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Foreign Affairs, Defence and Trade References Committee - 04/05/2015 - Commonwealth's treaty-making process

WEATHERALL, Associate Professor Kimberlee Gai, Private capacity

[14:29]

CHAIR: Welcome. Would you like to make a brief opening statement?

Prof. Weatherall : I am an associate professor in law at the University of Sydney. I specialise in IP law, so we are continuing an IP theme here. I have appeared before a range of committees in parliament inquiring into IP aspects of treaties, from the Australia-US free-trade agreement on—so, in essence, for the last 10 years or so. My submission and evidence is based on this experience.

In my view, the processes by which Australia undertakes treaty negotiations, at least in relation to those concerning matters of public controversy, do need to evolve. I think the current processes sideline both public and parliamentary input, and that is a problem for a number of reasons. It is a problem for the democratic legitimacy. It creates an atmosphere of distrust, and in my view the evidence is in on the outcomes. I think I my area of expertise Australia's recent trade agreements have problems. I think there is a very good chance that better processes could have led to better outcomes for Australia.

To give two examples, there is my forthcoming article, which I sent to the committee in draft, where I showed that the IP chapter of the Australia-US free-trade agreement has demonstrably constrained Australia's ability to make good copyright policy. And in the area of patent I note that similar conclusions were reached by the independent review of pharmaceutical patents.

My second example would be in previous evidence to this committee. I have demonstrated the problems with the obligations in the Korea agreement and in the Japan agreement, but particularly Korea. I have shown in some of that evidence, and in responses to questions on notice, how an agreement negotiated by Canada at around the same time provided much more flexibility and balance in both IP and in the investment chapter. Under current processes the evidence I might have given on these problems of course comes too late. By the time JSCOT or this committee looked at the Korea FTA it could not be changed; it was take it or leave it.

This all motivates my belief and my submission that we need better ex ante processes, so, better ways of getting public and parliamentary input during negotiations and not just when everything is a fait accompli. In theory JSCOT reviews or parliamentary committee reviews into past agreements could provide input for future agreements, but, again. if you look at the article I have shown in there how it appeared that the various criticisms of the approach in the Australia-US free-trade agreement did not appear to make any impact on Australia's future negotiating stance, where we appear to have taken the same approach with the Canada and Japan agreements, which have been criticised by parliamentary committees at the Senate level and in JSCOT.

This suggests to me that better ex ante processes are needed and also better ways to assess the impact of treaties down the line and connect those dots. It is a matter of looking at the assessment of how we went, say with the Australia-US free-trade agreement, and use that to inform our future treaty making. Again, that does not seem to be happening, as far as I can tell.

Finally, the claim that absolute confidentiality around negotiating positions is necessary cannot be supported given changing practices overseas. Again, here I would point specifically to European practices and the detailed processes of consultation that the European Commission now undertakes in relation to its trade agreements, including the TTIP, and investor-state dispute settlement generally.

Don't get me wrong. I know our negotiators work hard. I know they are often up against it. I value the opportunities I have had to provide input through both parliamentary committees and through occasional meaningful engagement with the representatives from DFAT. The few occasions where I have had meaningful discussions with DFAT around their negotiations have only convinced me that we can do better, and there should be more of those.

CHAIR: I would like to pose the same question I put to the last witnesses. After a century or more of making treaties, what has changed in the last five or 10 years that we need to have greater parliamentary scrutiny or that we are at risk with intellectual property? What is the nub of the issue from your angle?

Prof. Weatherall : The nub of the issue now is that IP chapters look like legislation, and they are at that level of detail. Traditionally, power to make legislation and to specify domestic policy at that level of detail has lain with parliament. If we are going to make agreements at that sort of level we need the same sort of parliamentary input and public input that we would have into legislation, because that is the level we are talking about.

CHAIR: But I think the previous submitter mentioned some criminality being brought into trade agreements.

Prof. Weatherall : In the area of IP trade agreements certainly impact on how we frame our criminal law in relation to intellectual property. Criminal provisions in both trademark and copyright have become a commonplace feature of our recent IP trade negotiations.

