Chapter 2
Consideration of the bill
Trade agreements and current trade policy
2.1
The Department of Foreign Affairs and Trade (DFAT) declined to make a
submission to the inquiry. However, in response to a question on notice from a Supplementary
Estimates hearing in November 2013, DFAT advised that the government's current
trade policy is as outlined in the Coalition's Policy for Trade, dated
September 2013.[1]
The policy focuses on concluding long-running free trade negotiations and
enhancing Australia's commitment to regional and multilateral trade.[2]
The policy will be implemented through priority given to free trade
negotiations, restoring funding to the Export Market Development Grants,
enhancing Australia's commitment to APEC and the WTO, and re-establishing the
Trade Advisory Council.[3]
2.2
DFAT defines a Free Trade Agreement (FTA) as:
...an international treaty which removes barriers to trade and
facilitates stronger trade and commercial ties, and increased economic
integration between participating countries.[4]
2.3
Further, DFAT notes that Australia, as a member of the World Trade
Organization (WTO), has to meet certain requirements in the design of its FTAs.
These include:
-
eliminate tariffs and other restrictions on 'substantially all
the trade' in goods between its member countries, and
-
eliminate substantially all discrimination against service
suppliers from member countries (helping to increase trade in services).[5]
2.4
Australia has seven FTAs currently in force. These account for 28 per
cent of Australia's trade.[6]
Australia is currently negotiating nine FTAs, including five bilateral FTA
negotiations. These will account for a further 45 per cent of Australia's
trade.[7]
Negotiations on the Korea-Australia FTA were recently concluded, however the
FTA is not yet in force.[8]
Provisions of the bill
2.5
The object of the bill is 'to encourage Australia's trading partners to
ensure that workers in their country are protected by certain internationally
accepted minimum standards about workers' rights'.[9]
To this end, the bill mandates that any trade agreements entered into include
provisions binding each country to have in place 'minimum standards about
workers' rights' and 'minimum wage fixing recommendations'. Definitions for
these terms are given in clause 8 and clause 6(3) respectively and accord with
the International Labour Organisation's standards. With regards to minimum
standards about workers' rights, clause 8 also lists a number of international
conventions.
2.6
The bill imposes a test on each potential trade agreement based on
ministerial discretion. Clause 5 specifies that the Minister must be satisfied
that the trade agreement includes a binding requirement to include minimum
standards of workers' rights in the domestic law of countries party to the
agreement. Clause 5 also prohibits the signing of any agreement which fails
this test of ministerial discretion.
2.7
Clause 6, relating to minimum wage fixing, provides for a less stringent
condition on the signing of trade agreements: 'the Commonwealth must endeavour
to include a binding requirement' that the parties include minimum wage fixing
recommendation standards in their domestic law. Unlike clause 5, should the
Commonwealth fail to include a binding requirement on minimum wage fixing,
there is no prohibition on signing the agreement. Clause 6, paragraph (2),
stipulates that the Minister must table in Parliament a written explanation
regarding why the requirement was not met.
2.8
The bill's definition of 'Trade Agreement' encompasses international
agreements:
...it [Trade Agreement] is an international agreement that the Commonwealth
has, or will, enter into with the government of another country, or with the
governments of a group of countries, that will abolish or decrease tariffs (or
other import charges) that are levied or charged by Australia at the time goods
are imported into Australia.[10]
2.9
Given this definition, the bill would apply to FTAs, partnership
agreements and other bilateral or multilateral agreements which have an element
of trade. Clauses 5 and 6 of the bill extend the application of the bill to
include both new agreements and amendments to existing agreements.
Evidence to the inquiry
2.10
A majority of submissions received by the committee support the object
of the bill. The submissions in general note the benefits of mandating labour
standards in trade agreements as:
- creating a level-playing field in trade by ensuring that all
workers have access to the same basic wage rights and conditions;[11]
- protecting Australian manufacturing interests;[12]
- promoting human rights;[13]
and
- assisting development and improvement of living standards.[14]
2.11
The Business Council of Australia submission opposes the bill:
...given the lack of identified shortcomings in Australia’s
current approach to considering workers’ rights in trade agreements; the
efficacy and flexibility of Australia’s current policy; the potential for the
proposed provisions to be a disguised form of protectionism; and the lack of
evidence supporting the effectiveness of the proposed provisions in enhancing
minimum standards for workers’ rights in other countries.[15]
2.12
The submission supported a case-by-case approach to including labour
standards in trade agreements and argued that Australia's current policy
provides sufficient flexibility.[16]
2.13
The National Farmers’ Federation (NFF) submission made a argument. It
summarized the findings of the Productivity Commission’s 2010 Review of
Bilateral and Regional Trade Agreements to support its cautious approach to
the bill:
The NFF supports the Productivity Commission recommendation
that the government should adopt a cautious approach towards the inclusion of
core labour standards in trade agreements, and should not include matters in
bilateral and regional trade agreements that would serve to increase barriers
to trade, raise costs or affect social policies without a transparent review of
the implications and other options of change.[17]
2.14
Considering Australia’s current approach to negotiating FTAs, the NFF
concluded:
The NFF is of the view that current policy settings already
allow provision on labour standards to be included in free trade agreements
where there is a recognised need.[18]
Committee View
2.15
The committee appreciates the intention of the bill and commends Senator
Madigan for his efforts to generate public discussion regarding workers'
rights. The committee acknowledges the arguments put by all those who made
submissions to the inquiry and thanks submitters for making the time to provide
their views to the committee.
2.16
The committee draws to DFAT's attention the submissions received during
the inquiry. The committee can see a benefit in the government giving further
consideration to the issues raised in the submissions regarding inclusions in
free trade negotiations.
2.17
However, the committee is not convinced that legislation is the best
mechanism by which to ensure the inclusion of workers' rights and minimum wage
recommendations. The committee agrees with the view of the NFF that there is no
evidence of a policy failure with regard to Australia’s current approach to
negotiating FTAs:
NFF acknowledge that Australia has been a founding and active
member of the International Labour Organisation (ILO). We are of the view that
there is no evidence of a policy failure with regard to Australia’s current
approach to free trade agreements (FTAs) and workers’ rights. In the NFFs view
a more effective way of assisting developing countries to improve workers’
rights may be through higher, rather than lower, trade and investment.[19]
2.18
The committee also notes the submission from the Business Council of
Australia which argued for flexibility in the negotiation of FTAs. The
committee agrees with this argument and is concerned that the proposed legislation
may constrain FTA negotiations. However, the committee considers that inclusion
of labour rights in FTAs is an issue worthy of further investigation.
Recommendation
1
The committee recommends that the bill not be passed.
Senator Alan Eggleston
Chair
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