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Foreign Affairs, Defence and Trade Legislation Committee

TIPPING, Mrs Tracey Ilana, Owner, Eternal Source Pty Ltd

Committee met at 09:00.

CHAIR ( Senator Back ): I declare open this public hearing of the Senate Foreign Affairs, Defence and Trade Legislation Committee. This hearing is in relation to the committee's inquiry into the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014. I welcome all witnesses here today. Before the committee starts taking evidence, I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee.

I want to emphasise that, while the committee prefers that all evidence be given in public, under the Senate's resolutions witnesses have the right to request to be heard in private session. If you would like any of your evidence to be heard in camera, please do not hesitate to advise the secretariat. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken and the committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, the witness may request that the answer be given in camera. As noted previously, such a request may be made at any other time. I welcome our first witness. Would you state that capacity in which you appear.

Mrs Tipping : My capacity today is mainly as a concerned citizen. I run a business called Eternal Source, so I guess I am here in both capacities, but mainly as a concerned citizen.

CHAIR: I thank you for your submission, which we have numbered 84, to the inquiry. I invite you to make a brief opening statement if you would like to before I go to questions.

Mrs Tipping : First up, thanks so much for the opportunity to be here to talk about this legislation. To describe a bit about me, I will be totally up-front in saying that I am not an expert in this area. Last September, I stumbled across an article by Mike Seccombe titled 'Abbott: open for business—and multinational lawsuits'. At that stage, I had never heard of ISDS provisions. It is not my area of expertise and I do not have a legal background, but, for some reason, it really got me feeling concerned and I started reading and getting a bit more knowledgeable about what ISDS provisions are and what they could mean for me as an Australian citizen and my sovereign rights, if that makes sense.

I started reading a whole lot of cases—things like the Philip Morris Asia case, in which we are being sued through an ISDS provision. I looked at the case of Quebec province in Canada, where they are being sued for $250 million over their decision to have a moratorium on coal seam gas fracking while they take time to assess the implications for their groundwater supply. There is a lot happening in Australia about coal seam gas and a lot of concerns for farmers and water supply. So that got me feeling concerned. In other cases, Germany were sued for €1.4 billion when they decided to impose higher water quality standards on new coal fired power stations. In the end, they had to settle the dispute by watering down their environmental protections on this new coal fired power station.

That made me think about the devastating fire at Hazelwood open-cut coalmine in Morwell, Victoria a few months ago. I thought, 'There's going to be an inquiry. There'll probably be new standards placed on new and existing coal fired power stations. Could we be sued under ISDS provisions over these new policies?' And so it kept going—as I read cases, to be honest, I just got increasingly concerned.

Questions came up for me. I could not understand why we would ever give a foreign corporation the right to sue us through an ISDS provision if they felt their policies were damaging to their corporate interests. I thought to myself, 'How would we feel if we had been sued when we banned asbestos or DDT?' These are pretty big issues. I could not understand why we would prioritise foreign investor rights over the rights of democratic citizens in Australia.

For me, it all culminated in me not being able to sleep for two weeks after I learnt about this issue. I decided, after some sleepless nights, to start a community petition to ban ISDS provisions in all upcoming trade agreements. The response has been really amazing. To date I have about 9,673 signatures. What I found in talking to people is that most people were exactly like me in that they had never heard of ISDS provisions. They, like me, felt really concerned once I went through the issues with them and the more I kept reading about what could happen to Australia, especially if we sign up to ISDS provisions in new agreements, particularly a big agreement such as the Trans-Pacific Partnership.

Just to sum up, I know it sounds really dramatic but, for me, the reason I am here today is that I honestly believe signing up to ISDS provisions in new agreements like the TPP could lead to a total and irreversible loss of national sovereignty to Australia. As a regular person and concerned citizen, I just wanted to do my bit to get as much information on the table as possible. I really believe in our democracy and that it is worth protecting. We have a great legal system and a good international legal system. I personally cannot see the benefit of exposing ourselves to this risk.

Senator WHISH-WILSON: Could you give us a little bit more information about your business and what you feel is the difference between fair trade and free trade.

Mrs Tipping : I run an online store specialising in organic, eco-friendly products. My focus is chemical-free living and helping particularly parents with kids with chemical sensitivities, eczema and all of those kinds of things to keep chemicals out of their lives. I support products that are organic, eco-friendly and fair trade.

