Kimberley Kitching (Victoria, Australian Labor Party) Share this | Hansard source

I'm pleased to have this opportunity to speak on the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 and a related bill. The purpose of this bill is to amend the Customs Act to introduce new rules of origin for goods imported into Australia from a party to the Trans-Pacific Partnership, now called the TPP-11. The TPP-11 is a new treaty that incorporates the provisions of the original Trans-Pacific Partnership, which was signed in February 2016. That treaty was rendered inoperative by President Trump's decision to withdraw the United States from the agreement. The remaining 11 signatories to the new treaty are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. These countries will implement the TPP between them, with the exception of a limited number of provisions, which will be suspended. Suspensions will remain in place until the parties agree to end them by consensus.

The amendments contained in this bill will enable eligible goods that satisfy the new rules of origin to enter Australia at preferential rates of customs duty. The amendments will also impose obligations on exporters of eligible goods to a party to the TPP-11 for which a preferential rate of customs duty is claimed and on manufacturers who produce such goods. The related bill makes complementary amendments to the Customs Tariff Act 1995 to give effect to the preferential treatment of customs duty in accordance with the TPP-11.

Last month Labor announced that we would be supporting this bill. It's no secret that this announcement was preceded by a lively debate in the Labor caucus and in the wider Labor movement about whether we should support or oppose the TPP-11 as it now stands. It's no secret that many people have argued strongly that we should oppose this bill, including some prominent figures in the trade union movement. In this Senate the Greens and the Centre Alliance have said that they will oppose the bill, so I think it is important that we on this side give a clear explanation of our position on this question. I take this opportunity to acknowledge the leadership of our shadow trade minister, the Hon. Jason Clare MP, in developing our position. He has had the responsibility of addressing the many and various points of view that have been put forward and of formulating our policy.

Ever since Federation—and indeed before—one of the fundamental cleavages in Australian politics has been free trade versus protectionism. Before 1910 we had Free Trade and Protectionist parties in the parliament. Within the Labor Party were both free trade and protectionist tendencies. Broadly speaking, from the First World War until the 1970s, Labor was a protectionist, high-tariff party. This was one of the many sacred cows slaughtered by Gough Whitlam. In 1973 the Whitlam government cut all tariffs by 25 per cent, the first major move towards free trade after decades of bipartisan protectionism. This breakthrough was followed by the reforms of the Hawke and Keating governments, working in close cooperation with the union movement under the leadership of Bill Kelty. These reforms opened up our economy, further reduced tariffs and, along with the many other reforms of the Hawke-Keating years, are one of the reasons we now have had 26 years without a recession.

Since the 1970s Labor has accepted the view held by almost all serious economists that free trade creates jobs and leads to increased wages. Labor has learned the lesson of the Great Depression, which is that the ideology of protectionism is fundamentally wrong. Protectionism does not protect industry, and it does not protect jobs. High tariffs and beggar-thy-neighbour trade wars throttle economic growth and put people out of work. I might quote our shadow Assistant Treasurer, Dr Andrew Leigh MP, who said:

We had this debate when Whitlam cut tariffs and again when Hawke and Keating did. We can't go ahead with our broad-based Asia plans by opposing trade liberalisation.

Sadly, this is a lesson which some current world leaders seem to have forgotten, and I fear that they will relearn it through higher unemployment, lower growth, lower incomes and more business failures.

According to the Centre for International Economics, one in five Australian jobs are linked to trade. That means 2.2 million Australians work in a trade related job. Sixty-seven per cent of mining jobs and 41 per cent of manufacturing jobs are trade related. The evidence shows that increasing exports leads to an increase in jobs. Increasing exports also increases wages. The work by the Centre for International Economics shows that the action undertaken by the Hawke and Keating governments to cut tariffs has put almost $8,500 in the pocket of every Australian family that those families would otherwise not have.

I spent last week up in the Pilbara, looking at mining operations and LNG plants, inter alia. The ships leaving the ports up there are ceaseless. Thousands of jobs depend on that trade. Our economy does well because of that trade. The latest move towards free trade comes at a perilous time. The United States and China are lurching towards a mutually destructive trade war. A trade war in the Asia-Pacific region poses huge risks to Australia and to all of our neighbours. This makes it all the more important that Australia moves to secure access to a broad range of markets to protect and grow export jobs. Free trade is, in fact, the best form of protectionism, and this is why Labor supports the TPP. It will increase market access for our farmers, steel manufacturers, universities and miners. Independent modelling commissioned by the Victorian Labor government indicates that this agreement will deliver modest economic benefits in the short term and more significant economic benefits in the longer term, if more countries sign up to this agreement. We want exporters to be able to take advantage of these opportunities, because that means more jobs for Australians.

The withdrawal of the US from the TPP is something we should greatly regret. It is my belief that the world is indeed a poorer place if America is isolated. But it does have the positive effect of increasing export opportunities for Australia in the other TPP signatories' markets—markets from which the US is partly excluding itself by putting itself outside the TPP.

