Treaties, Agreements and Partnerships

  • International treaties, agreements and partnerships designed without protection for the future well being of Australians can cause:
    • Higher prices for medicines
    • Undermine the Pharmaceutical Benefits Scheme (PBS)
    • Allow foreign investors to sue the Australian government in secret tribunals using ISDS clauses if the government enacts laws or policies that protect public health (or any other laws)
    • Introduce restrictions on public health regulations on food
    • and more!!

Doctors Without Borders reminds Australia of its regional responsibilities.

“Australia has a broader responsibility in these negotiations than simply improving Australia’s trade figures. Like it or not, The Australian Government’s success or otherwise in rejecting the aggressive demands of the brand name pharmaceutical lobby will affect the future health outcomes of millions of vulnerable people across the region.”

Australia signed the Trans Pacific Partnership (TPP) then the previously secret text was released.  Expert analysis  found very little good news and a lot of problems (summarised later).

The good news is that after Australia’s AFTINET spent six years fighting the risks in the TPP along with many other people and organisations, the election of Donald Trump proved to be the final nail in the TPP’s coffin (it seems at the moment).

The bad news is that the risky clauses in the TPP are not unique. The TPP is just one of many current secret negotiations that can adversely affect Australians and there are issues in some agreements that have already been signed.

Under the guise of deregulation and free trade, regulatory powers are in fact transferred to international institutions beyond the reach of democratic accountability (comment from AFTINET)

Some of the following sections related to the TPP and are retained for future reference.

A leading arbitration lawyer has said there are critical loopholes in the investment chapter (of the TPP) that leaves Australia wide open.

  • 9.15 provides protections for ….environmental, health or other regulatory objectives….but the protection is negated by five words in the middle
  • regarding Most Favoured Nation clause – Essentially, … is tantamount to a classic wipeout move. It would enable foreign corporations from TPP states to make a claim against Australia based on the ISDS provisions in any other trade deal Australia has signed, no matter which country it was signed with
  • ISDS claims are not heard in a standing court staffed by independent judges. Instead, claims can proceed in ad hoc courtrooms – a hotel room, for example – by three arbitrators hand-picked by the parties. Unlike a traditional court of law, these arbitrators are not obliged to refer to precedent and, since their decisions are not open to appeal, they are free to rule according to their personal opinion.

Medicines will be dearer

  • “While the Australian Government has said that the current law on 5-year data protection regime for costly biologics in Australia will not change, the text says that governments must deliver ‘through other measures’ an outcome comparable to eight years, meaning an extra three years.” (Public health expert Dr Deborah Gleeson quoted by AFTINET )

The USA’s problems with ISDS clauses in older treaties provides a stern warning for Australia.

  • US “dolphin safe” voluntary tuna labeling, which has made significant reductions in dolphin deaths, was ruled a technical barrier to trade and the US must now pay compensation to Mexican fishers or make further changes/cancel the law.
  • Canada and Mexico challenged US country of origin labeling (cool) for beef and pork claiming a “barrier to trade” and won.  The US must now pay over $1 billion annually in trade sanctions  unless and until the popular consumer policy is weakened or eliminated.
  • After previous rulings, the US has rolled back U.S. Clean Air Act regulations on gasoline cleanliness rules successfully challenged by Venezuela and Mexico and Endangered Species Act rules relating to shrimping techniques that kill sea turtles after a successful challenge by Malaysia and other nations. The U.S. also altered auto fuel efficiency (Corporate Average Fuel Economy) standards that were successfully challenged by the European Union.”

The benefit from the TPP, published by the Australia Institute quoting modelling commissioned by the Department of Foreign Affairs and Trade (DFAT) analysis estimates these agreements will:

  •   Increase GDP by 0.05 per cent in 2035, or an additional $780 million per year in today’s dollars.
  •   Increase employment in 2035 by just 5,434 jobs.
  •   Increase the value of Australia’s trade by about three per cent ie Increase imports by 2.5 per cent, Increase exports by 0.5 per cent.“

Phillip Morris provides another example of risks:

Using a 1993 Hong Kong- Australia investment treaty, Phillip Morris sued Australia in 2011 over plain cigarette packaging laws. In July 2015 SMH reported Australia’s costs were about to hit $50 million and that was just for the first stage, and didnt include possible penalties.

