Apparently the Australian Government is going to learn the hard way that modern free-trade agreements rarely provide low manufacturing-high primary production & natural resource extraction economies such as ours with the anticipated level of additional income from international trade.
The Guardian, 25 July 2016:
A key economic policy adviser to the federal government has said the Trans-Pacific Partnership has provisions of “questionable benefit” – including an investor-state dispute settlement (ISDS) clause allowing foreign corporations to sue the Australian government if they think the government has introduced or changed laws that hurt their commercial interests.
The Productivity Commission made the comment in its annual trade and assistance review, released on Monday. The review quantifies the level of assistance governments give to Australian industry and this year criticises regional adjustment programs that have followed the exit of the carmakers, and also the Turnbull government’s big defence procurement spend rolled out in the countdown to the recent federal election.
On the TPP the commission says it is uncertain whether the US will sign the controversial pact before the presidential election in November 2016. While noting that, the commission says the TPP contains provisions of questionable benefit. “These include term of copyright and the investor state dispute settlement elements.”
The commissioner, Paul Lindwall, warned the success in defending a recent landmark ISDS case relating to tobacco plain packaging entailed reported legal costs of about $50m.
The tobacco giant Philip Morris used an ISDS provision in the Hong Kong-Australia bilateral investment treaty, signed in 1993, in an effort to sue the Australian government over the plain packaging laws implemented by the Gillard government in 2012. The case dragged on for years before an international tribunal ruled in Australia’s favour, saying Philip Morris Asia’s claim was an abuse of process.
“As it was resolved on a technicality, and costs are apparently yet to be recovered, this success should not be taken as an indication that ISDS is essentially harmless,” Lindwall said Monday…..
Australian Productivity Commission Trade & Assistance Review 2014-15 here.
The Sydney Morning Herald, 12 January 2016:
Australia stands to gain almost nothing from the mega trade deal sealed with 11 other nations including United States, Japan, and Singapore, the first comprehensive economic analysis finds.
Prepared by staff from the World Bank, the study says the so-called Trans-Pacific Partnership would boost Australia's economy by just 0.7 per cent by the year 2030.
The annual boost to growth would be less than one half of one 10th of 1 per cent…..
World Bank graphs: Trans-Pacific Partnership
According to The Age economics editor Peter Martin, the three North Asia free-trade agreements (with China, Japan and the Republic of Korea) combined are only expected to increase total Australian exports by 0.5 per cent and local employment by less than one-half of one-tenth of 1 per cent by 2035. The agreements will boost imports into Australia from these countries by est. 2.5 per cent, sending Australia’s trade balance backwards.
NOTE: At the dissolution of the Senate and the House of Representatives on Monday, 9 May 2016 the Joint Standing Committee on Treaties ceased to exist. Any inquiries that were not completed have lapsed and submissions cannot be received.
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