Chapter 3 The National Interest Analysis
The Committee’s examination of treaties is generally guided by an
assessment of a particular treaty’s benefits contained in the NIA, which is
tabled in Parliament along with the treaty.
The ACTA NIA has been the subject of extensive criticism by participants
in the inquiry. The most significant criticism relates to the lack of evidence
to support the claims made in the NIA, and the fact that the NIA, and on a
number of occasions, Government witnesses, claimed that no legislative change
would be required to implement ACTA. This chapter will examine these
Evidence of the problem
The purpose of ACTA is to help counter the problem of counterfeiting and
IP infringement. Critics claim, however, that the NIA does little to
demonstrate the scale of the problem as it affects Australia and therfore the
need for Australia to sign a new treaty.
The NIA does refer to statistics from the Organisation for Economic
Co-operation and Development (OECD) that international trade in counterfeit and
‘pirated’ materials is growing and that the global value of this in 2007 was
The study cited found that the share of counterfeit goods in world trade
is estimated to have increased from 1.85% in 2000 to 1.95% in 2007.
Critiques of this study point out that this increase was largely accounted for
by the average growth in trade in the types of goods and exports from countries
most likely to generate counterfeit goods.
The NIA also notes that the value of border seizures in Australia of
alleged counterfeit products was A$26 million in the 2009-10 financial year.
However, as pointed out by a submitter to the Committee’s inquiry, this amount
represents only 0.01% of the A$258,655 million value of all imports into
Australia for the same period.
Other submitters told the Committee that:
...the National Interest Analysis contains no independent
analysis of the costs and benefits of ACTA nor does it contain evidence of the
IP enforcement issues currently experienced by Australian IP owners in the
countries negotiating ACTA to justify the [Agreement]...
... transparency is missing from the NIA and it also does not
include defendable evidence‐based
information to back up unsubstantiated claims of harm to Australia’s industry. Key
definitions, some related to criminal sanction and others that may affect
Australian industry are also missing.
The problem of reliable evidence is not limited to Australia. The United
States Government Accountability Office (GAO) Report to Congressional
Committees on Intellectual Property (Observations on Efforts to Quantify the
Economic Effects of Counterfeit and Pirated Goods) of April 2010 identified
that statistical evidence for the size of the counterfeiting problem arose from
unsubstantiated estimates. 
The paucity of evidence for the size of the problem listed in the NIA
weakens the case for signing ACTA, leading critics to claim that the
justification for the treaty is an article of faith rather than evidence.
On several occasions, Committee members asked Government witnesses why
no assessment of the economic benefits of ACTA had been made. The Government’s
response can be summarised with the following quote:
There were some questions put to the committee about the need
for a cost-benefit study. We can again confirm that the Office of Best Practice
Regulation was consulted on the issue of a regulation impact statement and had
determined that such an examination was not appropriate given there was no
regulatory change involved.
Exporting domestic standards
Another benefit of ACTA identified in the NIA without supporting
evidence is the claim that the internationalisation of Australia’s domestic IP
regime will benefit Australian IP holders. Whether Australia’s
present domestic standards are appropriate was contested by some witnesses.
Australia’s current domestic IP regime is based on Australia’s
obligations under the 2004 Australian United States Free Trade Agreement
(AUSFTA). According to the Australia Digital Alliance and the Australian
Libraries Copyright Committee the IP standards implemented under AUSFTA have
generated net costs on Australia:
In 2004, the Senate Select Committee on the Free Trade
Agreement between Australia and the United States of America cited concerns
that the AUSFTA ‘prevents Australia from retreating from this position in
future and implementing policies and laws which do not accord with the
provisions of AUSFTA’ The entrenchment of these IP standards in subsequent negotiations
of the ACTA ... further restricts Australia’s ability to implement flexible IP
The Australian Department of Foreign Affairs and Trade’s (DFAT)
negotiating position simply assumes that existing Australian standards are
appropriate for an international agreement.