In terms of my views on trade, I have always supported fair trade in the sense of no child labour and good social standards. I had always assumed that our push for free trade would be around the lines of fair trade. But, to be honest, after reading about ISDS provisions—and I have sat down and read through quite a lot of cases in other countries and the things they have gone through—my view on trade has changed a bit and I have realised what I thought was common sense might not be what is actually happening out there. So my focus tends to be on fair trade.

Senator WHISH-WILSON: On ISDS specifically, do you have concerns that ISDS could influence fair trade considerations that are important to you personally and to your business?

Mrs Tipping : Yes. I think that people should be able to choose and they should be able to have information about what they choose. People should know if a product contains genetically engineered content. We have major obesity issues, so I think food labelling is really important. I am someone who supports organic food, so I obviously think the organic food labelling angle is really important. There has recently been the case of Steve Marsh, an organic farmer in Western Australia who lost his organic certification because genetically engineered crop blew into his farm. I think these are really big issues going forward, certainly for someone like me. I think there are some really major health challenges that we have to address. I personally think ISDS provisions are going to make that a lot harder. Something like the TPP will particularly make that a lot harder.

Senator WHISH-WILSON: I am not sure if the committee is aware that Tasmania has a ban on genetically modified organisms and the use of genetically modified products. How important is that to Tasmania and to your business?

Mrs Tipping : I do not produce any products myself. I do not grow or make anything. I think it is really important for Tasmania in terms of its overall brand as a clean, green state. I personally think the jury is still out on genetically engineered organisms and that there is nothing wrong with states wanting to have a moratorium or ban in place. I think they should have that opportunity. If they had then put in a moratorium after the ISDS provisions, they would have most likely faced a lawsuit. I think, particularly, for a small state like Tasmania, with a $250 million lawsuit, you would abandon your policy straightaway. I can see it is a pretty tough economy over there. I can't see them persevering with a policy that they feel has merit but could involve a major lawsuit.

Senator WHISH-WILSON: You feel, for example, that Tasmanian state government's decision could perhaps be seen as discriminatory under ISDS-type provisions or under free trade provisions?

Mrs Tipping : I am not an expert but, if we had ISDS provisions with countries, say, like the United States or perhaps Europe, we could then put a ban in. Obviously, the moratorium is already in place and I think that gives us some protection for new agreements. I think there is another review of the moratorium coming up, so I don't know if new restrictions have been placed and we have signed up to a new agreement with South Korea with ISDS provisions. There is the Trans-Pacific Partnership coming up, and perhaps that would open the state up to legal challenges to those laws.

Senator WHISH-WILSON: We have to go on leaked documents, Chair, through you, because with the Trans-Pacific Partnership agreement, no-one has had a good look at the text or a look at all. Certainly, from leaked documents, it appears that decisions made by local governments and state governments are a sticking point in relation to the investment chapter and the investment clauses in the Trans-Pacific Partnership Agreement. I think it is a point of contention that we just don't have any information about it. Mrs Tipping, you did some case studies in your submissions. Is there anything else you wanted to highlight in terms of your concerns around ISDS?

Mrs Tipping : A big concern I have—and I think I did a section in the submission on it—is around health going forward. It might sound a little bit over-the-top, but I think we are sitting in the midst of a cancer epidemic in Australia: one in two men and one in three women will experience cancer in their lifetime. My view is that, over the coming years in terms of prevention, we are going to need to look at chemicals: chemicals in our food, chemicals in the environment and that chemicals are going to become a really important area that we just need to look at as part of prevention in addition to the great work that is being done on cures.

When I think about ISDS provisions going to new agreements and, like you said, on the Trans-Pacific Partnership and, although we don't know, there might be ISDS provisions and agreements that have really powerful chemical corporations headquartered in the US and Europe. I believe as a country we should be able to regulate and say, 'No: this pesticide or this herbicide needs to be banned on the grounds of health or cancer prevention' or whatever it is going to be. I think there are some areas coming up—I thought about the Philip Morris Asia case: back when they signed the agreement with Hong Kong in 1993, they did not know they would be sued in 2011 over plain-packaging laws. Back then, you could still smoke on some aeroplanes. Things have changed, and it concerns me that it locks us into a specific policy: things that make sense now will not make sense in 20 years time but ISDS will still be there. That is the bit that concerns me.

