Background and issues raised
			1.1        On
				23 August 2018, the Senate referred the provisions of the Customs Amendment
				(Comprehensive and Progressive Agreement for Trans-Pacific Partnership
				Implementation) Bill 2018 [Provisions] (Customs bill), and the Customs
				Tariff Amendment (Comprehensive Agreement for Trans-Pacific Implementation)
				Bill 2018 [Provisions] (Customs Tariff bill) to the Legal and
				Constitutional Affairs Legislation Committee (the committee) for inquiry and
				report by 10 October 2018.[1]
			1.2       
				The Senate Selection of Bills committee recommended that
				these bills be referred for inquiry to allow '[f]urther scrutiny by
				non-government Senators'.[2]
			Background to the bill
			1.3       
				The bills
				would amend the Customs Act 1901 (Customs Act) to implement Australia's obligations
				under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
				(TPP-11). The TPP-11 is an international free trade agreement (FTA) that was signed
				by 11 countries, including Australia, on 8 March 2018 in Santiago,
				Chile. On introducing the bill, the then Minister for Trade, Tourism and
				Investment, the Hon. Steven Ciobo MP, outlined the benefits of the agreement:
			
				The
					TPP-11 is one of the most comprehensive trade deals ever concluded and will
					eliminate more than 98 per cent of tariffs in a trade zone spanning the
					Americas and Asia, with a combined GDP worth $13.7 trillion. Australian
					farmers, manufacturers and services exporters will benefit from new market
					access opportunities in economies with nearly 500 million consumers. 
				It
					will provide better access for farm exporters including beef and sheep meat
					producers, dairy producers, canegrowers and sugar millers, as well as cereal
					and grains exporters. There will be new opportunities for our rice growers,
					cotton and woolgrowers, horticultural producers and our wine exporters... 
				Our
					manufacturers will benefit from the elimination of tariffs on industrial goods.
					Our services exporters will have access to liberalised and improved regulatory
					regimes for investment, notably in mining and resources, telecommunications and
					financial services. 
				The
					TPP-11 is truly a next-generation trade agreement. 
				And
					for the first time in a trade agreement, TPP-11 countries will guarantee the
					free flow of data across borders for services suppliers and investors as part
					of their business activity. This 'movement of information' or 'data flow' is
					relevant to all kinds of Australian businesses—from a hotel which relies on an
					international online reservation system to a telecommunications company
					providing data management services to businesses across a number of the TPP-11
					markets. It's important to note that TPP-11 governments have retained the
					ability to maintain and amend regulations related to data flows, but have
					undertaken to do so in a way that does not create barriers to trade.[3]
			
			1.4       
				According to
				the Department of Foreign Affairs and Trade, the TPP-11 is:
			
				...[an FTA]
					between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico,
					Peru, New Zealand, Singapore and Vietnam...
				This
					Agreement is a separate treaty that incorporates, by reference, the provisions
					of the Trans-Pacific Partnership (TPP) Agreement (signed but not yet in force),
					with the exception of a limited set of provisions to be suspended. The 11
					countries have a shared vision of the Agreement as a platform that is open to
					others to join if they are able to meet its high standards.[4]
			
			1.5       
				Essentially,
				the TPP-11 replicates many of the provisions of the earlier TPP FTA (now
				sometimes called TPP-12, to distinguish it from the later TPP-11). There are,
				however, significant differences. Most importantly, the TPP-11 does not include
				the United States as a member state. Consequentially, it omits some of the
				original agreement's provisions, as outlined in the Customs Bill Explanatory
				Memorandum.[5] 
			1.6       
				Regarding the
				opportunities for Australia in being a party to the TPP, DFAT has stated:
			
				The TPP
					is a regional free trade agreement of unprecedented scope and ambition with
					great potential to drive job-creating growth across the Australian economy.
				TPP
					outcomes include new market access opportunities for Australian exporters of
					goods and services, as well as investors, that are additional to Australia's
					existing free trade agreements. For investment, the TPP will create new
					opportunities and provide a more predictable and transparent regulatory
					environment.
				The TPP
					will also establish a more seamless trade and investment environment across 12 countries
					by setting commonly-agreed rules and promoting transparency of laws and
					regulations. The TPP will provide greater certainty for businesses, reduce
					costs and red tape and facilitate participation in regional supply chains.
				The TPP
					addresses contemporary trade challenges in ways that have not previously been
					addressed in Australian FTAs, such as commitments on state-owned enterprises,
					which will promote competition, trade and investment and enable Australian
					exporters to compete on a more level playing field.[6]
			
			Provisions of the bills
			1.7       
				The bills
				would make amendments to the Customs Act to implement Australia's commitments as
				a signatory to the TPP-11. 
			1.8       
				The Customs
				bill would introduce new rules of origin for goods imported into Australia from
				nations that have entered into the TPP, as well as make provision for
				Australian authorities to ensure that Australian exporters meet relevant
				country-of-origin rules under the TPP. According to the bill's Explanatory
				Memorandum:
			
				The
					TPP-11 amendments contained in the Bill will enable eligible goods that satisfy
					the new rules of origin to be entered into Australia at preferential rates of
					customs duty. The amendments will also impose obligations on exporters of
					eligible goods to a Party to the TPP-11 for which a preferential rate of
					customs duty is claimed, and on manufacturers who produce such goods.[7]
			
			1.9       
				The
				amendments made by the Customs bill would be complemented by the Customs Tariff
				bill, including its provisions:
			
				- providing preferential rates of customs duty, on entry into force
					of the TPP‑11, for all goods, excluding excise-equivalent goods, that are
					Trans‑Pacific Partnership originating goods determined in accordance with
					new Division 1GB of Part VIII of the [Customs Act]...;
 
