Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Hansard source

I rise to speak in support of the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 and the Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018, which comprise the package of bills to implement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. I want to put on record why—despite some important reservations that Labor has with these bills that have been outlined by the representing shadow minister, Senator Carr—it is important that the Senate passes the bills that are before it.

I'll come to the economic arguments in favour of passage shortly, but I want to start by putting this debate into a strategic context. Fundamentally, shared and growing economic prosperity contributes to the alignment of strategic interests, and our country has a deep interest in stable, settled and consistent trading arrangements. First, Australia benefits from economic engagement with the world. Second, open and consistent trading arrangements enable greater economic engagement between nations and greater convergence of interests. Third, Australia's relative economic size means we have much to lose from trade conflict that is predicated on a win-lose binary, where economic weight and the capacity to inflict economic harm become the primary determinants of outcome.

In relation to the first point, it is clear that trade matters to Australia in both a direct and an indirect economic sense. Exports and imports account for over 40 per cent of Australia's GDP, and trade is inextricably linked with Australian jobs. Research has shown that some 2.2 million jobs, or one in every five Australian jobs, are associated with trade. Exports account for 1.6 million jobs—that is, around 14 per cent of all Australian jobs. Two-thirds of mining jobs are export related, and 59 per cent of agricultural jobs, 41 per cent of manufacturing jobs and one in three transport and storage jobs—more than 650,000 Australian jobs on top of those I've outlined in relation to exports—rely on imports. This is why, as I have said before, Labor's support for trade can be summed up in a simple proposition: trade benefits working people. Trade benefits working people by contributing to economic growth, trade benefits working people by improving productivity and trade benefits working people by creating better paid, more rewarding and more secure jobs. And, of course, it benefits working people by delivering lower prices and greater choice for consumers. We know trade raises average living standards. As a nation of some 25 million people, the size of our domestic market means that, to have the standard of living Australians desire, we must generate income from other markets. So I support trade, not despite being a progressive but because I am a progressive. This is why Labor has had a proud history of supporting trade.

The most substantial decisions to reduce Australia's trade barriers have all been made by Labor governments. In 1973, the Whitlam government cut tariffs by 25 per cent and Prime Minister Whitlam made clear that, whilst the short-term aim of the tariff cut was to reduce inflation, its longer-term aim was to improve the efficiency of the Australian economy. A more efficient economy was the primary motivation for the 1988 and 1991 tariff cuts by the Hawke and Keating governments. But, just as Whitlam was conscious of the impact of tariffs on the costs of living for the Australians we represent, prime ministers Hawke and Keating also recognised that tariffs were pushing up the price of clothing, whitegoods, cars and other basic consumer items. They recognised that there was nothing progressive about a policy which meant working people struggled to afford decent school shoes for their children, and they also drove the modernisation of Australian industry in the 1980s and 1990s.

Trade reforms were amongst the reforms that contributed to Australia enjoying nearly a quarter century of uninterrupted economic growth. Labor's commitment to trade liberalisation was continued by the Rudd and Gillard governments. Despite what we sometimes hear from the other side, under Prime Ministers Rudd and Gillard Labor finalised the ASEAN-Australia-New Zealand Free Trade Agreement—which has possibly the most difficult-to-say acronym in a crowded space—launched negotiations for a global trade and services agreement, and contributed to the WTO's trade facilitation agreement, which was concluded in Bali in 2013.

The second reason for supporting the agreement this package of bills implements is that locking in a high-quality regional deal furthers regional economic integration and cooperation. An open, rules based free trading system delivers strategic as well as economic benefits. It creates greater opportunities for the convergence of interests, which itself contributes to peace and stability. The CPTPP agreement is a plurilateral trade deal, which is consistent with Labor's policy preference for multilateral and plurilateral agreements over bilateral agreements. It is a WTO-plus trade deal, going beyond goods barriers to deal with 21st century trade issues of services, investment, competition policy and intellectual policy. It also creates a stepping stone to further regional agreements, leading ultimately to an FTA of the Asia-Pacific, which Labor continues to support.

