When we enter into these agreements, in the interests of the Australian people, we should be looking to achieve trade and investment arrangements that are more fair, responsible and sustainable as well as more free, to overcome barriers that affect Australian producers both when it comes to tariffs and when it comes to non-tariff barriers.
Mr Wilson (5:57pm) – I’m glad to make some remarks about the Customs Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Bill 2021 and the Customs Tariff Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Bill 2021, which implement commitments that Australia has made under the Regional Comprehensive Economic Partnership. I’d like to say some things about what the RCEP is and what it isn’t. We are a trading nation and our trade relations are incredibly important to our own social, economic and environmental wellbeing and also to the way that we engage with the wider world. This is a key agreement in relation to our engagement with the Indo-Pacific as a trading nation.
I sometimes feel that in the parliament and perhaps also in the wider public domain our conversation around trade can be simplistic and can fail to engage with some of the details and nuances of trade and particularly with trade-agreement-making. I reflect on the contribution that the member for Brand, the shadow minister for trade, made earlier; it was an excellent overview not just of this agreement but of trade-agreement-making and some of the things that are caught up in that process and that are important for Australians to consider.
This agreement is a plurilateral trade agreement. It’s the world’s largest in terms of economic coverage. As the previous speaker, the member for Sturt, said, it picks up the 10 ASEAN nations. It is effectively an ASEAN led plurilateral agreement, which is significant in itself. In addition to picking up Australia, it covers China, Japan, the Republic of Korea and New Zealand. It is a shame that India isn’t part of it, and from Australia’s point of view the inclusion of India would have been meaningful in expanding access to markets, as I will talk about a little bit later on. The reality of this agreement is that it doesn’t give us access to markets to any greater degree than we already have, because we have existing agreements, in some cases several agreements, with all of the countries that are covered by RCEP.
It follows not too far from the heels of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—another plurilateral. Why are we seeing these plurilateral agreements? They follow on from a period in which Australia and other nations went pretty hard in trying to settle bilateral trade agreements and, to some degree, saw the limitations of having a somewhat messy and complex set of separate bilateral arrangements. Why did we have a period of going down a bilateral path? That was because the multilateral system, the system that was put in place under the General Agreement on Tariffs and Trade and through its successor the World Trade Organization, has really run out of steam. The best indication of that is that the Doha Round commenced in 2001 and hasn’t completed yet, 20 years later. Unfortunately the WTO, as the multilateral architecture for international trade, has lost its sting. There’s been a significant deterioration in co-operative spirit and participation and the practical effect of what should be an effective multilateral trading system, and so we get to these plurilaterals. We’ve had the CPTPP, and now we have the RCEP. Australia should pursue those. Labor has always thought that a multilateral system is the best system because it has the widest coverage. But, if you can’t get that, there’s certainly some benefit in plurilateral arrangements like the RCEP. They’re better than having a welter of bilateral trade and investment agreements.
When we enter into these agreements, in the interests of the Australian people, we should be looking to achieve trade and investment arrangements that are more fair, responsible and sustainable as well as more free, to overcome barriers that affect Australian producers both when it comes to tariffs and when it comes to non-tariff barriers. We should be seeking agreements that harmonise arrangements and avoid what’s called the noodle-bowl problem, which is what I was hinting at when I described the welter of bilateral agreements. It’s very difficult for business, particularly for small and medium enterprises, when they are trying to expand into a range of markets and each of those markets is covered by a separate bilateral. The things they need to conform to in order to have the benefit of those trade agreements change all the time. It becomes difficult to manage and difficult to comply with. That’s what is meant when trade analysts or experts refer to the noodle-bowl problem, and sometimes through plurilateral arrangements you can help clean that up. We should also be trying to get into agreements that draw nations together in a genuine commitment to ensuring that economic activity doesn’t compromise our environment and doesn’t compromise workers’ rights and human rights, and I’ll come back to that in terms of the RCEP. Certainly in that regard there’s a big difference between the CPTPP and the RCEP.
The RCEP has value as a framework, as a mechanism, for drawing the participant countries into closer collaboration, particularly when it comes to integrating the Indo-Pacific economically, but the pure economic benefits are not that great. The reality is that, even when fully matured, the RCEP would only provide tariff-free access that is equivalent to 94 per cent of what we currently have. If we were to get rid of all the agreements that exist with the other 14 nations—if we were to just click our fingers and make them all disappear—and rely on the RCEP, we would straightaway be going down to 86 per cent of existing tariff-free coverage. Even fully matured, we’d only have 94 per cent of the existing tariff-free coverage. That’s just where the negotiations ended up.
The economic value to Australia is apparently going to be in what’s called value-chain improvements. Some of the tariff arrangements between other countries—not between ourselves and the other 14 nations but between those nations themselves—provide the potential for economic benefits to Australian producers that are contributing into what is a multinational production chain. Those value chain improvements aren’t hard to understand in concept, but they are hard to quantify, and there was nothing that could be provided to the Joint Standing Committee on Treaties to really get down to the nitty-gritty of what those value chain improvements might be. As it currently stands, through our treaty-making process we don’t have any independent economic analysis. We should, but we don’t, so it’s very difficult to see what the precise benefit of agreements like the RCEP would be.
