Jakarta free trade deal sets up stronger political ties

The signing of the Indonesia Australia Comprehensive Economic Partnership Agreement is a move that will deepen our economic, political and cultural ties to an emerging powerhouse. The free trade agreement comes after tortuous negotiations, stretching over more than six years, derailed most recently in November after Scott Morrison said Canberra was considering recognising Jerusalem as the capital of Israel. The Coalition argues the deal will be the “central pillar” of our relationship with Indonesia, strengthening diplomatic and security links, which have often proven to be brittle. Our relations with Jakarta are conducted in a stop-start, on-off manner, with trouble seemingly never far away. In the recent past, issues such as live cattle exports, drug arrests and people-smuggling have set the tone of bilateral affairs.

While the FTA signed yesterday in Jakarta is limited in scope compared with those struck with the US, China, Japan and Korea, there is tremendous upside in removing trade barriers and bilateral co-operation. Australian agricultural exporters, such as beef cattle, vegetable and citrus producers, will soon see a benefit through the reduction or elimination of tariffs and other trade restrictions on 99 per cent of goods sold into Indonesia. Australian-owned higher education and training providers, healthcare and mining services, architectural and engineering companies will be allowed to majority-own and operate businesses in the country of 262 million people. Our tourism investors will be able to own outright Indonesian hotels and resorts as President Joko Widodo pursues an ambition to establish 10 “new Balis”. More Indonesians will be able to gain working holiday visas here.

Trade Minister Simon Birmingham said that beyond the obvious economic benefits, the deal would strengthen our “political, security, development, maritime, education and people-to-people ties” and would send a message to the world that modern trade rules are the best path to prosperity. The deal, of course, must still be ratified by the two national parliaments and that’s where this new-found trust and co-operation face serious threats from entrenched vested interests. In Australia, the risk to ratification comes from Labor and the new protectionists from within its trade union ranks, who are pushing for a change in the terms of the deal. ACTU president Michele O’Neil called the trade pact a “dodgy deal”, claiming it would hurt Australian workers and exploit foreign labour. The Australian Manufacturing Workers Union has been campaigning since 2016 against labour mobility provisions under the FTA, alleging Indonesian workers would be exploited here, as if the higher pay and better safety conditions common here won’t apply to them.

Unions also raise the furphy of national sovereignty. The so-called “Investor State Dispute Settlement” provisions — which allow foreign investors to seek international arbitration against governments in disputes — are standard practice to ensure the rule of law operates in global commerce. As well, Labor’s new trade policy demands all trade deals include enhanced “market testing” of the local workforce before jobs are opened to foreign labour. These tired arguments are spurious. The protectionist rubbish that held Australia back for decades is now the rancid rhetoric expected from the Greens at one end of the economic ignorance spectrum or the economic obscurantists from the far Right at the other. As a party of government, Labor should never entertain this claptrap on trade.

Yet Labor has form on this front. Bill Shorten was slow to repudiate the misleading and xenophobic CFMEU campaign on the China-Australia FTA, which warned of Chinese hordes swamping Australia to steal Aussie jobs. The ACTU and Electrical Trades Union were fellow travellers in that shameful episode. Mr Shorten has also delayed ratification of the Peru-Australia FTA, signed a year ago, by a referral back to the Joint Standing Committee on Treaties and demanding a side letter on dispute settlement provisions. For a party that was in the vanguard of free trade a generation ago, underwriting the economic and employment growth of the successful Hawke-Keating era, Shorten Labor is backsliding into the dark days of over-regulation, costly protection and union sabotage of the national interest.