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Tuesday, 3 August 2004
Page: 25429

Senator GREIG (6:12 PM) —I rise to speak on the US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004. The Democrats oppose the implementation of the free trade agreement. I want to focus in particular on two portfolio areas in which I have an interest, those being welfare and information technology. I would like to start off by talking about welfare. In doing so, I wonder whether the government or the opposition have examined or paid any attention to the deal of criticism they have received from interested parties, particularly those in the welfare sector, regarding the decision not to seek exemption from the government procurement provisions of the FTA for essential services—including health, welfare and education.

There is no doubt that the Australia-US free trade agreement could have some significant impacts on community services such as child protection; youth services; the jobs network; telephone counselling services, such as Lifeline; emergency financial aid; aged care in all its forms, such as residential care, nursing homes and home and community care; child care; services for people with disability; accommodation services for people with special needs, such as people with mental illness; community housing; tenants services; services for homeless people; drop-in centres; family and relationship counselling; mediation; credit line; counselling for people with addictions, such as alcohol or gambling; Meals on Wheels; play groups and other support services for parents; services for recent migrants, refugees and asylum seekers; prison welfare services; services for victims of family violence; and so on.

Community services often help redress or prevent marginalisation and disadvantage. They are crucial to human wellbeing and a healthy community. The commercial sector is increasingly becoming involved in community services. Obvious examples are the jobs network, aged care and child care. Since the free trade agreement with the United States is a negative-list agreement, any area of policy that is not explicitly excluded is covered by the agreement. This means that community services provided by the commercial—that is, for-profit—sector and the community or not-for-profit sector are covered, as are any services provided by government in competition with commercial providers.

The chapters of the FTA which are likely to affect community services include the chapters on cross-border trade in services, government procurement, transparency and investment. We know that representatives of the welfare sector have been involved in some of the meetings between DFAT and the Australian Fair Trade and Investment Network, and they have raised the matter of community services in more than one discussion with them. DFAT officials seem to say that community services were not really the target of free trade negotiations on services which were more concerned with matters such as financial, legal, engineering and other mainstream services in the commercial sector. Despite this, we know that community services will be covered by this agreement. The documentation on the free trade agreement does not include any regulatory impact statement regarding community services, although it is an area where there is substantial government regulation and government procurement of services on behalf of service users. There can be no doubt that the terms of the agreement, in particular the chapters on cross-border trade in services and government procurement, have the potential to significantly limit the ability of government to regulate this area unless it is listed as an exception.

The costs will be borne by the users of community services, community organisations and the government. Any such changes deserve careful consideration—certainly more than either the government or Labor has been prepared to give—not just incidental coverage in an agreement not tailored to these sorts of services. Any diminution of the ability of government to regulate community services would have implications for the quality of services available to service users and for the costs incurred by both the government and those users. It is doubtful that international free trade in community services is the best way forward for the sector. The normal business practice of investing for short periods in a particular business and then moving to other investments is inappropriate in many community services where people need a stable and secure situation, such as long-term accommodation. It is with some trepidation that the welfare and community sector is obliged to face the Australia-US FTA, and it is true that very few agencies in the community sector have commented on this matter. This is likely to be because the community sector, by its very nature, has never before needed to have knowledge of international trade law and because the government has failed to analyse the implications and consult with that sector regarding the changes. The relative silence of the sector comes not from accordance or acceptance but rather from the difficulty of finding the time and resources to consider the impact. It is quite appalling that Labor, in its haste to sign the agreement, equally failed to give consideration or consultation to that sector. One could cynically argue that, once the terms of the free trade agreement with the United States become available, any concerns from the welfare and community sector would be effectively moot. The substance of the agreement has been negotiated, and Labor is now demonstrating undue haste to secure its ratification.

In the nervous scurrying to conclude the agreement, many key stakeholders were not consulted. This is an agreement that, at various moments, can deprive the Australian government of the ability to enforce policy decisions that will impact on trade. The decision to abandon Australia's sovereignty should have been the subject of wider community debate and deliberation. Given the deal's likely impact on the community, the lack of opportunity to have input into the negotiations is of great concern. Despite Canberra's rhetoric that this means more jobs and freer markets, sectors of the community have expressed understandable unease about the impact of further economic liberalisation. For a particular group of Australians—that is, Aboriginal and Torres Strait Islander communities—there remains significant scepticism that any benefits will flow to them, despite some exceptions under the agreement. In particular, there is concern relating to government contracts for the health and welfare of Indigenous people and to measures for their economic and social advancement. The other concern is about an exemption that allows for:

... the right to adopt or maintain any measure with respect to investment that accords preferences to any indigenous person or organisation or provides for the favourable treatment of any indigenous person or organisation.

These exemptions relate to goods and services; critically, they do not ensure the protection of cultural, intellectual property and other rights.

Another issue that is cause for concern is the ability for US companies to challenge prices under the Pharmaceutical Benefits Scheme and to potentially force up the price of medicines. This will have an impact on all Australians, but Indigenous people, with their plethora of health problems, will feel it acutely.

