Apr 15 2019

Supply Chain News - Australia to sign free trade deal with Hong Kong

Australia signs a new agreement covering $18.8 billion in free trade with Hong Kong on Tuesday 2 April, as Labor prepares to officially back the Australia-Indonesia free trade deal if it wins government.



Source: SMH

Time has run out for the Coalition to secure the passage of the Indonesia deal before the next election, with the $16 billion agreement stuck before the joint standing committee on treaties and only three sitting days left, leaving farmers, universities and producers nervous that it could be torn up if Bill Shorten wins in May.

But momentum inside Labor has shifted since Friday, with senior frontbenchers now preparing to declare the deal is in the "national interest" after reviewing its details, despite mounting union pressure on job security for Australian workers.

The opposition will still push for investor-state dispute settlement clauses to be removed from the agreement. The clauses give corporations the right sue governments in international tribunals if they believe legislation changes will harm their investment and have been criticised for allowing tobacco giants to sue over changes to Australia's plain packaging laws.

Labor believes this can be done without market access implications because Indonesia never asked for them in there in the first place.

Trade Minister Simon Birmingham accused Labor of threatening the deal with "a trivial left-wing obsession like opposing investor dispute mechanisms".

"Bill Shorten and the Labor Party need to state plainly whether they’re going to back Australian farmers and businesses or be completely beholden to union demands," he said.

Labor maintains the investor dispute mechanisms can be excised in separate side letters to the agreements, avoiding costly and time consuming renegotiation.

Advice from the Department of Foreign affairs confirmed this but warned it could lead to delays.

Labor's trade spokesman Jason Clare said Labor strongly supported high quality trade agreements that are in the national interest.

He said the signing of the agreement with Hong Kong "is a positive step forward" and that Labor would scrutinise the agreement through the committee process in the next Parliament.

The signing of the Hong Kong agreement on Tuesday in Sydney will mean Australia will now have a free trade agreement with seven of its top eight export markets for goods and services. 

The deal will provide access for Australian finance, construction, communications, hospitality and other sectors.  It will also protect the free flow of data across borders for businesses and guarantee that Hong Kong will not apply tariffs to Australian goods exports in the future.

Like the Indonesian deal, it will exclude any investor dispute from companies that could challenge laws "designed and implemented to protect or promote public health".

The investor dispute clauses have been criticised after tobacco giant Phillip Morris used Australia's 1993 trade deal with Hong Kong to challenge to Australia's plain packaging laws costing taxpayers more than $12 million.


Whale has extensive trade dealings and relationships with Hong Kong, if you are interested in a consultation to see how this agreement may affect your business, get in touch with our team.

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