Published: 18 November 2015

Tuesday 10 November 2015. 11.54 a.m.

Ms FORREST (Murchison) - Mr President, if there was ever an issue that we should be able to discuss in a true nonpartisan way, then free trade should be it.


Yesterday, Senator Bill Heffernan, Liberal Senator from New South Wales and a very independent‑minded and strong supporter of primary industries, being a farmer himself, took issue with his Liberal and National Party colleagues on the China-Australia Free Trade Agreement, or ChAFTA.  The Senate was debating the Customs amendment for the ChAFTA implementation bill.  Senator Heffernan put on record some of his concerns on broader issues surrounding the power of corporations in modern-day free trade agreements.  He said he was not going to let his colleague, ACT Liberal Senator Zed Seselja, 'get away with bullshit' on the ChAFTA.  The Guardian further quoted Senator Heffernan as saying: 

The US corporates, they lobbied the US politicians.  Now if it cost $1.4 billion for Hillary Clinton's campaign for the presidency and they are corporate donations, you can imagine the corporates have got the ear of the particular politician.  I am not saying there is anything going wrong there. 

He goes on to say: 

So while free trade agreements are a great idea, they have got to have some safeguards around them ... I will go back to my first question.  How can you really have a free trade agreement … you cannot have the potential to have something shoved up you if the country you have the free trade agreement with won't put their currency on the market?  Otherwise they can just play with us. 

He is obviously quite passionate about this issue.  Senator Heffernan had raised similar concerns a year ago.  When speaking to the ABC, he raised concerns regarding the negotiation of a China free trade agreement, given that China does not have a floating currency.  He asked then whether you really have a trade agreement with a country that will not put their currency on the market, suggesting that we should learn from our free trade agreement with the United States, stating that when we signed the agreement we were at 65 cents.  When we enacted it the following February we were at 67 cents to the US dollar.  He stated: 

We did away with 5 per cent and 15 per cent tariffs and within a few years we found ourselves at a huge trade disadvantage, because we had a 45 per cent currency tariff against us because we went parity with the US and above parity at one stage. 

Free trade is a complicated subject.  I have hardly had time to read as much as I should in preparation for this debate.  My views on free trade in many ways are similar to those of Senator Heffernan.  The detail is much greater than the headlines and various aspects of the legislation and the supporting documents, with much of the detail not being readily available.  There really is no such thing as free trade.  There are varying degrees of managed trade. 


Free trade agreements tend to be pushed by corporate interests that have put their interests ahead of the queue, generally before the interests of the country.  Governments always argue free trade agreements are negotiated with the interests of the country always being paramount, but few accept this proposition.  The fact that recent governments have been loath to refer free trade agreements to the Productivity Commission for scrutiny, suggests that they are not prepared to accept the views of the independent advisory body that may conflict with their own predetermined positions. 


To put this in context, the Productivity Commission, having evolved from the Tariff Board, has unsurpassed experience and knowledge in trade matters.  It was they, for instance, who helped advise Gough Whitlam in 1973 when the biggest step in the history of free trade in this country during the last 50 years was taken.  The Productivity Commission does not call them free trade agreements, but rather Preferential Trade Agreements, or PTAs.  The Productivity Commission has always argued there is little evidence that PTAs produce benefits superior to unilateral deregulation and is critical of the government's failure to carry out a worthwhile assessment. 


Senator Heffernan raised concerns late last year regarding the apparent secrecy around the development and negotiation around the free trade agreements and the need to engage more broadly in their development.  His concern was also reported in the media, and I quote from The Guardian: 


Liberal Senator Bill Heffernan has called for transparency in negotiations over international trade deals, including the Trans-Pacific Partnership - TPP - and the China Free Trade Agreement - FTA - saying Australians deserve to know the details.   'I mean, it is all shrouded in secrecy.  I mean, I would like to know what the details are,' Heffernan said, 'I have asked the various players and I have been told, Bill, it is all in, you know, we cannot tell you because it is all sort of commercial-in-confidence.  You know, I just think we deserve to know the details of these things.'      