The RCEP could fix, but doesn’t fix, the noodle bowl problem. That’s related to what I’ve just said—we can’t get rid of the existing bilaterals because it would put our producers in a worse position than they’re currently in, so we need to keep most of those bilaterals and some other ASEAN-plus arrangements for their tariff benefit. Unfortunately, the potential for using the RCEP to alleviate some of those noodle bowl problems can’t exist. The Australian Chamber of Commerce and Industry made an argument to the JSCOT that the RCEP would be beneficial only if Australia wouldn’t ‘start to clean out the agreements from underneath it’. As I said, that would have impacts in reducing the amount of tariff-free access that Australian companies currently have under those pre-existing agreements. To give an example, Australia has five separate trade and/or investment agreements afoot with Malaysia. Imagine you’re a company seeking to expand and to trade into Malaysia for the first time. Which of the five would you be using?
Unfortunately, RCEP doesn’t include any commitments when it comes to a nation’s approach to environmental protection, workplace rights or human rights. The CPTPP did, but RCEP didn’t. Even though, when negotiations commenced in 2012, Australia put that on the table and pushed for that, the other nations—those in ASEAN in particular—were not interested in including that. That’s a shame. There are mechanisms by which the RCEP can evolve, and Australia should continue to use our diplomatic and trade leverage to push for those things to be included in time to come because they are important.
There’s no ISDS in the RCEP, and that’s welcome. That’s probably not because Australia is resistant to it—the present government is quite happy with ISDS—but it was the case that other participant nations didn’t want that. We’ve discussed in this place at length the fact that an international tribunal system does potentially give companies the right to sue the Australian government in relation to our own public policy, and I don’t understand why we would ever give away our sovereignty in that respect. It puts us at risk, and we saw that with Philip Morris and the plain packaging case. There is a question mark over some areas of the Australian economy—care service industries and aged care in particular—in relation to reforms that we might seek to make in future. That was explored a lot by the JSCOT and we were given reassurances that nothing in the RCEP would compromise Australia’s ability to make those kinds of rules. However, Australia lodged particular reservations in relation to child care. We lodged a specific reservation saying Australia will always maintain the ability to regulate with respect to child care, notwithstanding anything in the RCEP, but there was no similar reservation for aged care. Understandably, that raises the question: why child care and not aged care?
There’s nothing in the RCEP in terms of dispute resolution or remediation that is really any different to what’s in the WTO, and I think that’s something we should all reflect on. The member for Brand talked about the way the government will say: ‘Here’s this new you-beaut trade agreement—tick! Put it on the shelf.’ Let’s just remember all of our recent experience of geoeconomic coercion involving China. The government told us how good the free trade agreement was with China. This is a plurilateral agreement that includes China. How much has that bilateral agreement helped us with some of the actions that have been taken in relation to Australian producers and trade over the last couple of years? Does anyone think that the RCEP is going to change that? If they do, they’re not too bright. We heard through the JSCOT inquiry a list of the same kinds of concerns and shortcomings that really apply to our existing trade agreement-making process, and the member for Brand, the shadow minister for trade, talked about that list. I encourage members of the community and members in this place, if they’re interested, to look at report 193. It’s an unusual report in the work of the JSCOT because it’s not a report on an international agreement, which makes up most of the diet of JSCOT. It’s a standalone report on the trade agreement-making process itself. I’ve been fortunate to be a member of the JSCOT since I was elected in 2016 and I think it was a really worthwhile exercise. The report was delivered on a genuinely bipartisan basis and it makes some key recommendations about how we can improve the process of making trade agreements.
The JSCOT itself was introduced in recognition of what was called at the time a democratic deficit when it comes to the way the Australian government enters into international agreements because, but for the JSCOT, there is literally no involvement of the parliament in those agreements, other than when we get what we’re dealing with here, enabling legislation. But it puts the parliament in a very difficult position when we’re dealing with enabling legislation that has been committed to by the executive in a trade agreement that’s already been signed. That’s why the JSCOT should, in my view, be enabled to have more to do with the making of these agreements than it currently does. The JSCOT only sees these agreements once they’ve been signed. The recommendations in report 193 include: improved transparency; that the government publish negotiation aims and objectives in advance and both the community and the parliament get to see those documents; that the JSCOT be briefed biannually not just on agreements close to being settled but on those that are in process; that the government also looks to deliver greater stakeholder engagement through non-disclosure agreements so that there’s midstream engagement; and of course that there’s independent economic modelling.
I finish my remarks by again especially thanking the civil society participants in the treaty-making process, in this case and generally. I also thank the labour movement organisations like AFTINET and others. They make a huge difference despite not having any specific funding. They do it in the best interests of Australia as a whole. They raise really important issues, and without what they do we would end up with much lower-quality agreements than we get.