Executive Summary

This report contains the Joint Standing Committee on Treaties (JSCOT) review of the following major treaty action: Second Protocol to Amend the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) (AANZFTA Second Protocol).

The Association of Southeast Asian Nations (ASEAN) is Australia’s second largest trading partner and accounts for more than 14.8 per cent of Australia’s overall trade at AUD 178 billion. The original AANZFTA agreement was signed in February 2009 and entered into force for Australia in January 2010. The original treaty provides for extensive tariff reduction and greater certainty for service suppliers and investors.

AANZFTA is noted as being ASEAN’s highest quality free trade agreement in terms of market access for goods trade. The original treaty has since been amended by the First Protocol which entered into force in October 2015 and now potentially the Second Protocol, which is the treaty action being considered here. The AANZFTA Second Protocol provides broader coverage through new provisions on services and investments, new digital trade data rules, and first-time cooperation in the areas of environment, labour rights, and women’s economic empowerment.

JSCOT conducted an inquiry into the AANZFTA Second Protocol which included two public hearings. The first public hearing took place on 18 March 2024, at which officials from the Department of Foreign Affairs and Trade (DFAT) participated as witnesses. The second public hearing took place on 25 March 2024, with witnesses from academia and other stakeholders.

At the public hearings, issues raised included the importance of ASEAN to Australia, the need to update the original treaty, how matters related to how trade can contribute to sustainable development, the circumstances of micro-small and medium enterprises, the interests of First Nations people, the negative list approach, Investor-State Dispute Settlement (ISDS), questions relating to Myanmar and sanctions, and the nature of self-regulation. The Committee notes the concerns expressed about the use of ISDS, and, separately, the interaction between the crisis in Myanmar, the application of sanctions, and the treaty provisions and believes these matters have been adequately addressed through the inquiry. Notably, Australia successfully negotiated a review of the existing ISDS provisions in AANZFTA to occur 18 months after entry into force of the Second Protocol. This marked an instalment of the Government’s commitment to review ISDS provisions in agreements where they already exist, while ensuring Australia does not agree to ISDS mechanisms in new agreements.

The Committee supports the treaty action and recommends binding treaty action be taken.

The report also contains the Committee’s examination of three minor treaty actions which were adopted by the Committee with a recommendation for binding treaty action:

• Implementing Changes to the Product-Specific Rules Annex of the Regional Comprehensive Economic Partnership Agreement
• Instrument for the Amendment of the Constitution of the International Labour Organization, 1986
• Amendments of 2022 to the Code of the Maritime Labour Convention 2006