So, Trade Minister Andrew has formally signed the Trans-Pacific Partnership (TPP) trade deal, giving Australia and the other 11 member nations two years to ratify it. In doing so, Robb took a swing at opposition groups and deflected calls to have the agreement independently assessed before Parliament votes to bring the agreement into force. From The Canberra Times:
The TPP signing comes a day after 59 community organisations signed a letter calling for an independent assessment of the trade deal before Parliament is asked to vote on ratifying the agreement.
Groups such as World Vision, the Public Health Association, Greenpeace, the ACTU, Catholic Religious Australia and the Australian Fair Trade and Investment Network believe the agreement poses “grave risks to the public interest” because it has not been independently assessed.
They want an organisation like the Productivity Commission to evaluate its economic costs and benefits before it is ratified by Parliament.
Mr Robb told Fairfax Media that some of the organisations who signed the letter will never be satisfied with any answer he gives them, but others have been more serious and Australia’s trade officials have done their best to meet their concerns.
He says the call to have the Productivity Commission assess the TPP before it’s ratified is just a political tactic to delay it coming into force.
Well, Mr Robb. If you are so certain that the TPP is a good deal for Australia, why are you against having it reviewed by the Productivity Commission (PC)? The PC is, after all, the Government’s key analyst on economic policy matters, so why not use them? What are you trying to hide?
The TPP is an incredibly complex agreement whose text numbers some 6,000 pages and 30 chapters. It is far too complex for the Joint Standing Committee on Treaties (JSCOT) to comprehensively review. Therefore, the PC’s expert assessment is vital.
The truth is that Coalition is against referring the TPP to the PC because it risks uncovering any gremlins lurking in the text. The PC could also determine that the TPP is, in fact, detrimental to Australia’s interest – as modelling by the Global Development and Environment Institute at Tufts University has done, which found that employment in Australia would contract by 39,000 jobs.
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.
Unfortunately, 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.
