What would Howard do? How Tony Abbott could salvage China trade deal
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Version 0 of 1. Based on loud claims about racism and counter-claims of selling out Australian jobs, the political dispute between Labor and the Coalition over the China free trade deal would, on first glance, appear to be intractable. But putting aside the heavy rhetoric about “economic sabotage”, it is possible the government could toughen up some details in the enabling legislation to secure Labor’s support without sinking the entire agreement. Related: Coalition puts more pressure on Labor to back China-Australia free trade deal Senior Labor figures have signalled they don’t want to kill off the deal – that would be a very big call to make and would upset Australia’s biggest trading partner – but are coming under significant pressure from unions and wary caucus members. They are therefore looking for some concessions to “safeguard” jobs. At the same time, party elder Bob Hawke has gently reminded the current leadership that cool heads should prevail. The political standoff in 2004 about the US free trade agreement is instructive. Then, as now, Labor was in opposition and claiming the Coalition government had failed to secure a good enough deal. One of the major concerns raised by Labor’s then leader, Mark Latham, was the protection of Australia’s pharmaceutical benefits scheme (PBS). The then prime minister, John Howard, argued the government was “totally committed” to the “historic” deal that it had negotiated, insisted that the PBS was safe, and accused Labor of prioritising populist politics over the national interest. But he ultimately relented and allowed the implementation legislation to pass with Labor’s PBS-related amendments that he maintained were not needed and could irk the US. “If the ultimate price of getting the free trade agreement, albeit with some risk in relation to ultimate acceptance for the reasons that I have outlined, is to accept a clumsy, unnecessary and undesirable Labor amendment, I will do so in the national interest, not in my own political interest,” Howard said at the time. So when Tony Abbott sternly declares that the government “cannot change this agreement” and “cannot reopen the negotiations”, it’s important to distinguish between the text of the deal struck with China (not negotiable) and the associated bills that will be required to make any consequential changes to Australian domestic law (not yet presented to parliament; not necessarily fixed in stone). Yes, the enabling legislation cannot unpick details in the actual agreement without China’s consent, but arguably there is some room to move. Take, for instance, the complaints from unions and Labor about a lack of assurances before workers are brought to Australia for major projects worth more than $150m and backed by Chinese companies. Their concerns are about ensuring “labour market testing” – a requirement that companies prove that they have tried to find local workers before turning overseas. A memorandum of understanding signed with China says there “will be no requirement for labour market testing to enter into” one of these overarching investment facilitation arrangements - but it does not close the door to the government requiring the direct employers of people to test the market. Once the umbrella deal is approved, companies can apply to the immigration department “to sponsor and nominate temporary skilled workers to be engaged on the project”. The department will sign off any “sponsorship obligations associated with the labour agreement, including any requirements for labour market testing”. Labor and the unions argue this is weak protection because it appears to be discretionary, leaving the labour market testing rule open to government policy of the day. Abbott has argued the claims are a beat-up because the existing rules will apply: “You cannot bring people in without labour market testing; you cannot bring people in without paying them Australian wages and working them under Australian conditions.” If so, this would appear to be an obvious area where the enabling legislation could reinforce or clarify the current rules, as an olive branch to Labor which is in a tight spot given the forthright campaign being waged by its industrial base. Both the Coalition and Labor will have to decide how insistent they will be on holding to their public positions and to what extent they are prepared to risk the overall deal. Howard recognised he had to accept amendments to salvage the US free trade agreement. Abbott is yet to display the same willingness. Related: Julie Bishop says Labor's claims over China trade deal are 'economic treason' The Labor leader, Bill Shorten, hinted on Friday at the potential for minor tweaks in the bills rather than a wholesale rewriting of the free trade agreement. “We do not believe that the safeguards which Mr Abbott and his Liberals are saying exist actually have the ‘t’s crossed and the ‘i’s dotted,” he said. And as we reported this week, the trade minister, Andrew Robb, has opened the door to “constructive” talks with his Labor counterpart, Penny Wong, albeit with a narrow scope for a breakthrough. Robb would not like to see the deal he negotiated fall over. Is some form of political compromise easy? No. But possible? Yes. |