Originally published by Lloyd's List Australia - 28 May 2015
While there has been recent and (almost) unanimous approval for our North Asian "trifecta" of FTAs, that chorus of approval has not quite carried over into the conversations regarding the proposed Trans – Pacific Partnership Agreement (TPPA).
Notwithstanding the absence of a completed text, there has been a significant level of speculation as to what is supposed to be in the TPPA. Most of that speculation has been as to potentially adverse consequences. Some of the speculation has been based on alleged text leaked by Wikileaks and has included commentary on topics such as threats to the future availability of generic drugs, the evils inherent in an Investor State Dispute Resolution (ISDS) provision and the possibility that the TPPA would relax border biosecurity measures to allow the import of North American beef which is currently the subject of bans due to the fear that the cattle will be infected with "mad cow disease" which could decimate the Australian industry.
Much of the speculation on the potential adverse consequences of the TPPA does reflect a deep – seated distrust of the apparent secrecy of those seeking to complete the TPPA and a concern that it will only deliver benefits to a limited number of multinational traders to the detriment of the general population.
This is also taking place against a backdrop of daily updates on the progress of the US Trade Promotion Act (TPA) through Congress which has seen an unusual alliance of a Democrat President and Republican members of Congress opposed by Democrat members of Congress. In many ways, the TPA seems to be a key to the conclusion of the TPPA as it would allow the US to quickly complete its TTPA negotiations. Further delays with the US approval process may well cause a significant delay to TPPA negotiations as attention in the US will soon be drawn to the US Presidential election campaign. Indeed the fate of the TPPA could then rest on the outcome of the US elections as much as countries such as the US and Japan resolving disagreement on fundamental market access issues.
The debate on the TPPA in Australia has been the subject of extensive media and other commentary. In fact it has been so extensive that those covering the issue have resorted to asking me to provide commentary, including presentations at conferences for the CBFCA and AFIF, radio interviews, Sky TV and even inclusion in a story on ABC's "Lateline" program in my capacity as a director of the Export Council of Australia (ECA). Thankfully, most of the commentary I received on my appearance seemed to focus on the fact that my "hair looked good" and I managed to avoid many of the personal attacks doled out to those supporting the TPPA. The issue also raised its head during the recent hearings of a Senate Committee considering Australia's "Treaty Making Process" where I provided evidence in addition to a written submission on behalf of the ECA. A reasonable portion of the questions asked by one Senator opposed to the TPPA related to the current theories as to failings in the TPPA – which I was unable to address, not having the text of the TPPA. However I was able to point to our history of FTAs which did not support the adverse outcomes as being those likely to arise.
Still, all these experiences caused me to question the current concerns being expressed as to what may be in the TPPA and look at those concerns in light of past and current experiences.
- No FTA will be perfect. An FTA is like any other agreement in that it reflects the relative desires of the parties to the agreement and their ability to achieve those desired outcomes. In that context, Australia with its largely open economy and with low levels of tariffs, does not have much to compromise in negotiations. Given our unwillingness to compromise on basic protections then much of the attention of negotiating partners has focussed on our investment restrictions to allow more direct foreign investment. Accordingly that limits the capacity of Australia to secure comprehensive outcomes which satisfy the interests of all parties. In regional FTA with major trading partners such as the TPPA, our ability to influence the agenda is very limited – the major trading partners will dictate the majority of the agenda.
- Australia has largely done well in its negotiated FTA, especially in the Asian FTA Trifecta. In particular, securing the deal which it has apparently secured with China under the ChAFTA is a wonderful achievement. That said the ongoing delay in sighting the text of the ChAFTA is frustrating and begs the question as to what deal had actually been secured to support the announcements of the deal in November last year.
- I do not subscribe to the conspiracy theories that Australia has sold out vital national interests in the TPPA. For a start, we have no text to support that theory. Plus, if there we were to have relinquished fundamental interests then we would have done so previously to get the FTA negotiation agenda moving.
- Successive Federal Governments have been accused of secrecy in negotiations on its FTA especially in relation to the TPPA. I believe that there has been extensive consultation on the TPPA with interested parties in Australia to the extent possible given the reasonable expectations of secrecy of the other negotiating parties. It is unlikely that any negotiation between sovereign nations could succeed if their progressive positions and the text of their negotiations (in draft only) are subject to ongoing criticism. Indeed, there was direct evidence before the recent Senate inquiry from a former Trade Minister that disclosure of ongoing drafts of the text may actually hurt the negotiations by creating confusion.
- The inclusion of an ISDS in some form is a likely outcome and the current Government has allowed inclusion of ISDS provisions in other FTAs to date. There are actually merits to its inclusion including merits to Australian exporters operating overseas in countries where the local legal systems are not seen as robust as in other countries. Further, in response to the comments that an ISDS provision will lead to a compromise on basic interests such as anti – dumping and biosecurity protection, it should be noted that we have successfully "carved out" such sensitive areas from other ISDS provisions. There is no reason to believe that we cannot do so now to support the inclusion of an ISDS, especially given the imperative of the US to include such a provision.
- Experience suggests that we reserve our rights on sensitive areas. We still retain anti - dumping and countervailing provisions, along with FIRB review and our biosecurity regime. These are positions respected and adopted by other parties to the TPPA so we can expect similar outcomes.
- The TPPA includes countries such as Canada, Peru and Mexico with whom we do not have FTA and may not have secured FTA on a bilateral basis for some time. Accordingly the TPPA may well afford significant opportunities in new markets.
- The TPPA includes us in important regional supply chains and afford economies of scale which we may not have been otherwise able to secure.
- While there is no need for Parliamentary approval as in the US, such agreements as the TPPA and the implementing legislation in Australia are subject to review by a number of Parliamentary Committees. It is surprising how few submissions are made to such reviews.
- While massive, the TPPA "only" includes 12 countries. The next big regional deal is the Regional Economic Comprehensive Economic Partnership Agreement (RCEP) with 28 countries, including China. This is still being actively negotiated and yet there has yet to be any concerns expressed regarding the RCEP. Many of those who object to US influence under the TPPA similarly object to the influence of China under ChAFTA, yet there has been no outcry to date in relation to the RCEP. Maybe the attention will move to the RCEP once the future of the TPPA has been clarified.
This is by no means to suggest that our Federal Government and its agencies negotiate and implement FTAs in a perfect manner. It is widely recognised that Governments need to do more to support the implementation and the use of FTAs. In our Trade Policy Recommendations, the ECA called on Governments to do more in this area and suggested how that may arise. The recent Federal Budget echoed these needs and has allocated significant funding for a new "FTA dashboard" and a "roadshow" on "the North Asian FTA trifecta" which is consistent to the ECA Recommendations and which would be complimentary to similar work being done already by the ECA.
All things considered, on current "exposed form", our FTA agenda including the TPPA represent the best efforts of successive Governments, working in their perspective of the best interests of Australia. It's not perfect but it may reflect our real position in the world – if people feel otherwise then they should say so but in a constructive and not relentlessly negative manner based on facts and actual text rather than conspiracy theories.