CHAIR: I think there was a reasonably public case the other day of people who were told 'Don't worry if you get landed with $7,000 because you downloaded some obscure video from the United States.' It involved a case that was run and won in the United States that had implications internationally. People who may have illegally downloaded a copy of this movie, or whatever it was, were potentially in the firing line of a $7,000 letter. Is that the area—

Prof. Weatherall : There are a couple of things going on there. There is the criminal aspect and the civil aspect. The letters you are interested in are potentially a result of the civil action that is occurring at the moment, where the copyright owner has been seeking downloaded details in order to send those sorts of letters. That is actually a civil action. But the catch-all of non-commercial activities by our criminal laws in copyright is actually a result of the Australia-US free-trade agreement. We did significantly extend the criminal provisions as a result of that agreement.

CHAIR: This was not an issue 25 years ago, was it, because we did not have the internet or downloadable TV or video?

Prof. Weatherall : Sure. But it is possible to deal with new and evolving issues, including digital copyright issues at different levels of generality. We had a WIPO copyright treaty in 1996, which is the post internet era, and did seek to update copyright law for the digital era. Then Australia went through a legislative process and implemented rules around that in the digital agenda amendments that occurred around the year 2000. Then we negotiated a US free-trade agreement behind closed doors and then we had to change all of those digital copyright laws to adopt the US model, despite having gone through this extensive legislative local process where we decided how our laws should look. That is a beautiful example of the issue. These treaties change domestic law. If you are going to change domestic law you really should be having public input and parliamentary input.

Senator LUDWIG: Effectively, your argument is that because the treaties are not being utilised more effectively, in essence by drafting quasi law, and that they know in drafting it that way that they know it will be applicable in the country that joins the treaty, the scrutiny then should be, as you have indicated, at parliamentary level, or at least to the same extent that the legislation would be viewed. That is the shield from the department's view or the executive's view: that it should be done in confidence—'We have to do them in confidence. We do not want to play our hand. We do not want to have a discussion in the media about what could or might not be in a particular treaty in the future.'

Prof. Weatherall : There are a few things going on there. One reason is the fact that we were effectively writing legislation that way. Another is the complexity of the types of provisions we are dealing with, and frankly, with all due respect to the negotiators from DFAT, it is beyond the ability of any one negotiator to understand every aspect of trademark law, patent law and copyright law. I am an IP academic of 10 years standing and I do not pretend to be a patent expert. Everyone in IP specialises, and we are expecting these negotiators, who come in with not necessarily much background in IP, to get across these incredibly detailed provisions and then negotiate in Australia's best interests. I just do not think it is actually physically possible to do without expert input, and meaningful expert input, on the detail.

More generally, it is about the change in the topics that the trade agreements are now covering. The focus has shifted from tariff setting to behind the border domestic regulation issues. Once you really are impacting in detail on all sorts of domestic regulation issues, then I think you need much more public and parliamentary input.

Senator LUDWIG: Have you considered what form that might take? The argument is that, once you had a document over, from the government's perspective it ends up in the public domain, even with promises for it not to. The US do make their material available to expert groups. I am not quite sure in what form.

Prof. Weatherall : There is a range of practices around the world. I am not an institutional design expert, but if I look at processes we see overseas—

Senator LUDWIG: I think you are here to help us do that!

Prof. Weatherall : For what it is worth! The US show texts to cleared sets of advisers from industry. At least it means that some people outside government are looking at texts in detail and advising the US negotiators. The downside of that is that it creates certain levels of distrust, because some people are consulted and some are not. If you have a system of cleared advisers that is the definite downside. How do you ensure that there is a full range of views? How do you identify the experts? How do you clear them? I think there are issues around that model.

Another model that the European Union has been adopting in more recent times is the publication of not necessarily text but more detailed position statements and arguments supporting those position statements. Then, in the case of investment specifically, they actually did put some sort of proposed model texts out for discussion, with reasoning, and then sought input on that from the public generally. That was a model text rather than the text that was currently being negotiated. But it was clearly based on what they were negotiating and what they were thinking about, and that was open for public discussion. The position statements they have put forward in the TTIP I think are useful. It is not text but we are talking about the issue that we think this is the way this negotiation should go. I noticed that the Law Council submission before this inquiry had some suggestions around publication of position statements. I think those sorts of mechanisms should provide some guide to the committee.