In its 2010 report, the Productivity Commission cautioned against
adopting IP provisions that are of main interest to other parties. According to
the Australia Digital Alliance and the Australian Libraries Copyright
Committee, the main beneficiaries of ACTA’s IP enforcement standards will be in
net IP exporting countries.
Australia’s ability to make legislative changes based on recommendations
by bodies like the Australian Law Reform Commission, with due consideration of
the benefits and costs inherent in Australia’s existing IP regime, may be diminished
by a negotiating stance that assumes existing IP standards in Australia are
Evidentiary issues – Committee view
The NIA was inadequate in providing an economic assessment of the
agreement and this hindered the Committee’s assessment of ACTA’s costs and
benefits for Australia.
The Committee recommends that, in future, NIAs of treaties clearly
intended to have an economic impact include an assessment of the economic
benefits of the treaty, or, if no assessment of the economic benefit of a
treaty has been undertaken, a statement to that effect, along with an
explanation as to why it was not necessary.
||That National Interest Analyses of treaties clearly intended
to have an economic impact include an assessment of the economic benefits and
costs of the treaty, or, if no assessment of the economic benefit of a treaty
has been undertaken, a statement to that effect, along with an explanation as
to why it was not necessary or unable to be undertaken.
The problem presented by the lack of evidence is succinctly put by
It is not possible to comment sensibly on ACTA without first
reviewing the extent of the alleged problem with respect to counterfeit trademarks
and unauthorised use of copyright.
While the Committee believes that the problem ACTA seeks to address is
real, it is not possible to reach an evidence based decision as to whether the
agreement is in Australia’s interests or not using the information provided by
DFAT and other Government witnesses.
The ACTA NIA illustrates a flaw in the process of developing NIAs.
Clearly, ACTA is an agreement intended to provide an economic benefit to
Australians, yet, because it does not require a Regulation Impact Statement, no
effort has been made to develop the economic case for the Agreement.
||That the Australian Government commissions an independent
and transparent assessment of the economic and social benefits and costs of
the Anti-Counterfeiting Trade Agreement.
The most consistent charge levelled at the NIA is that its claim of ‘no
new legislative measures are required to implement obligations under ACTA in
Australia’ is misleading and, according to some submitters, incorrect.
Alphapharm expressed a number of concerns about the NIA specifically the
‘no new legislative measures...’ claim:
Alphapharm disagrees. An analysis undertaken at its request
by Dr Luigi Palombi from the Regulatory Institutions Network at the Australian
National University advises that significant changes will need to be made to
Australia’s patent laws if ACTA is ratified and is complied with.
Alphapharm also sought the independent advice of eminent
senior counsel, the Hon. Mr Robert Ellicott Q.C., a former Commonwealth
Solicitor-General, Attorney-General and Judge of the Federal Court of
Alphapharm’s criticisms are particularly pertinent as Alphapharm supports
the treaty’s intent but has difficulty accepting it in its current form.
Dr Luigi Palombi, too, questioned the veracity of this claim arguing
that it presented a contradiction:
The NIA contains an inherent contradiction which, if true,
undermines both the credibility of ACTA and the process employed throughout its
negotiation. At para 7 the NIA states: “No new legislative measures are
required to implement obligations under ACTA in Australia.” Yet at para 6 it
states: “ACTA is an important initiative, as existing IP enforcement standards
in the World Trade Organization (WTO) have been insufficient to diminish the
growth in international trade in counterfeit and pirated materials.” One might
ask: “how can it be that ‘existing IP enforcement standards’ have been
ineffective in dealing with the ‘international trade in counterfeit and pirated
materials’ and yet there be no need for ‘new legislative measures’?”
Ms Anna George also questioned the ‘no new legislative measures...’
To summarise, the crux of the NIA assessment is attached to
the claim that ‘no new legislative measures are required to implement
obligations under ACTA in Australia’. As a National Interest Analysis it simply
ignores and minimises the nature of this ACTA Treaty.