Senator WHISH-WILSON: Last question from me for now: you are obviously very passionate about the subject and that is very clear in your submission and your presentation. Can you give us some detail about the people that you have spoken to who have signed your survey and perhaps give the committee an idea of the feeling in the community around this particular issue?

Mrs Tipping : I am not part of any community group and I don't campaign on trade issues. As I said, I am not an expert; I just wrote a petition on a community petition website and I got three—

Senator WHISH-WILSON: Are you a member of any political party?

Mrs Tipping : I am not a member of any political party. I put the petition live and thought it would just start getting circulated—and of course I had three signatures from family members. I was a bit depressed, so I just sat on Facebook and started emailing groups that could be impacted by ISDS provisions like groups campaigning against coal seam gas restrictions in their local communities. I emailed groups that are working on chemical issues or organics. Suddenly, within about three days, I went from three to 500 signatures and it has kept going. I started having people emailing me asking, 'Why don't I know about this issue?' And I said, 'Well, I didn't know about this issue!' And it was only then—I am a bit embarrassed to say—that I heard of AFTINET. I had never heard of AFTINET. I really was very green. I did not realise that there are actually lots of groups campaigning in this area. I guess I just got outraged, got focused.

So, I have pretty much just been getting signatures that way. I do not get to re-email the people who have signed, so I do not have a community of people who have signed. But, as I said, a lot of the comments coming through were really from people who, like me, felt that this is an Australian sovereignty issue and that we should be able to choose our own policies without worrying about whether or not we will be sued by a foreign corporation.

I spoke to lots of people, even just coming to Canberra from Tasmania, in taxis and on the aeroplane, about why I was coming. I have never done anything like this before. It is quite a technical area, but I found that once you get to the crux of it most people are just really surprised that they do not know about it. It is not as though it is not being reported; it is just that it is pretty technical, and for a lot of us it is outside of our area. Hopefully that answers the question.

Senator GALLACHER: The ISDS has been around for about 25 years. It has been in four free trade agreements and 21 bilateral investment treaties, and there has been only one ISDS claim against us in all of that time. In fact, I think we have made a couple of claims against other people. So, what has changed so fundamentally that now all of a sudden this is a critical issue that needs to be dealt with, given the 25-year history?

Mrs Tipping : As I said, I am not an expert, but from the reading I have been doing the bulk of ISDS cases that are launched against governments seem to come from the United States and European countries. I think the US—and I do not want to give you the wrong stats—

Senator GALLACHER: It would account of about 60 per cent of the world's trade.

Mrs Tipping : Absolutely. And I should just say that I am not anti-trade and I am not anti-US or anything like that. But I guess Australia, when we concluded our trade agreement with the United States, did not have ISDS provisions. As I read through the cases, particularly looking at the impact in Canada—they have a lot of lawsuits against them through their North American Free Trade Agreement—I wondered whether, if we had signed up to ISDS provisions in our trade agreement with the United States or perhaps with some European countries, we would perhaps have a lot more cases lodged against us. And I suppose my urgency is that the Trans-Pacific Partnership does involve the United States and Canada, and my main concern about an agreement like that is having ISDS provisions in that and what that could do to our country. Hopefully that kind of answers it.

Senator GALLACHER: So your concern is really what it could do.

Mrs Tipping : What it could do, that is right.

Senator FAWCETT: You talk in your submission about the potential limiting of Australia's ability to legislate. What do you base that on? What precedents do you see that limit Australia's or indeed other countries' ability to legislate?

Mrs Tipping : There was a case in Germany where they put new legislation in place on new coal fired power stations—stricter water-control safety standards. I think it was involving the type of pollution that coal fired power stations could put in place. A Swedish energy company, Vattenfall, operating in Germany, lodged a case for 1.4 billion euros through an ISDS provision through one of their trade deals—it is in my submission—against Germany. In the end they settled the case by Germany watering down those new regulations so that Vattenfall could continue to operate, but they would not be subject to those regulations. Another case was in Quebec province in Canada. They decided to ban a pesticide called 2,4-D, which is the active ingredient in Agent Orange, on health grounds. They were also sued by Dow AgroSciences through the NAFTA. In the end the way they settled the case was to water down their laws. So, they were allowed to keep their ban, but they had to say that it does not pose an unacceptable risk to human health or the environment as long as instructions on the label are read.

