Chapter 5
Committee conclusions and recommendations
Introduction
5.1
The Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (TPP-11) is an important multi-lateral free trade agreement (FTA)
which is expected to deliver benefits to the 11 participating countries. The
Department of Foreign Affairs and Trade (DFAT) has described the TPP-11 as 'one
of the most ambitious global trade deals concluded since 1994'.[1]
5.2
The implementation of the TPP-11 is expected to see an increase in trade
opportunities for Australian businesses with the elimination of 98 per cent of
tariffs. A number of sectors identified particular benefits for their industry
including agriculture, resources and mining. The TPP-11 will provide
preferential access for a range of Australian exports into existing and new
markets.
5.3
While the committee accepts the importance and potential value of this
multi-lateral agreement, this inquiry has highlighted some areas of concern. As
the vast majority of the text of the TPP-11 remains unchanged from the original
Trans-Pacific Partnership (TPP), the committee was not surprised to receive
evidence highlighting many of the same issues raised during its inquiry into
the original TPP, including: the availability of independent economic modelling,
concerns about the Investor-State Dispute Settlement (ISDS) provisions and the
risks to Australia's sovereignty and ability to legislate in key areas,
concerns about the labour chapter with particular reference to mobility and
labour market testing, and concerns about the consultation process during the
treaty negotiation.
5.4
This inquiry has provided another opportunity for stakeholders and the
broader community to voice its concerns with the TPP-11. In this context, the
committee has made a number of recommendations. The committee notes the Joint
Standing Committee on Treaties (JSCOT) has made five recommendations in its
report on the TPP-11 tabled on 22 August 2018 where it has again recommended
that consideration be given to independent modelling and analysis being
undertaken and provided alongside the National Interest Analysis (NIA).
Reform to the treaty making process
5.5
Much of the evidence received for this inquiry highlighted concerns
about the treaty making process. Many of these concerns applied not just to the
process undertaken to negotiate the TPP-11, but to the treaty making processes
more broadly. The committee is familiar with these matters following its 2015
inquiry report Blind Agreement: reforming Australia's treaty-making process,
its previous inquiry into the original Trans-Pacific Partnership (TPP-12) as
well as the parliamentary inquiries undertaken by JSCOT.
5.6
In this committee's inquiry into the TPP-12, the committee welcomed and
supported the recommendations of the 2016 JSCOT majority report on the TPP-12 which
related to broader treaty making processes. In addition, the JSCOT concluded
that 'with growing isolationist sentiment internationally, the Australian
Government needs to focus on how it engages with the public on free trade
agreements if it wishes to maintain support for these agreements'.
5.7
Despite the recommendations made during previous parliamentary
inquiries, evidence to this inquiry indicates there is still a high level of
ongoing concern on these matters. The committee is of the view that further
work is still required to facilitate consultation and participation in the
treaty making process as well as increasing transparency. These issues are
discussed in more detail below.
Increased transparency
5.8
Evidence emphasised that organisations and the general public are
seeking more information to be made publicly available during the treaty
negotiation process. Several submissions and witnesses expressed the view that negotiations
had been conducted in secret, with details only being published once the treaty
negotiations were finalised.
5.9
The committee is cognisant of the range of issues that must be taken into account when negotiating trade
agreements including ensuring appropriate safeguards to ensure that draft
treaty text is kept confidential. The committee notes evidence from DFAT
explaining that parliamentarians were invited to view the text upon signing a confidentiality
letter. The committee views this as a positive initiative and one which could
be extended to other stakeholders provided that appropriate safeguards were in
place to maintain confidentiality.
5.10
It was clear to the committee that organisations and the community are
seeking additional opportunities to participate. The committee agrees there is
a need to increase the openness and transparency of the trade negotiation
process. As noted during the inquiry, consulting with a range of stakeholders
early in the process may assist the Australian Government in its negotiations
as they can highlight issues and suggest possible remedies early in the
process.
Consultation
5.11
The committee received evidence describing different perspectives on
DFAT's consultation process. While some witnesses from industry were positive
about their level of engagement with DAFT, witnesses from unions and civil
society groups noted that information was difficult to obtain and that requests
for meetings with departmental officials were not accepted.
5.12
The committee notes evidence from DFAT where they described the
extensive consultation process undertaken for TPP-11
(and TPP-12) as unprecedented and detailed the range of stakeholders consulted.
It is difficult for the committee to determine exactly what factors are
contributing to the range of views from witnesses about the consultation
experience.
Recommendation 1
5.13
The committee recommends that the Department of Foreign Affairs and
Trade conduct an evaluation of the consultation mechanisms used by the
department.