I question th[is] claim ... and that the content of the NIA
fulfils the obligation of providing a substantive assessment of Australia’s
The key NIA assessment: ‘No new legislative measures are
required to implement obligations under ACTA in Australia’ ‐ this is too narrow a
basis, by itself, for assessing national interest.
n The NIA adopts a very
blinkered approach to how IP ‐
economic monopoly ‐
actually operates. Unlike other property rights, IP has a long tail of legal
and financial consequences affecting economic and social policy and intrudes,
in complex ways, into private lives.
n By actively
supporting the development of ACTA, a particular policy position has been
pursued. This IP policy has an effect on Australia’s other foreign, trade and
security priorities. Nowhere are these issues addressed in the NIA. 
The Committee is concerned that the absolute nature of DFAT’s statement
may be misconstrued as being a broader statement than it actually is. In
particular, the Committee is concerned that the statement may be construed as
extending to the scope of enforcement activities.
The two key issues from the Committee’s point of view are the scope of
operational circumstances, and the role of the ACTA Committee in the
interpretation of the Agreement.
The fact that ACTA might not require new legislation does not mean it
will not lead to changes in operational policies that will impact on such
An example examined in some detail during the evidence gathering process
relates to the process for seizing alleged counterfeit shipments by the Australian
Customs and Border Protection Service.
According to the Australian Customs and Border Protection Service the
process for seizing alleged counterfeit shipments ‘begins with an IP holder advising
... that they suspect a particular shipment contains counterfeit goods.’ The Australian
Customs and Border Protection Service then holds the shipment pending an
analysis of its contents.
According to the Australian Customs and Border Protection Service, the
number of notifications of this sort is rising steadily, but the Department
does not expect ACTA to have an impact on the number of notifications.
Once again, there is no detailed modelling on which to base this
assumption. It is possible for a dispassionate observer to reach the opposite
conclusion in relation to a number of the enforcement aspects of ACTA. In
other words, DFAT’s commitment in relation to legislation would not prevent a
noticeable change in the operational approach to its enforcement. While this
would not be a legislative change, it would be a change in the regulatory
environment resulting from the implementation of ACTA.
The ACTA Committee
Article 36 of ACTA requires the establishment of an ACTA Committee
comprising a representative of each party to the Agreement, the functions of
which include reviewing the Agreement, assisting with its implementation, and
considering amendments to the Agreement.
A number of participants in the inquiry noted that the Article permits
the ACTA Committee, in performing its functions, to make recommendations
regarding the implementation and operation of this Agreement.
Participants expressed concern that less well defined provisions of ACTA
could be fleshed out through guidelines on an ongoing basis, with possible
amendments in the longer term. To reinforce this concern, other functions of
the ACTA Committee, such as promoting cooperation, where appropriate, among
competent authorities, and the regular meetings and exchange of information
about enforcement practices envisioned for the ACTA Committee, creates the
basic framework within which more detailed enforcement mechanisms can be
developed over time.
It is possible for a circumstance to arise in which the development and
entrenchment of guidelines that qualify provisions of ACTA could lead to a
requirement for legislative change in Australia without amendments to the
underlying treaty. Such changes would consequently occur without the benefit
of public scrutiny required by a treaty making process.
Legislative change – Committee view
The fact that Australia is already fully compliant with ACTA has been
portrayed in the NIA as a distinct advantage to Australia. As was the case
with the economic advantages of ACTA, this fact is not substantiated with
evidence. Participants in the inquiry have contested this statement.
In addition, participants in the inquiry have pointed out that
Australia’s compliance with ACTA does not by any means guarantee that
regulatory activity in Australia will remain unchanged by ACTA. The Committee
is of the view that witnesses have identified at least two mechanisms by which
Australia’s approach to enforcement of copyright and IP could be changed.
While such changes would not be legislative, they would still have an impact on
the people concerned.
A principal focus of this Committee in assessing treaties has been the
effect a treaty has on members of the community, regardless of whether those
effects are caused by legislative change or not. The Committee would like NIAs
to reflect on all possible effects on members of the community, including those
that occur for reasons other than legislative change.
Consequently, the Committee urges that in future, NIAs identify
potential changes to the domestic administration of issues dealt with in a
treaty, regardless of whether the treaty requires legislative change.