Trade agreements need much more scrutiny

Published on Thu 13 September 2018 1:37pm

Mr Wilson (1:17pm) — I speak in support of the amendment to the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018. The TPP-11 is not a great trade agreement, certainly not from Australia’s point of view. If you want to understand why it’s not a great deal, you only need to look at the process; it was badly done.

The trade and economic benefits are minimal and it has some very serious shortcomings that speakers in this debate have identified. It has some regional plurilateral benefits as an agreement that binds together countries in the Pacific, but it could have been so much better.

As we debate it and we consider the way forward, we should not be adopting a kind of barracking approach which we sometimes see from the government that tries to suggest that all free trade agreements are in and of themselves wonderful things that we have to patriotically sign up for. Trade agreements can and do consist of all sorts of things all mixed up together. It’s the responsibility of the government and the parliament to get that mix right, to make those agreements as strong as they can be. At the moment, our process for forming these agreements is not good enough. I want to acknowledge the work that the shadow minister for trade has done to set a path forward for us, for Australia, for a Shorten Labor government, if elected, to really improve the deficiencies in the process as it stands.

We talk about free trade agreements. We should get the language right. This is a plurilateral agreement that puts in place some preferential arrangements between countries to that agreement. It’s an uneven set of arrangements. It’s not the case that all participating countries sign up to a common set of changes or concessions.

It’s vitally important, when we talk about trade agreements and trade and investment agreements, that we start from the position of recognising they encompass a lot more than just what you would consider traditional matters of trade. First and foremost, the TPP-11 does deal with tariffs and market quotas—those are the sorts of traditional trade bits and pieces. The agreement does deal with rules of investment separate from trade, which includes the investor-state dispute resolution mechanisms that so many people have talked about. The TPP-11 deals with labour market access. Therefore, it bears upon and has implications for our migration framework. The agreement does deal with labour rights and environmental protection standards—that’s a good thing—but, if you want to be realistic, you have to look at the way in which it gives away labour market access protections and skills-testing protections. It gives away those things holus-bolus. It gives away those things unequivocally. The labour standards and the environmental protections are, you would say, aspirational. I’m glad that they’re there. I’m glad that there’s a framework for participating countries to perhaps strengthen those things in future, but let’s not be mistaken in thinking that there is some equivalence between the pernicious aspects of this agreement on the one hand and the things that are potentially beneficial on the other hand.

On the trade side of things, there are gains in this agreement for Australia. There’s no doubt about it. If you find the right sector, they will sing its praises, because they stand to benefit from it. It’s going to eliminate tariffs on cheese exports to Japan. It’s going to improve butter and skim milk quotas for exports to Japan. Our exports will be able to enter into some countries at a lower cost and be more competitive. We will get greater access in the form of quota expansion in some cases. Tariffs on all seafood exports to Canada, Vietnam, Mexico and Japan will disappear over time. The 15 per cent tariff on packaged wine exports to Japan will wind up by 2021.

So, of course, there are producers in this country that will get some benefit from the TPP-11, but what’s the overall aggregate economic benefit? It’s hard to know. It appears to be very slight: 0.5 per cent GDP over 10 years. That’s not a massive positive impact. Even when we look at those projected benefits, we should start by recognising that the projected benefits for agreements in the past have not generally been delivered. As part of the way we look at this and improve our process over time, if any government is so convinced of the benefits of any trade agreements that it strikes, it should be prepared to go back, as time progresses, and check its projections against the reality. The reality, in almost all cases, is much less beneficial than we were led to expect.

There hasn’t been any independent analysis of this agreement done at all. The national interest analysis is done within the department and the department negotiates the agreement. Do they think it’s worth entering? Surprise, surprise, they do. That’s one of the changes that Labor has committed to. The Joint Standing Committee on Treaties is a committee with a government majority and a government chair. I’ve been a member of that committee. Every time we look at trade agreements we have recommended to government that they commission independent economic analysis. The government keeps coming back saying, ‘We’re not going to do that.’ It’s hard to understand. The Productivity Commission report looked at trade agreements under the previous Labor government, and some equivalent organisation will do so under a Shorten Labor government, if elected.

