Labor to back trade deal with Indonesia

Australian farmers and businesses should soon be able to access trading opportunities worth billions with Indonesia.

ACTU president Michele O'Neil says MPs should not be expected to be “cheerleaders” for a trade agenda that “does not deliver for Australian workers or the broader community”. Picture: Glenn Hunt/The Australian

Australian farmers and businesses should soon be able to access trading opportunities worth billions of dollars with Indonesia — the world’s 10th largest economy — as Labor prepares to support the free-trade agreement in parliament.

The joint standing committee on treaties, which is dominated by nine Coalition MPs but has six Labor members, on Wednesday recommended the deal and an FTA with Hong Kong be ratified “as soon as possible”.

While pressure is mounting on Labor from unions to vote down the Indonesian agreement, opposition trade spokeswoman Made­leine King acknowledged the JSCOT report concluded the FTAs were “ultimately in Aus­tralia’s national interest”.

The enabling legislation to establish the Indonesian FTA is expected to be bundled into a single bill with agreements for Peru and Hong Kong and introduced in the House of Representatives next week.

What's in the Free Trade Agreement?

Labor’s caucus is to meet the following week to finalise a position on the bill, with some MPs warning that any attempt to circumnavigate the ALP’s national platform and support the Indo­nesian FTA would be fraught with danger.

Writing to Labor MPs this week, ACTU president Michele O’Neil said the ALP platform was “unequivocal” and MPs should not be expected to be “cheerleaders” for a trade agenda that “does not deliver for Australian workers or the broader community”.

The Indonesia FTA contains new investor-state dispute settlement provisions that allow foreign investors in some circumstances to sue the federal government in international tribunals if they consider new Australian laws harm their interests.

Labor’s national platform, adopted late last year, says the party in government would work to abolish ISDS provisions.

Ms King said Labor would continue to consult with stakeholders in the labour movement and beyond but it is understood the party’s senior ranks are backing in the enabling legislation.

JSCOT deputy chairman and Labor MP Peter Khalil said it was important for Australia to develop economic ties with Indonesia. “In a decade, it will be the world’s fourth-largest economy, and it’s a market of 260 million people on our doorstep, yet it accounts for only 2 per cent of our exports currently,” he said.

Trade Minister Simon Birmingham singled out producers of grains, beef, dairy and horticulture as the beneficiaries from lower tariffs and improved access to Indonesian markets.

“These free-trade deals also send a positive signal that Australia supports an open, global and rules-based trading system — a message that is more important than ever before, given the current global trade headwinds,” Senator Birmingham said.

The National Farmers Federation said the agreement ensured there would be valuable export markets in place ready to take Australia’s agricultural goods at a time when farmers were doing it tough and managing consecutive years of drought .

Labor members on JSCOT managed to convince the government to terminate the existing agreement with Indonesia, which was signed in 1992, and in turn remove old ISDS provisions.

The government was also asked to consider introducing independent modelling and analysis by the Productivity Commission of future trade agreements.

The Hong Kong and Indo­nesian FTAs have been endorsed by farming and business groups.