3.1
Through many inquiries since its establishment in 1996, the Committee has received considerable evidence on the effectiveness of the consultation process undertaken by the Department of Foreign Affairs and Trade (DFAT), particularly with regard to trade treaties. On one hand many businesses and industry representatives express satisfaction with the level and quality of consultation they receive and praise the accessibility and professionalism of DFAT staff. On the other hand, some smaller business representatives and civil society and union representatives claim the consultation process is inadequate.
The current Department of Foreign Affairs and Trade process
3.2
DFAT has frequently outlined its consultation process for the benefit of parliamentary committee members. In its submission to this inquiry DFAT again set out the broad outline of its consultation process for trade agreements:
The Government’s consultations and stakeholders engagement process on trade agreements generally includes:
open-ended calls on the DFAT website for written submissions from stakeholders and the general public for the duration of the negotiations;
formal stakeholder consultation meetings, involving community groups, NGOs [non-government organisations], trade unions, academics, peak industry bodies and business representatives; and
consultation with State and Territory governments through regular meetings of the:
Commonwealth-State-Territory Standing Committee on Treaties (SCOT);
Senior Officials’ Trade and Investment Group (Commonwealth and State and Territory officials); and
Trade and Investment Ministers’ meeting (Commonwealth, State and Territory Ministers).
3.3
DFAT elaborated on the details of these individual steps, stating that submitters are encouraged to ‘lodge submissions on the commercial, economic, regional and other impacts’ of the proposed trade agreement. Submissions may also focus on ‘specific market access challenges or other issues of importance’, including tariff and non-tariff barriers and barriers to investment. Submissions are usually published on the DFAT website unless a submitter specifically requests confidentiality.
3.4
The call for submissions is followed by meetings with stakeholders designed to provide information and answer queries:
In addition to continuing consultations with individual stakeholders, including civil society and unions, DFAT hosts biannual stakeholder meetings to brief interested groups on the state of play of current negotiations and to seek their views. Time is provided at these meetings for side discussions on particular matters that arise, as well as individual meetings with key negotiators to discuss specific matters of concern.
3.5
DFAT is satisfied that the current process provides for effective consultation:
Post-meeting surveys show that a significant majority of participants (90 per cent) see these meetings as useful in improving their understanding of the Government’s trade agenda, including on specific FTA [free trade agreement] negotiations, and as providing an opportunity to put forward their views.
3.6
The current process has developed over the past 20 years. During the seminar held to mark the 20th Anniversary of the Joint Standing Committee on Treaties (JSCOT) in 2016, Ms Patricia Holmes, Assistant Secretary, Trade and Law Branch, Office of Trade, in DFAT provided a potted history of the gradual implementation and refining of the process. She pointed out that submissions were first sought by the Department prior to the 1999 World Trade Organization (WTO) conference in Seattle. In 2003 in response to a recommendation by the Senate Foreign Affairs, Defence and Trade References Committee (SFADTRC), the government agreed to publish submissions on its website, subject to the agreement of submitters.
3.7
In addressing the seminar, Ms Holmes noted that the initial improvements in the consultation process and call for submissions were prompted by changing public attitudes:
I think we were starting to see the role of social media then. There was the process of engaging with the public more through the trade agreements. We issued invitations for public submissions and hearings were heard for the first time in all capital cities and regional towns.
3.8
In response to recent recommendations from several parliamentary committees for further improvements, the Government has offered assurance that the consultation process is continually under review. For example, following its 2019 inquiry into the Proposed Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the SFADTRC recommended that the Government ‘conduct an evaluation of the consultation mechanisms used by the department’. In its response the Government assured the Committee:
The Government keeps its consultation practices in relation to trade negotiations under active review, regularly considering whether there is scope for improvement. The Government will continue to explore new options.
Issues
3.9
The main concerns raised by some stakeholders regarding the consultation process fall into two main categories:
a lack of detailed information and transparency regarding the negotiation process and position; and
equity of access for all stakeholders.
Transparency
3.10
The Government has long maintained that, particularly with regard to trade agreements, confidentiality is essential to Australia’s national interest. In its submission to the SFADTRC for its inquiry into the Commonwealth’s treaty-making process in 2015, DFAT explained the negotiation process that necessitated confidentiality:
The government of the day is constrained in what it can disclose about current and ongoing treaty negotiations, partly because standard international practice is for the negotiating texts of bilateral and plurilateral treaties to be kept confidential between the parties prior to signature (although this does not preclude the discussion of texts by the relevant national government with sub-federal units, such as Australia’s States and Territories). In addition, disclosure of Australia’s negotiating positions could adversely affect the capacity for the government to pursue the national interest by negotiating the best attainable outcomes.
