Provisions in TPP expose Australia to unnecessary risk

Published on Thu 1 December 2016 11:40am

Mr Wilson (11:40am) — I am glad to have this opportunity to make some remarks about Report 165: Trans-Pacific Partnership Agreementof the Joint Standing Committee on Treaties. I am a member of that committee and I am a new member of this place. I begin by observing that the committee process was both instructive and constructive.

I thank the Chair, the member for Fadden, for the way he guided us through the process and, of course, my fellow Labor members of the committee for the way they approached the evidence and the submissions that we received in hearings.

The report enables ratification of the TPP to occur, and that report was tabled yesterday. The timing is little bit strange, considering the circumstances that confront us. Since 8 November and the success of President-elect Trump, it has become clear that the United States has no present intention of ratifying the TPP, and without the United States in the TPP it will not come into force. On that basis, Labor members of the Joint Standing Committee on Treaties thought it would be prudent to move the reporting date to the new year so that those developments in the United States could unfold. They were also mindful that there is an inquiry afoot in the other place that does not report until the first week of the new parliamentary year. That was not the mood of the majority of the committee. Obviously the report has been tabled and presumably ratification will ensue.

On the TPP itself, Labor supports fair and free trade agreements. From the time of the Hawke-Keating government, Australia has looked to participate openly in the global market on the basis that free and fair trade is in our national interest economically, socially and often geopolitically. When free trade agreements work well and are constructed properly, they are supportive of developing nations, including developing nations in our region. Labor has pursued tariff reduction, the opening up of the Australian economy and the winding back of nontariff barriers. We have always recognised, and we continue to recognise, that multilateral agreements are preferable to a noodle bowl of bilateral arrangements.

The Trans-Pacific Partnership itself is a plurilateral trade and investment agreement. It is important to recognise that the scope of these agreements has grown over time and we now see trade, investment and other matters combined within international agreements like the TPP. The TPP joins together a not insignificant group of nations in our region and elsewhere. While the modelled aggregate benefit of the TPP is modest, there are some significant benefits to be had for certain sectors of the Australian economy—the dairy sector, wine producers, beef and sugar and so on—and those benefits are acknowledged. There are also some meaningful improvements within the TPP that go to issues like tariff reduction, manufacturing, general market access, regulatory harmonisation and the removal of nontariff barriers. It is also welcome that the TPP includes provisions on environmental and labour standards, but it is worth observing that the compliance and enforcement mechanisms around those standards are not as robust as the mechanisms that cover the more purely economic aspects of the agreement.

There are some aspects of the TPP, in process and in substance, that are less than optimal, and I will touch on some of those. Both hearings and submissions that were provided to the Joint Standing Committee on Treaties—in its 44th Parliament incarnation and in its present incarnation—went to the question of the way in which relevant sectors of the Australian community are consulted and enabled to participate in the treaty-making process. It was observed that, in the European Union and in the United States, there is greater opportunity for a range of stakeholders to be involved. That includes representatives of different parts of the economy—different industry and economic sectors, as well as groups representing civil society interests. I am glad that one of the recommendations in report 165 goes to that issue. Indeed, recommendation 1 states:

… the Australian Government should consider changing its approach to free trade agreement negotiations to permit security cleared representatives from business and civil society to see the Australian Government positions being put as part of those negotiations.

I think that would be a welcome improvement.

I moved a further recommendation in the last relevant meeting of the JSCOT, which went to the issue of economic modelling and analysis. Over a number of years, a range of people with interests in the treaty-making process have observed that the national interest assessment alone is not a sufficient basis on which to judge the economic value of a trade agreement and the balance between the benefits and any costs that might flow from such an agreement. I was grateful to the committee chair and the majority of the committee for accepting a further recommendation which goes to the process and states:

The Committee recommends that the Australian Government consider implementing a process through which independent modelling and analysis of a proposed trade agreement is undertaken by the Productivity Commission, or equivalent organisation, and provided to the Committee alongside the National Interest Assessment (NIA) to improve assessment of the agreement.

I am grateful that that became part of the majority recommendations.

In terms of the substance of the agreement, the two areas of concern to Labor members of the committee, and to the opposition generally, are temporary labour market access and the inclusion of investor-state dispute settlement provisions. There were concerns as well in relation to intellectual property and monopoly rights—for pharmaceuticals and biologics, in particular.

On temporary labour market access, it is important to recognise that the concessions Australia proposes to make under the TPP are lopsided. We are offering temporary labour market access on terms that are not reciprocated by other participant nations. It is important to remember that the United States never includes or offers up labour market access as part of its approach to trade agreements. That is just a no-go area for the United States. Yet the TPP will operate in such a way that, under our existing 457 visa system, labour market testing for contractual service suppliers will not apply for six signatory countries: Canada, Peru, Brunei, Mexico, Malaysia and Vietnam. It is worth highlighting that more than 650 professions are currently covered by the term ‘contractual service providers’. There will also be a change to mandatory skills assessment, with the provision for contractual services providers to meet the assessment of their skills based on their accreditation in their home nation, rather than by an actual skills assessment. There are obvious concerns about that in relation to things like electrical trades.

I will finish with investor-state dispute settlement provisions. There really is no reason for Australia to enter into these arrangements. The TPP puts those arrangements between us and the United States, Canada, Japan and Peru for the first time. We already have ISDS between us and all of the other participant nations. It exposes us to an unnecessary risk. There is no evidence that shows ISDS increases or improves investor flows. And the Productivity Commission on multiple occasions has pointed out that the risks of ISDS in terms of costs and the impact on Australia’s ability to make public policy in the national interest just override any suggested benefit that ISDS may have. I will finish with what the Productivity Commission said in 2013-14. It said:

The Australian government should seek to avoid the inclusion of investor-state dispute settlement provisions that credit foreign investors in Australia substantive or procedural rights greater than those enjoyed by the Australian investors.
And it made the point it has a clear potential to impact our public policy making ability.

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