THE TRANSPACIFIC PARTNERSHIP – and why we should not be in it.

                Australia, along with ten other countries has entered a free trade agreement, known originally as the Trans-Pacific Partnership (TPP), or as it is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11). Other countries in this agreement include Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.[i]

The deal was signed on 8 March 2018 in Chile. [ii] The United States, perhaps wisely, decided not to join the TPP. The agreement is supposed to open markets for goods and services by way of free trade and facilitate foreign investment.

                As with previous free trade agreements we should expect to export more goods, enjoy more jobs and see a rise in living standards. However Australia has already entered into a number of other free trade agreements, the results being than many industries, like the car industry for example, have virtually closed their operations in this country, we now have unemployment rates that would have been thought disastrous fifty years ago, and relative to the rest of the world, our living standards are going backwards.

                Worse still these agreements often contain clauses that interfere with Australia’s sovereignty and the way the country is run.

                Currently employers who wish to bring in temporary migrant workers are expected to first undertake labour market testing to check that no Australian is available to do the work the migrant is being brought in to do. Under the TPP-11 this requirement is waived for six member countries, namely Mexico, Chile, Japan, Canada, Malaysia and Vietnam. [iii]

                Another matter of concern is that the TPP contains what is called Investor-State Dispute Settlement (ISDS) under which foreign companies investing in Australia can sue our government if it does something that adversely affects those companies. A number of people, including Sally McManus of the ACTU have already expressed concern about this provision. [iv]

                Stuart Rosewarne from the University of Sydney described ISDS as “quite scary because it effectively allows a foreign-owned company to have almost any Australian law, including enhanced labour laws that are considered to impose additional or onerous obligations on a company’s employment practices to be set aside”. [v]

                Dr Patricia Ranald of the Australian Fair Trade and Investment Network said she did not think the ISDS should be included in the TPP as it “gives special legal rights to global corporations that already have enormous market power”. [vi]

                There is some controversy about whether Australian companies can take action under ISDS provisions of the TPP.

                Australia has entered six other free trade agreements that include ISDS provisions. These agreements include those with China, Korea, Chile, Singapore and Thailand. The Australian Government claims that ISDS does not affect our sovereignty and does not prevent them from changing policies, regulating in the public interest, regulating for the environment, or maintaining the Pharmaceutical Benefits Scheme or health system. How this might pan out in the long term can only be guessed at. Who for instance will decide what is “in the public interest”? Australia has already had one case against it under ISDS when Philip Morris brought action over the plain packaging of tobacco. Basically the government won this case but it dragged on for years at an undisclosed cost to the taxpayer. Some Australian-based companies have also taken action against foreign countries. [vii]

                Overseas experience shows that losing an ISDS case can be very expensive for governments. In one case Canada tried to ban the export of toxic PCB waste but was sued by the company S.D. Myers under the North American Free Trade Agreement for $20 million. In 2012 the International Centre for Settlement of Investment Disputes (ICSID) tribunal awarded $1.8 billion, plus costs and interest, amounting to a total of $2.4 billion to Occidental Petroleum when it sued the government of Ecuador in 2012. [viii]

                The Turnbull government proclaims jobs and growth and presumably free trade agreements should enhance this but facts and figures are not encouraging. We have been entering free trade agreements for decades but our trade balances tend to be more in the red than in the black.

                Recently demand for our resources has been good for our trading figures but from March 2014 until March 2018 our trade figures were in deficit for 33 months and in the black for only 16 months. In other words we had negative trade figures twice as often as we had positive ones. [ix]

                Living standards are also declining relative to the rest of the world. As measured by gross domestic product (GDP) per capita we once had the highest living standards in the world but by 2016 we were rated 17th according to the World Bank and in 2017 we were rated 18th by the International Monetary Fund. [x] To make things worse Australia has a foreign debt of over a trillion dollars. [xi]

                Unemployment rates do not appear to have gone down due to free trade and in fact may have gone up. In March 2018 for instance the unemployment rate was 5.6% and doubtless would look worse if we included the underemployed. [xii] Back in the 1960s when we had a highly protected manufacturing sector and virtually no free trade the unemployment rate once got up to 3.2% but for most of the time was below 2.0%, a figure that appears impossible nowadays. [xiii]

                In summary the promises of free trade agreements have not been delivered for most Australians. Living standards continue to fall behind those of other nations, we have lost more jobs than we gained, our balance of trade figures indicate we import much more than we export, and our foreign debt continues to grow. Worse still these agreements are a danger to our sovereignty and give foreign corporations considerable power over the ordinary Australian citizen. They should be radically revised or abandoned.

[i] John Dagge, “Australia Home Free with TPP”, Daily Telegraph, 25 January 2018

[ii] Anna Patty, “TPP Deal May Expose Legal Risks”, Sydney Morning Herald, 5 March 2018

[iii] Ibid.

[iv] Ibid.

[v] Ibid.

[vi] Ibid.

[vii] Australian Government, Department of Foreign Affairs and Trade, “Investor-State Dispute Settlement”, Downloaded from the Internet May 2018

[viii] Wikipedia, “Investor-State Dispute Settlement”, Downloaded from the Internet May 2018

[xi] Australian Bureau of Statistics (ABS) Website, Downloaded 16 May 2018

[xii] Ibid.

[xiii] Barrie Dyster & David Meredith, “Australia in the International Economy”, Cambridge University Press, Melbourne, 1990 p.235

Prepared by Australia First Hawkesbury 17 May 2018

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