Introduction

The Australian Democrats support fair trade that is first and foremost in the national interest.

The 'national interest' is about more than basic economic considerations. It is also about our social and labour standards the preservation and improvement of our environment and our national cultural identity. These must also be taken into account in any trade decisions.

Wide-ranging trade agreements such as this FTA will have an impact on every facet of our economic, social and cultural framework and they must be assessed in terms of what has been won against what has been traded away.

Will the FTA be good for Australia?

Determining what is in Australia's national interest requires thorough examination of the terms of the agreement, consultation with key groups and stakeholders, and a balanced, reasoned assessment of the likely risks and benefits this agreement might bring to our country.

As these decisions will also have a critical impact on our national sovereignty more generally, we must be vigilant to ensure that the terms of the agreement do not affect our ability to regulate freely in the national interest in future.

The Government has committed to a public review of the economic impact of the Australia-US Free Trade Agreement. The Democrats have called on the Government to go further than merely analysing the economic effects, and use a triple bottom line approach that also considers the potential environmental and social impacts of the deal.

What are the areas of concern?

The deal has some very serious shortcomings from an Australian perspective. Pressure from the powerful US agricultural lobby has resulted in the complete exclusion of the sugar industry from the deal and only limited improvements in market access for other agricultural sectors such as beef and dairy.

While the Government says critical areas such as the PBS, Australian content in media, quarantine and public services have been protected, there are some alarming inconsistencies between Minister Vaile's assurances and the version of the story according to the US.

Particular areas of concern include:

Pharmaceutical Benefits Scheme

The Government has repeatedly assured the Australian public that the PBS will not be affected by the FTA. However, the details of the text of the deal indicate otherwise.

The Free Trade Agreement establishes a process whereby US drug companies can seek independent review of decisions made by the Pharmaceutical Benefits Advisory Committee about the listing of drugs on the PBS. This may lead to more expensive drugs being included in the scheme, which will increase the cost of the PBS to the taxpayer.

By signing the FTA, and committing Australia to the establishment of an independent process to review determinations of product listings, the Prime Minister went directly against the advice of the government-commissioned Tambling report. Big US companies with large profits at stake will see great advantages in appealing, should a drug not be accepted for subsidy at a price they want.

This has the potential for creating log-jams, overwhelming the bureaucracy, the courts and experts. Further, the need for this 'independent process' is questionable, given that decisions to subsidise medicines already rely on independent expert advice, and are ultimately a government responsibility about what is in the best interest of the public.

This Government has already tried to erode confidence in the PBS by calling it unsustainable, and in 2002 introduced legislation to increase the prices consumers pay under the scheme. The Democrats refused to support the legislation.

The Democrats have always supported the PBS and its success in giving Australians the drugs they need at an affordable price. We will continue to resist any efforts to compromise its effectiveness.

Australian Content in Broadcast Media

Australia has a system of controls in place to ensure that a basic minimum level of Australian content is broadcast on television. Our cultural policy exists to ensure a diverse range of local voices is heard and uniquely Australian stories continue to be told.

The FTA does include provisions for quotas of Australian content on television. However, these quotas are locked at specific levels, and can never be increased. If quota levels are lowered by a future government, they can never be returned to their current levels.

Further, the FTA provides that the US can challenge any regulation for Australian content in new media, which will severely limit future government regulatory options that may be required to deal with new technologies and new modes of delivery of audiovisual content.

The Democrats strongly support the Australian cultural sector, and will resist any attempts to weaken our strong and vibrant national cultural identity.

Intellectual Property and the IT Sector

The Department of Foreign Affairs and Trade has described the Intellectual Property outcomes of the FTA as 'harmonising [Australia's] intellectual property laws more closely with the largest intellectual property market in the world.' Given the amount of power wielded by US corporations in the field of copyright and patent protection, this prospect gives rise to some concern.

The Democrats have warned against allowing the Free Trade Agreement to go down the American route of giving extraordinary power and privilege to giant software companies, which can then be used to stifle competition.

Aspects of the US Digital Millennium Copyright Act (DMCA), along with software patents in the US, have seen the major software companies in that country frustrate and block smaller companies and IT research teams, by using the law to threaten and financially exhaust any competition.

The prospect under this FTA of software patents, rigorously enforced anti-circumvention provisions, and increased liability for internet service providers are a matter of considerable concern to the Democrats.

We strongly support the development and use of open source software, and a diverse and competitive IT environment in Australia.

We must retain our sovereignty in this area, and resist any efforts to sell out Australia's successful proliferation of small and medium-sized companies to US multinational giants, and stepping on civil liberties in the process.

Public Services

The FTA uses a 'negative list' approach to services, which means that all services are included in the agreement unless they have been specifically exempted.

The text of the FTA includes an exemption for 'services supplied in the exercise of Governmental authority'. The Agreement uses the same definition as the WTO General Agreement on Trade in Services: that is, 'any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.'

This is clearly ambiguous, given that so many essential public services have either been privatised or are in the process of becoming so and many are supplied in a competitive environment.

There is a very general reservation in the Agreement for Australia to 'adopt or maintain' any measure with respect to a number of services, including public education, health and child care. However, other essential public services such as water, energy services and waste disposal are not included in this reservation, and are therefore not protected.

The Democrats are committed to ensuring that this FTA does not compromise the ability of governments at all levels in Australia to deliver essential public services to their communities.

