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Tuesday, 28 February 1984
Page: 55


Senator HILL(8.51) —The Senate is debating the Foreign Proceedings (Excess of Jurisdiction) Bill 1983. I very much regret that this legislation is before the Senate at this time. I remind the Senate that the Attorney-General (Senator Gareth Evans), in his second reading speech, stated:

It is the Government's firm belief that jurisdictional conflicts between the laws and policies of sovereign governments should be resolved if at all possible by consultation and not by unilateral legal or executive action. But here jurisdictional conflict is attempted to be resolved by unilateral legislative action.

He also stated:

. . . the Government reaffirms Australia's commitment to the consultative approach of the Antitrust Co-operation Agreement between Australia and the United States.

This is not evidence of the consultative process in action. Rather this Bill is of a confrontationist nature. Furthermore, in current circumstances it is unnecessary confrontation. There is no evidence of current need and certainly no evidence has been given in the Minister's speech. To make matters worse, it is destructive of the consultative process. The consultative process, which went as far up as heads of state, was the path chosen by the previous Government to avoid the need for confrontationalist legislation such as this.

I remind the Senate that former Prime Minister Fraser and President Reagan met to discuss an alternative course and through them, and in due course their Attorneys-General, an agreement was reached. The action of the previous Government led to what is accepted as a unique agreement between Australia and the United States. It is a bilateral agreement which goes beyond that which had been previously negotiated between the United States and such countries as Canada and West Germany. I referred to the unique nature of the agreement in a speech I gave on this subject in the Senate on 2 December last year. It is based on the understanding and belief that the consultative process was the better way of resolving these difficulties, a better way than legislation which would only further inflame what has been at times a difficult trading relationship. Both parties-Australia and the United States-saw that as the better way to go. Clawback legislation, recovery-back legislation or what ever one calls it, is not helpful in industrial relations. The United States experience with the United Kingdom did not enhance the type of relationship we should all be seeking between friends and allies.

I remind the Senate of the language that was used in the report from the Joint Committee on Foreign Affairs and Defence on the extraterritorial application of United States laws. It adopted language that was put to it that there was lengthy and acrimonious confrontation between the United States and the United Kingdom following the implementation of the United Kingdom law. The previous government was of a view that that was not the way to go if there was a better alternative. The United States also had learnt by its experience and had negotiated with Australia with what I think can be fairly described as a new attitude. Australia on its part made it clear that if the consultative agreement could be made to work it was preferable to legislation. It is clear-I think this is the critical point in this debate-that an understanding was reached that we would go further and legislate on recovery-back only if the agreement failed. Tonight we heard the former Attorney-General remind the Senate that the recovery -back legislation was before the Senate for a long period but it was not enacted because of the understanding that had been reached with the United States that it would be enacted only if bilateral agreement failed. I remind the Senate of Senator Durack's Press release of 29 June 1983 in which he stated:

On behalf of the then Australian Government I assured the United States Government that we would not proceed with any further blocking legislation unless the Agreement proved less successful than we hoped.

As I have said, there is no evidence that the agreement has failed. There is no evidence in the Minister's second reading speech that the agreement has failed. The Attorney-General, in his second reading speech, also stated:

When the Labor Government came into office in March this year, the general climate between Australia and the United States in relation to the extraterritorial enforcement of U.S. antitrust laws had improved significantly in no small measure due to the fact that both countries were trying to abide by the spirit and the letter of the Agreement.

The Australian Government is reneging on the deal that was made. It is putting at risk the good faith that has developed. It is waving the legislative big stick at the United States in a provocative way when it acknowledges that both parties were, I repeat, trying to abide by the spirit and letter of the agreement. It is acknowledging that it does not have faith in the consultative solution. Its potential destruction of the good faith that has been built up through that agreement is something that I very much regret. I am not saying that the Westinghouse case was not an unsatisfactory affair and I am not condoning the international grasp of United States anti-trust law which I think is, on occasions, contrary to international law and international comity. I am not critical of the enactment of, first, the Foreign Proceedings (Prohibition of Certain Evidence) Act 1976 or, secondly, the Foreign Antitrust Judgments ( Restriction of Enforcement) Act of 1979 which, in the heat of the Westinghouse case, were necessary. It was a time of bad experiences and the Government had a responsibility to protect Australian interests. But the question that we then had to face was where should the Government go along the road of resolving these international trading difficulties. Should the Government introduce further legislation-I acknowledge, and I am sure the Attorney-General would acknowledge, that no legislation in this field can be totally protective- or should it seek a better alternative to develop machinery whereby these difficulties might be overcome by a consulative process in good faith? To its credit, the previous Government chose the latter path. The agreement reached, as I indicated, goes further than any previous agreement and is, I believe, to the great credit and achievement of Senator Durack. The scope and functions of that agreement are well set out in the explanatory memorandum. I say in passing that the explanatory memorandum is comprehensive, helpful and to be commended. I remind the Senate of paragraph 42 of that memorandum which states:

The Agreement does not attempt to provide a comprehensive panacea to cure all problems which might arise from the extraterritorial enforcement of antitrust laws. Rather, it is a framework for conflict resolution, in which two nations, respecting and understanding each other's differing positions on important issues have committed themselves to consultations and related conduct that will enable potential conflicts to be faced squarely at the earliest possible time, and to be resolved in a spirit of accommodation and compromise, according to the principles of comity and equality of sovereignty.

