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Tuesday, 10 August 2004
Page: 25976

Senator NETTLE (12:58 PM) —Let us talk about the disputes mechanism making a decision that one of Australia's quarantine laws is found to be a barrier to trade. That is what the disputes mechanism is deciding: whether any existing laws in our country are barriers to trade. So the disputes mechanism, involving three trade lawyers, decides that one part of our quarantine laws is a barrier to trade. My understanding of what the disputes mechanism can then do is this: through the trade agreement it can ensure that that law is changed so that it is not a barrier to trade. It can impose trade sanctions equivalent to the amount of money it believes has been lost via the Australian quarantine law that is a barrier to trade. So it can require compensation to be paid.

We have got a group of three trade lawyers making a decision about whether or not our laws are barriers to trade. Once they have decided something is a barrier to trade, what powers do they have? My understanding is that they can impose trade sanctions, as we saw when the New Zealand government decided to put their audiovisual sector onto the bargaining table for the General Agreement on Trade in Services. A subsequent government—in that case, a Labour government—came in in New Zealand and tried to increase the local content of audiovisual services. The United States, through the same trade disputes mechanism, threatened to impose sanctions on New Zealand equivalent to the amount of money the United States entertainment industry believed it had lost as a result of the changes to New Zealand law that had come about by them putting their audiovisual sector on the trade table. They had made those changes, and a Labour government got in and tried to increase the New Zealand content.

At the World Trade Organisation the United States were able to argue and win their case. They threatened to impose sanctions on the New Zealand government if they tried to increase their local content. So the New Zealand government did not. They were so threatened by the trade sanctions, the economic sanctions being proposed by the United States, that there was no increase in local content provisions by the New Zealand government. That is how powerful the trade dispute mechanism that is in this US-Australia free trade agreement is. A new government in New Zealand, a Labour government, got in and wanted to increase the local content levels. By winning through that dispute mechanism, the economic threat imposed by the United States, the great economic power that it is, was so great that the New Zealand government did not increase their content. That is the power of these trade agreements. Can the minister explain this for us: what power does the dispute mechanism have when it makes a decision that a quarantine law, a local content law or whatever it may be is a barrier to trade? What power does it have to change that situation?