Singapore-Australia Free Trade Agreement: There does need to be limitations on ISDS provisions

Terri Butler speaking in the Federation Chamber on 17th October 2017 regarding the Customs Amendment (Singapore - Australia Free Trade Agreement Amendment Implementation) Bill 2017.

Read the full speech below. 

Ms BUTLER (Griffith) (16:52): The 2003 Singapore-Australia Free Trade Agreement was the second free trade agreement that Australia entered into. The benefit of the institution of that agreement was that Australian imports into Singapore became tariff free. In June 2015, there was a comprehensive strategic partnership signed between Singapore and Australia, and one of the priorities under that partnership was to undertake a third review of the Singapore-Australia Free Trade Agreement.

I'm very hopeful that this free trade agreement will build on the already strong trade relationship that exists between Singapore and Australia. The two-way trade between our nations in the 2014-15 financial year was $28 billion. I'm hopeful that this revision will help us to build on that trade. One of the benefits of this revision will be to continue to increase free trade between the two countries by working on removing some of those behind-the-border impediments to trade—some of those non-tariff trade impediments. I hope that this free trade agreement will have that benefit. Labor supports trade liberalisation. I think we've all made it very clear that we would prefer to be working towards multilateral trade liberalisation through the World Trade Organization. Nonetheless, and despite some misgivings about the preferential nature of bilateral agreements and whether they improve net trade or are simply diversionary, this is an agreement that we hope will have some mutual benefits for Singapore and Australia.

I wanted to speak on these Singapore-Australia Free Trade Agreement bills specifically because, in relation to previous legislation and on previous occasions, I have raised concerns about investor-state dispute settlement provisions in trade agreements, particularly bilateral trade agreements. Everyone in this room would be aware of the difficulties that have arisen in relation to investor-state dispute settlement provisions, including a case against Australia in respect of our tobacco labelling. Tobacco labelling was one of the most significant pieces of public health improvement in recent decades, and I'm pleased that Australia was successful in fending off an ISDS-based complaint about cigarette and tobacco labelling.

It is of interest to most people that we ensure that our national sovereignty is not impeded or eroded through the inclusion of investor-state dispute settlement provisions in free trade agreements. I have long been a critic of ISDS provisions, so I did want to make a couple of observations about the Singapore-Australia Free Trade Agreement. The Singapore-Australia Free Trade Agreement does contain an ISDS provision, one of the investor-state dispute settlement provisions which are obviously provisions that allow for investors, if they invest in one of the countries involved, to then go to an arbitration process to seek to have their rights as against the country determined in the event that the country does something that causes harm or loss to that investor. The ramifications for sovereignty in those cases are obvious, and so I maintain my criticism of ISDS provisions. I wanted to acknowledge that there has been some improvement in the ISDS provision in relation to the Singapore-Australia Free Trade Agreement. Those improvements go to some of the public criticisms that have been made of investor-state dispute settlement processes internationally over a number of years. It is encouraging to see that there's an acknowledgement in this agreement that there do need to be limitations on ISDS provisions.

In this revision of the Singapore-Australia Free Trade Agreement there are more explicit safeguards protecting the Australian government's right to regulate in relation to public interest and public welfare, including some explicit rights to regulate in relation to protecting public welfare when it comes to matters relating to health. Obviously tobacco labelling is an important example of that, but you can imagine all sorts of other areas in which it might be in an investor's interest to consider action against a sovereign government in relation to health regulation in that country. So it is pleasing that that is there. Similarly, it is pleasing that there is an explicit provision regarding the environment and our government's right to legislate and regulate in respect of environmental matters.

Members will also be aware that one of the arguments sometimes used in investor-state dispute settlement is that a particular policy of a nation effectively represents indirect expropriation of an investor's property. There's a provision in this revised agreement that deals with that, and it says that mere government regulation, provided it is not discriminatory, will not be considered to be indirect expropriation of the investor's property other than in rare circumstances, and that is very positive as well.

Finally, government action that might be considered to be inconsistent with an investor's expectations should not be considered to be a breach of the minimum standard of treatment obligation in the free trade agreement, which again is a positive thing. We want governments to be able to act in the best interests of the nation without having to worry about being pulled into some sort of secretive international arbitration process and have legislative authority overridden because of wanting to uphold free trade agreements. It is positive to see that there is some acknowledgement of those problems.

When I say 'acknowledgement', it is quite pleasing to note that there are process-related improvements for the ISDS, not just substantive improvements. One process improvement that is really important is the requirement that those ISDS hearings be conducted in public, so the public can find out what happens—they are not the secretive behind-closed-doors ISDS provisions that we've come to expect in other free trade agreements. Similarly, there's some provision for ensuring a code of conduct for arbitrators, which is included in the agreement. Again, arbitrators have been criticised as being a bit like an international club that do their work in secret and it's a small number of people in the international arbitration field who are specific to investor-state settlement dispute procedures. Having a code of conduct for those people is an improvement.

This is not me saying it's great that we have ISDS provisions—I maintain my concerns about sovereignty and the erosion of sovereignty; however, I thought it was important to acknowledge there has at least been some movement in this new revised trade agreement in coming to terms with some of the real and genuine concerns and criticisms that people have had in relation to free trade agreement ISDS provisions.

There are other measures. There are measures in relation to creative arts, Indigenous cultural heritage and other cultural heritage, and tobacco-specific provisions. I don't wish to delay the chamber any further, but I wanted to put on record my continued concern in respect of investor-state dispute settlement provisions and my sense of encouragement that there is now some international acknowledgement of the improvements that need to be made.

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