TPP_ COMMENT_ The Trans-Pacific Partnership is bad for Australia

The Sydney Morning Herald

Comment

The Trans-Pacific Partnership is bad for Australia

Date June 29, 2015
Comments 3

Kenneth Davidson
Senior columnist at The Age

View more articles from Kenneth Davidson

The Productivity Commission appears to have tried to convince the government not to put Australia's head into a noose via the TPP.

President Barack Obama now has the authority to negotiate the Trans-Pacific Partnership agreement without Congressional interference. The Abbott government is reluctant to challenge even the most odious provisions of the agreement, which pretends to be a regional trade pact involving the US and 11 other countries. It is in fact a push for US regional dominance with particular relevance to its rivalry with China.

The Economist says the TPP is not the way to go. Last month, it said: "The exclusion of China is costly ... a more inclusive Pacific free-trade deal with weaker rules on state-owned firms would lift the income gains for the original 12 TPP members, including America, to $760 billion – more than double the boost from the TPP."

In an effort to talk up to alleged trade benefits of the TPP and the recently signed free-trade agreements with South Korea, China and Japan, the Australian government commissioned independent modelling of the three FTAs over the next 20 years by the Centre for International Economics. The fine print showed that the combined agreements would increase GDP by $24.5 billion – or a risible 0.1 per cent a year.

This did not prevent Trade Minister Andrew Robb claiming the economic gains demonstrated by the modelling justified the urgency with which the incoming government pursued the agreements.

The same consultancy undertook a study of the AUSFTA in 2005. It initially forecast a gain of $4 billion accruing to Australia from liberalisation of the US sugar market. That figure was later increased to $5.6 billion, even though it became clear the sugar market would not be opened up to Australia, despite a personal appeal by prime minister John Howard to president George W. Bush.

The revised forecast was achieved by a reduction in the estimated "equity risk premium". Leading trade economist Ross Garnaut said the revised result did not pass the "laugh test".

According to a review of AUSFTA after 10 years, by ANU economics professor Shiro Armstrong: "The evidence reveals AUSFTA resulted in a fall in Australian and US trade with the rest of the world and that the agreement led to a trade diversion. Estimates also show that AUSFTA is associated with a reduction in trade between Australia and the US."

Last week the Productivity Commission released a savage critique of the TPP and the so-called FTAs. It appears to be a last-ditch attempt by the commission to get the government to avoid putting Australia's collective head into an even bigger noose via the TPP.

According to the report: "The emerging and growing potential for trade preferences to impose net costs on the community presents a compelling case for the final text of an agreement to be rigorously analysed before signing."

Critics of the TPP recognise it is not so much aimed at promoting free trade but more at limiting government rights to deal with present and emerging problems, especially those associated with climate change and the environment. The TPP and the bilateral FTAs are seen as a sham, designed to facilitate the growth of the corporate state at the expense of the welfare state.

The vehicle for this rollback is the section dealing with Investor-State Dispute Settlement. The ISDS rules, administered by secret, ad hoc tribunals – whose members may alternate between judging disputes and advocating on behalf of corporations seeking compensation for future losses resulting from legislative change or court decisions – trump local democracy and law, according to the Chief Justice of the High Court.

Apologists for the ISDS section of the TPP, including Robb, argue that the draft for the TPP is less onerous than the same section in earlier free-trade agreements. But similar provisions in the European Union-US trade and investment partnership were opposed by France and Germany on the grounds that "it must not be that international investors have rights and influence before arbitration tribunals, which national enterprises don't have in their own country".

So what's in the TPP for Australia? Robb is evasive. Disingenuously, he claimed that the ISDS "is there to give investors protection in those markets where we don't understand the legal system, where the legal system may not be as fair as we think it should be".

In response to Geraldine Doogue on Radio National, who contrasted Howard's refusal to sign AUSFTA in 2005 with a similar ISDS clause which would have opened up public health and other social programs to challenge, Robb said: "I'm not looking to agree to anything which doesn't have those protections, and therefore people shouldn't have the concerns we are hearing about."

I'm sure Robb and the Abbott government would resist anything they considered would undermine the public interest. But their concept of the public interest, involving a rollback of state involvement in economic and social affairs in favour of unmediated market forces, sits far more comfortably with the Abbott/Robb neoliberal agenda than a majority of the population would accept, if given the choice.

Kenneth Davidson is a senior columnist for The Age.
Email: kdavidson@dissent.com.au

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