3.11
The Committee was told in 2016 that the confidentiality of negotiations is critical if the government is to achieve the best results for Australia:
… I will say as a negotiator that, whatever arrangement there is now or in the future, for Australia’s national interest that confidentiality absolutely has to be protected. You just do not want to see Australia’s bottom line on any given part on a blog on the web somewhere, because it would totally undermine our national interests. It is a tricky balance and to some extent it is about trust and handling sensitive information.
3.12
The need for some degree of confidentiality is understood by many stakeholders. During JSCOT’s inquiry into the Korea-Australia Free Trade Agreement (KAFTA) in 2014, the wine industry bluntly told the Committee:
We do not believe, like some others, that it should all be public, because, if you have interest groups—and we would be the same—they would be out there objecting to something and you would never get any decisions happening.
3.13
During the current inquiry, Clifford Chance, a law firm, told JSCOT that they consider confidentiality essential in order to protect the government’s negotiating position:
Despite these well held concerns, it is our view that Australia’s treaty negotiation process should remain confidential. Very few States have domestic treaty making processes that require draft treaty texts to be released for public consultation prior to signature—almost all nations follow the same approach as Australia i.e. treaty negotiations are conducted on a confidential basis … should the Executive be required to make its treaty negotiations available to the public this could impede on the Executive’s treaty negotiation strategy and bargaining position in respect of the treaty being negotiated and future Australian treaties.
3.14
Business and industry groups are conscious that there is a need for a level of confidentiality but recommend that affected stakeholders are in the best position to provide advice on the ultimate outcomes of trade agreements:
AiGroup recognises the obligations to maintain the confidentiality of the negotiating position of the other side. However, we do believe that the offers of the Australian side should be explained clearly to those affected by them. It is Australian industry which will implement the advantages of freeing up trade. But it’s also industry which will bear the brunt of rapid erosion of domestic markets. And it is industry which has the expertise to advise on the effect of proposed measures and to highlight some of the unintended outcomes.
3.15
The Productivity Commission told the Committee that the requirement of confidentiality remains a significant barrier for stakeholders wishing to provide valuable input to the treaty-making process:
Transparency is particularly problematic with respect to trade negotiations. Stakeholders reported that opportunities for consultation become very limited once negotiations begin, precluding ongoing, contextual advice from industry and civil society groups throughout negotiations.
Negotiators are also reluctant to provide details of the proposed agreement to stakeholders due to concerns about confidentiality and prejudicing negotiations … This makes it difficult for stakeholders to meaningfully comment on agreement provisions.
3.16
This finding was supported by stakeholders with frequent first-hand experience of the process. Echoing a sentiment expressed by several submitters, the Public Health Association of Australia (PHAA) explained the frustration caused by the lack of information imposed by the confidentiality requirements:
At present it is extremely difficult to access information about the specifics of the issues being discussed in trade negotiations. While we appreciate the efforts of Australia’s trade negotiators (within the constraints of their mandate) to share general information about the status of negotiations and Australia’s positions on key issues of interest to us, we continue to be frustrated by the lack of detail provided and our lack of access to negotiating text. This severely limits the ability of our Association and its expert members to assess the implications of trade treaties.
3.17
Evidence to the various parliamentary inquiries has identified two consequences of the lack of meaningful information on treaty actions:
government is impeded from receiving expert advice, and therefore cannot attain the best negotiated result for Australia; and
unexpected impacts are experienced by some stakeholders and the wider Australian community, especially given the increasing impact of trade-related agreements ‘behind-the-borders’.
Access
3.18
AiGroup has repeatedly drawn attention to the difficulties involved in reaching the diverse Australian manufacturing sector. For example, with regard to the Japan-Australia Economic Partnership Agreement (JAEPA), they told JSCOT:
AiGroup appreciates the efforts made by negotiators to consult widely but, overall, domestic manufacturers were not engaged in the consultations. The sector is dispersed and heterogeneous in nature and comprises large, medium and small businesses. This makes it difficult for negotiators to get a feel for the very wide range of interests at play.
