Economy

Oct 2, 2013

Taking care of business: Abbott and the Trans-Pacific Partnership

The Coalition has promised to involve industry groups more in trade negotiations. But Dr Matthew Rimmer of the ANU College of Law argues industry already has too much influence.

After the Australian election, United States President Barack Obama called newly elected Australian Prime Minister Tony Abbott to congratulate him upon his victory and encourage him to work co-operatively on the regional trade deal the Trans-Pacific Partnership. Rather than appoint a National Party member, as has been tradition, or Foreign Affairs Minister Julie Bishop, Mr Abbott has selected Andrew Robb to be the Minister for Trade and Investment.  The Prime Minister also emphasised that free trade and foreign investment will be the centrepiece of the Coalition’s agenda to encourage economic growth. The Coalition’s trade policy is ambitious, hectic, and febrile -- covering multilateral, regional and bilateral trade deals. The policy emphasised: "We are committed to the negotiation of a Trans-Pacific Partnership Agreement as a stepping stone to a longer term goal of an Asia-Pacific free trade area." The Coalition has also been enthusiastic about the Regional Comprehensive Economic Partnership, saying it wants to "fast-track the conclusion of free trade agreements with China, South Korea, Japan, India, the Gulf Cooperation Council and Indonesia". 1. The democratic deficit In its trade policy, the Coalition has said it will "take a pragmatic approach to trade negotiations and will consult widely with industry bodies and associations to ensure that stakeholder priorities are taken into account". However, its approach appears to reflect a decidedly free-market ideology in terms of its beliefs about free trade and foreign investment. The new government has promised to "provide a greater voice for local industry through the appointment of at least one industry representative who will be directly included in the negotiation of free trade agreements". Moreover, the Coalition has said that it would establish a ministerial advisory council on trade and investment. The Coalition has promised to appoint "prominent Australian business people as special envoys for Australia’s agricultural, manufacturing and service industries to better promote Australia’s wide range of trade interests in the 21st century". Such initiatives are superfluous. DFAT has long been responsive to industry. Indeed, the problem has often been that industry groups have been overly influential in the treaty-making process, with their interests represented above those of the larger public interest. The Coalition policy does not address the democratic deficits that exist in Australia’s process of treaty-making. There seems to be a failure to address the long-standing problems in relation to the transparency, accountability and public participation in the negotiation of free-trade agreements. The secrecy surrounding regional trade agreements such as the Trans-Pacific Partnership has prevented a full and frank assessment of the benefits and the costs of the trade deals. The Department of Foreign Affairs and Trade has heavily redacted freedom of information requests from concerned citizens. Stakeholder information sessions have lacked substance and content. DFAT has often been unwilling to properly inform the Joint Standing Committee on Treaties about the nature and progress of trade deals. The department has failed to fully and properly engage with other government departments on key matters of public regulation. The Productivity Commission should be engaged to provide independent analysis of the economic and social impacts of all trade deals, but there has been a lack of willingness to consult with citizens, experts, and civil society over trade agreements. As recommended by Professor George Williams and his collaborators in No Country is an Island, there is a need to overhaul the processes of treaty-making in Australia. 2. Foreign investment Controversially, the Coalition has said that it remains "open to utilising investor-state dispute settlement clauses as part of Australia’s negotiating position". Such a stance reflects the influence of the Australian Chamber for Commerce and Industry, with journalist Mike Seccombe commenting that the chamber is "an enthusiastic booster of both the Trans-Pacific Partnership and the inclusion of ISDS provisions in trade agreements". This position is highly problematic. As the astute Fairfax economist Peter Martin has commented: "Opening Australian governments to lawsuits over resource extraction, foreign land purchases, pharmaceutical benefits and health measures is a potential minefield for the government." Foreign investors have sought to use investor-state dispute settlement clauses to challenge government regulation. Australia’s regime of plain packaging of tobacco products has been challenged by tobacco giant Philip Morris under an investment treaty with Hong Kong. Similarly, Uruguay’s graphic health warnings for tobacco products have been subjected to investor challenges by tobacco companies. Will Abbott’s conservative Coalition defend graphic health warnings and plain packaging in the Trans-Pacific Partnership? Health Minister Peter Dutton has affirmed he would protect plain packaging. However, Bishop and Robb have expressed enthusiasm for state-investor clauses, even though such measures have been used by tobacco companies to challenge Australia’s plain packaging laws. Investment clauses have also affected other areas of public regulation. Stephen Harper’s Canadian government has faced a challenge over its drug patent laws by big pharmaceutical company Eli Lilly. Quebec’s moratorium on fracking has been challenged under an investor lawsuit under the North America Free Trade Agreement. Ecuador has protested that investor-state clauses have interfered with its ability to gain compensation for pollution by oil companies. Professor Peter Drahos has observed that trade agreements are "litigation-intensive agreements". There is a need to account for such long-term costs involved in any negotiation. 3. Trade demands and challenges There has been a concern that special interest groups will seek sweetheart deals from the Coalition government in free-trade agreements. Rupert Murdoch has been lobbying heavily for enhanced copyright protection to protect his business interests in traditional media forms, such as news, television, and film. Big pharma has been demanding data protection for biologics, stronger patent protection for pharmaceutical drugs, and restrictions on access to essential medicines for HIV/AIDS, tuberculosis, and malaria. The fossil fuel industry has been calling for the removal of environmental and climate regulations -- pejoratively known as "green tape" -- under the guise of trade agreements and state-investor clauses. The Australian agricultural sector remains rather bitter about the failure to achieve greater gains in the Australia-United States Free Trade Agreement and will be demanding better efforts this time round. Robb will have to deal with a formidable array of trade partners. The United States overwhelmed Australia in the negotiations over the Australia-United States Free Trade Agreement, and got the better part of the deal; Robb will have to ensure that Australia does not meekly capitulate to the demands of United States negotiators this time round. Japan has been adamant about protecting its traditional agriculture and food sovereignty in the Trans-Pacific Partnership discussions. And Robb’s predecessor, Dr Craig Emerson, doubts whether the tight deadlines for the Trans-Pacific Partnership are realistic. By entering into preferential trade deals, Australia also is in danger of alienating other countries. The Lowy Institute's Mike Callaghan has warned that regional deals like the Trans-Pacific Partnership discriminate against poor and emerging countries. China and other members of the BRICS Group are suspicious of regional trade agreements, which exclude them. Robb will need to ensure that Australia builds up -- rather than undermines -- the multilateral trade regime. Abbott and Robb will also have to contend with the crossbenches of the Australia Senate to secure the passage of any accompanying legislation for the trade agreements. That will test their powers of negotiation and compromise. It remains to be seen whether the government will realise this ambitious yet perilous dream of free trade, foreign investment and economic growth.