5.14
The committee notes that this committee and the JSCOT have both
previously made recommendations suggesting changes to the consultation undertaken
during treaty negotiations. While the committee notes that DFAT has undertaken
consultation and engaged with a range of stakeholders during the negotiation
stages for the TPP-11, the committee is concerned about the range of
individuals and organisations who have identified that they have not been
engaged in the process. In light of this, the committee is of the view that
further consideration should be given to making changes to the treaty
consultation process.
Recommendation 2
5.15
The committee recommends that the Australian Government: provide public
updates on each round of trade negotiations; release draft texts during
negotiations where feasible and with appropriate safeguards; and table the text
of proposed agreements in Parliament before
they are signed.
5.16
As highlighted in previous reports, the committee is aware of the treaty
making processes undertaken in other countries. The model used in the United
States was again raised in the current inquiry as a model which allows some
flexibility for identified stakeholders to participate in the consultation
process and view draft treaty text on a confidential basis. Given the high
level of interest from stakeholders and the potential benefits that can be
gained from early identification of issues, the committee is of the view that
alternate models for consultation should be explored. Furthermore, the
committee notes the proposal from the Australian Chamber of Commerce and
Industry for an Australian Trade Centre.
Recommendation 3
5.17
The committee recommends the creation by legislation of an Accredited
Trade Advisors program where industry, union and civil society groups would
provide real time feedback on draft trade agreements during negotiations.
Recommendation 4
5.18
The committee recommends that the Department of Foreign Affairs and
Trade review the stakeholder consultation mechanisms used internationally and
assess their appropriateness for an Australian context and provide
recommendations to government.
Modelling and review of free trade
agreements
Independent modelling
5.19
Several submissions and witnesses expressed concern that the TPP-11 has
not been subjected to independent economic modelling to assess the impact of
the TPP-11 in an Australian context. The objectivity of the NIA was questioned
given that this analysis was produced by DFAT, the lead department conducting
the treaty negotiations. It was acknowledged that several international
economic studies have been undertaken but that none of these have assessed the
impact of the TPP-11 in an Australian context.
5.20
The committee restates its support of the 2016 recommendation of the
JSCOT that to increase transparency of the benefits and costs there should be
an independent assessment of free trade agreements before the agreements are
signed to provide an accurate picture of the impact on jobs and the economy. The
committee notes with interest that JSCOT's Report 181 on the TPP-11,
tabled on 22 August 2018, again includes a recommendation that the Australian
Government 'consider implementing a process through which independent modelling
and analysis of a proposed trade agreement is undertaken by the Productivity
Commission, or equivalent organisation, and provided to the Committee alongside
the National Interest Assessment (NIA) to improve assessment of the agreement'.
It continues to be the view of the committee that the Productivity Commission
is best placed to undertake such an assessment.
Recommendation 5
5.21
The committee recommends that before new free trade agreements are
signed, the Australian Government commission the Productivity Commission to
undertake independent economic modelling and that this modelling be released
publicly.
5.22
On a related matter, the committee received evidence suggesting that the
TPP-11 should be assessed for its impact on a range of issues, with particular
reference to assessing the health and gender impacts of such agreements. It is
the view of the committee that undertaking assessments in these specific areas
may be beneficial and that these matters could be considered as part of any
economic modelling taken on free trade agreements.
Review of existing FTAs
5.23
Some witnesses referred to the 2010 research report published by the
Productivity Commission: Bilateral and Regional Trade Agreements. This
report examined the effects of bilateral and regional trade agreements on a
range of matters, including trade and investment barriers, prospects for multilateral
reform, regional integration and Australia's economy generally.
5.24
Given that almost a decade has passed since the Productivity Commission
conducted its research for the Bilateral and Regional Trade Agreements report,
and Australia has signed a number of new agreements since that time, the
committee agrees it may be beneficial for a follow up review to be undertaken. The
committee suggests that consideration be given to expand this review to assess
impacts on health, gender and the environment.
Recommendation 6
5.25
The committee recommends that the Australian Government make a reference
to the Productivity Commission to conduct a review of Australia's bilateral and
regional trade agreements.
Investor-State Dispute Settlement
5.26
As with the committee's inquiry into the TPP-12, the committee received much
evidence expressing concerns about ISDS provisions. Many contributors to the
inquiry shared the view that ISDS provisions grant legal rights to global
corporations that are unavailable to domestic investors and these provisions may
affect the Australian Government's ability to legislate in a range of areas
because of the threat of legal action.
5.27
Evidence from DFAT emphasised the inclusion of safeguards in the
Agreement which will protect the Australian Government from ISDS cases and will
ensure that Australia can continue to develop legislation and deliver services
in a range of areas without being concerned about being the subject of ISDS
cases.
5.28
The committee notes that several witnesses and submissions were not
reassured by the current safeguards and continued to have concerns about the
ISDS process with particular reference to the regulatory framework and the
institutions that facilitate and adjudicate the ISDS process. It was noted that
an international conversation is underway about this framework which has
included discussions about possible reforms to the key ISDS processes and
institutions that may be required.