I recently had the opportunity of visiting two such countries, Mexico and Peru, as part of a parliamentary delegation of which Senator Leyonhjelm was also a member. These are both fast-growing and increasingly prosperous countries, with increasing appetites for high-quality agricultural and manufactured goods, such as those we export so successfully. Mexico is already one of the world's top 20 economies. Signing up to the TPP-11 will give us better access to both these emerging markets, and will make us more competitive at a time when the US is impeding its own exports by erecting trade barriers. As an example, having more students seeking education services here in Australia would enable our tertiary sector to have greater diversity in its fee-paying students, and that may be important.

None of this is to say that the TPP-11 as it currently exists is perfect. It is not. It has significant flaws. There are aspects of the agreement which are in conflict with Labor policy. But we do not accept the assertion that, because of these flaws, we should reject the whole agreement. There are many times in politics when we have to choose between alternatives that are less than perfect. This is one of those occasions. We cannot allow the perfect to be the enemy of the good. That is why we have agreed to support this bill, while at the same time making a commitment to renegotiate some aspects of the TPP-11 agreement if we are able to form government after the coming election. The Greens political party and others have asserted that this is impossible—that, once we have signed up to the TPP-11, its terms will be set in stone forever. This is simply not true. In government, we will follow the example of Jacinda Ardern's Labour government in New Zealand, which has successfully negotiated side letters with other TPP signatories to gain exemptions from certain objectionable aspects of the TPP. If New Zealand can do this I am sure Australia can as well.

There are two major aspects of the TPP-11 agreement which do not conform to Labor Party policy and which Labor, in government, will be seeking to change in so much as they apply to Australia. These are the investor-state dispute settlement mechanism, or the ISDS clauses, and labour market testing. ISDS is a mechanism which allows foreign companies to sue the Australian government for policy changes which they believe commercially disadvantage them. Labor does not support the inclusion of ISDS clauses in trade agreements. We oppose ISDS clauses, because these provisions provide foreign corporations with increased legal rights and can be used to sue governments for legitimate policy decisions.

It should be understood, however, that ISDS clauses are not a novelty which are being introduced for the first time by the TPP agreement. They are contained in 20 investor agreements and eight trade agreements to which Australia is already a signatory and has been, in some cases, for 30 years. During that time, only one case has been brought against Australia and that case was unsuccessful. In fact, under the TPP-11 agreement ISDS only applies to one additional country, namely Canada. Australia already has ISDS with the other signatory countries as a result of other agreements. The ISDS provisions in the TPP-11 agreement are narrower than those that were in the original TPP. Under this agreement, ISDS can't be used in cases where a company has a contract with the government or where it had an Australian government approval, which was subsequently withdrawn.

Contrary to some assertions the agreement does not stop the Australian government from changing policy or regulations in line with government health and education policy. Annex II of the agreement gives Australia the explicit right to adopt or maintain any measure for public services. The text explicitly mentions health, child care, public utilities, public transport, social welfare and public housing. ISDS, therefore, cannot be used in these circumstances.

Nevertheless, we remain opposed to the ISDS provisions in the agreement as the current government has negotiated them. In government we will follow the example of New Zealand, which has successfully negotiated side letters to remove ISDS clauses with four countries in the TPP. To do this we will set up a negotiating team whose job will be to remove ISDS clauses from this and, if necessary, from other agreements.

On the issue of labour market testing we will take the same approach. We do not support the right of employers to bring in workers from other countries without first testing the Australian labour market to determine whether there are Australian workers available to fill job vacancies. In government, we will work to reinstate labour market testing for contractual service suppliers with the countries where the current Liberal government has agreed to waive it.

Labor has also made a firm commitment to change the rules about the way future trade agreements are negotiated. A Shorten Labor government will fix the way we do trade deals to give Australian business and Australian workers a real say in that process and to be more open and more honest. We will act to prohibit future governments from waiving labour market testing and including ISDS clauses in trade agreements. We will also end the shroud of secrecy under which trade agreements are currently negotiated by strengthening the role of the parliament.

We will require governments to provide the Joint Standing Committee on Treaties with a statement of objectives for assessment prior to negotiations and a briefing after each round of negotiation. We will establish an accredited advisers' program, which will give stakeholders, including business, trade unions and civil society organisations real-time access to trade agreements. We will require governments to provide public updates on each round of negotiations and to release draft texts during negotiations where this is feasible. We will require governments to subject all new trade agreements to an independent national interest assessment examining economic, strategic and social impacts.

Labor has had challenges with this agreement. We had to choose between accepting a less-than-perfect agreement, which we had no say in negotiating and which contains major flaws, and rejecting an agreement which offers greater access for our exporters to some of the world's most important new markets, which will generate many jobs for Australian workers. We have decided to support the agreement, despite its flaws, while making firm commitments to rectify some of the agreement's flaws and also to reform the way in which we negotiate future treaties. I think this was the right choice. I recommend the bill to the Senate and I look forward to Labor returning to this agreement in government.