Senator LUDWIG: Regarding your point about the cost-benefit analysis. It is difficult, as you would appreciate, to do it at the time of establishing the treaty, because a range of variables are unknown—the trade levels can be predicted but not necessarily with the greatest certainty. So you are also advocating that it could be conducted on a post facto basis down the track, when the information is more clear and the legislation is passed and what level of trade actually occurs or what the impact might be are known. Is your argument just at the inception of the treaty or a more continuous look at how the treaty has—

Prof. Weatherall : My view would be that you need a bit of both. There is the idea that you cannot do any costings for IP, which seemed to be discussed in, say, the Australia-US free-trade agreement. The discussions after that agreement were that we could not possibly model anything about IP, but that is simply not true. I think you can model parts of it, particularly things like term extensions, where you know how much you are paying in royalties and you can extend that our, not just for copyright but for patent as well. Look at the analysis that the pharmaceutical patents review did around the cost of the patent provisions we have, what patent term extension would cost us and what one additional year would cost us to the PBS. They have done some detailed analysis there. You can do that ex ante. If one of the matters for discussion is extending patent terms by another three years or extending data protection by another three years, that can be costed. There are models for doing that, and the pharmaceutical patents review is an example. So it is a furphy to say you cannot do anything. I think there is some analysis that you can do. It will be fuzzy, but there are some things that you can cost.

I do think, though, that the ex-post analysis is important. We are now 10 years on from the Australia-US Free Trade Agreement. You can do a cost-benefit analysis. There was some cost-benefit analysis done by the Productivity Commission in the context of its consideration of bilateral agreements, and some of those analyses did not come out all that well. They suggested that a lot of the benefits of some of those agreements were far less than had been touted. I think that sort of analysis and feeding that into future positions is really important, because if we do not learn from our mistakes then we are going to keep repeating them.

CHAIR: I think that is very good point at which to break for afternoon tea.

Proceedings suspended from 14:45 to 15 : 00

CHAIR: We are now back in session.

Senator WHISH-WILSON: Professor Weatherall, you mention in your submission on page 58 that:

In short, both Parliamentary and expert independent criticisms appear to have little or no impact on DFAT's negotiating stance on IP since 2004.

Why do you think that is the case?

Dr Weatherall : Do you mean what is the evidence for my point or why do I think they have ignored it?

Senator WHISH-WILSON: Both, if possible. You could substantiate that with some examples or evidence. It is a fairly big statement. You express in your submission that you are not necessarily unhappy with the access you have had to DFAT and some of the discussions that you have had with them; you mentioned it in your opening statement. Why do you think it is possibly going in one ear and out the other?

Dr Weatherall : I think any attempt by me to explain that is likely to be speculation. I sought to evidence the point through the article, which I attached to my submission. The basic point here is that consistently in JSCOT and in the Senate committee that looked at the Australia-US free-trade agreement there were criticisms of the IP chapter, the detail in the IP chapter, its prescriptiveness and its lack of balancing provisions. What we have seen in subsequent treaties negotiated by DFAT—in particular, the Korean agreement and the Japan agreement—is a similar level of detail and a similar level of prescriptiveness. It is not to quite the same extent as the Australia-US free-trade agreement, but it is certainly beyond what you would have expected. There is a lack of balance. That is my basis for the claim that the criticism that has come from parliamentary committees and from experts like the Productivity Commission does not appear to have made an impact.

There is also the fact that when the Productivity Commission considered our bilateral trade agreements and criticised the IP chapters in its draft report the response from DFAT was robust and defensive, more or less saying, 'We think this is important.' The justification ordinarily given by DFAT for the IP chapters is, 'IP is important to some of our stakeholders.' My general response to that is that that does not actually explain the level of detail we see in the IP chapters. There is no link between saying that IP is important and trying to write all of our domestic law into a treaty chapter.

It is also unusual; that is another thing that emerges from the research that I have done. If you look at the approach that—say—Singapore, Japan or Korea have adopted in their other bilateral negotiations, even when they have negotiated an agreement with the US and so have those detailed obligations in the US FTA, Singapore has in its subsequent agreements and bilateral negotiations gone back to very general provisions and very high-level provisions. The stance that DFAT has adopted internationally is quite unusual. I am somewhat confused by it.