Some independent analysis done for the World Bank suggested that the impact of the original TPP would cost 39,000 full-time jobs in this country. There wasn’t separate analysis done on the jobs impact of the TPP-11. We know, in terms of the pernicious aspects of the agreement, it gives away labour market testing for six countries. Why? They are lopsided concessions. They’re not being given for something. They’re not being traded. They’re being given away because they suit the agenda of the government. The government has a labour market deregulation agenda that it can’t get through this place, because it knows it doesn’t wash with this parliament and it doesn’t wash with the Australian public. It has been using trade agreements to advance its labour market deregulation agenda. The United States as a matter of principle does not include labour market arrangements of any kind in any trade agreement. They just do not do it. That is a province for their domestic congressional processes and for their migration and temporary-labour-market-access arrangements. That’s how they deal with them. This government has been looking around to give away labour market protections wherever it can by executive prerogative. That’s how it has used trade agreements.

ISDS is crazy. I’m glad that Labor for some considerable time has committed to getting rid of ISDS arrangements where they exist and ensuring that we never enter into them. Why should foreign companies have rights that Australian companies don’t have? Why should foreign companies be able to bring legal action against Australian government policy? The lack of understanding about ISDS is astounding. I think it was the member for North Sydney before who claimed that we’d won the case against Philip Morris that they brought under the obscure Hong Kong investment agreement. He claimed that we’d won that case and it showed that the ISDS mechanisms were fine. We didn’t win the case; it was put aside as a matter of standing or some sort of jurisdictional technical issue. The actual substance of the case under that ISDS clause was never tested.

We had a lawyer appear before the JSCOT who acts in this place and acted for Philip Morris. I put it to him that, if they had had the opportunity to have the case heard on its merits and the substance of it tested, they may well have won. He seemed to suggest that he thought that was probably true. When I asked him how sensible it was to have foreign multinationals going around the world essentially affecting the democratic processes and the sovereign rights of nation-states, he said: ‘You know, the world has evolved. Nation-states themselves aren’t that old. Once upon a time there weren’t nation-states. We’ve had nation-states for a while. Now we have global multinationals. Maybe that’s the next shift.’ He said: ‘You’re a parliamentarian. You’ve got an interest in retaining the decision-making power in these matters, but that’s because you’re a parliamentarian. Who is to say that global multinationals aren’t in a position to make policy for all of us on this planet better than parliaments?’ What an astounding, frightening view that is. But that’s what ISDS mechanisms potentially hold for us.

Remember that, while Philip Morris was bringing that case against Australia that cost us millions and millions of dollars to see through, New Zealand did not go ahead with its own plain-packaging arrangements, because it didn’t want to be exposed to the costs that would occur if the ISDS tribunal had found in Philip Morris’s favour. So for several years an incredibly valuable public health policy measure that New Zealand was looking to introduce following from the pioneering work here in Australia was held up because of that chilling effect that happens when multinationals roam the earth using these ridiculous tribunals to have their way over the legitimate processes and proper decision-making and legal frameworks that democracies put in place.

The last thing I’ll point out is that there are some ticking time bombs within the TPP-11. The US are not in the agreement, but they could come back. If they did, one of the things they would insist upon is monopoly right protections for biologic medicines. That’s the other thing you’ve got to remember about trade agreements: those of the laissez-faire, free marketeer persuasion should remember that a lot of the things that go into these agreements are not about making economic activity more free and less fettered; they’re about protecting vested interests. The United States want greater monopoly rights protections for biologic medicines because their big pharmaceutical companies want to be able to charge more money for as long as they can. If we committed, in effect, to extending those monopoly protections from five to eight years, that would have a cost to the PBS of hundreds of millions of dollars a year. That is something that could occur if the US come back into the TPP-11.

So let’s not ever in this place get into that kind of black-and-white, good-cop bad-cop, ‘we’re for trade; you’re not for trade’ kind of rubbish. These agreements are incredibly important. They should be looked at much more closely. We should be able to be much more forensic in how we look at them, but, if that’s to occur, the process has to change. We need independent modelling. We need stakeholder engagement. We need the government to listen to the JSCOT when it makes recommendations.

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