in the last 30 years especially, has led to a concentration of business activity and wealth in a small number of very large companies right across all sorts of different industries and sectors. So when we think about a free trade deal like the Trans-Pacific Partnership or the RCEP deal or even simple unilateral, bilateral or multilateral deals, it is the special interests—that employ people, that produce—that are driving these deals. It is the special interests that are behind these. And they are corporations.

I think what we really need to look at is whether the interests of these corporations are also in the interests of our nation, the general public and, of course, the Australian voters. The Greens have long been very strong and fierce advocates for fair trade. There is a fundamental difference in theory and in practice between fair trade and free trade. Let us just look at what is in the national accounts—our current account and our financial account. That is where trade and investment activity is buried. That is where we go every quarter when we want to look at the activity to do with exports, imports and direct foreign investment. That is all good stuff, but that is all measured in monetary terms. When we think of fair trade, we think of those things external to purely monetary measurements. We think of the impacts on existing industries—for example, workplace standards and fair work standards. We think about the environmental aspects of trade and production and whether we are creating any externalities in the products that we may be trading in. Exporting coal to the world is one really good example where we are exporting an externality—probably the biggest externality that has ever factored into our modern economic system. It has been there since the beginning: the creation of the gases that lead to global warming. These are issues, and we could think of a lot of other examples where trade and business production activity do not necessarily reflect these externalities, and it is exactly the same in trade deals.

So the idea of having stronger standards in general is certainly something that our party supports. Of course, across the chamber the most common argument we will get against that is increased cost of doing business and putting imposts on companies and businesses that may lead to the erosion of profits and ultimately to lower employment and the reduction of other activities. But there are also benefits in putting better standards in place—for example, certification schemes on a whole range of products.

I was very pleased earlier in the year that the Senate unanimously passed a motion following the very tragic Rana Plaza collapse in Bangladesh, where 1,200 people were buried alive while working in a factory with appalling labour conditions and safety standards. We later learned, following an expose by Four Corners and significant international attention on the rag trade coming out of a country like Bangladesh—and it is not just Bangladesh—about the conditions that workers in foreign countries were subjected to to produce what are essentially throwaway goods for us—the $5, $10, $15 and $20 garments that we take our kids to buy down in the local shop. There is a price to be paid for having cheap garments in this country made in appalling conditions in foreign countries, and that price of course is the misery and death of human beings.

So what can we do about this? Obviously there is a lot we can do by letting Australian consumers know so that they can make a choice between buying goods that are produced unethically under appalling conditions and buying goods from those companies that do the right thing. I respect that it may cost a little bit more to put in place a certification program that simply has a label or a tag on a product made in a country like Bangladesh that says that that particular item of clothing has conformed to minimum standards and those standards have somehow been verified. This has actually developed from voluntary schemes around the world, and I really think it is something this country needs to face up to.

I understand the focus of Senator Madigan's bill is on import standards, which I will get to in a minute. We need to be very careful about what we import into this country, not just in terms of ethical considerations but also with agriculture: standards around quarantine, MRLs and the conditions under which food has been brought into this country. When I speak to people in the agricultural sector—farmers in Tassie—it is fascinating. Being an economist, I had always assumed that low prices mean low inflation and low interest rates, maximise economic growth and are good for the economy. But I really wonder sometimes whether we should look at the concept of fair prices for products that are produced in this country and the fact that our farmers, for example—I know it is the same for manufacturing industries in this country—cannot compete effectively with international competition. This is classified as competitive disadvantage. There are some reasons why Australian businesses cannot compete on a level playing field against foreign countries. Of course, the low cost of labour in these countries is one of the most common things that we talk about, but there is also a lack of standards and verification processes in, for example, agriculture—a whole range of different issues that relate to other countries' rules and regulations or lack of rules and regulations.

So the simple question is: is the constant focus in our society on low prices necessarily sustainable in the long term and is it necessarily a healthy thing? We all want to lower our cost of living and there is no problem with that, but at some stage—maybe it will come if our dollar ever depreciates—we will have to start paying more for cheap imported products, allowing more of a level playing field. But it is absolutely essential that we start questioning these issues, and I am very pleased to hear Senator Ludwig say that Labor is open-minded about exploring a broad range of issues around free trade—no doubt about the positive aspects of trade, but free trade certainly comes with costs.