So, as I started to read through cases I thought, well, there is evidence of countries' laws—new laws—being challenged by ISDS provisions in those agreements. In the Philip Morris case they are challenging our plain packaging tobacco laws. I am not a lawyer, but when I read through the documents I thought they were saying that they want us to either drop the laws or pay them billions of dollars of compensation. So I guess it is that challenging of our ability to legislate in the national interest. That is how I read it.

Senator FAWCETT: In the case of the agreement with Hong Kong, are you aware of whether or not there are specific carve-outs for health policies?

Mrs Tipping : I did not think there would have been carve-outs back in 1993, but I really do not know. I was told that the new South Korea agreement does have carve-outs—

Senator FAWCETT: And you are correct; the Hong Kong one does not. Are you aware of whether either the German or the Canadian examples had carve-outs for those specific areas?

Mrs Tipping : I am not sure if they did. The only thing I knew about carve-outs—and I think there are other people talking later today who know much more about this—is that there is language that can make it quite broad, although not a loophole, and that a couple of countries that have had carve-outs were not able to successfully defend cases against themselves. I believe that El Salvador had an environmental carve-out and had a case lodged against them that they were not successful in winning, and the same with Peru; their carve-out was contested as well.

Perhaps I could just add some of my thinking on that. The actual cases are quite expensive to run. As I was reading through I realised—and the Philip Morris case is a great example, even though there is no carve-out—that it costs between $8 million and $30 million to defend a case. So, even if you win your case, there is still quite a lot of taxpayer money being used to defend the case if someone challenges one of the carve-outs. It also can act as a deterrent. I believe other countries have put their plain-packaging laws on hold until they see the outcome of the Australian case. Even if Philip Morris loses their case, they have had a few little successes here and there in getting other countries to delay—I think the Productivity Commission called it a 'regulatory chill'. People get cold feet about whether, if there is a safeguard, it will work. And the tribunal does not always follow precedence. It is a bit different to other legal bodies, I believe. I hope that answered the question.

Senator FAWCETT: That certainly answers the questions in terms of your perspective, but I guess I come back to the word 'potential'. I would like to think that we are a learning people. Having learned from the fact that in the agreement with Hong Kong we did not have any exclusions, we are now putting exclusions in and in fact tightening the wording up and limiting the application of the ISDS to the investment sections of, for example, the Korean free trade agreement. Given that those protections are in place, and given the 25-year history with only one claim, even where there were fewer protections, does that change your concerns about the potential?

Mrs Tipping : I would really hope that the safeguards do what they are supposed to do, which is to safeguard. I had a couple of questions in my mind as I was going through. When I was looking at the GMO moratorium in Tasmania, there had recently been a review, so I put in a submission on that. The moratorium was on the basis of marketing and the branding of Tasmania as this clean, green economy. I think a moratorium on GMOs is good from an environmental policy perspective, which a safeguard would presumably cover. But the moratorium is on the grounds of marketing and branding. I do not know whether there is a legal reason that it is not allowed to be on health or environmental grounds. So, I asked myself, is a GMO moratorium or GMO food labelling a marketing policy? Or is it a health or social or environmental policy? And I guess I started thinking that sometimes it is not so clear what it is in my mind, as opposed to what it is out there. And obviously there are litigation issues. Tasmania presumably could not say that it is on health grounds, because that would defame corporations that are making GMOs, so I guess they have done it on marketing-branding grounds. I started getting questions: is that a marketing policy or is that a health policy? I really hope that safeguards would work but I guess I have these concerns. Hence I am here.

CHAIR: What part of Tasmania are you from?

Mrs Tipping : I live in Fern Tree, which is in Hobart. I am not from Tasmania, I should say. I have been there for 2½ years. I am from Sydney, before, but I have lived all over.

CHAIR: I was not from Tasmania, either, but I used to delight in coming up to Canberra in the winter because at least I came to a place that was colder than Hobart.

Mrs Tipping : I cannot believe that it is colder this morning than in Hobart. That is right.

CHAIR: Do you have a copy of the survey or the on-line questionnaire that you sent out to people?

Mrs Tipping : It should be in my submission, yes.

CHAIR: Is that the community petitions?

Mrs Tipping : That is correct. It is a petition as opposed to a survey. I have an updated version which has more signatures on it but the text is identical.

CHAIR: But that was it: 'Do not let foreign corporations sue Australia over our policies.'

Mrs Tipping : Yes.

