Chapter 5
Conclusion and recommendations
Treaty-making process reform
5.1
The committee recently completed an inquiry into the treaty-making
process which made four key findings:
- All treaties are presented to Parliament
and subject to scrutiny after agreements have been signed, leaving the Parliament
'with an all-or-nothing choice' when considering treaty implementation
legislation.
- The Joint Standing Committee
on Treaties does not commence inquiries until after agreements are signed, and
this 'does not provide an adequate level of oversight and scrutiny'.
- The Department of Foreign
Affairs and Trade's consultation is falling short of expectations and adding to
stakeholders' frustrations.
- There is 'an insufficient
amount of publicly available information about agreements under negotiation and
independently sourced economic analyses of their likely benefits are not
mandatory'.[1]
5.2
The committee made a number of recommendations including: that independent
analyses be undertaken prior to the commencement of negotiations (as well as an
evaluation of likely costs and benefits after negotiations have concluded);
granting confidential access to draft treaty texts; and the creation of a 'model
trade agreement' that could cover 'controversial topics'.
5.3
The committee's inquiry into ChAFTA illustrates that these findings and
recommendations have continuing relevance. It is worth considering whether the
issues with the labour mobility components of ChAFTA would have surfaced if
improvements to the treaty-making processes had been made. In the view of the
committee, it is possible these issues could have been appropriately resolved before
the final treaty text was agreed. In this context, the committee reiterates its
recommended reforms to the treaty-making process.
Labour market testing, skills assessments, protections for wages and
conditions, and foreign workers
5.4
Where there are genuine labour shortages, temporary overseas workers and
skilled migration can play an important role in economic growth. However, Australians
should always have priority in the labour market, and overseas workers should
only be recruited when suitably qualified Australian workers are not available.
The text of ChAFTA, the Memorandum of Understanding on Investment Facilitation
Agreement and the side letter on skills assessment processes raised legitimate
concerns that this important principle would be undermined.
5.5
The committee considers that many of these concerns have been mitigated
through the agreement reached between the Government and the Australian Labor
Party. This agreement will facilitate protections through amendments to the Migration
Regulations and through changes to immigration policy.
5.6
The committee acknowledges the work done by the Shadow Minister for
Trade and Investment, Senator the Hon Penny Wong, Minister Robb and
Minister Dutton, to deliver these important safeguards for Australian
jobs, wages and conditions. However, the committee's view is that the scope of
these agreed safeguards was limited due to explicit commitments made by the
Australian Government in ChAFTA. This is an area worthy of continued scrutiny
and, if necessary, further reform.
Investor-state dispute settlement mechanism
5.7
There has been strong and consistent community opposition to the
inclusion of ISDS provisions in Australia's trade agreements. This has mirrored
the rapid and worrying increase in the number of ISDS claims made against
national governments. This committee has previously recommended the Australian
Government not include ISDS mechanisms in future trade agreements noting 'fundamental
procedural flaws' and 'potential impacts on Australia's justice system'.[2]
5.8
It is worth noting that the Productivity Commission has also recommended
that the Australian Government should seek to avoid the inclusion of
investor-state dispute settlement provisions in [bilateral and regional trade
agreements] that grant investors in Australia substantive or procedural rights
greater than those enjoyed by Australian investors'.[3]
In relation to Australia's ISDS liabilities, it has recently observed that the
'ongoing costs to Australian taxpayers of funding the preparation and defence
of the tobacco plain packaging legislation are likely to be substantial'. The
Productivity Commission considered that this 'highlights the need for advance
liability provisioning and transparency about the true cost of including ISDS
provisions in Australia's trade agreements and investment treaties'.[4]
5.9
In this context, the unfinished nature of the ISDS provisions within
ChAFTA is concerning. The committee acknowledges that the ISDS provisions
appear to include more safeguards for the Australian Government than those
included in previous trade and investment agreements. Nonetheless, the extent
of Australia's trade relationship with China means the impact of a flawed ISDS
mechanism could be significant.
5.10
The committee notes that the ISDS mechanism will be reviewed to
potentially broaden its scope. The committee urges the Australian Government to
utilise this opportunity to further restrict the potential impact of the ISDS
mechanism in ChAFTA on Australia.
Recommendation 1
5.11
The committee recommends the Australian Government utilise the review of
the investor-state dispute settlement provisions to further enhance the
safeguards for Australia.
Conclusion
5.12
The committee continues to have misgivings regarding ChAFTA, including
in relation to the sectors which will be affected by inequitable tariff changes,
the requirements to conduct labour market testing and the eventual scope of the
ISDS mechanism. However, it is clear from the submissions received that
Australian businesses will benefit from tariff reductions and improved access
to the Chinese market. This in turn will provide modest increases in job
opportunities for Australians. For example, Blackmores has outlined that it had
employed an additional 100 staff across its Australian operation largely as a
result of growth in sales of its products to Chinese consumers.[5]
5.13
Further, in order to take advantage of the tariff reductions, the
committee agrees it is preferable for ChAFTA to be ratified this year. Any
renegotiation of ChAFTA is not compatible with achieving this objective. Taking
these factors into account, the committee has concluded that the ratification
of ChAFTA is in the national interest. The committee's view is that binding
treaty action should be undertaken as soon as possible to take advantage of the
schedule of tariff reductions.
Recommendation 2
5.14
The committee recommends that binding treaty action be taken in relation
to the Free Trade Agreement between the Government of Australia and the
Government of the People's Republic of China.
Senator Alex Gallacher
Chair
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