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Thursday, 24 June 2004
Page: 31477

Mr KELVIN THOMSON (11:01 AM) —I rise to support the second reading amendment to the US Free Trade Agreement Implementation Bill 2004 moved by the member for Rankin. Labor are not opposing passage of the FTA enabling legislation through the House but we are reserving our position in the Senate. We have not made a decision to support this legislation in the Senate, nor have we made a decision to oppose it. When we say we are reserving our position, that is precisely what we mean. I therefore strongly support the second reading amendment.

One of the points I want to make in relation to this issue is that this government has been selling out Australia's national interest in making a disgraceful claim that to oppose the free trade agreement with the United States is to be anti-American. That is a ludicrous proposition. Our obligation in this place and our obligation as Australians is to act in Australia's national interest. Does the government seriously propose that, no matter what the content of the free trade agreement might be and no matter how disadvantageous it might be to Australia, we have an obligation in these matters to look after the Americans? That is an absurd proposition, and yet that is exactly what government ministers have been saying. The Minister for Foreign Affairs has been suggesting that people are anti-American if they do not support this deal. The Minister for Health and Ageing said on the Sunday program, hosted by Laurie Oakes:

... the big question, Laurie, is does the Labor Party support the US free trade agreement. They say they support the alliance, but it's hard to see how they can support the alliance if they don't support the free trade agreement ...

It is a ridiculous and outrageous proposition that, in supporting the Australia-US defence alliance, we are somehow obliged to support anything and everything that might come forward in a proposed free trade agreement—or trade agreement, because as other speakers have noted this is certainly not a free trade agreement; it is anything but. Indeed, yesterday we had a number of actors and directors such as Geoffrey Rush, Sigrid Thornton, David Wenham and Toni Collette in the parliament. Is the government seriously alleging that these people are anti-American if they put forward the proposition, as they were yesterday, that we should not be supporting the free trade agreement—that somehow this involves questioning the alliance with the United States? That is an absurd and preposterous proposition. It suggests that the government is in fact willing to sell out the Australian national interest in the interest of pursuing a trade deal with the United States. Our obligation—and I am sure this is what the Australian people expect of us—is to look to the Australian national interest in these matters and to come up with a position which reflects Australia's best interests.

The second thing I want to say is that bilateral trade agreements are not cost free. Some people would want us to look at the Australia-United States agreement as if it were the only thing on the table and not think about what implications these bilateral trade agreements have for global trade and what implications they may have for other countries with whom Australian trades and wishes to trade. I believe that the proliferation of preferential free trade agreements—or trade agreements—is dealing a severe blow to the global round of multilateral trade negotiations, that this proliferation is damaging in the region and that beyond that it undermines the continued viability of the World Trade Organisation. I believe that the negotiations for the Doha Round of multilateral trade negotiations are being put in jeopardy by the focus on bilateral preferential deals. I think we need to understand that these bilateral deals are not cost free and that indeed it would be better if we had success at the multilateral level and were able to reduce barriers to trade in an international way rather than seeking to do one-off special deals which undermine trade relations with other countries and undermine international and multilateral trade negotiations.

I want to speak now in more detail about the environmental consequences of this proposed agreement. The environmental implications of the Australia-United States free trade agreement have not received a great deal of scrutiny. I think that is unfortunate, and I want to use my opportunity in this debate to try to rectify that. It is not that people have taken no interest in the environmental implications. Indeed, I want to draw to the attention of the House the work of the Australian Conservation Foundation, which has done a very detailed submission concerning the Australia-United States free trade agreement. I have had a good look at that very detailed work.

In my opinion, the strongest area of concern regarding the environmental impact of the Australia-United States free trade agreement relates to the potential right to compensation for United States investors where Australian governments make decisions to protect the Australian environment. Article 11.7.1(c) obliges the Australian government to pay compensation to United States investors if Australian laws, including environmental laws, expropriate their investments either directly or indirectly through measures equivalent to expropriation.

According to the Australian Conservation Foundation submission, this article is equivalent to an article in the NAFTA. Also, in a NAFTA case, Metalclad Corporation v. United Mexican States, back in 2000, the relevant tribunal provided an extremely broad definition of what constitutes expropriation. In addition to the more conventional notion, the one that we would understand about expropriation involving the taking of property, the tribunal held that expropriation under that NAFTA clause or article includes:

... covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be expected economic benefit of property ...

This decision was subsequently upheld on appeal to the Supreme Court of British Columbia.

Such a decision or definition would grant rights to US investors to obtain compensation from the Australian government well beyond the compensation rights enjoyed by Australians under Australian law. The Australian Constitution, as we all know, recognises a right to compensation when property has been acquired or—as they describe it—effectively `sterilised'. It does not extend to circumstances where regulations significantly interfere with the use or reasonably to be expected economic benefit of property. There is good reason for this. To extend a right to compensation to circumstances where there has been a mere regulatory interference with the use of property would be enormously costly. The obvious example is: if I say that I want to put a casino on my property and the local council say, `We're not going to give you a planning permit to put a casino on your property,' you can understand that, if I could then sue them for the loss of the economic benefit that the casino might provide to me, that would make life very difficult for councils. Indeed, it would make life very difficult for state and federal governments to make good and proper decisions.

