Paul Davidson, Economics
Given continuing difficulty in striking multilateral agreements, Australia has increasingly pursued bilateral and regional trade agreements to further its interests.
Some issues for the 45th Parliament include whether the agreements are in the national interest, having regard to the relative magnitude of benefits generated, and additional protections provided to foreign investors. An additional issue is the recent rise in protectionist measures—partly as a result of recently formed trade agreements—and whether such measures are in the national interest.
As one of the 163 members of the World Trade Organization
(WTO), Australia benefits from the most‑favoured nation and non‑discrimination
provisions when engaging in international trade with other member nations. In
practice, this means that Australia is treated the same as another country’s most-favoured
trading partner would be, and that Australian products are treated analogously
to the identical domestically produced products of our trading partners. In
addition to being a WTO member, Australia has negotiated a number of bilateral
and regional trade agreements with other nations (Table 1).
Table 1: Trade agreements currently in force in Australia
Australia is currently negotiating a number of
trade agreements, from separate bilateral agreements with India and Indonesia,
and regional agreements with the Gulf Cooperation Council and the European Union;
to multilateral agreements via the WTO on environmental goods.
In Australia and overseas, trade is currently being
disrupted by a significant rise in protectionist measures. In part, these are
as a direct consequence of the changing nature of trade agreements. Trade
agreements now frequently provide significant trade obligations in areas such
as investment, the environment, and other areas of public regulation.
Protectionist measures include the application of trade-restrictive measures
(particularly anti-dumping), as well as the treatment of foreign investment.
The latest report by the WTO on G20 trade measures
highlighted that between mid‑October 2015 and mid-May 2016, some 145 new
trade-restrictive measures were introduced. This was the highest number of new
measures introduced since the report series begin since 2008 during the global
Although Australia’s initiations of anti‑dumping
investigations had fallen slightly from the previous year, 17 matters were
still initiated. As noted in a recent Productivity Commission (PC) report,
anti-dumping measures have recently been strengthened and there have been calls
to strengthen it further. A direct link was found between countries with highly
protectionist anti-dumping systems and the level and value of imports subject
The PC report also found that anti-dumping measures
were more than three times higher than Australia’s remaining maximum tariff
rates. Anti-dumping measures were mainly imposed on base metals, paper and
wood, and plastics and polymers products. In particular, it was noted that
Australian anti‑dumping measures currently in force are predominantly in
the steel sector.
Foreign investor protections
Concerns have been raised by a number of academics,
the Productivity Commission, and even the Chief Justice of the High Court about
protections granted to foreign investors under trade agreements, principally
investor‑state dispute settlement (ISDS) provisions.
ISDS provisions in trade agreements provide a
mechanism for foreign investors (including Australian investors investing
overseas) to seek recourse in an international tribunal in the event that a
host government to the agreement breaches its investment obligations.
Trans-Pacific Partnership (TPP)
One of the most high-profile trade agreements—the
Trans-Pacific Partnership (TPP)—contains ISDS provisions. The TPP was signed on
4 February 2016 and includes 12 signatories: Australia, Brunei,
Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the
United States, and Vietnam. These 12 nations account for around 40 per cent of
Although concerns have been raised, many of
Australia’s existing trade agreements contain ISDS provisions, including some
with other TPP nations. Of the ten trade agreements above, only the agreements
with New Zealand, Malaysia, the United States, and Japan do not contain ISDS
clauses. Table 2 illustrates that Australia already has ISDS provisions
with the vast majority of TPP nations.
A provision in the TPP provides that the agreement
cannot enter into force without the acquiescence of the United States (and also
Japan). However, the TPP has faced staunch opposition in the United States and
its passage through the current Congress is in doubt. Both American presidential
nominees have explicitly ruled out adopting the TPP in its current form. There
have therefore been calls from some quarters, including Australia’s Ambassador
to the United States, for the TPP to be passed during a ‘lame duck’ session of
Congress, which occurs between the presidential election on 8 November and the inauguration
of the new president on 20 January 2017.
Table 2: Existence of ISDS provisions with
TPP nations, outside of the TPP agreement
| TPP country
|| ISDS provisions
currently exist in:
|| ISDS provisions in
force, ignoring the TPP
| Bilateral Investment
|| Bilateral trade
means not applicable.
ISDS provisions are not explicit although there is explicit scope for their future
inclusion in the trade agreement.
Does not apply between Australia and New Zealand.
Chief Justice Robert French AC, ‘Investor-State Dispute Settlement—a cut above the courts?’, Supreme and Federal Courts Judges Conference, Darwin, 9 July 2014.
Productivity Commission, Bilateral and regional trade agreements, Research report, Canberra, 2010.
Productivity Commission, Intellectual property arrangements, Draft report, Canberra, 2016.
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