Australia won a victory, apparently successfully claiming Phillip Morris was “treaty shopping”.  However, that isnt a ruling on the substance of Philip Morris’ claims. Many countries considering plain paper packaging still risk being sued under ISDS clauses and the threat may stop the introduction.

Further detail is available via internal link  Trans Pacific Partnership plus Investor State Dispute Settlement

More examples:

  • Big tobacco is  reportedly providing legal advice and funding to the Ukraine and Honduras Governments which have launched a complaint in the World Trade Organisation (WTO) on the grounds that the Australian legislation is contrary to a WTO intellectual property agreement, see external link  AFTINET.
    There have been media reports that Ukraine is wavering after recent exposure to Australia but that does not deny the ruthless Big Tobacco strategy.
  • …..billionaire philanthropists Michael Bloomberg and Bill Gates  … provided $US4 million to help developing countries fight legal threats from tobacco companies.
    …. 161 lobbyists were hired by just one tobacco company.
    Sydney Morning Herald 22/3/2015

The risks of long term economic damage to future generations are real:

  • In 1969 PM W McMahon signed a tax treaty with Singapore.
  • Forty six years later, in April 2015, a journalist revealed that BHP Billiton used the Singapore tax treaty to pay only 0.002% of tax on US$5.7 billion derived from the sale of  Australian resources.
    To put 0.002% tax in perspective, a person earning $100,000 per year would pay less than the cost of a cup of coffee in tax per year.

More information re lost Australian taxes is available in Multinational Profit Siphoning

These “deals” present a threat magnified by the faction that now controls the Liberal party.  The Howard government did not agree to ISDS clauses (that transfer regulatory powers to multinationals) in the US free trade agreement but the current Coalition government, both Abbott and Turnbull, have agreed to ISDS in recent agreements. Cabinet has the sole right to determine the wording, parliament has no right to participate and the wording is kept secret until signed, even from parliament.

The Abbott government signed a free trade agreement with China (June 2015) which includes giving Chinese companies the right to sue the Australian government if they feel they have been discriminated against and adjudication will be by a tribunal outside Australia’s legal jurisdiction.  Even worse, the fine detail of China’s right to sue has been deferred until after the agreement has been implemented.

A recent agreement with Korea also gives Korean companies ISDS rights.

Eminent economist Joseph Stigliz makes this point:  if these provisions were in place when the lethal effects of asbestos were discovered, rather than shutting down manufacturers and forcing them to compensate those who had been harmed, under ISDS, governments would have had to pay the manufacturers not to kill their citizens.

AFTINET campaigns vigorously for fair trade on behalf of Australians and is not opposed to trade agreements.  For more detailed information on health risks in the TPP and wider risks, together with opportunities for you to help, see external link, Australian Fair Trade & Investment Network Pty Ltd.

Australia’s Productivity Commission’s have serious concerns according to various media reports , for example, Peter Martin, Sydney Morning Herald, June 24 2015:

“The Productivity Commission has launched a scathing attack on Australia’s latest series of free trade agreements, saying they grant legal rights to foreign investors not available to Australians, expose the government to potentially large unfunded liabilities and add extra costs on businesses attempting to comply with them” (unfunded liabilities include substantial legal costs and compensation payments).

The commission is also concerned that the overall benefits have not been rigorously evaluated.

AFTINET is working with GetUp to inform and mobilise Australians, an external link for GetUp follows.

There are many other groups actively campaigning to protect Australians from multinational threats. External Greens links follow and the first  link includes a petition.

You can also help by making your views plain to your Senators and MP by using this link which  allows a search by postcode to obtain contact options your MP and Senators Contact Senators and members

This external link contains a radio interview with illuminating comments by the Productivity Commission. ABC report containing a sound clip

The TPP looks bad for Australia but does it help the American people?? NO, it hurts them economically according to Robert Reich.