Investment

The threshold for US investment in Australia that must be subject to review by the Foreign Investment Review Board has been lifted from $50 million to $800 million. The US Trade Representative has boasted that if these rules had been in place over the last three years, almost '90% of all US investment in Australia would not have been reviewed.'

While some exemptions have been retained (examples include newspapers, broadcasting, Telstra and Qantas), essentially these provisions amount to a massive reduction in our ability to review investment proposals to ensure they are in the national interest.

One of the key fears relating to the FTA before its release was that it would include what are known as 'Investor-to-State' dispute resolution mechanisms, such as those used in the North American Free Trade Agreement (NAFTA). These provisions enable corporations to legally challenge governments (and receive compensation) for laws or policies that conflict with their interests. While these dispute resolution mechanisms have not been included in the Australia-US FTA, fears remain that such a process could develop at a later stage.

The Investment chapter of the Agreement refers to a process where if there are a 'change in circumstances', investors can request a consultation with the Government with a view to addressing their concerns and making necessary changes to allow their investment to take place.

Quarantine

It seems clear that as a result of the FTA, the US will now have the capacity to have considerable influence over our quarantine measures.

The FTA will establish two committees and a series of procedures that are designed to provide a forum for the negotiated resolution of quarantine issues 'with a view to facilitating trade'.

Through this process, either party can force a review of the other party's quarantine measures. The review is carried out by Standing Technical Working Group on Animal and Plant Health Measures, which can carry out a risk assessment on quarantine measures, identify mutually agreeable mitigation measures and even refer matters to an 'independent scientific peer review'. The FTA states clearly that both parties have an obligation to seek to resolve issues by mutual consent.

The Democrats have always maintained that quarantine issues should be resolved solely on the basis of the best available science, where the primary objective is to protect animal and plant health and the environment. Compromising Australia's natural environment and biodiversity should not be a matter for negotiation.

Labelling of Genetically Modified Products

The US does not have labelling of genetically engineered foods, and is currently pursuing an action through the WTO against the European Union to challenge EU labelling laws, which the US regards as a 'barrier to trade'.

The Agreement places a positive obligation on Australia to accept US technical regulations as equivalent to our own.

Further, Article 8.7 of the Agreement states that Australia must allow the US to participate in the development of standards and technical regulations, 'on terms no less favourable than those accorded to [Australia's] own persons.'

This gives the United States a direct role in the determination of Australian public policy with respect to areas such as genetically engineered crops, matters which we must resolve with regard to our own national interest, not those of our trading partners.

What's the process?

This FTA will come into effect once it has been ratified. This process will include the following steps:

The Government will table the text of the FTA in Parliament, and it will be referred immediately to the Joint Standing Committee on Treaties (JSCOT) for review.

Economic modelling to determine the net worth of the Agreement has also been commissioned by the Government, and will be conducted by the Centre for International Economics (CIE). This decision was announced just days after the Trade Minister had promised a full public tender process would be held, and the Government ignored the Democrats' calls for a triple bottom line approach.

CIE did the initial economic analysis for the Government's predictions of what the FTA would be worth, and their work has been widely criticised for using unrealistic assumptions and massively overstating the net gains to Australia of an FTA with the US. The results of the new CIE analysis will feed into the JSCOT review process.

The JSCOT has a majority of Government members, and is likely to report in favour of the FTA.

The Government will also introduce legislation to seek to implement those parts of the FTA that require changes to the law.

A separate Select Committee has also been established by the Senate to more thoroughly investigate the terms of the FTA. This Inquiry will conduct extensive hearings across the country, consulting with stakeholders and interested parties.

In the US, the FTA requires a vote of Congress in order for it to be approved. This vote will occur after a three-month review period.

Will the Democrats vote the FTA down?

The Australian Parliament does not get an opportunity to vote on the FTA in its entirety (unlike the US Congress). Under our Constitution, the Executive Government can enter into treaties without having to obtain the approval of Parliament.

However, the Government will need to introduce some legislation to implement key aspects of the deal. The Democrats will carefully scrutinise this legislation on its merits to ensure that Australia's national interest will be protected.

The Australian Democrats believe Parliament should have a critical role to play in the trade agreement-making process - that is to scrutinise, debate and vote on any such agreements that can so significantly affect our future.

Former Democrats Senator for NSW, Vicki Bourne introduced the Parliamentary Approval of Treaties Bill in 1995, which we will re-introduce to Parliament.

The Australian Senate, as a strong and independent house of review, has a critical role to play in this regard.

Are the Democrats anti-trade?

The Democrats are not against free trade. We support fair trade that is in our national interest.

Fair trade means any trade liberalisation commitments are made in line with those of our trading partners and that we are not unduly disadvantaged as a result of any trade deal.

It also means recognising that trade has a global impact, and that we have a duty to consider what would be best for the whole world.

In this regard, we prefer the multilateral approach to trade negotiations. Multilateral trade agreements (such as those negotiated through the World Trade Organisation) can deal with a wider range of issues than bilateral FTAs.

We advocate the need for an international system of rules for international trade. The WTO needs reform to become more accountable, open and transparent - with clearly established rules and processes, and a publicly accountable dispute resolution process.

Where else can I find information?

Democrat speeches and press releases about the Australia-US FTA:
www.democrats.org.au
www.adenridgeway.com

Senate Select Committee Inquiry into the Australia-US Free Trade Agreement
www.aph.gov.au/Senate/committee/freetrade_ctte/index.htm

Department of Foreign Affairs and Trade:
www.dfat.gov.au/trade/negotiations/us.html

US Trade Representative:
www.ustr.gov/new/fta/australia.htm