If one goes to the terms of the agreement itself-I just briefly touch upon the premise to the agreement-the language is of the same style:

The Government of Australia and the Government of the United States of America;

Recognising that conflicts have arisen between the interests reflected in the United States anti-trust laws and policies and those reflected in Australian laws and policies, and that such conflicts may arise in the future;

Recognising the need for such conflicts to be resolved with mutual respect for each other's sovereignty and with due regard for considerations of comity;

Considering that intergovernmental consultations may facilitate the resolution of such conflicts;

Desiring to establish an appropriate bilateral framework for conducting consultations; and

Considering that in, the absence of conflicts, co-operation between the Governments of Australia and the United States is desirable in the enforcement of anti-trust laws,

Have agreed as follows--

So continues the agreement that was reached. I think that one has only to consider those words to realise the moment of the agreement that was, in fact, reached. Also, if one looks at the words of the then United States Attorney- General, one sees further evidence of that good faith and the early development of what I think can be described as a new and commendable United States attitude in this field. I remind the Senate of his words at the time, which appear in the report I mentioned. The Attorney said:

While neither of our countries has sacrificed any part of its sovereignty or rights under international law by this agreement, we have agreed upon an excellent mechanism for channelling and containing potential differences. The United States will work diligently to ensure the usefulness of that mechanism to both nations.

I repeat:

The United States will work diligently to ensure the usefulness of that mechanism to both nations.

The Labor Government is putting all of this at risk by this Bill. Why? One can surmise only that a new Attorney-General hungry for legislative achievement, a Prime Minister perhaps too busy at sporting contests, a Caucus always gleefully ready to embrace any attempt to kick the Americans, fail to appreciate the consequences of their actions.

The Attorney-General said that he went to the United States and satisfied himself that America would not be too concerned by such legislation. I invite him to produce one statement from an American official that expressed that view. It is illogical in view of the existence of the agreement to which I have referred and the statements made by the then American Attorney-General which I have quoted. We then get the argument that now is the right time. The Attorney- General said:

. . . in the light of this much improved relationship between the two countries .

In other words, we can slap the American face now because we are getting on better. The Attorney-General in his second reading speech, said:

. . . it is better to introduce protective legislation now, during a period of improved relations, than to leave it until some crisis arrives--

What a disappointingly negative approach, an approach that dismisses the agreement and the good faith upon which it is based, that dismisses the consultative process. The Attorney-General, in his speech, places great emphasis on the report of the Joint Committee on Foreign Affairs and Defence. Not surprisingly he fails to mention that a third of the members of that Committee, after taking into account those who were away, strongly dissented, believing that to legislate in these terms, whilst the agreement was being given an opportunity to work, was not in Australia's best interests.

I remind the Senate that apart from myself, members of the Committee included Mr Coleman who is, I think, highly regarded by all in the area of international affairs; Mr Shipton, the former Chairman of the Joint Foreign Affairs and Defence Committee of this Parliament; Mr Lusher, who was the Chairman of the Sub -Committee inquiring into the Pacific Basin which took upon itself this reference and who had to chair the first half of that Sub-Committee's reference before the last election; the Hon. Ray Groom, and you, Mr Acting Deputy President. These members were all of the view that to legislate at this time in these terms was unwise. I would have thought that to be fair, when the Attorney- General was laying great emphasis in his speech upon the decisions and recommendations of the Joint Committee, he would have made some reference to the fact that about a third of the members of that Committee held a totally different view.

I wish to look very briefly at the other of the Attorney-General's arguments. He says that one reason we should proceed in this way is that no significant change in United States domestic anti-trust laws is occurring; whereas I think anyone who has done work in this field would concede that Congress is particularly stubborn in this area and that his statement is technically correct . I draw the attention of those who are interested to chapter 6 of the report of the Joint Committee on Foreign Affairs and Defence which looks at all sorts of new pressures that are being brought to bear by the American Bar Association, by the Justice Department, by the State Department, by the American Chamber of Commerce in Australia and other American chambers of commerce throughout the region and to a number of supportive speeches that are starting to occur, in fact, within the Congress. There is evidence of a slowly changing-but changing- attitude. Whether that is to continue whilst governments such as ours unnecessarily decide to enact provocative legislation is questionable.

Secondly, the Attorney-General says that the agreement will not resolve problems of private treble damages. I say that whilst there is no absolute answer to that, article 6 of the agreement provides a process which allows the American Government to become involved and which requires consultation between governments and for the American Government to put the result of such consultations to the court. Under the Timberlane principle it is likely, I believe, to be taken into account. But the trouble is that we will never know whether the agreement would have satisfactorily worked because this Government has decided that there are better courses to take by provocative legislation.

Thirdly, the Attorney says that the agreement will not overcome trade problems that might arise incidentally after the use by the United States of its Export Administration Act to implement foreign policy decisions. That point has been mentioned by others tonight. Again, the way the Government proposes to act is not the way to resolve such difficulties. When one envisages particular examples it is difficult to see how it would work. I for one cannot see how it could have helped the Santos case, which I noticed was not mentioned by the Attorney- General in his speech. That is the case usually cited as the type of problem that could be overcome by such legislation. The fact is that we cannot effectively legislate out of these problems. Their solution depends upon good relations and good faith. It is a choice of the way in which to operate when in government-whether we are prepared to stand by foreign relations undertakings given by a previous government or whether we favour the consultative process over that of the implied threat. It is clear that the former Government preferred the consultative process and gave the opportunity for a new leadership between friends in what has been a difficult area. It is clear that this Government prefers the alternative of an implied threat. It talks about its comprehensive arsenal of defences, terms which might be used more appropriately in a policy on war or defence.

The present Opposition is still anxious to remain constructive and will not formally oppose the Bill. To divide would be to accentuate the differences, and that is still not seen by us as in Australia's best interest. This is not the way we would have gone had we remained in government. In summary, the decision the Government has made, I believe, reflects poorly upon Australia and its good foreign relations and has led to a situation which I regret.