The prospect of the costs in that kind of situation would deter or limit the capacity of current and future Australian governments to pass legislation pursuing legitimate public interest objectives, such as environmental protection. The article that we see in the Australia-United States free trade agreement could fetter the capacity of future Australian governments to legislate to protect the environment. The Australian Conservation Foundation gives examples which might require compensation to be paid to US investors, such as amendments to state planning schemes to protect sensitive coastal areas from development—indeed, Labor recently released a policy about protecting sensitive coastal areas from development—and amendments which would prevent US property owners from developing a coastal property. Or it could relate to emission standards on power generators that interfere with the profits of US companies which own Australian coal-fired power generators. It could also apply to new anti-tree-clearing or water conservation laws which interfere with the profits of United States agricultural companies operating in Australia.

Article 11.11, in chapter 11, says:

Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure ... that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.

While that might sound as if it is a protection for environmental measures, this article does not appear to deal with the question of compensation. It appears that if an environmental law expropriates or significantly interferes with the investments of a US corporation, the Australian government would still be liable to compensate that corporation, notwithstanding article 11.11. I want to reiterate the point that that would then put United States investors in a position superior to that of Australian investors or investors from any other country. I think that is a matter of concern.

Another serious point raised by the Australian Conservation Foundation is the absence of an environmental impact statement concerning the free trade agreement. Unlike United States law, there is no Australian legislation in place that requires the Australian government to undertake a review of the environmental impacts of free trade agreements. The United States government commenced its environmental review of the Australia-US free trade agreement back in March 2003, so it has been doing the environmental review for over a year. The Australian government still has not done so. Without an environmental impact statement, Australia is unable to fully assess the potential environmental impacts of the Australia-United States free trade agreement.

The Australian Conservation Foundation and other bodies have raised a range of other issues. I think perhaps they are of lesser significance, but they are issues which ought to be considered and responded to nevertheless. They indicate that the emphasis throughout the agreement is on measures to enhance environmental performance through voluntary and flexible outcomes and that those sorts of outcomes have not been successful in the past. I think that it is frequently the case that voluntary and flexible mechanisms do not really get you the results. But I suspect that it may not be a valid criticism of the free trade agreement to say that it fails to strengthen existing environment protection mechanisms.

The submission also talks about the cross-border trade in services. The ACF is concerned that environment regulations could be considered a barrier to trade in services unless they are based on objective and transparent criteria and are not more burdensome than necessary to ensure quality of the service. Some of Australia's environment regulations are based on the precautionary principle but, for my own point of view, I do not see any reason why properly founded regulations could not meet the tests being established. The ACF also mentions the possible privatisation of national parks or water services as an outcome of the free trade agreement. I think this is drawing a long bow, but we as a parliament do need to have a response to this concern. The government wants to rush this legislation through without anywhere having produced a response to concerns such as this.

Conservation groups have also expressed concern that chapter 7 of the free trade agreement, which relates to sanitary and phytosanitary measures, runs the risk of watering down our stringent controls on imported products which could become pests or invasive species and impact on Australian flora and fauna. Prior to my remarks, I heard my colleague the member for Corio talking about the issue of sanitary and phytosanitary measures. Clearly, we need to ensure that our stringent sanitary and phytosanitary measures are not watered down. Weeds and invasive species are already a very substantial problem for the Australian environment. Wherever I go in my travels around the country, talking with groups concerned about environmental issues, the question of weeds comes up very frequently. We cannot afford to have any relaxation of controls which could allow new invasive species into the country.

There has also been concern about chapter 8 of the free trade agreement relating to technical barriers to trade. There is concern about the possibility of changes to labelling arrangements for genetically modified organisms. My impression is that chapter 8 does not really change the existing law. Given the arguments that have been put, it appears to me that United States companies could already initiate proceedings under WTO dispute settlement procedures and that the free trade agreement does not change the legal situation in this regard. But I believe that all of these issues are serious concerns and that a proper environmental impact assessment would enable the federal government to assess environmental issues in detail and establish whether some of the concerns which have been raised have genuine merit. It would certainly enable us to deal with that important question of the liability of Australian governments to compensate corporations whose profits are adversely affected by Australian government decisions designed to protect our environment.

There are serious issues which have been raised. If the parliament is going to make a considered decision, it needs to take these issues into account as well as the many other issues that have been raised, such as on pharmaceuticals, the protection of Australian culture, and sanitary and phytosanitary controls. There is a whole range of issues which will impact on this country's future. This is not a decision which should be entered into lightly; it is one which should be entered into after proper consideration of all the issues. Labor has properly sought this through the Senate committee process. The government appears to be unwilling to allow that proper process to run its course. It prefers to bring the legislation into the parliament when, in many cases, Australians have not had the opportunity to properly consider and understand its impact.

The government's motives in this regard appear to be political rather than genuinely those in the Australian national interest. The United States have not yet voted on the free trade agreement. They are giving themselves proper time to consider these issues and so should we. Therefore, the second reading amendment moved by the member for Rankin properly expresses some of the issues which need to be considered before we make a final judgment on this matter. I commend that amendment to the House and reject the government's politically motivated attempt to get the legislation through the House and the Senate during the final sitting week of this session.