David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I present the 142nd report of the Joint Standing Committee on Treaties, tabled on 13 May 2014, and I seek leave to move a motion in relation to the report.

Leave granted.

I move:

That the Senate take note of the report.

I present the Joint Standing Committee on Treaties report 142, containing the committee's views on the free trade agreement between the government of Australia and the Republic of Korea. The Korea-Australia Free Trade Agreement, better known as KAFTA, was tabled in parliament on 13 May 2014. Free trade agreements are becoming increasingly the means by which trade liberalisation is encouraged, opening up market access and strengthening bilateral relationships. This, indeed, is the eighth free trade agreement that Australia has signed.

Korea is one of Australia's most important trading partners, our third largest export market, our fourth largest trading partner and a growing investment partner. Currently, Australia faces various tariff and non-tariff barriers and restrictions in Korea. The average tariff on imports into Korea from Australia is 16.8 per cent, with an average tariff on agricultural goods of 53.6 per cent and tariff peaks of over 500 per cent. KAFTA will eliminate these very high tariffs on a wide range of Australian goods, including beef, wheat, sugar, dairy, wine, horticulture and seafood. It will also create new market openings in key areas of commercial interest to Australian services providers, including legal, accounting, financial, education and other professional services.

KAFTA is expected to be worth some $5 billion in additional income to Australia between 2015 and 2030. It is expected to provide an annual boost to the Australian economy of approximately $650 million after 15 years of operation. In its first year of operation, KAFTA is expected to create 1,700 jobs. Eighty four per cent of Australia's current exports by value will enter Korea duty free. Agricultural exports are expected to increase by 73 per cent and manufacturing by 53 per cent by 2030 as a result of the agreement.

The committee found that a range of benefits are likely to flow from the implementation of KAFTA for Australian businesses, industry and exporters. Apart from the direct value of tariff reductions, increased competitive advantage and potential future opportunities were identified as tangible positive results. Witnesses emphasised the importance of the agreement in protecting our competitive edge in the Korean market as Korea signs free-trade agreements with our major competitors including the United States, the European Union, Chile and ASEAN countries.

We identified and examined a number of issues that are causing concern amongst the wider community, in particular, the perceived dangers associated with the inclusion of an investor-state dispute settlement mechanism in the agreement and the possible changes to intellectual property rights. More generally, ongoing dissatisfaction with the treaty-making process in Australia was drawn to our attention. However, we recognised the constitutional constraints on the process in Australia and we highlighted the improvements that have been made over the last two decades. Overall, the committee is satisfied that KAFTA will provide substantial economic benefit not only to Australian business and industry but also to the broader community. On behalf of the committee, I commend the report to the Senate.

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

The Greens have put in a dissenting report. Whereas we found the overall report that has been put through by JSCOT to be very good, having provided a balanced discussion of the evidence that was provided to the committee, unfortunately, the recommendations really did not reflect, in my opinion, anything that was in the main body of the report.

This is a second-rate trade deal. But more importantly, it has been done through a second-rate and, possibly, a fundamentally flawed trade negotiation process. In the past, JSCOT and the Productivity Commission have recommended looking at the way we conduct our trade negotiations. The reason, I suppose, that this is sensitive for the Greens—and I have no doubt Labor would share a similar opinion on this—is that earlier this year the Senate passed a motion for an order of production of documents to consider to ask the government to release the final draft text of this agreement prior to it being signed by cabinet, because once it is signed by cabinet it is officially a done deal. Once it goes to JSCOT, of course we can scrutinise it, but it is an all-or-nothing proposition from that point on.

There is a lot to like in this deal with Korea, but in the Greens' opinion it contains some very significant risks, not least being the inclusion for the first time in years of an investor-state dispute settlement clause. Evidence was provided to the committee that the reason the deal had sat there for years without being signed was because the Koreans insisted on putting an ISDS clause in the trade agreement and the previous Labor administration had refused to sign that.

We also had evidence from the beef producers that they lobbied the government to compromise on this particular issue. The issue with compromising on this issue is a big one. We are about to enter into the Trans-Pacific Partnership agreement. We have been negotiating that for years. It is the biggest trade agreement in this country's history. It is with 12 countries including the US. If we sign an ISDS clause in the Korean free-trade deal—because it is the first time in a decade we have the policy of using these things as a negotiating tool—then we have no doubt that it will be used in the Trans-Pacific Partnership agreement with a very litigious nation, the United States. This poses a big risk to our sovereignty. It is not just the Greens that are saying this; this is a massive international issue. The Greens recently put up a bill to ban the use of these clauses in modern trade deals. They are not necessary. There is no evidence they bring anything to the party to facilitate trade flows or to reduce risk to corporations. But they do, as we have seen with the Philip Morris case, introduce significant risks to the public interest.

The Greens also have issues in our reports which are outlined around IP, intellectual property. This was almost like a old-fashioned free-trade deal that gives agriculture access, and the other complicating factors seem to be a nuisance to the government. Proper consideration was not given around risks in IP, nor risks in the investment treaty side of it.

And just to finish up, because I know I have limited time, the Greens were very disappointed that the impact on the car industry was not taken into account in the final signing of this deal and in the modelling around the deal either before or after. The car industry made it very clear that these trade deals, and especially this one, were the straw that broke the camel's back. That evidence was provided by the union. But of course, even though other experts were saying this in the 12 months leading up to KAFTA, clearly a value judgement was made by this government to trade cars and the car industry for cows and coal. That was a value judgement made by this government and by the negotiators at DFAT. It was done in secret with limited transparency. We have to change the way we do trade deals in this country so we are taking a stand on this and recommending that this deal is not ratified by parliament. We need to get these negotiations right. The Chamber of Commerce and Industry tended to agree with us around process issues and negotiations. We had a lot of stakeholders who said that we need to look at a model investment trade treaty in this country and redo the way we do trade deals.

We have recommended that parliament does not ratify this deal. It is second-rate. We can do a lot better. Unfortunately, the way the process stands does not allow parliament to make necessary changes to this deal. We have to take a very strong and principled stand on issues like ISDS because they pose significant risks to this country. We do not believe these risks were properly assessed—or assessed at all—or given any consideration by this government, which is very keen to get trade deals done in the early part of its administration to get some good headlines and to get some good consultation going with stakeholders. But it is a bad precedent and we do not believe parliament should ratify it.

Question agreed to.