Additional Comments - Labor Members

Agreement to Amend the Singapore-Australia Free Trade Agreement

Singapore is Australia’s fifth largest two way trading partner and our fourth largest export market for services. Trade with Singapore benefits Australia by encouraging greater economic activity and creating jobs. These jobs are often more stable and better paid. This helps to lift Australia’s rate of economic growth and productivity leading to greater economic opportunities. It provides consumers with cheaper products and offers Australian firms the ability to invest and operate in Singapore.

While recognising these benefits, Labor members of the Committee have some concerns about the details of the Agreement and these can be broken into three key areas:

The removal of Labour Market Testing

Investor State Dispute Settlement (ISDS) provisions

Lack of independent analysis.

The removal of Labour Market Testing

The SAFTA update will undermine Australia’s migrant visa program by failing to apply labour market testing for ‘contractual service suppliers’. This will mean jobs in Australia will be able to be filled by workers from Singapore without being offered to Australians first. This policy shift comes at a time when many in Australia are concerned about finding employment.

While Labor acknowledges foreign workers are vital to the success of the Australian economy it is fundamental that Australians are offered employment first. Foreign workers should only be brought into the country once there is a demonstrated need. Australia’s migrant visa system is supposed to supplement the skills of Australians, not replace the ability of Australians to get jobs.

This decision to waive labour market testing is in direct contradiction to the Government’s recent announcement to replace the Subclass 457 Visa scheme. In April of this year, the Prime Minister stated that the two tiered Temporary Skill Shortage Visa would require mandatory labour market testing for all applicants unless an international obligation applied. The Government’s decision to waive labour market testing for contractual service suppliers in this update exempts Singapore from this provision and undermines the effectiveness of the Government’s policy change.

Investor State Dispute Settlement (ISDS)

Labor remains concerned that the ISDS provisions within SAFTA leaves Australia vulnerable to lengthy legal disputes with foreign-owned corporations. What is evident is that ISDS poses a significant threat to Australia’s sovereignty and could stop future governments from pursuing legitimate public policy goals.

This was the concern of many submissions to the Committee is indicative of community sentiment. Labor acknowledges that a large proportion of the Australian community are either extremely sceptical or directly oppose ISDS provisions in trade agreements.

Lack of transparency and independent analysis

Of concern to Committee members was the lack of independent economic analysis of SAFTA. Recent evidence from the Department of Foreign Affairs and Trade has confirmed each trade agreement is only modelled by the Department if it is instructed to do so by the Government. This has not happened with the SAFTA update and therefore the economic benefit of the agreement has not been independently assessed.

This is not a new criticism and independent economic analysis of new trade agreements has been recommended by a number of Parliamentary inquiries. Their recommendations are included below:

“The Committee recommends that the Australian Government consider implementing a process through which independent modelling and analysis of a proposed trade agreement is undertaken by the Productivity Commission, or equivalent organisation, and provided to the Committee alongside the National Interest Assessment (NIA) to improve assessment of the agreement.” (TPP (JSCOT) – November 2016 (Recommendation 2, Committee Report))

The Senate Committee inquiry into the TPP also welcomed Recommendation 2 from the TPP (JSCOT) inquiry – see above. (TPP (Senate Inquiry) – February 2017)

“The committee recommends that National Interest Analysis (NIAs) be prepared by an independent body such as the Productivity Commission and, wherever possible, presented to the government before an agreement is authorised by cabinet for signature. NIAs should be comprehensive and address specifically the foreseeable environmental, health and human rights effects of a treaty.” (Blind Agreement – Reforming Australia’s treaty-making process (Senate Inquiry Recommendation 10, Committee Report) - June 2015))

“The Committee recommends that the text of the IA-CEPA should not include provisions which waive labour market testing, or which include ISDS provisions, and the final text of the agreement should be accompanied by independent analysis conducted by either the Productivity Commission or equivalent organisation. (Leveraging our Advantages (Joint Standing Committee on Trade and Investment) – June 2017)

These recommendations are important because they are not specific to SAFTA and improvements can be made to future free trade negotiations conducted by the Australian government. High quality free trade agreements can increase Australia’s economic productivity and prosperity. Excluding labour market testing concessions and ISDS provisions from free trade agreements as well as conducting independent economic analysis of newly negotiated trade agreements would be a good start.

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