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Resisting issue-linkage: social standards and Australian trade agreements

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Abstract

Free trade agreements (FTAs) have become the main vehicle of trade liberalisation. Both North-South and South-South FTAs increasingly go beyond the removal of trade barriers and link free trade with social standards, including labour and environmental provisions. Australia has been at the forefront of bilateral trade liberalisation, signing multiple FTAs, but conspicuously avoided incorporating social standards in the agreements it initiated. In doing so it has become a real outlier in the OECD world. What accounts for Australia’s resistance to the inclusion of social standards in FTAs? Scholars have advanced various explanations for the issue-linkage between social standards and FTAs, including cross-national diffusion, societal interests, domestic institutions and bargaining. We evaluate their explanatory power and argue that Australian policy-makers view social standards primarily as protectionist tools that could hurt trade. This perception is reinforced by the broad acceptance of free trade among the Australian public. We explore the framing of social standards by Australian trade policy officials and the public to uncover why Australia has failed to link social standards with its trade agreements. Our analysis adds to the growing literature on FTA design and non-trade issues using Australia as a deviant case.

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Notes

  1. Currently, Australia has 14 FTAs in force with another one signed and is further negotiating eight agreements based on the information obtained on the DFAT website.

  2. Please note we only focus on FTAs, not economic and partnership agreements.

  3. The US Congress requires all US FTAs to include social standards to be ratified, so negotiators are left with no room for manoeuvre. South Korea started including softer social provisions in its FTAs more recently.

  4. Countries in the European Free Trade Association (EFTA) have the greatest number of FTAs with labour provisions (Raess and Sari 2018). Japan tends to include legally binding labour provisions (Engen 2017). More recent entrants into the OECD, such as Mexico and Turkey, are the exceptions. On the other hand, Chile started including labour and environmental clauses in its FTAs even before joining the organisation.

  5. See http://aftinet.org.au/cms/aftinet-principles

  6. This mirrors the rejection of such link at the multilateral level. The Productivity Commission published a report saying Austraia shold not support labor standards in the WTO because it risks being sanctioned itself and because it ‘could affect the progress of the broader trade liberalisation agenda’ (Productivity Commission 2002).

  7. Our interviewee familiar with the organisational processes within DFAT has confirmed that the Department views mining and agriculture as its main interlocutors (interview 28 February 2022, Melbourne).

  8. See https://cdn.australianlabor.com.au/documents/ALP_National_Platform.pdf

  9. A key constituent of ALP, the ACTU, demanded protections for Australian workers in the CHAFTA’s labour mobility clause and was successful in receiving this concession from the Coalition.

  10. We interviewed labour union and fair trade constituency representatives and senior trade policy officials engaged with them using the snowball procedure. A total of nine in-depth interviews were conducted and there has been consistency of views across interviewees from government and civil society. Additionally, a presentation by a senior DFAT official for an audience of policy-makers in Brussels which the authors attended has been consulted.

  11. Such favourable attitudes towards free trade are likely to be a product of liberal policies of the Hawke-Keating governments (1983–1996), which liberalised the Australian economy and are often credited with laying the foundations of a continuous period of economic growth.

  12. Importantly, the labour and environmental chapters in the Australia-Korea FTA are exempt from the dispute settlement mechanism and emphasise the respect of each party to establish and enforce its own domestic laws. This is the approach taken by South Korea in other FTAs, following the negotiations of the EU-Korea agreement (Postnikov 2020). Engen (2017) discusses how over time South Korea’s opposition to the inclusion of social standards has been weakened and led to the government endorsement of labour standards in FTAs. Similar logic is plausible in the case of environmental standards.

  13. Most of the public debate and civil society lobbying in Australia tends to be focussed on the issue of Investor-State Dispute Settlement (ISDS), as evidenced by the TPP negotiations (Ranald 2018).

  14. The relative weakness of these constituencies in Australian trade policy-making also corresponds to the low level of politicisation of free trade among Australians.

  15. Currently, the ACTU only has one person in Canberra who does not reside there permanently. Public consultations held by the DFAT are rather novel and infrequent.

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  1. School of Social and Political Sciences, The University of Melbourne, Melbourne, Australia

    Evgeny Postnikov & Lachlan McKenzie

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  1. Evgeny Postnikov
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Postnikov, E., McKenzie, L. Resisting issue-linkage: social standards and Australian trade agreements. J Int Relat Dev 25, 1079–1100 (2022). https://doi.org/10.1057/s41268-022-00277-9

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