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4 comments

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4 thoughts on “Taking care of business: Abbott and the Trans-Pacific Partnership

  1. Matthew Rimmer

    A significant issue will be the impact of the Trans-Pacific Partnership upon the public regulation of coal seam gas
    – and fracking.

    On the 1st October 2013, Lock the Gate and the Australian Fair Trade and Investment Network have put out a joint statement:
    http://aftinet.org.au/cms/sites/default/files/Robb%20Media%20Release%20October%202%202013%20-%20Copy.pdf
    http://aftinet.org.au/cms/sites/default/files/AFTINET%20%26%20LTG%20letter%20Minister%20Robb%20300913%20-%20Copy.pdf

    “More than 70 organisations including 54 regional groups ranging from Mirboo in Victoria, to the
    Cassowary Coast in North Queensland, to Walgett in NSW, in traditional areas of Coalition support,
    have endorsed a letter to Trade Minister Andrew Robb. They express their strong opposition to
    clauses in trade agreements which would enable foreign investors to sue governments for damages
    in international tribunals if government regulation is seen to ‘harm’ their investment. These proposals
    are known as investor-state dispute settlement (ISDS).

    “ISDS would reduce the ability of governments to regulate the activities of foreign companies even if
    these activities have a negative impact on health and the environment. This would prevent
    governments from responding to community concerns about Coal Seam Gas mining (CSG)”, Drew
    Hutton, President of Lock the Gate, said today.

    “The US-based Lone Pine energy company is using ISDS clauses in the North American Free Trade
    Agreement to sue the Canadian Quebec provincial government for $250 million, because it
    responded to community concerns and reviewed the environmental impact of shale gas mining,” said
    Mr Hutton

    “In a similar way, farmers and community members in NSW and Victoria have influenced their state
    governments to review the environmental impact of CSG mining and to consider regulation. If
    Australia agrees to include ISDS in trade agreements, governments could be sued for millions of
    dollars for responding to community concerns,” explained Mr Hutton.”

  2. Matthew Rimmer

    The relationship between the Trans-Pacific Partnership, intellectual property, and public health is also a critical issue.

    On the 1st October 2013, seven civil society organisations made a submission to Andrew Robb and the Department of Foreign Affairs and Trade:
    http://www.dfat.gov.au/fta/tpp/subs/tpp_sub_multi_NGO_on_IP.pdf

    The executive summary of the submission emphasized:

    “The United States Trade Representative proposed a set of extreme pharmaceutical intellectual
    property (IP) provisions for the Trans Pacific Partnership Agreement in 2011. These proposals, which
    were subsequently leaked, were met with outrage by national and international health and
    development organisations as they would severely restrict access to affordable medicines in the
    TPPA countries. Our organisations are strongly opposed to all elements of the US proposals.
    Recently there have been reports that a sub-set of TPPA countries have made a counter-proposal
    that is largely based on the World Trade Organization’s Agreement on the Trade-Related Aspects of
    Intellectual Property Rights (TRIPS). This submission argues that the TRIPS Agreement is a far more
    appropriate standard for intellectual property than the US proposals as it allows significant flexibility
    for countries to determine the appropriate intellectual property regime for their own circumstances.