3.19
Likewise, the Export Council of Australia (ECA) considers that members of the trading community miss out during the current consultation process:
The consultations held by DFAT during the negotiation phase are unable to accommodate a diverse range of voices from the trade community due to their limited time and geographic scope. There is a tendency for the ‘bigger end of town’ to dominate the process due to the costs of participation being too high to justify. This can lead to an unintended distortion of voices in the consultation process that limits who and what perspectives are included.
3.20
Civil society groups and union representatives have long argued that they are not provided the same level of access as business and industry representatives, and that consultation is inadequate or tokenistic. The Australian Fair Trade and Investment Network (AFTINET) discuss this problem in relation to the Regional Comprehensive Economic Partnership Agreement (RCEP):
We do know there was strong representation of business at RCEP negotiating rounds, because there were reports of seminars hosted by corporate consultancies and business organisations which gave presentations to RCEP negotiators … In contrast, there were no formal consultations with civil society representatives at RCEP negotiating rounds until 2016.
3.21
DFAT contests this assertion:
DFAT's general approach is to consult early and maintain close and ongoing contact with all stakeholders so that negotiating strategies are informed by a broad range of interests and priorities.
Objective of consultation
3.22
When considering any solutions to these issues, the aim of the negotiation process must be kept in mind. In its submission to the SFADTRC inquiry into the Commonwealth’s treaty-making process in 2015, DFAT stated that the aim of consultation is to assist the government to make an informed decision:
The aims of the consultation process are to give decision-makers, ultimately Ministers, access to a wide range of information and to provide interested persons and groups with the opportunities to present their views to the government – including during the course of treaty negotiations.
Final decisions on particular treaty texts and whether or not to enter into a treaty necessarily involve a balancing of competing interests with the aim of upholding a broader national interest. As noted above, the latter requires confidentiality regarding the details of the negotiating process.
3.23
This position was echoed by Ms Holmes at the JSCOT 20th Anniversary Seminar. While she reassured stakeholders that their views were important and are taken into consideration during the negotiation process, she cautioned:
… consultation does not mean agreement. We look, we read, we consider but we cannot agree with everybody. There will always be sections of the community which do not agree with an outcome and sections which are not satisfied with the compromises that are reached, because trade agreements are inherently compromises.
3.24
Speaking to JSCOT during the current inquiry, DFAT reiterated the difficulties involved in trying to satisfy competing interests:
… it is very difficult if not impossible to satisfy all of the competing interests at play. In many cases there will be foreign-partner sensitivities to be managed, and time and other pressures must also be factored in. Our objective is always to secure the best possible outcome in the national interest. In any treaty negotiation, interested parties will have their own views on what the most important elements are for Australia. Often those views will be competing and may be mutually exclusive. The role of negotiators is to balance those competing views in a way that delivers the best overall outcome for Australia.
3.25
However, some stakeholders argue that if the government is to achieve the best possible advice for decision-makers the consultation process must be improved to allow greater participation by all those affected by the outcome of any proposed treaty action.
3.26
Potential avenues identified to deepen consultation whilst protecting the integrity of the negotiation process include the following:
the establishment of the Ministerial Advisory Council (MAC);
more regular briefings of relevant parliamentary committees;
publication of government priorities and objectives for trade agreements both before and during negotiations; and
non-disclosure or confidentiality agreements to provide for greater consultation with stakeholders in a protected environment.
Ministerial Advisory Council
3.27
DFAT advised the Committee that the Government had established the MAC on free trade negotiations in June 2020 to ‘help inform the Government’s ongoing FTA agenda’. Chaired by the Minister for Trade, Tourism and Investment, the Government expects the MAC to improve consultation with business and Australian society more generally:
The MAC is expected to convene at least twice a year, bringing together a broad cross-section of business, industry and community representatives with trade expertise to help inform Australia’s negotiations and policies going forward.
3.28
MAC membership is drawn from a wide cross-section of Australian society, including business and community-based organisations. Individual members are leaders in their fields with an interest in international trade policy, and are drawn from industry groups and bodies and include a trade union representative. The Council has met on four occasions since it was established and summaries of its discussions are published on the DFAT website.
3.29
The ECA cautiously welcomed the creation of the MAC but suggested that there is a need for a review mechanism of the membership and that the role of the MAC will need to be more visible. It warned that the current representation was limited:
While the Committee membership is representative of a broad range of sectors and businesses, it is still limited in scope. There is no representation from an enterprise or industry association that can be the voice for Australian exporters and importers views. Committee representatives can and should be elected by key stakeholders. Alternatively, membership on a rotating basis would also allow for a diverse set of viewpoints and insights relevant to the process to be addressed and integrated.