Senator WHISH-WILSON: This might be speculating again, but I presume that DFAT works with the executive of other departments when they make decisions in negotiations. It is not just the negotiator on their own making a decision in the national interest. It is obviously part of a much bigger process—

Dr Weatherall : I am sure they talk to some of the departments. I do not know the details of that and I do not know how many departments they consulted on some of these chapters. Intellectual property affects all sorts of different areas, everything from education and health right through to innovation, industry and communications. I do not know how many of those departments are actively consulted on the IP obligations. I know that people from IP Australia and A-G's are consulted and talked to; I do not know about the extent of consultations beyond that.

Senator WHISH-WILSON: Would this be something that could be captured by an ex-ante process where you go into looking at, for example, cost benefits in a process prior to a trade deal—or certainly during the deal—where you could capture all that information through submissions?

Prof. Weatherall : I think if we did have a process, it would be something like the Harper committee envisaged where there would be an international IP strategy stetting process with open public discussion. I think you could capture a much greater range of perspectives on the sorts of IP provisions and the sorts of things we should be focusing on. I think that would be a very useful process.

Senator WHISH-WILSON: You also mention in your submission a couple of pages later:

The capacity for individual stakeholders to make submissions to DFAT at early stages is not an adequate substitute for on open, informed discussion conducted by a body other than the bureaucracy.

Does that statement very much align with what you just said?

Prof. Weatherall : Making submissions and writing submissions that go into DFAT—you do not necessarily know where they go once they have gone into the department. More often than not, you do not get much of a response. They will say, 'Thank you for your input,' and that is about all you hear. So that is very different from a process where you get open, public discussion, the contest of views. You want to reach the best policy outcome—open, public discussion with a contest of views from all perspectives—so you can reach that compromise publicly, I think, is a much better process.

Senator WHISH-WILSON: In terms of the US, you mention the cleared advisers. Is information available as to who those cleared advisers are in relation to what you have said and whether they were academics such as yourself, NGOs or all corporate interests?

Prof. Weatherall : Historically, they have been representatives of more corporate stakeholders, so people from, say, the movie industry and the pharmaceutical industry. I would need to take on notice the question of whether it is still the case that it is only those industries. I am afraid I have not looked more recently at the revised list. My understanding was they were trying to balance it more, but I would have to check.

Senator WHISH-WILSON: In a similar line of questioning: you also state in terms of that access:

… in the US, numerous representatives of US corporate interests are given detailed access to negotiating positions and texts …

Can you elaborate on what that detailed access is: is it simply more than we get, or do you know what—

Prof. Weatherall : My understanding is that it includes negotiating texts.

Senator WHISH-WILSON: Updated negotiating texts?

Prof. Weatherall : Yes.

Senator WHISH-WILSON: So, presumably, the negotiators on the US side before they go to their next set of negotiations are getting an update from those stakeholders as to whether that position is acceptable?

Prof. Weatherall : Yes.

Senator WHISH-WILSON: Can you let the committee know whether any political representatives in the US system have cleared access as well?

Prof. Weatherall : That is a question I would have to take on notice. There has been some discussion around that particularly recently in the fast-track negotiations, but I would have to check the latest position. I could do that.

Senator WHISH-WILSON: You said in your next paragraph that at least some parliamentary representatives have had access both in the US and in Europe. So I would be interested if you could get any specifics.

Prof. Weatherall : I can look for some more specific detail on that, yes.

Senator WHISH-WILSON: We can ask the other witnesses if they are aware of that.

Prof. Weatherall : There have certainly been some public comments from some members of Congress about access in camera and in rooms without being able to take text away, but the details of that I would have to provide to you on notice.

Senator WHISH-WILSON: Thank you.

CHAIR: Just on that point, there are two quite different systems: the US system and the Westminster system so to speak. Are you suggesting that there should be, say, a subcommittee or JSCOT should have expanded roles to scrutinise treaties?

Prof. Weatherall : I certainly think one option would be for JSCOT to have a more expanded role, including during negotiations. That would be one avenue. I think there is a range of different levels of transparency that you can talk about, and it might depend on the treaty, the level of detail of the treaty and which level of transparency is actually necessary to go to. I am not saying for all time: I think the solution for all treaties is more involvement by JSCOT. In theory, JSCOT could do it now but they do not.