These strategic benefits are consistent with Labor's long-term focus on our region and on Asia-Pacific trade liberalisation and economic integration, dating from the Hawke and Keating government's role in the formation of APEC and the Bogor declaration's goal of free trade in APEC. In an environment of rising protectionist sentiment and trade conflicts, the strategic benefits of greater economic integration are compelling. History has shown us that mercantilist, winner-take-all approaches to trade have contributed to international tension and rivalries. In the 20th century the role of beggar-thy-neighbour protectionism in the 1930s exacerbated the Great Depression and contributed to the tensions that ultimately led to World War II. It was in the aftermath of World War II that countries including the United States, and Australia under Prime Minister Chifley, supported the formation of the General Agreement on Tariffs and Trade, the precursor to the WTO, as they sought to establish a multilateral rules based trading system. Enhanced international economic cooperation and engagement promote understanding between nations, reduce tensions and increase the economic incentive to avoid conflict.

In contrast, protectionism and mercantilism foster tit-for-tat retaliation and hostility, which can put the wider system of international cooperation under pressure. These strategic aspects of trade loom large in our region. Our region is a locus of strategic competition, including around who makes the rules that govern relations between nations. The nature of the region and its arrangements, including on trade, are fundamental to Australia's future prosperity and Australia's future security. Australia wants a region which retains a system of institutions, rules and norms to guide behaviour, to enable collective action and to resolve disputes. We want a region in which those seeking to make or shape the rules do so through negotiation and not imposition, we want a region with an open trading system and investment transparency to maximise opportunity, and we want a region where outcomes are not determined only by power. The desire to play a constructive role in shaping open and transparent rules for trade in the region was an explicit rationale of the Obama administration in pursuing the original TPP. The CPTPP is important also because it goes to the nature and character of the region we want.

We should also pause to consider the benefit to our neighbours. We have an interest in their development and stability. Increased economic integration and trade will help increase incomes in some of the poorest countries in our region. Economic modelling shows that the gains from this agreement are larger for developing nations than for developed countries. It shows that this agreement would increase real national income by 3.1 per cent in Malaysia—5.4 per cent under a TPP-16 scenario—2.2 per cent in Vietnam, 2.2 per cent in Peru and 2.6 per cent in Brunei. There is a strong nexus between international trade, economic growth, development and poverty reduction, and any party committed to alleviating poverty and improving the lives of humanity in general, as Labor most certainly is, cannot ignore the benefits that will flow to hundreds of millions of people.

In addition to the growth benefits for developing countries in the region, the labour chapter will require reforms to workplace rights in the region. The requirements are designed to protect and enforce labour rights, improve working conditions and living standards, strengthen cooperation on labour issues and enhance labour capability amongst the parties. We do need to do more to ensure that ILO standards are more broadly observed and that workers in the region enjoy better wages and conditions. Whilst more remains to be done, the requirements imposed by the CPTPP are a step in the right direction. They will raise labour standards in the region, reduce the impact of unfair practices like forced and child labour, and reinforce international commitments.

This leads to my third point. The reality is that our relative economic size means that Australia has much to lose from trade conflict predicated on a win-lose binary, where economic weight and the capacity to inflict economic harm become the primary determinants of outcome. Australia has a direct interest in an open, rules based international order in which countries work together to resolve tensions and to tackle problems. Our power may not extend across the globe, but our interests most certainly do. To realise our interests we need both to shape emerging opportunities and to hedge against adversity. This is what constructive internationalism does. It deals with setback and disruption while at the same time generating opportunities. Trade can be an example of a constructive internationalism and also reinforce it in practice.

We need to support and advance an agreed international rules based order where those seeking to shape and make the rules do so through negotiation and not the imposition of will. Agreements such as the CPTPP are practical and constructive steps towards a world where rules, negotiation and cooperation are preferred to power and might. It is perhaps unsurprising that as shadow foreign minister I am drawn to the strategic rationale for supporting this legislation. But I should be explicit: there are sound domestic reasons for supporting this agreement and the legislation to implement it. The agreement eliminates more than 98 per cent of tariffs between signatory countries. For our farmers it will reduce and eliminate tariffs on beef, sugar, cheese, wheat, barley, wine and seafood, and expand quotas on butter, rice and skim milk. It will eliminate tariffs on iron ore, copper, nickel, butane, propane and LNG. And for Australian manufacturers it will eliminate tariffs on iron and steel products.

