Mr McCLELLAND(1.09 p.m.) —I join with the chairman of the committee in recommending the report to the House. This 11th report, as the chairman noted, is significant because it is the first time that the committee has actually recommended against the ratification of a treaty—and I think we have considered over 90 treaties at this point in time.

As members are aware, the treaties committee is a joint committee made up of Liberal, Labor and Democrat members and senators. It is significant that this report was unanimous, including the recommendation against ratification of the agreement on economic and commercial cooperation with Kazakhstan.

The difficulty which committee members had with that particular agreement with Kazakhstan, as the chairman has noted, was not such so much with its terms but rather with the conduct of Kazakhstan officials and, in particular, officials in their dealings with Telstra.

The terms of the agreement itself are relatively standard terms and, as we note in the 11th report, the committee has already recommended ratification of similar agreements with Romania, Mexico, the Czech Republic and Lebanon. As the chairman has mentioned, the committee had significant reservations as to whether there was any usefulness in ratifying the treaty with Kazakhstan, given the past conduct of the Kazakhstan officials in their dealings with Telstra.

The situation with respect to Telstra has been outlined and summarised by the chairman, but basically in 1994 Telstra began a joint venture called Satel, the other participant in that joint venture being Kazakh Telecom. Telstra's investment in Satel was about $7½ million and the joint venture was to provide high quality telecommunications to multinational companies operating in Kazakhstan. The joint venture was for an indefinite period.

The Satel joint venture proceeded profitably and successfully up until 1996. It appears that at that time, however, the Kazakhstan government made a decision to sell 40 per cent of its interest in the state owned Kazakh Telecom to a Korean conglomerate of the car manufac turer Daewoo. It appears that in order to increase the price of the shareholding in that company the Kazakhstan government promised Daewoo a monopoly over Kazakhstan telecommunications.

In that context, the activities of the joint venture companies and specifically the activities of Telstra proved an impediment to the granting of that monopoly. To get Telstra out of the equation they required the joint venture to re-register. There were several other joint venture companies in a similar boat. But in order to re-register, Satel, the joint venture company, was required to have the signatures of both joint venturers, the shareholders in the joint venture, which of course included Kazakh Telecom, which was still 60 per cent owned by the Kazakhstan government. Kazakh Telecom withheld their signature and hence the joint venture could not be re-registered.

Having committed itself to significant investment in infrastructure, Telstra continued managing the business of Satel for a short time. However, again, in order to terminate its activities, the government froze Satel's accounts and required it to repay any profits that had been earned from 1 January 1997. By their actions, which can only be described as high-handed, the Kazakhstan government therefore forced Telstra's investment in Kazakhstan to end abruptly.

It has been said that the concept of the rule of law as we know it is non-existent in Kazakhstan, which is an emerging economy. From a personal point of view, however, the concept of good faith is not one which is based on any legal premise but rather is based on mutual respect and integrity.

Clearly, the actions of the Kazakhstan government were quite inconsistent with that obligation of good faith which is an essential underpinning of any commercial relationship. The members of the treaties committee therefore formed the view that it was pointless for the Australian government to enter into an agreement with the Kazakhstan government which, at this stage of the game at least, has not demonstrated that required goodwill and integrity for there to be any meaningful and viable treaty agreement.

The position which we have adopted again demonstrates that international treaties are not edicts of the United Nations acting as some international parliament. Rather, treaties are agreements between sovereign nations. The mere fact that a nation enters into a treaty is a confirmation of its own sovereignty.

At the same time, it would be pointless to enter any commercial relationship, which is equivalent to a treaty relationship, if you do not have faith in the integrity of the other party. Disappointingly, at this point in time, members of the treaties committee found that they could not accept the existence of that required good faith in view of the conduct demonstrated by the Kazakhstan government.

We have indicated, however, that we would readily review and revisit our decision, should the required good faith be demonstrated and, in particular, should the government of Kazakhstan offer appropriate compensation or permit Telstra to re-enter the country.

Mr DEPUTY SPEAKER (Mr Nehl) —Order! It being 1.15 p.m., in accordance with standing order 102C the time for consideration of committee and delegation reports has concluded. Does the member for Groom wish to move a motion in connection with the report to enable it to be debated on a future occasion?