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Wednesday, 11 August 2004
Page: 26092

Senator HILL (Minister for Defence) (9:58 AM) —I have listened to the speeches this morning, particularly from Senator Ridgeway and Senator Harris. They continue to draw upon experiences from the North American Free Trade Agreement, which they argue provides a warning for Australia in relation to this bilateral agreement with the US. The point is that the provisions that are in NAFTA are not in this agreement. It is an interesting intellectual debate, but they could have come into the chamber today and said that they were pleased to see that the provisions within NAFTA that have allowed the sort of actions they have spoken about to be instituted cannot be instituted under this agreement. Rather they chose to come in here and tell us of the dire outcomes that flowed from litigation out of the North American agreement. The short and simple answer to their concerns is that the investor-state clause simply does not exist in this agreement.

There is a provision for consultation between states, and that causes Senator Brown concern. He is seeking through this amendment to provide particular restrictions on it. It is the view of the government that the consultation provision—although it may not ever be instituted; nobody knows for certain—provides some flexibility that may well be in the interests of Australian investors. All the emphasis in the argument from the three speakers this morning has been on the negative side of this debate, without any reflection on circumstances where an Australian investor might go to the Australian government and seek some form of arbitration. This provision at least allows the Australian government a process of consultation with the other party state—the United States—on that issue.

It is very hard to predict in the long term what circumstances will arise, but it seems to me that out of this consultation provision Australia gets the benefit of both sides. On the one hand, Australian investors will be protected from unnecessary or inappropriate actions by US investors in that the Australian government is the buffer in this provision—such arbitration could not occur without the Australian government's agreement. On the other hand, at least it gives the Australian government a consultative process if it is in the interests of an Australian investor to argue for some form of arbitration. So it is the government's view that the provision is sensible and it has safeguards within it, but it also provides some flexibility that could in some circumstances be to the benefit of Australian investors. Therefore, we certainly do not support amendments that would, in an arbitrary way, restrict its application. In relation to the detail of how that would be implemented, that would obviously come out of the consultation between the party states. As no instance has arisen and there has been no consultation between the party states, the detail of that cannot be pre-determined—and you would not want to try to pre-determine it because otherwise you are undermining the flexibility of the consultation.

So what we are setting up here is a framework. It is designed, as I said yesterday, to facilitate economic growth, but in a way that ensures that there are not abuses. I recognise, as was said in the Senate yesterday, that there are two economies involved here, and one is much larger and much stronger than the other. Therefore, the role of the Australian state party is particularly important. Even though we do have these investor-state dispute settlements in a whole range of existing agreements, nevertheless in this one—and having observed the experience elsewhere—the negotiation has led to a different outcome which Senator Ridgeway and Senator Harris, at least, should be applauding. It is on that basis, therefore, that we are not prepared to agree to further restrictions upon the consultation provision that we have in article 11.6 of the agreement.