Investor Protections in Trade Deal Won't Hobble Australia

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By Murray Griffin

Nov. 7 — A 12-nation Pacific Rim trade deal won't hinder Australia's ability to regulate in the national interest, nor will it require adjustments to health or drug approval processes, a senior trade official told a parliamentary committee holding hearings on the agreement.

Australia negotiated the Trans-Pacific Partnership in “a clear-eyed manner” to ensure the pact's investor-state dispute settlement (ISDS) provisions wouldn't hobble its capacity to regulate in the public interest, Elizabeth Ward, chief negotiator on the TPP, said Nov. 7 during the last public hearing of the Joint Standing Committee on Treaties.

The TPP contains investor-state dispute settlement provisions that allow investors to seek compensation from foreign governments through international tribunals. Critics of ISDS say it undermines the right of governments to regulate in the public interest, while supporters say it is necessary to ensure that investors are treated fairly in foreign jurisdictions.

As for pharmaceutical issues, Ward said the TPP's provisions on innovative new medicines called biologics are “very favorable” for Australia. Some lawmakers and health advocates have said the TPP's protections for brand-name drug makers could pose risks to the country's drug-subsidy program.

Ward was one of officials from 11 agencies testifying at the joint committee's last public hearing on its inquiry into the TPP.

Although the treaties committee has now concluded its hearings, ahead of releasing its report next month, a Senate committee is conducting its own inquiry into the TPP. The inquiry by the Senate Foreign Affairs, Defense and Trade References Committee is due to report by Feb. 7.

`Pause for Thought.’

Quizzed on whether the TPP's investor-state dispute settlement provisions might have a chilling effect on government attempts to regulate, Ward said ISDS provisions had been around for some time in various agreements and governments have managed to “continue to legislate.”

In any case, “if it gives regulators en masse, including the public sector, pause for thought about the sort of regulations and legislation we are putting in place, that is no bad thing,” she said.

Furthermore, said Ward, there are plenty of safeguards in the ISDS provisions, including procedures to quickly dispose of baseless claims and scope for governments to make counter-claims against investors.

In addition, the TPP provisions on intellectual property won't require legislative changes and won't circumscribe the government's capacity to adjust intellectual property policy in future, Ward said.

No Renegotiation, Clarification

Asked whether there is a risk that the U.S. might seek further commitments or guarantees from Australia, Ward told the committee, “We will not consider renegotiation or clarification of the deal that has been done.”

“It was an extremely complicated and hard-fought negotiation, and we fully intend and the other parties intend to leave it at that.”

There would a very strong risk of the deal unravelling if negotiations were restarted on even a small aspect, she said.

Some industry groups, such as Australian Chamber of Commerce and Industry, said they are concerned the U.S. would use its certification process as leverage to rewrite the terms the parties reached during the TPP negotiations and to secure additional concessions, even though the agreement has been signed.

The process requires a president to certify to Congress that the other countries involved not only have approved the pact, but also have made the changes in their laws and practices required to comply with it.

Biologics Terms `Favorable.’

Ward said the TPP's provisions on innovative new medicines called biologics are “very favorable” for Australia, adding that they won't require adjustments to health or drug approval legislation and processes.

Her testimony came just days after a spokesman for trade minister Steve Ciobo told Bloomberg BNA: “Australia does not need to change any law or policies in order to meet the requirements of the TPP biologics provisions.”

The government has been trying to fend off concerns that ratifying the deal might extend the time it takes to bring to the Australian market less expensive “biosimilar” versions of biologics.

Referring to the country's taxpayer-funded Pharmaceutical Benefits Scheme (PBS), which subsidizes the cost of medicines, Ward said Australia was determined that the TPP shouldn't result in changes that would affect the PBS.

“We are satisfied that is the case,” she said.

Her comments were backed up by the Department of Health's senior medical adviser, Dr. Megan Keaney, although Keaney made it clear she was not commenting on any ramifications the provisions might have for the cost of medicines in developing countries.

Significant Benefits for Agriculture

Richard Emerson-Elliott, director of agricultural policy and negotiations with the Department of Foreign Affairs and Trade, told the hearing that the TPP would deliver enormous benefits for Australian farmers.

In the case of trade with Japan, the TPP would gain access for dairy goods, reduce tariffs on beef, eliminate tariffs on wheat for feed and reduce them on wheat for human consumption.

The agreement also would immediately provide increased access to the U.S. sugar market.

As well, “every time the U.S. needs to import more sugar, we will get 23 percent of that share,” he said, adding that this would make Australia the second largest exporter of sugar to the U.S. behind Mexico.

To contact the reporter responsible for this story: Murray Griffin in Melbourne at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

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