Choice has today called on the Federal Government to refer the Trans-Pacific Partnership (TPP) trade agreement to the Productivity Commission (PC) for assessment prior to the vote to ratify the deal by both houses of parliament:
Now that the agreement has been finalised, the government will sign the treaty. Then it will go before Parliament. An assessment of the finalised TPP will be conducted by the Joint Standing Committee on Treaties (JSCOT), within 20 joint parliamentary sitting days.
After this comparatively short period of time, Parliament then needs to make a decision to accept or reject the finalised agreement in full, with no ability to influence the details or seek improvements.
New legislation might be needed to bring the agreement into effect, or existing legislation might need to be amended…
With a relatively short time before Parliament needs to make a decision, CHOICE believes expert analysis to help guide the JSCOT consultation process and inform the public will be vital. In the absence of a comprehensive, transparent analysis, the Productivity Commission tells us that it is not possible to be certain of the benefits of trade agreements. The government shouldn’t sign us up to an agreement as significant as the TPP without being sure it will benefit Australia.
CHOICE is calling on the government to commit to a full cost-benefit analysis of the TPP by the Productivity Commission before Australia signs on to the complex new rules in this enormous agreement.
Hear, hear. The TPP is an incredibly complex agreement whose text numbers some 6,000 pages and 30 chapters. It is far too complex for JSCOT to comprehensively review within just 20 parliamentary sitting days. Therefore, the PC’s expert assessment is vital.
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.
unconventionaleconomist@hotmail.com