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, he was Secretary of Labor in the Clinton administration.

When you read Robert’s comments (see later), consider that the US government is championing the TPP and hurting its own citizens, what will happen to Australian citizens??

Does the Australian economy benefit?  Not much, if any.

The Federal Government’s Productivity Commission investigated “Bilateral and Regional Trade Agreements” (BRTA) and reported in 2010 . Relevant findings appear further down this page, they rely on key phrases offering little comfort:

….. “likely..modest”; …”little evidence”; …. “other options may be more cost effective” … “oversell the benefits”.

Studies have been published and articles written labeling the US Australia free trade agreement a “dud” and claiming that Australia’s trade actually reduced.  Shiro Armstrong at ANU recently wrote: under AUSFTA, Australia and the United States reduced their trade with the rest of the world by US$53 billion and are worse off than they would have been without the agreement.

The big clear winners though, were multinationals who had their copyrights extended, longer than previously applied under Australian law.  While Australian exports to the US shrank, US imports into Australia ballooned.

Economics Editor Ross Gittens considered the Trans Pacific Partnership and concluded from various modelling, that after ten years, GDP will be 0.5% higher. New York’s Quartz news outlet quotes modelling to say Australia’s GDP increase will be 0.3% after ten years (US will be 0.2%).

These figures are consistent with various economists saying that the US and Australia have very open economies, hence little benefit. Quartz also says US manufacturing will decline, I presume Australia’s will also.

So who really benefits?

  • Future (and current) generations lose when multinationals constrain and penalise  their national government. Regulatory powers are in fact transferred to international institutions beyond the reach of democratic accountability
  • Multinationals and their shareholders are the biggest winners
  • Politicians who sign the agreement glory in the media coverage as long as the the public don’t fully understand the ongoing costs, risks and penalties.  The reality is the financial penalties imposed by secret tribunals are kept secret from citizens, so Australians will never be able to recognise failed agreements so political parties are safe to make bad deals.
  • Some commentators argue China will ultimately win, for example (Canadian) external link, Trans-Pacific Partnership is a wonderful idea – for China

Supporting Information

Robert Reich

The extract below is from Robert Reich, see external link to read the full article, then find May 8 2015 http://robertreich.org/ 

Nike isn’t the solution to the problem of stagnant wages in America. Nike is the problem.

… over the past two years Nike has added 2,000 good-paying professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial tax break it wrangled ….

But Nike’s U.S. workers make only a tiny percent of Nike’s products.

.. Nike generated  $27.8 billion revenue last year. And Nike is moving ever more of its production abroad. Last year, a third of Nike’s remaining 13,922 American production workers were laid off.

……As wages have risen in China, Nike has switched most of its production to Vietnam where wages are less than 60 cents are hour. Almost 340,000 workers cut and assemble Nike products there.

In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders.

…….

Trade agreements like the Trans Pacific Partnership protect corporate investors but lead to even more off-shoring of American jobs.

They make it safer for firms to relocate abroad …. “lowering the risk premium” on offshoring ……

If the Trans Pacific Partnership goes into effect American wages will be dragged down by further losses of manufacturing jobs.

……. Bottom line: we need new rules for the global economy that allow Americans to win.

Instead, the Trans Pacific Partnership – which includes 12 nations, including Vietnam, but would be open for every nation to join – would lock us into an expanded version of the very policies that have failed most Americans for the past twenty years.

……

No doubt Nike is supporting the TPP. The corporation would get a tax cut on its Vietnamese and Malaysian-made goods. But even with the tariffs in place, Nike’s current expense for those $100-plus shoes is less than $10 per pair. So don’t expect that tax cut to result in cheaper prices for American consumers.

…..

Nike may be the perfect example of life under TPP, but that is not a future many Americans would choose.

(President Obama chose Nike headquarters in Oregon to deliver a defense of his proposed Trans-Pacific Partnership, May 2015)

Federal Government’s Productivity Commission investigation of “Bilateral and Regional Trade Agreements” (BRTA) 2010

These key points are from the Productivity Commission web site.

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