Labor locks on to legal rights to derail trade deal with Peru

A trade deal with Peru has been delayed after Labor called for it to be renegotiated.

A trade deal with Peru has been delayed after Labor called for it to be renegotiated to remove clauses allowing foreign companies to sue the Australian government.

The deal has been signed but has yet to be ratified by both sides.

Peru’s Trade Minister, Edgar Vasquez, said his country expected to ratify the agreement within “days”. But party sources said legislation to enact the deal was now unlikely to be debated in federal parliament tomorrow as planned, as negotiations continue between the Coalition and Labor over legal protections.

With just one sitting week left before the election, it will now be difficult for it to pass through both houses before Australia goes to the polls.

Labor, under pressure from unions opposed to major multilateral trade deals, released a new trade policy last year.

The policy says Labor will only accept a new trade deal with tougher labour market testing and without clauses that allow foreign companies to sue the Australian government and Australian companies to do the same overseas. Labor had already sent the deal back to be examined again by the joint standing committee on treaties.

Labor members of the committee made two recommendations — for the deal to be the subject of independent modelling and for the government to push Peru to delete from the deal clauses granting companies the right to sue. Labor is now hoping Peru will agree to a “side letter” to delete the clauses so the party can support the deal. However, trade experts view such a move as highly unusual.

Both countries are already part of the Trans-Pacific Partnership but the bilateral deal expands tariff reductions for agriculture.

“Peru is granting tariffs preferences to Australia in agricultural products that were not granted in TPP: dairy, sugar, maize, rice and sorghum. These kind of benefits will give Australian exporters an advantage in the Peruvian markets with respect to other TPP countries,” Peru’s ambassador to Australia, Miguel Palomino de la Gala, said.

He tried to reassure Labor in his remarks to the committee last year. “This means that while Australia will maintain its labour market test in (the trade agreement), Australian business persons will have the benefit to enter to Peru with no limitation,” he said.