CHAIR: The only example is the intelligence committee which dealt with the metadata situation, where both government and opposition are getting briefed on secure and confidential aspects. They were able to come out with a report to either side of the parliament, so to speak. Is something like that necessary in trade?

Prof. Weatherall : Certainly more detailed briefings to a wider range of members of parliament is a basic requirement, I would have thought. That is not the level of transparency that we probably need in some of these negotiations, but it would be a start.

CHAIR: We only get to vote on the enabling regulations; we do not get to vote on anything other than that.

Prof. Weatherall : Correct.

CHAIR: That has been the case for 115 years.

Prof. Weatherall : Yes.

Senator WHISH-WILSON: That does not mean it has to be for the next 115 years.

CHAIR: What has changed?

Prof. Weatherall : A lot has changed in the last 20 years since the 1996 process.

Senator WHISH-WILSON: I go to what I asked earlier regarding your comment about capacity for individual stakeholders to meet with DFAT in the early stages and provide feedback, which you have done yourself, or another process that could be a Harper review style process. I think you talked about an open, informed discussion. Is there a reason we do not have that process at the moment? If that bigger, informed discussion is out in the public arena, it locks DFAT into opposition. They do not have to justify why they may not have adopted recommendations from a separate cost-benefit analysis—for example, on IP. At the moment it is in flux.

Prof. Weatherall : I certainly understand that that may be the concern. There are a couple of responses to that. One is that confidentiality should not be a cover for assessment of how well DFAT did in its negotiations. That is something that we should be rightly interested in discussing—how well are we doing in our trade negotiations; is there a problem; how can we do better? That is something that I would have thought the entire parliament and the Australian public would be interested in securing: better processes and better outcomes. As to locking us into positions, certainly informed commentators understand that treaty negotiations are negotiations. You are not going to get everything you want. There will be trade-offs and compromises. It is really incumbent on us to assess the compromises and whether they are worthwhile. I point again to the European Commission in the context of the TTIP negotiations. I encourage you to look at some of those position statements, where the European Commission has said, 'We think a desirable outcome would be along these lines.' They probably will not achieve all of those things, but at least if they are saying, 'This is what we think is desirable,' people who might differ from that can go back to them and say, 'I think you're wrong for these reasons.' You can again have that meaningful discussion. Or a stakeholder can come in and say, 'I understand that your priority is X, but we think you also need to think about Y.' Trade negotiators cannot possibly know every priority of every stakeholder. They cannot guess that. Nor is it possible for all stakeholders to guess where they need to get involved and make submissions. I have to confess that, if I had any idea what was likely to be in the Korean agreement on IP, I would have been much more involved. I certainly did not expect to see anything like what we got in that agreement.

Senator McEWEN: I take your point about putting in measures to make sure that you get the treaty right before everybody signs up to it, but is it possible to change a treaty once it is agreed? How does a government of a state go about doing that? Is it possible? How do you do it? How complicated is it?

Prof. Weatherall : That is something that I am sure DFAT is better qualified to answer than me. From a practical perspective, it seems to me to be difficult, particularly in a bilateral, let alone a multiparty negotiation, to go back to all the parties and say, 'I know we negotiated X, but our parliament didn't like it. Would you mind reopening now?' Realistically, that is not going to happen at the point where the agreement has been signed and published and leaders have been pictured signing it. From a practical perspective, I do not think it will happen. In theory, you can go back and renegotiate points. To be fair, the US has done that on a couple of its free trade agreements. It went back and renegotiated with Korea, Peru and a number of other countries after congress refused to pass some of the treaties. Of course, in the US context, congress does get the up or down vote on treaties. They could not get the up vote, so they went back and renegotiated it. The US being the US, I suspect it has a lot more power to do that kind of thing than Australia ever would have—again, in practical terms. As to the actual mechanics of it, I am afraid I am not an expert.

Senator BACK: I think the current negotiations involves 12 countries. In terms of the draft text and position papers being made public, is it your understanding that it would require the agreement of all of the parties before such a document or a position statement for each could be made public?

Prof. Weatherall : I do not know the detail of the agreements that might have been reached between the parties.

Senator BACK: I mean in general terms. You understand the protocols of it more than I do. I am just trying to work out whether there would be some form of breach of confidence—whether it be IP, PBS or whatever—if a negotiating group from one country were to make a position paper or the negotiating text public without the agreement of the other players. I am just trying to get an understanding of how that would play out in terms of the relationship around the negotiating table.

