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Thursday, 18 November 2004
Page: 12


Senator RIDGEWAY (10:12 AM) —I rise on behalf of the Australian Democrats to talk on the Customs Amendment (Thailand-Australia Free Trade Agreement Implementation) Bill 2004 and the Customs Tariff Amendment (Thailand-Australia Free Trade Agreement Implementation) Bill 2004. Whilst the Australian Democrats are not opposed to free trade agreements, we want to put on the record our regard for the need to ensure that trade agreements are fair and that there is an opportunity for Australia to observe both process and substance in terms of what is contained within these agreements and how they are arrived at. In this case, whilst I want to criticise some of the issues that are in the trade agreement, it is also relevant to highlight some issues that are not there. The government certainly missed an enormous opportunity to deal with issues that are of concern to Australians—certainly in places like Thailand—and to send a very clear message to other parts of Asia.

Only a few short months ago I stood in this chamber and fought hard to have the government face up to its responsibilities in the parliament about being accountable to answer what were legitimate concerns of the people of Australia about a free trade agreement with the United States. We all know that that came to nothing and, thanks to the compliance of the Australian Labor Party, the government got away with it. A couple of months on, we are back in the same place. The government continues to try to assure us that it will not abuse its position of power when it gains control of the Senate in July next year. However, we already know that it will not think twice about avoiding scrutiny and accountability wherever possible. This legislation is yet another example of that. Here we are, in the first week of a parliamentary sitting, rushing through consideration of a bill so that the government can implement this free trade agreement by 1 January next year.

A while back the government introduced a system whereby the Joint Standing Committee on Treaties would consider any treaty action that was entered into by the executive and make recommendations to the parliament about whether or not any treaty should be implemented. That is a sound idea and one that the Australian Democrats have supported, because we believe that accountability and scrutiny are always welcome in this place.

Short of requiring parliamentary approval for treaties, which is the long, hard fought for position of the Democrats, we believe that there should be careful parliamentary consideration of any binding treaty instruments before they are ratified. However, the problem is that the government's promises fall far short of reality. They have themselves established a process that they have little regard and certainly no respect for. It is not the first time that we are considering the legislative implementation of a treaty before the JSCOT report has been tabled, and I fear it will not be the last time that this practice occurs.

I remember that exactly the same thing happened when the Singapore-Australia Free Trade Agreement was voted on in this place last year. It was dealt with some time around 3 a.m. So, in essence, there was no debate and speeches were read into Hansard. When this government will not even give a passing nod to proper process and accountability you have to ask the question: `How can we trust them to use their power responsibly when they do take control of both houses of parliament next year?'

I now turn to some of the specifics of this agreement, because the Howard government has made clear certain policy choices when it comes to trade. Certainly Advancingthenationalinterest: Australia's foreign and tradepolicywhitepaper, which was released in March last year, makes only a token reference to the importance of multilateral agreements and clearly signals the government's preference for bilateral initiatives. This is a fundamental problem, given Australia's limited ability to devote resources to both labour intensive functions.

It is no secret that the Australian Democrats support a multilateral approach to trade negotiations. Multilateral trade agreements such as those negotiated through the World Trade Organisation can deal with a wider range of issues than bilateral FTAs. I think that is what needs to be criticised in this respect. We advocate the need for an international system of rules for international trade. The WTO needs reform to become more accountable, open and transparent, with clearly established rules and processes and certainly a publicly accountable dispute resolution process.

The focus on bilateral FTAs, which this government seems hell-bent on, will also contribute to the potentially devastating trade diversion effect. That has been confirmed and documented by the Productivity Commission, yet it has been ignored. Given that the South-East Asia region is of critical importance in terms of Australia's trade overall, it is a dangerous path to take and I think one that the government needs to be mindful of. Further, there are several specific features of this FTA that mirror similar commitments made in the free trade agreement with Singapore and the free trade agreement with the US that the Senate considered only recently. The Democrats' opposition to the bills before us now is consistent with our approach to both of those previous agreements.