5.29
On this matter, the committee notes advice from DFAT that Australia is
actively involved in the two processes currently looking into possible reforms
to the ISDS; one involving the UN Commission on International Trade Law
(UNCITRAL) and the other with the International Centre for Settlement of
Investment Disputes (ICSID). It was noted that changes of a technical or procedural
nature would be unlikely to require a change to the treaty text, however any
reform that would require a change to treaty text would require additional
consideration by JSCOT.
5.30
Given the current international conversation about ISDS and the actions
taken by some countries to no longer include ISDS provisions in their FTAs, the
committee is of the view that Australia must continue to take an active role in
discussions about reforming the ISDS processes or institutions. As these
discussions continue, it will be important that DFAT provide regular public
updates and advise the implications for Australia's existing FTAs and any that
are under development.
Recommendation 7
5.31
The committee recommends the Australian Government remove ISDS
provisions from existing free trade agreements and legislate so that a future
Australian government cannot sign an agreement with such provisions.
5.32
The committee recognises that ISDS clauses are in place in existing
trade and investment arrangements and that there has been limited ISDS cases
taken against Australian to date. Although Australia was ultimately successful
in the tobacco plain packaging case, this case was resource intensive, time consuming
and potentially damaging to Australian public health and sovereignty. Despite
the successful outcome, this does demonstrate the potential impact on
Australia, particularly from a sovereignty perspective, should ISDS clauses be
invoked. The potential financial impact on the Australian Government is also
significant.
5.33
Due to the high level of community concern with ISDS clauses and the
potential impact should a case be brought against Australia, the committee is
of the view that careful consideration should be given to whether ISDS clauses
should be included in future trade agreements. The committee was encouraged to
hear evidence from DFAT that the inclusion of ISDS provisions in trade
agreements in considered on a case by case basis.
Labour market testing
5.34
Under the TPP-11, Australia will extend the commitment to waive labour
market testing in the contractual service supplier category to six TPP-11
countries: Brunei, Canada, Malaysia, Mexico, Peru and Vietnam. Australia has
obtained equivalent reciprocal commitments from each of the six countries which
DFAT has suggested will result in benefits both for Australian businesses and
Australians seeking employment overseas. DFAT emphasised that under the TPP-11,
Australia has made commitments to waive labour market testing but there will be
sufficient flexibility in the operationalising of this commitment due to the
fact that the skilled occupations list administered by the Department of Jobs
and Small Business is not bound in the TPP-11.
5.35
Despite the reassurances from DFAT, evidence to the inquiry indicated
that concerns remain about the negative impact the commitment to waive labour
market testing may have on Australian workers. There was a sense that under the
Agreement, Australian workers would be disproportionally affected. Concern was also
raised about the high number of professions that could currently be covered by
the term 'contractual service supplier'.
Recommendation 8
5.36
The committee recommends that the Department of Foreign Affairs and
Trade include the provision of further information on labour market testing in
its outreach strategy and seminars.
Recommendation 9
5.37
The committee recommends that the Australian Government reinstates
labour market testing for contractual service suppliers where it has been
waived and legislate so that a future Australian Government cannot waive labour
market testing for contractual service suppliers in new agreements.
Implementing the Agreement
5.38
As stated in the Analysis of Regulatory Impact on Australia (ARIA), once
the TPP-11 enters into force, it is intended that DFAT and Austrade will
implement an outreach strategy which will include information sessions held
throughout Australia. The committee notes that, separate to the TPP-11 process,
DFAT and Austrade are already hosting information sessions in states and
territories to provide information to businesses about FTAs broadly and the
potential opportunities for their business.
5.39
Given the level of community interest in the TPP-11 and the range of
sectors that may have an interest in its implementation, it is important that
DFAT and Austrade build on the existing information sessions to provide
targeted information about specific matters related to the implementation of
the TPP-11. In order for Australian businesses to take advantage of the
opportunities that the Agreement is intended to deliver, it is vital that the
outreach strategy and a program of TPP-11 information sessions are developed
and published in a timely fashion.
5.40
Furthermore, in order to assist a range of stakeholders, it is important
that the sessions are promoted widely, held in a variety of locations and
targeted to a range of affected sectors. It would beneficial if information was
made available in a range of formats including webinars for people in remote
areas. Businesses may also find it useful if a summary of outcomes from
information sessions was published on the DFAT website.
Recommendation 10
5.41
The committee recommends that the Department of Foreign Affairs and
Trade develop and publish an outreach strategy which includes a schedule of
information sessions in a wide variety of locations and considers the most
appropriate mechanism for publishing key outcomes from the information sessions
on the Department's website.
