This report contains the Joint Standing Committee on Treaties’ review of the following treaty action the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between the Government of Australia and the Governments of: Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam and associated side letters (Santiago, 8 March 2018) (the TPP 11).
In November 2016, the Joint Standing Committee on Treaties tabled its Report 165 into the Trans-Pacific Partnership Agreement (TPP).
By the time the Report was tabled, it was clear that the chances of the TPP coming into force were slim.
In January 2017, the United States Trade Representative notified the other parties to the TPP that the United States would not be ratifying the Agreement.
The TPP has been revived by the remaining TPP signatories as the TPP 11. The active provisions of the TPP 11 are much the same as those in the TPP, with the exception of a handful of suspensions.
While the Committee has effectively already examined the provisions of the TPP 11 in Report 165, the Committee determined to conduct an extensive inquiry because:
in the absence of the United States, the impact of the TPP will be different;
in the time since the Committee reported on the TPP, extensive additional research into the impact of the agreement has been undertaken; and
the suspended provisions change the environment for a number of important Australian industries.
Chapter 2 of the Report examines trade in goods. Support for the tariff reduction measures in TPP 11 is widespread, and the tariff reductions are highly likely to benefit Australian business in general.
The absence of the United States TPP 11 will have some unexpected benefits for Australia, particularly in relation to trade with Japan.
Chapter 3 examines trade in services. The Committee found that there were significant opportunities for Australian service providers in TPP 11 countries, particularly in the Mineral Exploration and Technology Services.
The Committee also found that concerns about limitations on Australia’s ability to regulate services like health care and education are mitigated by Australia’s listing of non-conforming measures in relation to these sectors.
Investor-State Dispute Settlement (ISDS), which is discussed in Chapter 4, remains a matter of concern to some participants in the inquiry.
The Committee considers that while ISDS provides a degree of certainty to Australian investors overseas, there is a potential pitfall in ISDS for the Australian Government.
Chapter 5 deals with the movement of persons provisions in the TPP 11.
People remain concerned about the need for Australia to use skilled temporary visas to fill job vacancies. Concerns generally focus on the adequacy of training of skilled temporary visa holders and the exploitation of temporary visa holders, regardless of the visa program under which they entered Australia.
In a strict sense, these concerns are about labour market regulation in Australia, rather than about trade agreements, but the two are conflated in public opinion, and so concerns about people on temporary visas working in Australia contributes to concerns about trade liberalisation generally.
Chapter 6 deals with Intellectual Property, where the most significant impact of the suspended provisions of the TPP 11 is being felt. Participants to the inquiry, with some exceptions, supported the suspensions, particularly as the suspensions relate to medicines and copyright.
The biggest concern was the uncertainty surrounding the reintroduction of the suspended provisions. The Committee recommends that, if the suspended provisions are reintroduced, they should be considered to be a treaty action and should be subject to an inquiry by the Committee.
The final Chapter considers matters not related to the specific provisions of the TPP 11.
Participants to the inquiry engaged in debate about the sets of modelling undertaken into the TPP and TPP 11 and the results they predicted for Australia. While the debate was extensive, it was not illuminating.
Modelling trade agreements is an activity constrained by the data used in the model and the specificity of the matters modelled. In other words, models are not predictive, merely illustrative.
Modelling is only useful as one guide to decision making amongst others. Nevertheless, the Committee is of the view that it is better to have some modelling rather than none and better to have modelling by an independent and recognised body. The Committee reiterates its recommendation from Report 165 that the Australian Government implement independent modelling of proposed trade agreements through an independent and recognised body, preferably the Productivity Commission.
Acceptance of a rules based international trade system and trade liberalisation has only worsened since the Committee tabled its report on TPP in November 2016.
On the international level, the United States and China, amongst others, are targeting each other with increasing levels of protectionism. At a local level, public trust in trade liberalisation is eroding as a result of perceptions about a loss of national sovereignty and employment matters.
The Committee is firmly of the view that maintaining trade liberalisation can only benefit Australia. Australia is a trading nation. If Australia’s ability to trade is impaired, Australia will be significantly worse off.
The Committee supports the ratification of the TPP 11.