We cannot support the FTA unless some fundamental aspects are addressed by the government, and I will outline some of them. The first one is about a triple bottom line approach. It seems to me that the government once again commissioned the Centre for International Economics to model the impact of this agreement on the Australian economy and, not surprisingly, the CIE have reported in favour of the agreement. They have estimated that TAFTA will result in $US2.4 billion additional GDP to Australia over its first 20 years of operation. According to the CIE, the agreement will increase real consumption in Australia by $US1.6 billion over the same period. But you have to ask these questions about that assessment: `Where is the analysis of the impact of this agreement on the environment; where is the consideration of the price that may be paid in terms of the social goals—our social objectives—of the nation; and, if the provision of public services is eroded through this agreement, what impact will that have on Australian communities?'

In their submission to the JSCOT investigation of this FTA, the Australian Manufacturing Workers Union made the very valid point that the CIE report used a vastly oversimplified model that does not take into account the likely impact of the agreement on individual sectors in our economy. A further matter for concern is that the CIE report contains no analysis of the likely effect of the agreement by state or by region. As the Australian Fair Trade and Investment Network has pointed out, the manufacturing, TCF and agriculture sectors are of most significance in this agreement and are particularly important sectors in regional areas. The impact of trade agreements on regional areas should be examined publicly before negotiations are finalised to allow informed decisions to be made and to enable regional communities to have the opportunity to give input to the process.

This has been a consistent omission in DFAT's analysis of trade agreements and it continues with the Thai free trade agreement. Wide-ranging FTAs such as this one will have an impact on every aspect of Australia's future, not just on mere economics. It is time for the government to endorse a triple bottom line approach when analysing the benefits and costs of its actions. I think Australians deserve to know what those impacts are going to be.

The Thai-Australia free trade agreement uses a positive list approach for services, which is a vast improvement on the negative list approach that was taken in the Singapore and US free trade agreements. We understand that the agreement has a positive list only because the Thai government refused a negative list structure, presumably because the Thai government wished to retain some ability to continue to regulate services and did not want to go beyond the WTO-GATS framework, which has a positive list structure approach. It is interesting to note that in this respect the Thai government did have the strength to stand up to the Australian negotiators. I do not believe the same can be said for our negotiating team when it came to pursuing our objectives at the negotiating table for a free trade agreement with the United States.

The text of the free trade agreement includes an exemption for services supplied in the exercise of governmental authority. The agreement uses the same definition as the WTO General Agreement on Trade in Services—that is, any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers. It is the same definition that is used in the WTO General Agreement on Trade in Services. As we have said in the past with respect to other free trade agreements, it is ambiguous given that so many essential public services either have been privatised or are in the process of becoming so and many are supplied in a nationally competitive environment.

The government has repeatedly assured us that public services will not be under threat from free trade agreements of any sort that it has entered into. If that is the case, why not include a specific exemption to that effect? Why leave us with a dangerously ambiguous definition which has yet to be tested at the WTO level and which may be subject to a far narrower interpretation than the government might be anticipating? If public services are not meant to be included then the text itself should be very clear and specific about that, yet we do not see that there.

Another matter of concern is the investor-state dispute resolution process. The FTA does set a very dangerous precedent in one particular respect: our government have agreed to allow for investor-state dispute resolution mechanisms in this agreement, just as they did in the case of the Singapore free trade agreement. What does this all mean? It is an alarming restriction on the ability of future democratically elected governments to regulate as they see fit. An investor-state dispute settlement mechanism essentially enables a corporation to take legal action if they can argue that any of our laws or regulations are inconsistent with the free trade agreement. They will have the power to sue the Australian government for damages, either in national courts or in one of the two international arbitration panels, UNCITRAL and ICSID, which do not provide the levels of openness of regular courts.

This is a serious limitation on national sovereignty. It gives multinational corporations an unacceptable right to interfere with the Australian democratic process. I think Australians deserve to know, and I think the government needs to be mindful of how it proposes to deal with these situations when they arise in the future. As we know from the North American Free Trade Agreement experience, US corporations have used the same mechanisms to sue the Mexican and Canadian governments for hundreds of millions of dollars. The examples that were quoted in previous debates, such as the US Metalclad Corporation and the Ethyl Corporation cases, are frightening examples of what can happen with investor-to-state dispute resolution mechanisms such as those that are likely to be put in place under this agreement.