				- inserting new Schedule 8B to provide for excise-equivalent rates
					of duty on certain alcohol, tobacco and fuel products and for phasing rates of
					customs duty in accordance with the TPP-11; and
 
				- amending certain concessional items in Schedule 4 to the Customs
					Tariff Act to maintain customs duty rates in line with the applicable
					concessional item and in accordance with the TPP-11.[8]
 
			
			Parliamentary scrutiny
				of the Trans-Pacific Partnership
			1.10     
				In
				introducing the bills, the Minister stated that:
			
				Here
					in Australia, this agreement has undergone a level of scrutiny perhaps
					unprecedented by any other free trade agreement. It has been subject to four parliamentary
					committee inquiries.[9]
			
			1.11     
				These
				parliamentary inquiries have included work undertaken by:
			
				- the Joint Standing
					Committee on Treaties, in its inquiry into the Treaty tabled on 9 February
					2016 (which lapsed with the dissolution of the Senate and the House of
					Representatives on 9 May 2016 and so did not produce a final report);[10]
 
				- the Joint
					Standing Committee on Treaties, in its Report 165: Trans-Pacific Partnership
					Agreement (tabled 30 November 2016);[11] 
 
				- the Senate Foreign
					Affairs, Defence and Trade References Committee,  in its inquiry into the Proposed
					Trans-Pacific Partnership (TPP) Agreement (tabled 7 February 2017);[12] and
 
				- the Joint Standing Committee on Treaties, in its Report 181: Comprehensive and Progressive Agreement for Trans-Pacific Partnership (tabled 22 August 2018).[13]
 
			
			Financial implications
			1.12     
				The
				Explanatory Memoranda for both bills contain the same Financial Impact
				Statement, which estimates that implementing the TPP would reduce customs duty
				collections by $195 million over the forward estimates, as forecast by the
				2016–17 Commonwealth Budget.[14]
			1.13     
				According to
				the Explanatory Memoranda these estimates are still current, with the 2018–19
				Budget noting that there 'would be no additional costs of implementing the
				TPP-11'.[15]
			1.14     
				The Customs
				Bill Explanatory Memorandum includes a Regulatory Burden and Cost Estimate,
				which suggests that the TPP is expected to reduce compliance costs for
				Australian exporters to TPP-11 Parties. This would come from two sources:
			
				First,
					the ability of exporters to use one set of documentary procedures to export to
					10 other markets instead of under eight separate FTAs plus two non-FTA
					partners. Second, the possibility that some businesses that previously sought
					and obtained non-preferential certificates of origin (COOs) may now be able to
					self-certify the origin of their goods for exports to Brunei Darussalam,
					Canada, New Zealand, Mexico, and Vietnam. Existing agreements allow businesses
					to self-certify the origin of their goods for exports to Chile, Japan,
					Malaysia, Peru and Singapore.[16]
			
			Compatibility with human
				rights
			1.15     
				According to the Explanatory Memoranda, the bills are compatible with
				the human rights and freedoms recognised or declared in the international
				instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
				Act 2011. 
			1.16     
				The Explanatory Memorandum for the Customs bill recognises that it
				engages the Right to not be subjected to arbitrary or unlawful interference
				with privacy in Article 17 of the International Covenant on Civil and
				Political Rights (ICCPR).[17] It concludes that the bill is compatible with human rights, as 'to the extent
				that it may engage the right to privacy, [its provisions] will not constitute
				an unlawful or arbitrary interference with privacy'.[18] 
			1.17     
				Regarding the
				Customs Tariff bill, the relevant Explanatory Memorandum states that its
				provisions do not raise any human rights issues.[19]
			1.18     
				The Senate
				Scrutiny of Bills Committee stated that it had no comment in relation to the
				bills.[20]
			Regulatory impact
			1.19     
				The Explanatory
				Memorandum for the Customs bill contains a Regulation Impact Statement covering
				both bills. This outlines the potential risks of Australia not becoming party
				to the TPP, should it choose to do so following the withdrawal of the United
				States from the agreement on 23 January 2017.[21] 
				These risks would primarily be missing out on the forecast benefits of the agreement,
				including that it is expected to:
			
				- deliver
					commercially meaningful market access gains that will benefit Australian
					agriculture, resources, energy and manufacturing exporters, service providers,
					consumers and investors; 
 
				- secure
					Australian exporters' competitive position in the Asia-Pacific; 
 
				- deliver
					faster and deeper market access gains than are possible through multilateral [World
					Trade Organisation] negotiations; 
 
				- be consistent
					with WTO requirements for FTAs, and 
 
				- complement
					Australia's efforts to seek additional trade liberalisation from other TPP-11
					parties through the WTO and regional mechanisms.[22]
 
			
			Conduct of the inquiry
			1.20     
				Details of
				this inquiry were advertised on the committee's website, including a call for submissions to be
				received by 10 September 2018. The committee also wrote directly to a number of
				individuals and organisations inviting them to make submissions.
			1.21     
				The committee
				received 15 submissions, which are listed at Appendix 1. All submissions are
				available in full on the committee's website.[23]
			Structure of this
				report
			1.22     
				This report
				consists of two chapters:
			
				- This chapter sets out the background and provisions of the bill, as
					well as the administrative details of the inquiry; and 
 
				- Chapter 2 outlines the principal issues raised by participants in
					the inquiry, and sets out the committee's views and recommendations.
 
			
			Acknowledgements
			1.23     
				The committee
				thanks all organisations and individuals that made submissions to this inquiry.
			
			
			
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