The Australian Competition and Consumer Commission (ACCC) has issued a damning assessment of the Trans-Pacific Partnership (TPP) trade agreement, raising concern about tighter intellectual property (IP) and Investor-State Dispute Settlement (ISDS) provisions that could raise costs for Australian consumers and lead to taxpayers being sued by foreign corporations, thereby impeding domestic reforms. From Fairfax:
[The ACCC] says the TPP may burden Australia with IP obligations to other countries that have significant consequences for competition “over decades”…
“The ACCC is concerned that the agreement appears to impose IP restrictions beyond existing international treaties, and this may tilt the balance in favour of IP rights holders to the detriment of competition and consumers,” its submission says.
It has also warned that the TPP’s investor-state dispute settlement provisions need to be analysed properly before the government enacts the agreement.
ISDS provisions give foreign companies the right to sue Australian governments for introducing laws they say have harmed their interests.
“The ACCC agrees with the Productivity Commission’s view expressed in its 2013-14 Trade and Assistance Review that such [ISDS] provisions risk impeding domestic reforms in the public interest,” the ACCC has warned.
In the lead up to the final round of negotiations for the Trans-Pacific Partnership (TPP) trade agreement, the Productivity Commission also issued a warning that ceding to US demands to strengthen intellectual property rights could make Australians worse-off:
The history of IP arrangements being addressed in preferential trade deals is not good. Indeed, to the extent that the return to IP holders awarded by more stringent IP laws outweighed the benefits to the broader economy, the provision would also impose a net cost on both partners, lowering trading and growth potential across the bloc.
The PC also raised concerned the TPP would grant legal rights to foreign investors via ISDS clauses, which could expose the government (and taxpayers) to potentially large law suits.
The fact remains that the TPP is an incredibly complex agreement whose text numbers some 6,000 pages and 30 chapters. It should, therefore, be sent to the PC for assessment prior to the vote to ratify the deal by both houses of parliament.
Unfortunately, the Coalition is unlikely to refer the TPP to the PC because it risks uncovering any gremlins lurking in the text.
We have seen this story before.
While working as the Australian Treasury’s trade analyst in 2003-04, I witnessed the Howard Government commission the Centre for International Economics (CIE) to undertake the modelling on the Australia-US Free Trade Agreement (AUSFTA), even though the PC was available and wanted the job.
It was the belief of many at the time that the CIE was chosen over the PC because it would provide more favourable modelling results, making it easier for the Government to sell the deal to the public. By contrast, the PC was inherently skeptical of preferential trade agreements (for good reason), and it was feared that it would provide a poor assessment of the AUSFTA if commissioned to undertake the work.
Alas, the CIE delivered a glowing report on the AUSFTA, claiming that it would boost Australia’s GDP by nearly $6 billion. A large proportion of these gains came from a fanciful decrease in Australia’s “equity risk premia” – a result described by Professor Ross Garnaut at the time as “not passing the laugh test”.
A decade on, The Crawford School at the ANU delivered its assessment of the AUSFTA, which showed the agreement diverted Australia’s trade away from the lowest-cost sources. Australia and the United States reduced their trade with rest of the world by US$53 billion and are worse off than they would have been without the agreement.
The AUSFTA also included extensions to both patent and copyright terms, which has raised the cost of pharmaceuticals and copyrighted materials in Australia.
Of course, the last thing governments want is transparency and accountability, which is why they prefer to use paid consultants to do the analysis of trade deals, or refuse to undertake any analysis at all.
Little surprise, then, that Australia’s trade agreements have generally delivered poor outcomes. Expect more of the same with the TPP.