Possibly the worst aspect of this is that our negotiators did not agree to a dispute settlement mechanism of this kind when negotiating with the United States. However, we are now seeking to impose this condition upon our Thai neighbours. DFAT itself says on its web site that this FTA:

... will link Australia to the second largest and fastest growing economy in South East Asia. It will be Thailand's first comprehensive free trade agreement with a developed economy and Australia's fourth free trade agreement. It is also the first FTA between a developed and developing country in South East Asia and sets a benchmark for future trade liberalisation in the region.

If this is the benchmark, the future looks bleak. I want to take a moment to consider the precedent that is being set with this free trade agreement.

The government likes to say that Australia has a definite commitment to specific development goals in our region. The purpose behind AusAID is to advance Australia's interests by assisting developing countries to reduce poverty and achieve sustainable development. It seems to me that negotiating a trade agreement with a country such as Thailand does provide an enormous opportunity to incorporate our development goals with our trade policies and to ensure that the two objectives complement each other. AFTINET has made the point that:

Other countries have incorporated their development goals into their trade policies. For example Canada and New Zealand have adopted particular measures within their GATS strategies to take account of the impact of trade negotiations on least developed countries. Such an approach offers a more internally consistent approach to foreign policy, and ensures that development issues are not confined to questions of aid provision.

When it comes to dealing with issues like human rights abuses, the exploitation of children, child sex tourism and all of the things that we are familiar with, there was certainly an opportunity to reach out and deal with these in some form under the free trade agreement—at least to the extent of bringing our social policies and trade policies together.

Another opportunity that has been missed in this free trade agreement is to ensure, as I have said, that human rights in Thailand are promoted and respected. The Uniting Church stated in their submission to the Joint Standing Committee on Treaties in consideration of this FTA:

Thailand has not signed ILO Convention 87, ILO Convention 98 nor ratified the International Covenant on Economic, Social and Cultural Rights. Australia is the first developed nation to negotiate a FTA with Thailand. The Australian Government therefore had the opportunity to model an equitable agreement that does not promote the exchange of goods that have been manufactured in situations involving human rights abuses.

There is considerable evidence to suggest that garment workers, for example, in Thailand work in terrible conditions for very little pay. Tariff concessions in this free trade agreement will give manufacturers a price advantage in the Australian marketplace and will provide no incentive to redress the situation that occurs in Thailand. The Justice and International Mission Unit of the Uniting Church go on to say in their submission that the treaty action should:

... not be taken until human rights and labour rights standards are specifically recognised in the Free Trade Agreement and measures incorporated into the agreement that would ensure that these standards are upheld.

And, at the very least:

These measures should include:

Reciprocal agreements of monitoring for human rights standards in manufacturing be introduced.

Human rights violations should be documented and perpetrators of such violations should be publicised within Thailand and Australia.

Penalties be applied where incidences of human rights violations in the manufacture of goods is recognised. This may be included in planned amendments to the Customs Tariff Act 1995 and the Customs Act 1901 to incorporate penalty tariff rates that will apply to goods imported from Thailand under the FTA where there is evidence of human rights violations in the manufacture of goods.

Penalties should be applied to Australian companies who knowingly import goods from Thailand, or produce goods in Thailand that have been manufactured with human rights abuses.

When we consider the absence of these issues being raised in the free trade agreement, we ought to be concerned about a great opportunity overlooked and missed by the government. It is not enough to say that we should just look at it from a single, bottom-line approach—that is, economic gains. We have to look at both social and environmental outcomes. That analysis has not been done. On balance, the Australian Democrats believe that, while the agreement is set with the right intentions, the government has not gone far enough. The agreement does not go to the question of dealing with our national interest, nor does it deal with the question of what is in the best interest of regions right across the country—there simply has not been an analysis done. We do not know, for example, what the effect is going to be on many of our own manufacturing industries, particularly the textile, clothing and footwear industry. That analysis is really scant and, quite frankly, little assurance is given to Australian industries that they can be internationally competitive and compete with their counterparts in Thailand.

I note that there are two second reading amendments; one is being put forward by the opposition. On behalf of the Australian Democrats, I indicate that we will be supporting both amendments. The two bills before us, dealing with a free trade agreement with Thailand, fail on a number of fronts. For those reasons, the Australian Democrats will not be supporting them.