- Legislated approach
Overview
7.1This chapter outlines the evidence received in relation to the benefits of enshrining the content of trade agreements in a legislative framework, as well as the suitability of a legislative approach and key considerations and risks. Enshrining elements of the stakeholder consultation and engagement process in a legislative framework was discussed in Chapter 2 of the Interim Report.
Benefits of a legislative approach
7.2Throughout the inquiry submitters made a wide range of proposals regarding the content of Australia’s trade and investment agreements. In doing so, many specified that a legislative framework should be introduced setting out what should and should not be included in Australia’s trade and investment agreements. The concept of a legislative framework was variously described as establishing parameters, guardrails, limits, baselines, and minimum standards for the content of agreements.
7.3The Electrical Trades Union (ETU) described why in its view elements of the content of trade and investment agreements should be enshrined in legislation:
In order to ensure that Australian trade agreements are negotiated in the best interests of workers and the broader public, a set of agreed national priorities needs to apply to guide their development. Introducing legislative guardrails on the content of trade agreements is an essential step to prevent future Governments from dealing away critical labour protections and policy sovereignty at the negotiating table.
7.4Ms Michele O’Neil, President of the Australian Council of Trade Union (ACTU) explained to the Committee how a legislative approach would operate:
A legislative approach will ensure clarity and democratic oversight of Australia's approach to trade, giving DFAT [Department of Foreign Affairs and Trade] negotiators the ability to determine strategy but within a clear democratically accountable set of parameters in the public interest. It would also clearly signal to our trading partners Australian values and priorities.
7.5The Australian Manufacturing Workers’ Union (AMWU) suggested that legislation would provide assurance that key public interest measures would be maintained:
There is overwhelming support for Australia’s public health system, including Medicare and the Pharmaceutical Benefits Scheme, but also laws that support public health, like plain packaging of cigarettes. Governments always assure the public that these are sacrosanct and will not be traded away in FTAs [free trade agreements], but legislation would ensure that the public were not asked to take this on trust.
7.6Several submitters identified the key benefit of a legislative approach is that it can only be changed by further legislation, thereby providing a more robust and enduring framework in comparison to a non-legislative policy approach. Ms Patricia Holmes, Assistant Secretary, Trade and Investment Strategy Branch at DFAT acknowledged that: ‘… legislation can be used as an option to [p]resent a policy or establish a structure that subsequently can be changed through future legislation only. That would be one rationale to develop legislation.’
Suitability of a legislative approach
7.7In response to whether certain aspects of the content of trade and investment agreements could be suitably enshrined in legislation, submitters reflected on the nature of trade agreements, whether legislation is the most appropriate way of achieving desired objectives, and considerations and risks of a legislative approach.
Nature of trade and investment agreements
7.8Some submitters suggested that the nature of trade and investment agreements is not well-suited to a legislative approach, particularly because it could limit flexibility both during negotiations and across different agreements. For example, DFAT noted the fast changing negotiating environment for trade agreements and pointed out that: ‘Introducing legislative requirements may imbue the negotiating process with undue inflexibility, which may have negative implications for the Government being able to negotiate these agreements quickly if required.’
7.9The Red Meat Advisory Council (RMAC), German Australian Business Council (GABC), Grain Trade Australia (GTA) and DFAT emphasised the need to consider how a legislative framework would apply across types of agreements, different trading partners, and a range of negotiating environments. The GABC suggested that legislation is not necessary and reflected that: ‘Free trade agreements will always be a product of the international and economic environment in which they are concluded, as well as reflecting the different political priorities of the respective governments.’
7.10Mr Pat O’Shannassy, Chief Executive Officer at GTA explained the need to consider an approach that is applicable across different agreements and markets:
… legislation has its benefits, but it also has its constraints. If you're looking at particular trade agreements, there are going to be different issues in different markets. As for locking it into a legislative approach, we may be looking at that and end up legislating an approach around the EU FTA [A-EUFTA], then we move to our next market and find that our issues are quite different there. We should be seriously thinking about unintended consequences, if you're going down that track.
7.11DFAT outlined that it continually seeks to improve the approach to negotiating trade and investment agreements, including in response to changes in the priorities of stakeholders and shifts in the global environment. Mr Tim Yeend, Associate Secretary, Trade and Investment Group at DFAT told the Committee that in relation to a legislative framework:
…you would need to make sure that in legislating you were not constraining the ability of the process to evolve. Legislation, to some extent, locks you in to particular approaches and ways of doing things. That can be a positive step, but you would just need to take account of that evolving sort of process that I mentioned as well and not constrain in a negative way the ability to reflect those changing circumstances as they evolve.
