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Thursday, 12 November 2015
Page: 8534


Senator GALLACHER (South Australia) (18:33): I would like to take note of the Foreign Affairs, Defence and Trade References Committee's report Blind agreement: reforming Australia's treaty-making process. I want to put a couple of remarks on the record about the deliberations of this committee. This is a report into Australia's treaty-making process. It was finalised just as the China-Australia Free Trade Agreement—a major trade deal of some 10 years in the making, and which was negotiated in secret—was signed and tabled in the Australian parliament. It was referred to the Joint Standing Committee on Treaties for inquiry and report within 20 joint sitting days, consistent with the process that has been in place for two decades. The Trans-Pacific Partnership is also entering its final stages of negotiation, with parliamentarians recently told that they can access the draft text, but only after signing confidentiality agreements.

The committee's inquiry has been timely if for no other reason that it shows, in sharp relief, compelling evidence from industry bodies, the union movement, academic experts and other stakeholders in the treaty-making process that the treaty-making process is in need of reform. During the committee's hearing, the Department of Foreign Affairs and Trade—which is responsible for negotiating, consulting on and finalising free trade agreements—was the lone voice in supporting the status quo. This immediately raises the suspicion that not all is right with the current process.

The committee heard consistent evidence that the current process falls short on a number of counts. Also, it is pointless for JSCOT inquiries to begin after the treaties are signed. It is counterintuitive that complex trade agreements, which are years in the making and negotiated in secret, are subject to stakeholder and parliamentary scrutiny for a few short months with there being no realistic capacity for the text to be changed and then the implementing legislation goes through the parliament unamended. This comes very close to making a mockery of the process of the parliament's involvement.

In addressing these problems, the report steers a middle course between doing nothing, which is the entrenched position of the coalition government, and recommending that treaties be subject to parliamentary approval, which is unlikely to garner political support any time soon. The opposition favours incremental change building on the sensible package of reforms introduced by the government in 1996. This is why the report makes practical recommendations aimed at improving the level of transparency in negotiating treaties and the quality of consultations between DFAT and stakeholders, making parliament a real player in treaty making.

That is just a summation of the findings of the inquiry. I have been fortunate enough to have been educated in treaty making by involvement in the Japan-Australia Economic Partnership Agreement, the Korea-Australia Free Trade Agreement and the ChAFTA—the China-Australia Free Trade Agreement. At the outset, it is very clear: there is not a lot of difference between the Labor Party and the Liberal Party. In fact, all Westminster systems prescribe executive prerogative for making treaties. That has been the way for all Westminster parliaments. It is the job of the minister, it is the job of the government and it is the job of the department to make agreements.

But it is also very clear when you look in detail at the Japan-Australia Economic Partnership Agreement that it is fine for the Japanese to protect rice, beef and all manner of sectors of the economy, but we are opening the doors on our side of the fence to zero tariff. We are far and away the freest economy when it comes to making these agreements. If you look at the Korea-Australia Free Trade Agreement, we allow zero tariff on Hyundais coming into Australia. The awful, short-term reality of that—whether it is, in aggregate, good for the country or not I am not debating—is that you end up with nearly 2,000 workers in my home state losing their jobs, and you face the flow-on effect of 25,000 people in South Australia whose manufacturing jobs are disappearing.

The minister is probably quite right to say the Korean free trade agreement is, in aggregate, a great deal for Australia. We pick up in agriculture. But, when you look at it in detail, in Korea the real competition was with the United States on beef and with Chile on wine, and, in New Zealand's case, they are in front of us in a number of areas. So when we are talking about these deals, although we call them free trade agreements, we do not get into their countries for zero tariff. We get in on a competitive basis with our competitors in New Zealand, America and Chile. The impetus to sign these agreements was quite often that if we did not sign them on time we would fall behind in our competitive position against United States or Chile or New Zealand.

I am a free trader, but I do not believe that this government can keep trotting out the rhetoric that all free trade is good and that there is no price to pay. I understand competition is good, but competition means someone finishes first and others finish second, third, fourth and fifth. There are plenty of businesses in Australia that are going to benefit from this free trade environment, but there are plenty who are going to be decimated by the competition that they are not even aware of. It is going to push them out of the marketplace and into other sectors of the economy. The Australian Chamber of Commerce and Industry gave evidence which I will paraphrase. They represent 18,000 companies. About 20 per cent of those companies are involved in export. Around about 50 per cent of those people who are involved in export actually understand what they are doing and take advantage of the opportunities. But a whole 100 per cent of companies face the competitive effects of the free trade agreement. So there are plenty of businesses that are operating right now that do not know what is coming for them as the China free trade agreement takes effect in our economy.

I accept absolutely that there is plenty of opportunity for us to go and do some work over there, but I look at this another way. We can recognise the legal system in Japan and Korea. There was evidence to the effect that Korea has a mature legal system. Lawyers in Australia know how to deal with the legal system in Korea. It is the same in Japan and it is likewise between Japan and Australia. But I do not know anybody who is saying that Australian lawyers know what the legal system looks like in China. I do not know anybody who has put evidence about that. If someone does get into a situation where they need to access legal services in China—in what is basically the communist state of China—because they have got a problem with something in terms of export, I do not know anybody who is saying it is all going to be hunky-dory. I do not know anybody who is saying, 'Yes, it's not a problem. You just get Minter Ellison. They go over there and do the business, and you get a decision out of a Chinese court in a week or month or a year.' I think the complete opposite is true.

Despite the hyperbole about all of these great deals—and they will be great for Australia in aggregate over the long term—there will be pain in sections of the economy. Clearly, the manufacturers of motor vehicles are bereft of assistance from this government. The money that was set aside to transition them into a better place has not been forthcoming. There will be other areas in the economy that will do equally as badly as manufacturing.

You cannot go into these things without having a degree of scepticism and, dare I say it, cynicism. When I was in China earlier this year a person told me that if you want to get a knock-off Mercedes-Benz it is possible. You can actually buy a knock-off Mercedes-Benz car—not a handbag; not a pen; a car. We know that in their $15 billion spend-up on the biggest trading day of the year, Singles Day, 40 per cent of the items that they buy online are likely to be knock-offs—that is what the Chinese media are saying—and we are inviting them to flood this country with imports and compete against our businesses and we are all supposed to say, 'It's going to be great. We're all going to win.' Well, I do not think we are all going to win. We will win in the long term, in the aggregate, but there is going to be plenty of pain and there are going to be plenty of companies who suffer.

I suggested that we have an assessment of how valuable these trade agreements are prospectively and retrospectively. Then I thought, 'What will that do? That will actually crystallise the losers who will know who to blame—the people who signed the treaty. No politician is going to agree to that.' We are not going to have a list of companies we put out of business through these free trade arrangements, because, in aggregate, the truth is Australia will be better off. But we can make improvements in our transparency and in our due diligence and we can be more honest in our presentation of these agreements to the Australian people. I seek leave to continue my remarks later.

Leave granted; debate adjourned.