Secrecy and costs threaten benefits in momentous trade deal

Source: The Sydney Morning Herald

30 July 2015

For months Trade Minister Andrew Robb has defended the secrecy of the TPP talks and shrugged off potential pitfalls.

For months Trade Minister Andrew Robb has defended the secrecy of the TPP talks and shrugged off potential pitfalls. Photo: Alex Ellinghausen

Voters will not tolerate a shift in power from their elected governments to multinationals, placing foreign corporate interests above domestic ones.

Federal Trade Minister Andrew Robb and officials from 11 nations are in Hawaii seeking to seal a momentous trade deal covering almost 40 per cent of the world’s economy – and eventually China.

A successful Trans-Pacific Partnership would shore up President Barack Obama’s legacy if settled this week so Congress can pass it this year.

The Abbott government believes the TPP would strengthen Australia’s trade and investment relationships, open new market opportunities, promote integration into regional supply chains and improve productivity. New trade rules (including those to determine origin of goods) would provide certainty and less red tape for business.

Now for a reality check.

The confidential nature of the draft TPP texts up for negotiation makes an objective assessment of the deal’s lofty aspirations problematic. That is not just the Herald saying that; it is the view of the normally reform-minded Productivity Commission.

For months Mr Robb has defended the secrecy of the TPP talks and shrugged off potential pitfalls revealed by the PC and based on leaked draft chapters of the deal. These cover medicine prices, intellectual property protection, freedom of information on the internet and terms that allow foreign multinationals to sue the Australian government – so-called “investor-state dispute settlement” provisions.

Most of the controversial measures favour of big corporations, the majority of which lobby the US government.

Still, the benefits for Australia and world trade from the TPP are hard to dispute. And Mr Robb says he won’t accept any deal that gives too much power to pharmaceutical companies, which claim they need to increase from five years to 12 years their protection of patent medicines using biological material. Mr Robb has also committed to obtaining some benefit for Australian sugar growers, who missed out in the US-Australia trade deal in 2005. Many other exporters and service companies in particular see great potential for growth in Asia as a result of the TPP.

The details are being thrashed out between Australia, Canada, Singapore, Brunei, New Zealand, Chile, Mexico, the US, Japan, Malaysia, Peru and Vietnam.

Mr Robb defends the concept of ISDS provisions, saying Australia has been party to them in 29 agreements and “the sun has still come up”.

But the number of court cases being brought under ISDS terms has risen rapidly. Tobacco maker Philip Morris even shifted headquarters to Hong Kong to utilise such a term in an Australian-Hong Kong investment deal. The cost to taxpayers of defending the case has passed $50 million, with more likely.

ISDS terms were risky enough for former prime minister John Howard to exclude them from trade deals he oversaw, including the US-Australia agreement. High Court Chief Justice Robert French believes they threaten to override local courts. Reserve Bank of Australia board member Heather Ridout says we will rue the day we sign away our rights. Yet the Abbott government has allowed ISDS terms in deals with Korea and Japan. It has also been open to them in the TPP.

The Productivity Commission says “the absence of any rigorous and transparent assessment of the (TPP) before government commitment is a critical failure in transparency”. It says the ISDS terms do not encourage extra investment or trade and are “a very high risk strategy” if used as a trade-off for market access objectives.

Thankfully Mr Robb has admitted this week that Australia will not accept an ISDS provision “until we’re satisfied that there’s a carve-out for public policy on health and the environment”. That should prevent a multinational from suing the Australia government for policies that reduce the value of their intellectual property, such as public health programs. Mr Robb added that a modified version of an ISDS term was under consideration.

But the Abbott government is asking voters to trust Australia’s negotiators to work in the nation’s best interest. Fearing a backlash, the Trade Department has issued a myth-busting fact sheet that include “modern ISDS mechanisms incorporate explicit safeguards to reaffirm the right of governments to take decisions in the public interest, including in the areas of health and the environment, and reduce the chances that foreign investors bring frivolous claims”.

Some analysts say the Productivity Commission should run a cost-benefit analysis of all trade deals before negotiations commence. That would shore up confidence and set limits to concessions. But the political pressure to accept a TPP quickly is immense.

We just hope Australia’s negotiators realise that voters will not tolerate a shift in power from their elected governments to multinationals, placing foreign corporate interests above domestic ones. If the Abbott government is found later to have sold Australians short, it can hardly expect voters to trust promises about future trade deals.

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