    In this submission, we outline the risks the TPPA negotiations present for access to affordable
    medicines, and the opportunity they present for determining a more appropriate standard for IP that
    would enable countries to utilise the flexibilities available to them under the TRIPS Agreement. We
    argue that the level of IP protection currently reflected in the Australia-US Free Trade Agreement and
    in Australian law is inappropriately high for the developing countries and that the Australian
    Government should not pursue an AUSFTA-type outcome in the TPPA.

    We set a number of general principles we believe the Australian Government should pursue in the
    negotiations on pharmaceutical IP. These are:

     Avoid provisions that would add to pharmaceutical expenditure in Australia;
     Ensure that the TPPA does not introduce ‘TRIPS Plus’ intellectual property rights in
    developing countries;
     Preserve and affirm countries’ ability to use legal flexibilities under the TRIPS Agreement and
    the Doha Declaration on the TRIPS Agreement and Public Health;
     Commit to transparency and civil society input in the TPPA negotiations; and
     Ensure aid effectiveness and regional responsibility.

    The submission also outlines our views regarding particular provisions which may be discussed for
    the TPPA. We argue that:
    1) No patent term extension provision should be included in the TPPA, as this adds significantly
    to pharmaceutical expenditure. Failing this, if a patent term extension provision is included, it
    should be non-mandatory, allowing flexible implementation, limited to patents disclosing the
    molecule, and not permitted in relation to putative delays in the regulatory approval process.
    2) No ‘TRIPS Plus’ data protection should be included, as this results in unacceptable delays to
    the market entry of generics and presents an impediment to compulsory licensing.
    3) No patent linkage provision should be considered for the TPPA.
    4) The scope of patentability should not be expanded to cover new forms, uses or methods of
    using existing medicines, or to cover diagnostic and treatment methods. Pre-grant opposition
    should be retained.

    It has been reported that the US may be considering proposing differential IP standards for developed
    and developing countries. Our organisations are opposed to this as it would still ‘lock in’ existing high
    levels of IP privileges in countries such as Australia, reducing domestic flexibility to alter them in
    future.”

  3. Matthew Rimmer

    Ilana Solomon of the Sierra Club has detailed the NAFTA action by Lone Pine Resources Limited against Canada over Quebec’s fracking moratorium:
    http://www.huffingtonpost.ca/ilana-solomon/lone-pine-sues-canada-over-fracking_b_4032696.html

    Solomon commented: “Governments – including the U.S. government – are actively engaged in expanding the very rules that led to this harmful case. Investment rules very similar to the ones in NAFTA are set to be included in the 12-nation Trans-Pacific Partnership trade pact, and may also be included in the U.S.-EU trade pact.”

    Solomon maintained: “It’s time that governments stop signing trade and investment pacts that put the rights of corporations above the rights of communities and the environment. My right to clean water, clean air, and a healthy planet for my family and community has to come before Lone Pine’s right to mine and profit.”

  4. Ewen Richards

    When Europeans, Americans and others first came to Australia in the Gold Rush, they started a tradition of healthy resistance to foreign dominance and fought for self-determination. My Welsh ancestor, John White, a miner and later a farmer, fought at Eureka stockade 159 years ago, a battle that shaped Australian democracy. The miners from many nations stood for the rights of small businesspeople to earn a living without interference. My father was in the Navy in World War 2 defending Australia from Japanese invasion. Now our illegitimate puppet government is ready to sign away most of our rights which were hard won by our ancestors. If Australia signs the secret TPP, it will be goodbye to sovereignty, consumer rights, environmental protection, internet freedom and many other things. It will give multinational corporations such as Monsanto the ability to sue the Australian government for attempting to protect its citizens. This has already happened with Phillip Morris over the plain packaging legislation and Julia Gillard learned the lesson and said she would never sign away these rights again with the TPP or similar. So far,only the Greens have made a stand on this and the mainstream media, even the ABC has been ignoring the implications of this “Trojan Horse”. If some genuine National Party people properly investigate the Trans Pacific Partnership and its implications, it could well cause a split in the coalition! TPP favours foreign multinationals and gives them more rights than Australian citizens or Australian businesses. Malaysia will at least debate it in parliament according to this article, which may buy us some time to have a national debate about it. http://www.freemalaysiatoday.com/category/nation/2013/10/07/najib-concerned-over-tppa/

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