3.30
Other submitters also identified gaps in the membership. ActionAid noted that, of the 20 members, there was only one union and one consumer organisation representative and one stakeholder representing Aboriginal and Torres Strait Islander businesses. Further they are concerned about the gender imbalance with 12 male representatives on the Council and only 8 female representatives and would like to see a space reserved for gender expertise. Similarly, the PHAA pointed out that the MAC ‘is dominated by industry’ and that there is ‘no public health representation’.
Briefings for parliamentary committees
3.31
DFAT also advised JSCOT that the Department had commenced a biannual briefing program on FTA negotiations for the Trade Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) in June 2020. JSCFADT was briefed on the Australia-European Union Free Trade Agreement (A-EUFTA) at that time.
3.32
This is a pilot program. Asked if it would be extended to JSCOT, DFAT replied that no decision had been made to that effect to date.
Publication of priorities and objectives
3.33
During its 2003 inquiry into the WTO General Agreement on Trade in Services (GATS) and the proposed Australia-United States Free Trade Agreement (AUSFTA) in 2003, the SFADTRC found that, despite the improvements to Australia’s treaty-making process brought by the 1996 reforms, the growing ‘domestic significance of international trade treaties’ required further facilitation of parliamentary and public scrutiny. As part of a recommendation to increase parliamentary scrutiny of trade agreements, it recommended that the government’s priorities and objectives for any trade agreement should be tabled in Parliament before negotiations began. The government rejected the overall recommendation stating that it was ‘unworkable’ and ‘would circumscribe the capacity of the government to secure the best possible trade outcomes from trade negotiations’.
3.34
In its 2008 report on the inquiry into the Australia-Chile Free Trade Agreement, JSCOT isolated the recommendation and proposed only that a document setting out priorities and objectives be tabled in the parliament:
The Committee recommends that, prior to commencing negotiations for bilateral or regional trade agreements, the Government table in Parliament a document setting out its priorities and objectives. The document should include independent assessments of the costs and benefits. Such assessments should consider the economic regional, social, cultural, regulatory and environmental impacts which are expected to arise.
3.35
In its response tabled on 4 February 2010, the government advised that it was already implementing this recommendation ‘through its commitment to transparent and inclusive trade policies’. It cited its consultation process for the Trans-Pacific Partnership Agreement (TPP) and KAFTA and noted that it had tabled documents in Parliament when negotiations on those agreements commenced. The documents were based on those consultations and set out the objectives and priorities of the negotiations.
3.36
However, the tabling of such a document did not become regular practice and JSCOT repeated the recommendation in 2012, and the SFADTRC again in 2015. The government rejected both recommendations, considering its existing process sufficient:
The Government does not accept this recommendation. Under Australia’s existing treaty-making system extensive information is already made publicly available both in the lead up to and during the course of trade agreement negotiations, including detailed feasibility studies where appropriate.
3.37
The suggestion was again raised during the current inquiry. DFAT indicated that the information for two of the current treaties under negotiation are available on the Department’s website:
… in fact we publish our negotiating objectives on the DFAT website. So you will find on the DFAT website the negotiating objectives for the EU FTA [European Union Free Trade Agreement] and more recently for the UK FTA [United Kingdom Free Trade Agreement]. You will see from those objectives that it covers a broad range of disciplines that would be included in a comprehensive FTA. We also publish what we perceive to be the benefits from an FTA with a particular country and a summary of each negotiating round so that stakeholders can see what has been negotiated.
3.38
The Committee notes that with respect to A-EUFTA, DFAT has published on its website a six-page ‘summary of negotiating aims and approach’ and a two-page ‘objectives’ paper, in addition to a three-page ‘benefits fact sheet’. Similar documentation exists with respect to the Australia-United Kingdom Free Trade Agreement (A-UKFTA), also under negotiation, though not for other agreements currently listed as under negotiation.
Confidentiality agreements
3.39
The Productivity Commission has suggested that the use of ‘confidentiality agreements’ could provide the confidentiality that the government requires while allowing access to relevant documents and the draft treaty text:
The use of confidentiality agreements (or deeds) between government and key stakeholders can go some way to increasing transparency in trade negotiations, by enabling formal consultation on draft treaty text. While not everyone can be in the negotiating room, identifying parties that are capable of offering critical assessments of proposals can help negotiators understand where the benefits of prospective agreements lie, and where costs might be imposed.