CHAIR: My only questions perhaps continue on from others. The advice that is available to me is that Australia can participate in negotiations with other countries for free trade agreements and indeed the Trans-Pacific Partnership but exclude itself from various provisions, including some or all ISDS provisions. Are you aware that we have that capacity? It is not all or none. It is not as though we cannot participate unless we agree to sign up to every concern. Are you aware of that, or can I make you aware of that?

Mrs Tipping : I cannot say I was aware of that but what you are saying makes sense. Thank you. I cannot say that I was aware of that, though.

CHAIR: Examples have been given to us—I am sure you will hear them if you are here during the day—about obligations under intellectual property and obligations under environmental aspects. So I think it is important to clarify that fact for anybody who may be listening. The capacity does exist for the negotiating teams to take on board Australia's concerns. You obviously voice very valid concerns.

Again, in response to questions asked and your answers, could we have predicted plain packaging when we did the free trade agreement with Hong Kong? Possibly not, but it is a learning curve. The other thing, as you have indicated, is that it is costly to do these things. But at the end of the day we still do not have a ruling on the Philip Morris exercise.

I think we need to be aware that Australia is an exporter. We export 65 per cent of everything that we produce. In my own state of Western Australia we export an even greater proportion than that. We need to reflect on the fact that with such a small population we cannot consume—unlike America, China or even some European countries—everything that we produce. So I guess I would just put on record the fact that, having regard to the safeguards that you are quite rightly observing to us, we have the capacity in any agreement—be it with one other country or a range of other countries—to go cherry picking, a bit. We can say that there are some areas that, to Australia, are sacrosanct. They might be environmental or in intellectual property or whatever.

I do not have any other specific questions of you. I thank you for the concern that you have and the points you have made. You have obviously done a lot of hard work on it.

Senator WHISH-WILSON: I wanted to get on record that I think the chair is right in the sense that, in the TPP, DFAT have made it clear that, while we are not sure whether ISDS is off or on the table because nothing is official, they do have flexibility on whether they sign up to that. I would like to highlight that they did also have that flexibility in the Korean trade deal but they decided to sign up to ISDS including on areas of intellectual property.

I also wanted to ask you a question earlier about the carve-outs in the Korean deal—similarly to what have been looked at in Canadian deals. They are only for what is considered non-discriminatory measures. Of course, a state that wants to promote its own GM-free labelling, marketing and even health could potentially be seen as discriminatory in terms of being a policy. Carve-outs only apply where it is considered non-discriminatory and that area is open to significant interpretation as well. I just wanted to get that on the record for the committee. It is one of the issues which have not been dealt with yet in terms of the provisions we are looking at today. Is there anything else you would like to add?

Mrs Tipping : No.

Senator WHISH-WILSON: Otherwise, I think I am done, Chair. And it is very brave of you as a farmer to front the committee today and good on you for speaking up.

Mrs Tipping : Thanks.

CHAIR: Absolutely.

Mrs Tipping : I do not know why this issue impacted me the way it did, but from the moment I learnt about it I felt that one of the things I love about Australia is that we can all debate the policies that mean something to us and we can vote for our political parties based on the policies we like. I guess we as voters can also cherry picker what we do and do not like. I was really concerned with the idea that governments might first have to think about whether they will be sued before they come up with a new policy or a new policy area, even in the areas of financial regulation, which are obviously outside my area of focus, being environmental and health areas. The concept where you would have to first think, 'This is a great policy, but would we be sued? Oh we would. Well, put that on the backburner,' is not to me what democracy is about. Like I said, I am not anti trade. I think there are huge benefits to all parties involved. The only minor thing that I have not spoken about today comes back to those chemical issues. At the moment there is a bit of a crisis with bees in the world dying and some scientists believe it is due to pesticides. Australia is pretty lucky that we still have healthy bee populations. I think we are the only country in the world that has healthy bees.

CHAIR: We do not have the varroa mite. I think that is the main reason.

Mrs Tipping : Yes, that is right. So I guess the European Union has banned some pesticides and is facing some pretty big law suits, nothing to do, I do not believe, with ISDS or anything like that. It just came back to me about allowing ourselves flexibility in the future, that things will change and new circumstances will arise and, from my perspective anyway, that applying the precautionary principle and giving ourselves the freedom to regulate and legislate as the world shifts and not having to worry about what we might have signed up to in ISDS provisions and whether we need to take legal considerations into account.

CHAIR: Thank you again for your evidence. I appreciate it greatly.

Mrs Tipping : Thank you for the time again. I really appreciate it.