7.12DFAT also noted that a legislative framework with predetermined constraints on negotiations may send certain signals to trading partners and reduce the capacity to respond to their negotiating positions.
7.13Conversely, the ACTU considered that having a legislated framework would demonstrate clear standards and values to trading partners upfront, which could foster shared understanding and result in more effective and timely negotiations.
Appropriateness of legislation to achieve objectives
7.14In its evidence to the Committee, DFAT emphasised the need to consider whether legislation is the most appropriate way to achieve desired objectives in relation to Australia’s approach to negotiating trade and investment agreements. For example, Ms Holmes explained that:
In relation to the question about legislation, I think it’s important to consider what we use legislation for.
…
Would legislation be the most effective and appropriate mechanism to implement change? In particular, is it necessary? At this point, the processes that we've described are not contained in legislation at all and it's not essential for these processes that there is legislation.
7.15DFAT also observed that different elements of the negotiation of agreements may suit different approaches, for example: ‘It may be that legislation is deemed appropriate for some key elements of either the mandate and/or the negotiating process, with most elements remaining to be set out in policies.’
7.16RMAC outlined that an alternative to a legislative approach could be to adopt a set of guidelines or best-practice principles for the negotiation of trade and investment agreements. It further explained that: ‘Such principles, which would be non-binding, and tailored to each agreement, should be constructed to help guide the negotiation of high-quality, ambitious and trade liberalising agreements… The purpose of a principles-based approach would also be to prompt negotiators on the best practice approach to including certain provisions in an agreement.’
7.17In its submission, DFAT referred to guidance issued by the Attorney-General’s Department outlining that there are risks in addressing policy issues with legislation where legislation is not required to do so, and that legislation should only be introduced if it is essential.
Considerations and risks of a legislative approach
7.18DFAT advised of the need to consider the potential legal risks associated with a legislated approach:
The risk of legal challenge in the event of uncertainty regarding whether a mandate, consultation obligation or transparency requirement has been properly followed in accordance with the legislation may lead to uncertainty, both within Australia and for trading partners. This could impact implementation of trade agreements as well as the negotiating process.
7.19The Business Council of Australia (BCA) stated that it does not support a legislative approach, however it suggested that if legislation is introduced it should be designed to avoid legal challenges that could disrupt and delay the development of trade and investment agreements.
7.20DFAT noted that to minimise the risk of legal challenge as far as is reasonably practicable, it would be important to ensure officials implementing the legislation have clarity on the intent and understand their obligations as well as where flexibility does or does not exist within the scope of the legislation.
7.21DFAT also observed that any legislation governing trade and investment agreements would need to carefully consider the definition of trade or investment agreement and what instruments would be within the scope of the legislation.
Committee Comment
7.22The Committee believes that there is substantial benefit in elements of the process for negotiating trade and investment agreements being enshrined in a legislative framework, this includes stakeholder consultation and engagement (see Chapter 2 of the Interim Report); publication of negotiating aims and objectives (see Chapter 3 of the Interim Report); National Interest Analysis and economic, social, and environmental impact assessments (see Chapter 3); and post-implementation reviews (see Chapter 5 of the Interim Report).
7.23With regard to the content of agreements, in general the Committee is of the view that it is not appropriate or necessary for a legislative framework to be highly prescriptive in ruling certain provisions in or out of future trade and investment agreements. Such an approach would likely reduce flexibility and limit the scope for negotiation, with the result being potentially reduced benefits from trade.
7.24However, the Committee does believe that there are certain exceptional commitments that are fundamental to the public interest that could be appropriately enshrined in a legislative framework. Further, broad principles in relation to maintaining consistency with international rights and standards, and retaining the ability to regulate in the public interest across key policy areas could also be appropriately enshrined in a legislative framework. For example, in relation to public health and safety, biosecurity, labour, creative and cultural industries etc. To some extent, this might involve codifying existing practices and safeguards in legislation.
7.25The Committee notes that a legislative approach would provide the Parliament with greater input to and visibility of the parameters for the negotiation of Australia’s trade and investment agreements. As previously observed, entering into trade and investment agreements is an executive power (see Chapter 4 of the Interim Report). However, the Committee believes that providing a broad framework for negotiations as a guide is appropriate.
7.26The Committee notes the potential considerations and risks to a legislative approach outlined in the evidence, which must be carefully considered in the design of any legislation.
Recommendations
7.27The Committee recommends that the Australian Government establish a legislative framework for the negotiation of Australia’s trade and investment agreements.
Mr Steve Georganas MP
Chair
29 April 2024