Australia's Free Trade Agreement with South Korea should be Scrutinised.

20 February 2014

Read the fine print.
Thats what any prudent lawyer would tell you to do before signing a contract.
But when the Abbott Government finally released all 1800-plus pages of the proposed Free Trade Agreement with Korea this week, its attitude seemed to be Just trust us.
Labor knows that reducing barriers to trade can boost Australias economic growth, forge more competitive local industries, create jobs, and give consumers greater choice and lower prices.
Free trade agreements have the potential to deliver tremendous benefits for Australian consumers, workers and businesses but whether this potential is realised depends on the quality of the deals which governments negotiate.
Until this week, the Government had been bluntly refusing to release the text of the Korea Australia Free Trade Agreement (KAFTA) for public scrutiny before it signs the final deal.
Now the Coalition has belatedly accepted the need for transparency, Labor will examine KAFTA to ensure it is in Australias national interest.
The tests we will apply are straight-forward.
Does the agreement deliver the best deal for Australian jobs? Is the promised access to Koreas markets real? Will it erode Australias ability to legislate over domestic policy issues in the national interest.
It was the former Labor Government that launched negotiations for a free trade agreement with Korea, recognising the importance of Australias fourth largest trading partner to our economy.
But an initial assessment of the deal the Coalition has delivered suggests there are areas that need close scrutiny.
The Government has agreed to Koreas push to include an investor-state dispute settlement mechanism in the agreement. This would allow Korean businesses to take disputes with the Australian Government to arbitration.
Labor is concerned at the impact of investor-state dispute settlement provisions on Australias ability to legislate in areas such as health policy, environmental standards and social policy.
In the case of KAFTA, the Government claims it has secured carve-outs preserving Australias ability to legislate in important policy areas.
Labor remains to be convinced. The onus is on the Government to demonstrate how policies such as the Pharmaceutical Benefits Scheme, an important part of Australias social safety net, are protected by these provisions.
Labor is also concerned at the potential impact of KAFTA on Australias automotive manufacturing sector.
Following the decisions by Ford, Holden and Toyota to stop making cars in Australia, the jobs of thousands of workers at local auto component manufacturers hang in the balance.
The future for Australias auto component manufacturers is to step up their efforts to become part of the global supply chains which increasingly characterise the world auto industry.
KAFTA holds out the promise of greater access to the Korean market for Australian auto component manufacturers.
Labor will use Parliamentary to examine whether KAFTA represents an appropriately balanced package for the auto industry given the severe threats this sector faces at present.
We will also be asking whether the benefits for Australian farmers which the Governments PR machine has lauded are all they purport to be.
Apparently some of the Governments own MPs share Labors concerns about the quality of the agreements provisions on Australian agricultural exports to Korea.
The Liberal backbencher Sharman Stone, who represents the Victorian farming electorate of Murray, has criticised the agreement for failing to deliver tariff reductions for a raft of Australian food exports.
It is particularly disappointing that apples, pears and honey will not be exempted from the existing exorbitant tariffs, nor frozen pork, or condensed milk, given Australia enjoys a disease free status for these products unequalled in the world, Dr Stone said after the text of the deal was released.
By contrast, the Trade Minister Andrew Robb was eager to talk up Koreas agreement to phase out its tariffs of between 40 and 72 per cent on Australian beef over 15 years.
Yet, in the fine print, Mr Robb has given the Korean Government the right to unilaterally reimpose significant tariffs on Australian beef if the volume of our exports grows by only two per cent a year.
And he has conceded similar safeguard measures for other Australian farm exports.
The Minister should explain why he failed to negotiate comparable safeguards for sensitive Australian sectors like auto components or steel making.
Labor is determined to ensure that the Abbott Government does not trade away the national interest for its own political interest in notching up trophy trade deals.