Prof. Weatherall : As I said, I do not know what particular agreements on confidentiality—and the text of any particular agreements—might have been made in the context of the TPP negotiations. It would seem to me to be a strange position for another country to argue that Australia publishing its preferred outcomes and what it was aiming for was confidential to them. Surely that is only our—

Senator BACK: Perhaps my question might go more widely to the negotiating position of other parties as well as our own.

Prof. Weatherall : I imagine that other negotiating parties might be upset if you revealed all the details of their negotiating positions. But I do not think that would be necessary. There are different levels at which you can say 'These are the issues at play and this is our position' without revealing the negotiating positions of particular countries. I think there are ways of doing that without descending into the depths of 'The US thinks we should do X.' I do not think you would need to go to that extent to provide for meaningful information. It is interesting in the context of the TTIP negotiations that the US has not gone to the same extent as, say, the EU in publishing its current position papers. As far as I know, that has not prevented the negotiations from being ongoing. So I do not think the existence of another party to the negotiations precludes one party from saying it wants to have a discussion internally about what its priorities should be.

Senator BACK: I am staying with the concept of material being made public as opposed to being made available to keep people with a key interest. I imagine that, in the negotiating processes, people would put out their ambit claims.

Prof. Weatherall : They do at a very general level.

Senator BACK: So I am wondering about the extent to which it is helpful in the wider public discourse if that is widely known, widely canvassed and widely debated in the media—either on our part or that of some other participant around the negotiating table. I am wondering whether that is likely to be helpful or distracting to the endgame given that, until negotiations are completed, they actually have no status at all.

Prof. Weatherall : I take your point and I know it is a concern that we will get into a big debate about texts, everyone will get all worked up, and then it will turn out to be nothing because it was not actually something that ended up being in the agreement. I understand the point. My obvious response, however, is that we are having that debate anyway, we are having that distraction anyway. That is partly because of leaked text or partly because of 'Ooh, we think this might be in there! We do not know. We have not seen the text but we are very concerned that it might be.' We are having that public discussion now except it is occurring on a completely ill informed basis. It is occurring in an atmosphere of high distrust. We have the trade minister saying everyone is just fear mongering and they do not know what they are talking about. The obvious response is: 'We don't know entirely what we are talking about because you won't show us, so we can only work on the assumptions of leaked text, statements and past agreements and try to piece something together.' That is a very unsatisfactory basis on which to have a public debate and a public discussion.

CHAIR: Going back to your point about intellectual property in the CAFTA agreement, is there anything in the TPP that gives you the same concern? Or have you satisfied yourself as to what is in the TPP arena? Can you actually see that?

Prof. Weatherall : I am very concerned about some of the things that are being discussed in the context of the TPP.

CHAIR: How do you know that. Is there any visibility at all that leads you to that concern?

Prof. Weatherall : There is a leaked text on WikiLeaks, for what it is worth. It dates from May last year—the most recent one.

CHAIR: You said that had you been aware of the contents of the Korea free trade agreement on intellectual property you would have been much more active. So that has been replicated in the TPP? You are just guessing what has been negotiated there? There is no transparency?

Senator WHISH-WILSON: Is there a standard set of trade deals that you use across deals? Or do you have to set the same standards or improve on them?

Prof. Weatherall : A short response is that I have been much more active in relation to the Trans-Pacific Partnership partly because I have seen some texts—leaked texts which may or may not accurately reflect what is going on. I have been able to do detailed analyses of the potential impacts of some of these texts, publish them for general discussion and have discussions with representatives from DFAT about some of that analysis. And I have had some meaningful discussions as a result. I did not have that opportunity with the Korea agreement.

CHAIR: You said intellectual property is an incredibly complex field and that an expert in one area could be, for want of a better word, ignorant in another area. Who does DFAT consult?

Prof. Weatherall : That is a question you would have to direct to DFAT.

CHAIR: We will, but don't you know where they get their background information from?

Prof. Weatherall : They do not publish who they get their background information from. They publish lists of people they have talked to, but I do not know what the contents of those conversations have been.

CHAIR: Thank you very much for your evidence.