The jury of public opinion still seems to be out on the overall benefit and value of previous free trade agreements, even though they may well be a step in the right direction in terms of reducing regulation and possibly giving some confidence to various industry sectors.  They are also possibly overstating in the benefit.  However, it is quite likely an agreement is better than no agreement.  We should always recognise there are always winners and losers in these situations. 


The Productivity Commission has recently released its annual Trade and Assistance Review for 2013-14 and was highly critical of preferential trade agreements and the Minister for Trade, Andrew Robb.  The report noted that the proliferation of preferential trade agreements at the bilateral and regional level, suggesting that this is adding to the complexity and business transaction costs of the international trading system. 


The report also noted the practical impacts of agreements being entered into by Australia remain unclear and highlight the need for a thorough evaluation of the negotiated agreement, and the text of that, prior to signing.  It was suggested the devil resides in the detail of these agreements.  A full and transparent analysis is not afforded to the final texts for many of them.  


In its report, the Productivity Commission found preferential trade agreements - PTAs - add to the red tape burden and compliance costs on Australian and foreign businesses because of the complicated country of origin rules applying to products that can benefit from the agreements.  Similarly, there are complex and widely varying rules for determining whether a company is sufficiently a company of one of the signatory countries to take advantage when it comes to services.  The benefits to Australian companies do not often materialise, because non-tariff and other kinds of barriers remain in place, especially with regard to services.  The secrecy around the negotiation and assessment of the PTAs is damaging.  PTAs have resulted in more stringent intellectual property rights protection.  


There are a number of challenges raised by the Productivity Commission that we do need to be aware of. 


Free trade is like motherhood.  If you speak against it, one risks being indicted for heresy.  The textbook world of free trade that existed 200 years ago, when economist David Ricardo first formulated his law of comparative advantage, is no longer.  He showed how Portugal produced both wine and wool cheaper than England.  It was even better producing wine than wool.  It had a comparative advantage in wine, so it was to the advantage of both countries that Portugal produced all the wine and England all the wool.  They traded with each other. 


It was assumed that capital, being mainly land and natural endowments, did not cross borders.  Today, capital is largely intellectual capital and know-how, and can flit across borders at a moment's notice.  The textbooks always assume resources freed by closing down one industry would soon be employed by another, but no longer.  'What does it matter if old industries close down?' we are told.  'New industries replace them, industries in the knowledge economy.'  But what is going to stop them going as well?  India has more software engineers with PhDs than there are people in Tasmania. 


Take the United States firm, Apple.  It might be headquartered in the US, but offshoring saw most of its production relocated years ago.  'Not to worry, all the high value jobs are still in Silicon Valley', so the American public was reassured, but what is to stop them from moving to India in the next 10 years?  That would be the end, as far as Apple contributing to the US economy.  When profits are made, taxes - if any - are being paid in yet another jurisdiction. 


As Senator Heffernan observed, we have become beholden to the interests of large corporates.  Half of the US imports are goods that have been offshored.  Is this one of the benefits of free trade, or should the hollowing out of the US industry be seen as one of the casualties?  Is that how we should see it? 


Free trade may be great, but if capital and now labour can cross borders at the drop of a hat, what is left?  What is left is stuff that cannot cross borders, and that is our land.  To the extent that free trade agreements can help us use our comparative advantage with our land, and maybe water, we should exploit the opportunities, but we do need to be wary.  


The world now has a problem of oversupply.  There are too many under-utilised resources in the world, particularly labour.  Free trade may help countries and industries in small pockets, but as the universal solution to the world's problems, that textbook unreality ceased years ago. 


There may be some, possibly many, benefits from ChAFTA.  My mind is still open.  The benefits may take many years to materialise, and may not be as significant as suggested.  The Government has not made its case conclusively.  We need to be aware of governments of any colour seeking to score political points and resorting to clichés and slogans in this area.  What is needed is an understanding of ChAFTA as presented, not just blind support, lest you are seen to be a heretic.  A free trade agreement, or preferential trade agreement, should not be considered the only answer.  We need to ensure we have policies and processes in place that provide certainty and clarity for investors - local, national, and international - if we are to increase investment in this state and country.  Beware of people bearing gifts.  Beware of spruiking before adequate assessment. 


