Union threat to scupper agreement with Jakarta

Unions could seek to scuttle the historic free-trade deal to be signed in Jakarta today, citing fears it will hurt workers.

Paul Bastian NSW Secretary of Australian Manufacturing Workers Union says there is “no substantive evidence” the deal will benefit Australian workers.

Unions could seek to scuttle the historic free-trade deal to be signed in Jakarta today, citing fears it will hurt Australian workers, exploit foreign labour and undermine national sovereignty by allowing international rulings on investment disputes.

Trade Minister Simon Birmingham will sign Australia’s biggest bilateral trade deal in years with his Indonesian counterpart, Lukita Enggartiasto, after more than six years of stop-start negotiations.

The Indonesia Australia Comprehensive Economic Partnership Agreement — forecast in a previous feasibility study to be worth about $35 billion to the two countries’ economies in coming years — was to have been signed last November but was put on hold in protest by Indonesia after Scott Morrison said Australia was considering recognising Jerusalem as the Israeli capital.

Senator Birmingham yesterday said the deal would form the “central pillar to our strategic ­relationship with ­Indonesia”, not only deepening economic ties but also diplomatic and security links.

“The fact that — despite all the commentary in the last few months — we are both proceeding to sign this agreement is a real demonstration of the maturity of the relationship; that we can have areas where we may not always be in complete agreement, but that need not undermine the potential for strong bilateral ties and co-­operation,” he said.

Champions of the deal say it has the potential to transform the Australia-Indonesia relationship.

But Australian unions yesterday stepped up their opposition to the deal as it currently stands and warned they would lobby a future Labor government to renegotiate the terms before it is ratified by parliament. “We are deeply concerned that they (the government) have done yet another dodgy deal that lets corporations hire temporary-visa holders in unlimited numbers instead of hiring and training ­locally,” ACTU president Michele O’Neil said. Australian Manufacturing Workers Union national secretary Paul Bastian said there was “no substantive evidence” the deal would benefit Australian workers.

“Since 2016, we have been raising concerns about aspects of this agreement … about labour mobility provisions which could see Indonesian workers exposed to exploitation in Australia.”

The AMWU also opposes dispute-settlement provisions that allow foreign investors to seek international arbitration against governments in investment disputes, but which he said “undermine our national sovereignty”. Mr Bastian also criticised the timing of the signing, given imminent elections in both countries. Labor’s new trade policy demands all trade deals include stepped up “market-testing” of the local workforce before jobs are opened to foreign labour.

But Senator Birmingham rejected the claims, and accused the unions of “blatant scaremongering”.

“It beggars belief that the likes of the ACTU and AMWU want to stand in the way of a good deal that provides significant benefits to Australian farmers and businesses, and will actually create more jobs for Australians,” he said.

Labor trade spokesman Jason Clare pointed out that Labor commenced the negotiations with Indonesia, and said trade with Australia’s neighbour was “massively underdone”. But he also said: “we look forward to seeing the details of this agreement” when asked if he would support it.

Labor frontbencher Michelle Rowland has backed the free trade deal with Indonesia despite a push from the unions to scupper the long-awaited deal.

“We do support increased trade with Indonesia. They are obviously one of our closest neighbours and they’re a country with whom we need to do more trade,” she told Sky News today.

“This is inherent in all Labor’s policy settings and has been for some time. We’ve seen our future, for a very long time, in the Asia-Pacific, Indo-Pacific region.

“It’s imperative we increase our trade with Indonesia ... we have about 1800 Australian companies doing trade with New Zealand, one of our closest neighbours, a country of 4 or so million people. We’ve got a quarter of a billion people in Indonesia and it’s only something like 2000 Australian companies.”

Ms Rowland said the union pushback was down to growing economic uncertainty on a global scale, but Labor was still keen to see the free trade agreement progress.

Once ratified, the deal would most immediately benefit Australian agricultural exporters, such as beef cattle and vegetable producers, through the reduction or elimination of tariffs and other trade restrictions on 99 per cent of Australian goods into the Indonesian market.

All remaining tariffs on Indonesian products into Australia, including textiles, coffee and palm oil, will be eliminated and 200 Indonesians a year will be given six-month work-training opportunities in Australia. The number of working holiday visas available to Indonesians will also rise from 1000 to 4100 a year.

The agreement also allows for Australian-owned healthcare providers, mining services, architectural and engineering companies, universities and vocational training institutions to majority-own and operate businesses in Indonesia with a view to opening Australia’s labour market to Indonesian workers. Australian tourism investors will be allowed 100 per cent ownership in Indonesia of resorts and hotels to help President Joko Widodo realise his ambition to establish 10 “new Balis”.

But the agreement also faces significant political opposition in Indonesia. Azam Azman Natawijana, deputy chairman of the parliamentary committee overseeing trade, industry and investment, said he expected the ratification process would be protracted. “The agreement will benefit Australia more than Indonesia. Australia is at the corner of the globe and it is natural that they want their products sold in Indonesia, a big consumer market of 250 million people,” he said. “I worry that this will only increase our trade deficit with Australia and allow Australian businesses to operate in Indonesia and drive competitors out of business.”

Two way trade between the two countries was $16.5bn in 2017, and Indonesia is Australia’s 13th largest trading partner.

Australia Indonesia Business Council president Phil Turtle, who will join an Australian business delegation to witness the signing today, said he was “delighted” with the deal and excited about the breadth of opportunities it provided — “particularly with our trade relationship with China looking a bit jittery”.

Mr Turtle said criticisms from Indonesian politicians that the deal heavily-favoured Australia were misinformed, because the agreement was “very deliberately designed to be mutually beneficial”.

Additional reporting: Nivell Rayda, Richard Ferguson