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Thursday, 26 June 2003
Page: 12661

Senator MARSHALL (10:43 AM) —I rise to speak on report 52, Treaties Tabled in March 2003, tabled by my colleague Senator Kirk. I am unable to support recommendation 2 in this report, which effectively supports the ratification of this treaty, for two reasons. Firstly, I have some very serious concerns about the level of public consultation that took place throughout the committee's investigation. There is a high level of public discourse about trade agreements at the moment. I encourage that, because these sorts of trade agreements do have a serious and real impact on ordinary Australians. I encourage more and more involvement in that process. But I was not satisfied that the committee paid enough attention to concerns raised by the public, nor did they go through a process of public hearings.

I also have some very serious concerns about the level of consultation with the states. Agreements of this nature have the ability to impact upon some of the constitutional areas where states and territories have rights. I have some serious concerns that the states have not been made aware of the specific implications of the making of these treaties and how they may in fact impact upon their rights as states under the Constitution. One of my main criticisms is that the committee should have specifically drawn these matters to the states' attention and specifically requested comments from the states effectively consenting or objecting to the making of the treaty which would have enabled the committee to take those views into consideration.

A lot of those concerns go to chapter 8, which contains the investment provisions. The chapter 8 investment provisions of SAFTA apply to all measures used by government, including laws, regulations, procedures, decisions and administrative actions by central, regional and local governments and authorities. It also covers non-government bodies exercising powers delegated by central, regional or local governments or authorities. The dispute settlement provisions in chapter 8 are broadly based on the North American Free Trade Agreement—NAFTA. United States and Canadian corporations have used NAFTA provisions to sue US, Canadian and Mexican governments—including provincial governments—over changes in regulations.

I want to give a couple of examples where this has occurred. Even though the provisions in NAFTA are slightly different to those in SAFTA, they can be easily transposed, and it involves the same sorts of issues that our states and local governments and the federal government, for that matter, could find themselves in litigation about. In the first example, the US Metalclad Corporation was awarded damages because a Mexican local council refused permission for Metalclad to build a hazardous waste facility on land already heavily contaminated. In the second example, the US chemical company Ethyl Corporation successfully sued the Canadian government for damages after the Canadian parliament imposed a ban on the importation and trade of a fuel additive made by Ethyl. In the third example, Sunbelt Water, a US based company, is suing Canada because the Canadian province of British Columbia interfered with Sunbelt Water's plans to export water to California. In the fourth example, in 1999 the American company United Parcel Service—UPS—filed a suit against the public owned Canadian postal service for using its monopoly on standard postal services to subsidise its parcel courier services. Finally, in 2002, Philip Morris threatened to sue the Canadian government under the NAFTA provisions for proposed changes to health warnings on cigarettes sold in Canada. All those issues give me some significant concerns about the impact of trade agreements in relation to removing the sovereignty that states and territories may have in determining standards that may apply to their constituencies.

SAFTA will also have a direct impact upon the Australian state and territory governments one year after SAFTA enters into force, largely through the chapter 7 provisions on trading services and the chapter 8 provisions on investment. In that interim one year, states and territories will be required to submit areas that they wish to have reserved or protected from the SAFTA provisions. The federal government says it will be consulting with the states and territories closely to develop lists of reservations or exclusions in relation to the investment services chapters. SAFTA will have important implications in its own right for the ability of future Australian federal, state and local governments to regulate. Australia already has about 20 bilateral agreements that establish rules on how the investments of companies are regulated in the countries concerned. However, to date, these have been made with the developing countries, which, arguably, would not be home to many large corporations that could invest in Australia.

Just as importantly, however, the manner in which SAFTA is negotiated and completed will set precedents for how other free trade agreements, such as that currently being negotiated with the United States, will be progressed into the future. The Minister for Trade, Mark Vaile, has already said that SAFTA is a `test case' for the US-Australia free trade agreement. He said that in the Courier-Mail of 4 November 2002. Moreover, other FTAs negotiated by the United States, such as the US-Singapore Free Trade Agreement and the US-Chile Free Trade Agreement have included similar investment chapters modelled on the investment provisions contained in NAFTA.

I have some concerns about that, and in my additional comments I certainly consider that in the best interests of transparency and for the best consultative practice the committee should have conducted public hearings regarding this treaty, and I strongly recommend that when future treaties of this nature are being considered by the committee they should conduct public hearings and take submissions from all interested parties. I also believe that states and territories should have been directly advised by the committee of the specific impact that the proposed treaty would have upon states and territories and, in future, when the committee is considering treaties of this nature, states and territories should have a direct response specifically requested of them, thereby assuring the committee that they have effectively consented to the making of the treaty. I believe similar provisions should apply to representatives of local government.