5.42
In addition to the DFAT and Austrade information sessions, evidence to
the inquiry emphasised the value of an education program to ensure that
businesses are aware of the opportunities that may be available to them under
FTAs. In particular, it was noted that small and medium enterprises (SMEs) may
benefit from a targeted training program to assist them to navigate the
potential opportunities. It was suggested that such a training program could be
developed by government in partnership with the private sector and delivered
online.
5.43
The committee supports initiatives that will assist Australian
businesses to understand and take advantage of opportunities from the TPP-11 and
encourages DFAT and Austrade to develop a range of programs to assist business.
In light of the concerns raised with the committee about labour market testing,
it is particularly important that the education program provides up to date
advice to businesses on those issues.
Recommendation 11
5.44
The committee recommends that the Department of Foreign Affairs and
Trade and Austrade consider options, including possible partnerships with the
private sector, for providing additional information about the TPP-11 to businesses.
TPP-11 Commission
5.45
The committee notes that a TPP-11 Commission will be established under
the Agreement which will be responsible for the operation of the Agreement. As
outlined in the ARIA, this Commission will review the operation of the TPP-11
three years after entry into force and at least every five years thereafter.
5.46
The committee is aware that this Commission will comprise
representatives from each of the TPP-11 parties at the level of Ministers or
senior officials and its purpose is to oversee the implementation of the
Agreement and to review its operation as actions under the Agreement are rolled
out. The Commission will consider ways to further enhance trade and investment
between the Parties and supervise the work of all committees and working groups
established under the Agreement. The Commission is required to meet within one
year of the TPP-11 commencing and thereafter as the TPP-11 parties decide.
5.47
As already discussed, evidence to the inquiry highlighted the potential
value of ongoing review and evaluation of the TPP-11 as this can provide
insight into the implementation of the TPP-11. The work undertaken by the
TPP-11 Commission to review the operation of the Agreement could be a valuable
contribution to the broader discussion about the implementation and the
committee encourages DFAT to consider ways to provide regular updates about the
work of the Commission.
Recommendation 12
5.48
The committee recommends that the Department of Foreign Affairs provide
regular public updates about matters discussed at the TPP-11 Commission.
Suspended provisions
5.49
The committee notes that 22 provisions included in the original TPP-12 have
been suspended for the TPP-11 and these provisions can only be reinstated with
the agreement of all TPP-11 parties. Evidence to the committee highlighted that
although the suspension of the provisions was welcomed, concern remains about
the implications should they be reinstated. The committee notes the reassurance
from DFAT to the JSCOT committee that should all TPP-11 parties agree to
reinstate the suspended clauses, that would trigger a treaty review process to
be undertaken by JSCOT. In effect, the suspended clauses would not be
reinstated until they had been considered in further detail by the JSCOT.
5.50
The committee recognises the importance of ongoing parliamentary
oversight and scrutiny of free trade agreements and the need to ensure that stakeholders
are kept informed throughout the committee inquiry process. In the event that
TPP-11 parties do agree to reinstate the suspended provisions, it is important
that the Government consider the issues raised through the parliamentary inquiry
process about the suspended provisions.
5.51
In this context, the committee supports the recommendation from JSCOT's
report into the TPP-11 that in the event that the TPP-11 parties agree to
reinstate the suspended provisions, the reinstatement be treated as an
amendment to the treaty and be subject to an inquiry by the JSCOT.
Other inquiries
5.52
The committee has conducted this inquiry at the same time as the JSCOT
has conducted its inquiry into the TPP-11. Concurrent inquiries were also
conducted when the committees inquired into the original Trans-Pacific
Partnership.
5.53
In this context, the committee is concerned that in conducting this
inquiry it has largely replicated the work of the JSCOT which is established to
look into such agreements. Two different committees looking into the same
agreement was also confusing for submitters and witnesses. To the committee
this does not appear to be the best use of limited committee resources.
5.54
The committee understands that the resolution of appointment
establishing the JSCOT does not include provision for participating membership.
The committee notes that the Joint Committee on Electoral Matters has resolved
to include participating members for inquiries and that this should also be
considered for the JSCOT. Allowing participating members on such committees
would enable the Parliament to perform vital review functions while alleviating
the need to duplicate inquiries.
Recommendation 13
5.55
The committee recommends that the Joint Standing Committee on Treaties
consider a resolution to enable participating membership for inquiries and, if
agreed, put the necessary changes to both chambers.
Recommendation 14
5.56
The committee recommends the Australian Government provide the
Government's Statement of Objectives for Negotiation to the Joint Standing
Committee on Treaties for consideration and feedback; and to provide the Joint
Standing Committee on Treaties with a briefing at the end of each round of
negotiations.
Senator Alex Gallacher
Chair
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