It is not heresy to question the free trade agreements, nor is it misguided to have a different view about some of the ramifications.  It is also important to acknowledge that an agreement such as is proposed will not be the solution to all export challenges or desires. 


The symbolism does have some significance, however, it will not kickstart all investment in all agricultural sectors including dairy, particularly in the short term, as some seem to suggest it will.  There may well be long-term benefits but only time will tell. 


In Tasmania we would be better off working hard to create an attractive investment environment rather than continuing with ill‑informed cliches and political pointscoring.  Such an approach creates uncertainty for investors, and we have seen this over many years.  It goes right across governments.  It is not a criticism of any particular government.  It is apolitical and nonpartisan.  We need to move to an approach which provides certainty and clarity. 


I welcome the chance to speak on such a significant, and what should be nonpartisan, discourse.  The detail of the ChAFTA is important.  I, for one, and I am sure other members and/or others who may be impacted by and/or benefit from such an agreement, have not had a chance to read and understand all the details.  For this reason I find it difficult to support the motion as worded when it includes the fourth point, that this House strongly supports the China-Australia Free Trade Agreement.  I appreciate the information the member for Montgomery sent to assist us in preparing for the debate of this motion.  It was informative to a degree but did not address all the detail which point (4) of this motion seeks our full support for. 


Much of the relevant detail has been difficult to discover and some of it only very recently released.  I am quite happy to support points (1), (2) and (3) of the motion and note the benefits the ChAFTA may bring to the Tasmanian economy.  I acknowledge that the trade and investment opportunities with China are vitally important to Tasmania in a range of sectors as described in point (3) - 'agriculture, tourism, education, financial services, manufacturing and other resource‑related industries'.  I do not have all the necessary information and detail before me to give strong support to the ChAFTA.  By doing this, we are agreeing with everything it is, with all the information required to make such an assessment. 


It is being debated in the Australian Parliament.  That is where those decisions need to be made.  That is where the rubber needs to hit the road.  That is their job.  It is not our job to undertake such scrutiny of it.  It is the Australian Parliament's job, and they are doing it at the moment.  By all accounts it will go through and that is a good thing. 


However, the motion as worded implies that I, in this House, am happy with all aspects of the agreement.  It may well change during the Senate process, which we do not have all the detail of and are not required to debate and review as part of our legislative role. 


I am happy to support this motion if point (4) is deleted or amended.  It is not our job to make a full assessment of this detail.  


I seek to move to omit point (4) which requires this House to strongly support the China-Australia Free Trade Agreement.  I understand I can only move one motion at a time but the other option is to say that we support in principle the China-Australia Free Trade Agreement.  I am happy with either.  Perhaps we move the debate stand adjourned or we could debate what members prefer.  I do not want to vote against the motion, but if it stays as it is I cannot support it with point (4) as worded.  We do not have the information before us.  It is not the principle, it is the agreement we are supporting here.  That is the problem for me. 


Mr PRESIDENT - Do you wish to move a motion? 


Ms Previous HitFORRESTNext Hit - Yes, Mr President.  I am trying to take some guidance as to which would be preferable to members and if they are willing to even consider this at all.




Mr PRESIDENT - Normally amendments are given in writing.  One thing you could do is move the debate stand adjourned in order that you can write your amendment.  The amendment can then be debated.  Alternatively, if another member would like to move that - but you will not know that at this stage.




Ms Previous HitFORRESTNext Hit - Mr President, we have another motion to go on with and we can come back to this. 




Mr PRESIDENT - Alternatively, even though they are in writing, it would seem it would be a fairly simple amendment to move the deletion of point (4).




Ms Previous HitFORRESTNext Hit - The alternative says we support in principle, which I do not have an issue with.  It is the way it is worded I cannot support.  We do not have all that detail in front of this Chamber, in my view, to support the agreement which is before the Australia Senate at the moment with the detail on that. 




Mr PRESIDENT - I have taken some advice and it would be best to move that the debate stand adjourned at this stage, if that were the case, then decide which motion you wish to move, which to proceed with, and then we can proceed from there.




Ms Previous HitFORRESTNext Hit - Thank you, Mr President.  Mr President, I move -




That the debate stand adjourned for the purposes of determining an amendment to the motion.

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