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Joint Standing Committee on Treaties hearing on the Trans-Pacific Partnership Agreement

Opening Statement by Ms Elizabeth Ward, TPP Chief Negotiator

For many decades the Australian Government has steadfastly supported the notion of a rules-based liberalised international trading system. We are a trading nation, and we benefit from openness and engagement.

At a time of worrying, growing isolationism across the world, and with the World Trade Organization (WTO) struggling to drive global change, the Trans-Pacific Partnership Agreement provides hope for the nations in our region. At its core, the TPP is an economic agreement that:

  • Breaks down some of the most persistent barriers to deliver opportunities for our businesses to enter new markets;
  • Shapes new standards for TPP governments, to facilitate trade and investment, and address commercial challenges in this digital era; and,
  • Invigorates shared rules for a TPP community, on environment, labour and anti-corruption, and encouraging SMEs to participate, all the more actively, in trade and investment in our region.

The scope of this deal, and its level of ambition have not been matched since the conclusion of the WTO Uruguay Round, more than 20 years ago. It adds breadth and value to Australia's existing free trade agreements (FTAs) with eight of the TPP parties, and provides a response to those concerned by the so-called "noodle bowl" of multiple overlapping trade agreements. It has undeniable, significant strategic weight.

Mr Chairman – in this opening statement, rather than restate the extensive benefits of the TPP for Australian exporters of goods and services, I will focus on three issues which have emerged in the hearings of this Committee and warrant a response: the economic impact of the deal for Australia, investor-state dispute settlement (ISDS) and intellectual property.

On economic outcomes, let me say this. Australia, for some time now has been in the fortunate position of having an open economy. Over the last forty years successive governments have done the hard yards to reform our economy, to increase our productivity and competitiveness, because it made good economic sense. The TPP captures and enshrines that openness. The TPP negotiation has been toughest for those TPP parties who have not trodden this path, and who will need to put in place a range of reforms to comply and further open their markets. Understandably, as the economic models show, it is they that therefore stand to make the most from this deal.

And I'm referring here, Mr Chairman, to the results of the World Bank's analysis of the TPP, which found that all 12 economies would benefit in terms of GDP growth and exports, but that the emerging economies with the highest trade barriers would benefit the most. Nevertheless. the World Bank's finding of a 0.7 per cent increase in Australia's GDP as a result of the TPP is significant, representing a permanent US$15 billion per year to Australia's economy.

ISDS. Over the last fifty years a distinct stream of international law has been forged to provide foreign investors with certainty that they have a means of redress if discriminated against, treated unfairly without due process, if their property was expropriated without appropriate compensation. Australia has entered into agreements which include this type of dispute settlement with 29 economies. We have done so because it is important to support Australia's outward investors who add so much value to our own economy. But equally, entering into such an arrangement is a signal of our confidence in the strength of our own system of governance. We have more to gain than to lose in this space.

It is public information that Australia was the last to join this part of the investment negotiation. When we signalled this in late 2013, it was in a clear-eyed manner. Our terms were to ensure that such a mechanism would not interfere with the public policy-making role of the government. Mr Chairman, our role as officials in the Australian Public Service is to assess and manage risk. The layers of defences we have included in this deal to minimize the risk of a challenge to legitimate regulation means there is a low risk of Australia falling foul of these obligations, given the strong rule of law in this country.

In the intellectual property negotiation, Australian officials did well to negotiate within existing policy settings, notwithstanding considerable pressure from other Parties. Contrary to certain misconceptions in the community, we will not be required to make changes to our system as a result of the negotiation, whether in the area of copyright, pharmaceutical patents or any other area. Arguments that the TPP circumscribes our policy flexibility are, we consider, overdone. We are no more locked into our policy settings than we have been for the last decade when we ratified the Australia-United States Free Trade Agreement. That ten other Parties were prepared to agree to similar settings demonstrates the pull of gravity in the international policy community on these issues.

Mr Chairman – a day out from the US Presidential election, we are all wondering what the next few months will hold for the future of the TPP. For today, the question is what happens if the Agreement enters into force. Let me conclude by posing the counterfactual - what happens if it enters into force and Australia isn't in it.

In summary:

  • Our competitive position in vital markets, such as the US and Japan would be lost – because the TPP neutralizes and then exceeds the outcomes of other trade deals we have done
    • For instance, in Japan alone for our exporters of beef and dairy, where we have very well established and extremely valuable markets, we would be disadvantaged compared to our competitors from New Zealand, Canada and the US
  • We would lose opportunities afforded by new market access for Australian business in everything from financial and educational services to agriculture and manufactured goods.
  • More fundamentally, we would be tacitly choosing not to endorse international rules which reflect some of the reforms that Australia has undertaken in the last thirty or so years; and
  • We would be turning away from embracing trade rules that respond to contemporary commercial challenges.

In many ways, inconceivable.

Mr Chairman, thank you for the opportunity to make these opening remarks and, with the assistance from this group of officials from 11 agencies across the public service, we would be pleased to answer any questions that you and the Committee may have on the TPP.

Last Updated: 7 November 2016
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