It will also enhance opportunities for Australian higher education providers in Brunei, Japan, Malaysia, Mexico and Vietnam. A number of independent economic analyses of the agreement have been undertaken, which found that it will provide relatively modest economic benefits in the short term, predominantly for agricultural goods, and that there is potential for more-significant economic benefits in the longer term, particularly if more countries in the region sign up to the agreement.

An analysis commissioned by a number of business groups has estimated that by 2030 the agreement would increase our national income by $15.6 billion, boost exports by just under $30 billion and lift investment in Australia by $7.8 billion. But it is the case that trade also places uneven pressures on our society. So, because I support free trade I also believe that we have to have proper social democratic institutions and progressive policies. That means insisting on high-quality trade agreements that maximise local employment, and this is a core element of Labor's track record on trade. We have always sought to ensure that the benefits of trade flow to Australian workers—the people we represent. We saw this in the ChAFTA—the China-Australia Free Trade Agreement—where we won concessions from the government to protect the interests of workers and to protect foreign workers who are on temporary visas from exploitation. I said at the time, as shadow trade minister, that Australians accept the need for a temporary migration system where there are genuine skills shortages and a lack of labour supply. But Australians do not accept a temporary migration system that is used to bypass Australian workers and to cut wages and conditions.

Despite resistance from then minister Andrew Robb, we managed to have significant safeguards put into law, including entrenching labour market testing under the Migration Act; imposing a market-salary-rate requirement on temporary visa workers to ensure that they are treated fairly and that temporary skilled migration does not undercut Australian wages and conditions; and creating new visa conditions for temporary work visas in occupations where holding a licence is mandatory under state and territory workplace, skills and safety laws. These conditions require temporary work visa holders in these occupations not to perform the occupation without holding the relevant licence, to obtain the licence within 90 days of arriving in Australia, to comply with any conditions imposed on the licence, not to engage in any work or duty inconsistent with the licence, and to notify the department in writing if their application is refused or they are granted a licence that is subsequently revoked or cancelled.

As with the China-Australia Free Trade Agreement, Labor continues to have reservations about the deal that the current government has signed. This is not the agreement we would have signed. The government could have done more and should have worked harder to protect the rights of Australian workers. The shadow trade minister, Jason Clare, has made it clear that Labor in government will not waive labour market testing in the trade agreements we sign, and we will also work to reinstate labour market testing for contractual service suppliers in countries where the Liberals have agreed to waive it. We will build on the protections we won in the ChAFTA agreement to strengthen rules around temporary workers to ensure that migrants are not exploited, Australian workers are not bypassed and the safety of Australians is not jeopardised.

This agreement also extends our ISDS obligations to one country, Canada. If we win the next election, Labor have made clear we will follow the approach of the Ardern Labor government in New Zealand. We will negotiate with the Canadian government to remove the application of this clause between our two countries by way of side letters. The New Zealand Labour government has signed side letters with four countries that are part of the CPTPP, and the effect of these letters is that the ISDS clauses in this agreement do not apply as between New Zealand and these countries. Australia has also signed a similar letter with New Zealand. What this shows is that it is possible to set these clauses aside, and that is what we will seek. Labor will also legislate to prohibit governments from signing trade agreements that waive labour market testing or include ISDS provisions, and I encourage those in this chamber who have concerns about these elements to support our legislation to this effect.

As I've said, this is not the agreement Labor would have negotiated. It can be improved and, if we form government, we will do so, but that does not mean we should reject the agreement. As the Labor Party's national platform puts it, more trade is a pathway to a high-skill, high-wage future for Australians. Labor members and senators do not pursue trade liberalisation out of any blind adherence to abstract theories. We pursue trade liberalisation because it delivers concrete benefits for the people we represent. We will be supporting the legislation to implement the CPTPP because it will benefit our trading partners, promote economic prosperity and cooperation in our region, and benefit Australian workers and Australian consumers.