The decreased capacity to impose future local content restrictions is also a negative outcome for Australian culture in general and for Indigenous culture in particular. Aboriginal and Torres Strait Islander communities have rightly expressed concerns about the impact of free trade agreements, and this has been at least in part because of the experiences of indigenous people in North America, Mexico, the US and Canada. These countries each have significant indigenous populations, and their experiences under the North American Free Trade Agreement, NAFTA, provide some insight. As a poorer socioeconomic group, indigenous people are vulnerable—often more vulnerable than others—to economic shifts. The creation of low-waged employment in Mexico has been heralded as one of the great achievements of NAFTA, but this is hardly a situation Indigenous communities want replicated in Australia, particularly given the prevalence of Work for the Dole schemes over real employment opportunities in Aboriginal communities.

Disadvantaged Australians had no public process to review or recommend amendments to the draft text of the Australia-US FTA. Even this parliament could not stop the agreement being signed by our Prime Minister. The sole course of action available to the parliament in support of the welfare and community sector was to block at the domestic level the enabling legislation required to implement the agreement after it was signed. Today that option has been taken away by Labor's capitulation and failure to give the agreement full consideration. We Democrats urge the government and Labor to consider our proposal that community services, no matter who provides them, must be excluded from the Australia-United States free trade agreement and from all other free trade agreements.

I would like to turn briefly to the issue of intellectual property provisions under the FTA and their impact on the open source, open format sector in Australia. 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 real concerns. We Democrats have already 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 for short, 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 anticircumvention 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—while stepping on civil liberties in the process.

The Electronic Frontier Foundation has investigated the operation of the US Digital Millennium Copyright Act and the impact it has had on the independent software industry in the United States. This investigation found that since enacted in 1998 the anticircumvention provisions of the DMCA, codified in section 1201 of the Copyright Act, have not been used as congress envisioned. The US Congress meant to stop copyright pirates from defeating antipiracy protections added to copyrighted works and to ban `black box' devices intended for that purpose. In practice, the anticircumvention provisions have been used to stifle a wide array of legitimate activities rather than to stop copyright piracy.

As a result, the DMCA has developed into a serious threat to several important public policy priorities. Firstly, experience with section 1201 demonstrates that it is being used to stifle free speech and scientific research. Lawsuits against a magazine, a research team and prosecution of Russian programmer Dmitry Skylarov have stifled the legitimate activities of journalists, publishers, scientists, students, programmers and members of the public. The Skylarov case involved a Russian programmer who had designed a program that allowed Adobe's protected eBook format to be transformed into the unprotected and more common portable document format, or PDF. The software he designed would only work on eBooks that had been legitimately purchased. The purpose of the software was to assist blind people to access eBooks and to allow eBooks to be moved from one computer to another. On a trip to the US to speak at a conference, the programmer was arrested.

Secondly, by banning all acts of circumvention and all technologies and tools that can be used for circumvention, section 1201 grants to copyright owners the power to unilaterally eliminate the public's `fair use' rights. Already the music industry has begun deploying copy-protected CDs that promise to curtail consumers' ability to make legitimate, personal copies of music they have purchased. In Australia we do not even have the `fair use' rights that exist in the US.

The DMCA also impedes competition and innovation. Rather than focusing on pirates, many copyright owners have wielded the DMCA to hinder their legitimate competitors. For example, Sony has invoked section 1201 to protect its monopoly on Playstation video game consoles as well as its regionalisation system, limiting users in one country from playing games legitimately purchased in another. Further, section 1201 has been misused as a new general-purpose prohibition on computer network access which, unlike the several federal antihacking statutes that already protect computer network owners from unauthorized intrusions, lacks any financial harm threshold. A situation where a disgruntled ex-employer, Pearl Investments, used the DMCA against a contract programmer who connected to the company's computer system through a password-protected virtual private network illustrates the potential for unscrupulous persons to misuse the DMCA to achieve what would not be possible under existing computer access regulation regimes. IT law expert Brendan Scott has written:

These are prohibitions on accessing data which has been protected by a technological measure. The explicit purpose of these provisions is to prohibit data interoperability. If open source vendors are not permitted to implement data interoperability, they will face substantial barriers to entry in many important submarkets. In essence, a vendor will be locked out of competition merely because the current incumbent uses a protected format for customers to store their data in.

He also wrote:

These prohibitions were initially created to protect a small minority of content producers from competition from new technologies, particularly in respect of audio and video content. However these provisions have already been subject of much broader implementation in the United States. In particular they have been used to inappropriately suppress competition in respect of printer cartridges and garage doors ...

Even pressing the shift key can be a breach of the US version of these laws. He continues:

They can be used to anti-competitive effect on any article to which a computer chip can be attached—and there is every reason to suspect that if this category does not already encompass all manufactures, it will do so in the not too distant future.

While they have been characterised as applying to prevent unauthorised copying of music, it would be a grave mistake to think they will be restricted to this area in the future. The anti-circumvention provisions are a legislative imprimatur to the reduction of competition across the whole breadth of the economy. No analysis of the economic impacts of the FTA that I am aware of takes into account this extensive anti-competitive effect. At its worst it will shave percentage points off Australia's GDP.

I will conclude with the words of Rusty Russell, a member of Australia's open source community who appeared before the Senate inquiry. He said:

Let me make this clear: people in the Open Source industry feel directly threatened by the laws required by the FTA. We have seen threats issued against Open Source developers in the United States, and we fear the same thing here. This kind of fear, and this kind of uncertainty, as I have already noted, is toxic. It drives people from the industry, and it drives people from engaging in innovative activities. And that is a real shame, because currently in Australia we have some of the most talented, and innovative, Open Source developers of any country in the world.

For those reasons and more we Democrats continue to strongly oppose the legislation before us.