3.40
The Commission acknowledges the government’s concerns over confidentiality and the reality of the negotiation environment, but considers these are not insurmountable barriers to improving access:
… [confidentiality agreements] are a mechanism by which you could overcome the most obvious concern about consultation as the negotiations are unfolding, namely that negotiators are concerned that they’re sharing intricate details of a delicately poised negotiation with stakeholders and there is that risk of public exposure when they want to keep things reasonably tight. Obviously that’s an understandable concern. Confidentiality agreements can be used as a mechanism to try and provide greater comfort to negotiators that their candid discussion with stakeholders won’t be abused.
3.41
The Chair of the Productivity Commission reminded the Committee that confidentiality agreements are already employed by government during the development of policy more generally:
I would note that [confidentiality agreements are] used quite a lot in policy formulation. When governments are looking at particular policy options and they need stakeholder input to test the workability of various policy options and the like, it’s quite routine to sign outside parties up to confidentiality agreements in ways that allow that candid exchange.
3.42
The National Farmers’ Federation (NFF) also advocates for such a system for industry representatives:
The NFF considers that the creation of a system whereby certain industry representatives be provided with access to live negotiating texts and schedules and provide feedback on those texts and schedules, on the condition that they sign a non-disclosure agreement, would achieve the desired outcome while avoiding compromising the confidential and sensitive nature of ongoing negotiations.
3.43
The NFF stress the benefits to the Government and the broader community of such a system:
The simple principle underlying this proposal is that actions based on incomplete information are likely to be sub-optimal. The more informed Australia’s negotiators are of Australia’s sectoral interests, the more likely they are to secure optimal outcomes. It is not possible for sectoral interests to convey their priorities to Australia’s negotiators with precision and comprehensiveness unless they are aware of what is being offered by Australia’s negotiating partner.
3.44
Law firm Clifford Chance supports such a process suggesting that DFAT is currently ‘missing opportunities to get valuable, business-level feedback from stakeholders’:
To make the consultation process more transparent and accessible to stakeholders, we consider that DFAT may wish to establish a set of publicly available guidelines which set out the criteria that need to be met for an interested party to engage in the confidential DFAT consultation process. We consider that, in certain circumstances (such as where an Australian business has a major investment in the country with which the treaty is being negotiated), it should be possible for stakeholders to view relevant parts of the negotiation text, or at least be briefed on the effect of the text proposed. This exceptional engagement mechanism could include a requirement that the stakeholder sign a Confidentiality or Non-Disclosure Agreement.
3.45
Confidentiality agreements are part of the process used in the United States model and frequently brought to the attention of parliamentary committees’ inquiries into treaty-making in Australia. During this inquiry the AiGroup and NFF both raised the example with JSCOT.
3.46
The Committee recognises the limitations of confidentiality or non-disclosure agreements. Whilst they may provide some level of assurance, enforcing non-disclosure agreements and identifying breaches may prove difficult in practice.
3.47
When the SFADTRC recommended stakeholders be given access to draft treaty texts under conditions of confidentiality, the Government Response did not accept the Recommendation.
Conclusion
3.48
The Committee acknowledges and accepts that the dynamics of trade negotiations, and in particular the principle that nothing is agreed until everything is agreed, means that a high degree of transparency as negotiations unfold would compromise Australia’s negotiating position and ultimately be inimical to Australia’s national interests.
3.49
Nonetheless the Committee is of the view that improvements can be made in the consultation process that would provide greater oversight and visibility of trade negotiations as they unfold and allow improved access to industry and stakeholder expertise to inform negotiating positions.
3.50
The Committee commends the formation of the MAC and urges that it be used by the Government to inform its trade negotiating agenda.
3.51
The Committee recommends that the Government publish negotiation aims and objectives for all future trade treaty negotiations.
3.52
The Committee recommends that the Government brief the Joint Standing Committee on Treaties biannually on the status of upcoming and current free trade agreement negotiations, potentially as part of the same briefing to the Trade Sub-Committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade.
3.53
The Committee recommends the Government consider the use of non-disclosure agreements with key stakeholders to allow for improved consultation in certain areas of trade agreement negotiation, having regard to the approaches and mechanisms used by the United States and by the European Union.