As the protracted negotiations over a giant Pacific trade agreement continue into the second half of the year, the optimism felt by policymakers at the beginning of 2015 has been replaced by desperation, as the scale of the opposition becomes clear.
The Trans-Pacific Partnership (TPP) has long since crossed from niche item to front page news in the US. It is dominating the political debate in the final year of Barack Obama’s presidency, with his own Democratic Party in open mutiny over a deal that they fear could directly lead to the hollowing out of more US industries at the expense of cheaper producers in Asia, while at the same time allowing multinational corporations to undermine the authority of governments in secretive dispute settlement courts.
Australia is one of the 12 states negotiating the deal and, given the Liberal government’s track record on free trade since taking power in 2013, one could reasonably expect it to be among the most acquiescent participants when it comes to agreeing to the terms of the TPP. After all, Prime Minister Tony Abbott recently finalised a bilateral agreement with China, having previously negotiated comprehensive deals with South Korea and Japan. India will likely be next.
But in recent months and weeks a wave of resistance has been forming Down Under, culminating in the formation of a cross-party coalition between independents, Greens and – most notably – members of the Labor Party, aimed at derailing the world’s biggest free trade agreement in Australia.
Anti-trade demonstrators are often portrayed as radicals – an image arguably hammered home in the aftermath of the anti-WTO riots in Seattle in 1999. The situation in the US right now is helping to change this, with respected Senators and Representatives presenting the opposition with a new, more esteemed voice.
This is reflected in Australia, where the spearheads are experienced practitioners, nuanced in the ways of international law and finance and determined to insert more transparency into a TPP agreement that they say must be better on labour, environmental and social issues.
“Australia already has free trade agreements with nine of the TPP countries, so there are no significant market access gains to be had from this agreement,” Melissa Parke, a former UN lawyer who now serves as the Representative for Fremantle, Western Australia in the Australian parliament, tells GTR. “In fact, the FTAs we have already signed are not balanced and reciprocal. For instance, the Korean FTA contains an extraordinary anomaly in relation to employment provisions that open the door to virtually any Korean workers in Australia, but makes it very difficult for Australians wanting to work in Korea.”
Parke is a member of the official opposition and she says that there is “great concern” among the Labor party regarding the TPP. The party is heavily influenced by the trade union movement, which has come out strongly against the trade deal.
She is joined in leading the coalition by Nick Xenophon, an independent Senator from South Australia and Peter Whish Wilson (pictured), an economist and former banker who now sits in the Senate for the Green Party. “I taught finance and economics at university, including international finance and trade theory. I worked for Merrill Lynch and Deutsche Bank, including in Hong Kong and New York. I have a background in international finance and trade. My perspective hasn’t been built on an ideological position, it’s been built on my observations and experience,” Whish Wilson says in a telephone interview.
His view is that the Australian political class is not fully aware of what the TPP actually means. He claims that there has been no proper cost-benefit analysis and that the treaty process needs to be changed to allow parliamentary debate. It’s a complaint not indigenous to Australia. In Europe, governments’ claims that the Transatlantic Trade and Investment Partnership (TTIP) could add US$100bn to annual trade between the EU and US have been found to be spurious at best, with detailed analysis suggesting that the additional value would be worth less than a percentage point of GDP per year.
Failure to articulate the true benefit harbours distrust. This is not helped, opponents across the world say, by the lack of transparency surrounding the agreements themselves, as well as the way in which they are finalised.
While the US must give Obama the trade promotion authority, in Australia – as in the UK and much of Europe – the system is already set up for fast-track. Parliament must vote for the finished agreement without making any amendments: it’s a straight up-down vote.
The matter came to a head in June, when Australian politicians were permitted to view the confidential negotiating texts on the premise that they would not disclose anything they had seen for four years.
“I wasn’t prepared to submit myself to that kind of constraint. It would likely have prevented me from speaking out on this important issue,” says Parke, who declined the chance to view the texts on this basis.
Australia is currently the only country in the world that mandates plain packaging for all tobacco products. It is a record that Labor politicians – who were the architects of the legislation – are extremely proud of, but one which has been fiercely fought by the tobacco industry.
The country is currently being pursued in the WTO by Honduras, Indonesia, Cuba and the Dominican Republic, all of which demand that Australia drop their plain packaging legislation (Ukraine recently dropped such an action). The case is confusing, since none of the countries make any money from selling tobacco to Australia. It has been alleged that the actions are being bankrolled by Big Tobacco, which is a powerful lobby in each of the respective nations.
Many in Australia fear that this could be a taste of things to come in a post-TPP world. It’s expected that a final agreement would contain the controversial investor-state dispute settlement clause (ISDS), which was first concocted in a trade agreement between Germany and Pakistan in 1959, as Germany sought to protect its investors’ assets in a volatile Pakistani market (ironically, Germany is now among the EU’s most vociferous opponents of ISDS).
ISDS allows companies to initiate dispute settlement proceedings if it feels a foreign government has damaged its investment. The cases are heard in private courts, with little in the way of transparency.
One of the highest profile ISDS tribunals is the one ongoing between the Uruguayan government and Philip Morris International (PMI), the tobacco giant behind Marlboro. The proceedings were sparked after the Uruguayan government ordered that 80% of tobacco packaging be covered by health warnings, which PMI claims contravenes a bilateral trade and investment treaty between the two.
“The ISDS clauses in such agreements are a particular cause for concern because they allow multinational corporations to challenge in private international tribunals the laws, regulations and policies that countries may put in place in the best interests of their people in such areas as health,” says Parke, who adds she would find it impossible to support a TPP that includes such clauses.
Her Labor Party, she says, refused to sign the Korean free trade agreement while it included ISDS – a fact that may not bode well for the government’s ability to seal enough votes to get TPP through the Australian political system.
“I put up legislation to have ISDS banned from trade deals, which got a lot of international interest. I think we were the first parliament to try and ban them,” Whish Wilson says. “The High Court got involved and we had over 150 witnesses at the Senate enquiry, only one of which supported keeping ISDS.”
While the measure was effectively defeated, awareness of its existence and potential implications is growing in Australia.
Whether TPP can garner enough votes when it finally comes to a ballot in Canberra depends on what stance Labor takes in the debate (Whish Wilson says he is sure he can rally all the crossbenchers in opposition). Given the viewpoint of the unions and Labor’s internal conflictions over free trade, it looks likely to go down to the wire.
So while US proponents of TPP confidently claim that if they can get TPA over the line, then TPP will follow, it’s worth taking a moment to consider a similar debate happening on the other side of the world – one which is really gathering momentum.