FTAs and Export Controls

'How Trade Deals Extend the Frontiers of International Patent Law' (CIGI Papers No. 199 — November 2018) by Jean-Frédéric Morin and Dimitri Thériault for the Centre for International Governance Innovation comments 

Bilateral and regional trade deals frequently include patent provisions that go beyond the minimum requirement of the multilateral Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). They extend the scope of patentability and provide additional rights to patent holders. This paper systematically maps these “TRIPS-plus” agreements. Exploiting a new data set, 52 TRIPS-plus agreements are found to have been concluded between 1990 and 2017. The major proponents of these TRIPS-plus agreements on patents are the United States, followed by the European Union and the European Free Trade Association. Other technology-rich countries, such as Japan and Korea, have surprisingly few TRIPSplus provisions on patent protection in their trade agreements. Few South-South trade agreements include TRIPS-plus provisions, but some include TRIPS-extra provisions on genetic resources and traditional knowledge. Having a clear picture of these TRIPS-plus agreements is essential as they can have important social and economic consequences, including for the development of innovations and access to technologies.

The authors note

This paper is one of the first attempts to systematically map key patent provisions in bilateral and regional preferential trade agreements (PTAs). Some of these provisions have important policy implications, including for the development of innovations and access to technologies. This paper shows their historical evolution and their geographical distribution. 

The available literature has already reported that some PTAs offer a level of patent protection that goes beyond the minimum requirements of TRIPS. However, several questions still need more research and analysis. In particular, the number and scope of TRIPS-plus agreements are uncertain. It is also unclear if their conclusion is more frequent today than it was a decade ago. As well, the practices of several countries remain undocumented, beyond some well-known advocates and opponents of TRIPS-plus agreements. 

This paper fills these gaps by relying on a recent data set of TRIPS-plus agreements (the T+TPA data set) introduced by Jean-Frédéric Morin and Jenny Surbeck. This data set is based on an exhaustive collection of more than 600 PTAs concluded between 1947 and 2017. Among these PTAs, Morin and Surbeck identified 52 PTAs with significant TRIPS-plus provisions on patents. 

The rest of this paper is divided into seven short sections. The first section describes the current state of multilateral negotiations over patent law. The second section describes eight categories of TRIPS-plus provisions on patents, while the third section presents their development over time. The next section identifies the key role played by the United States and by European countries in promoting TRIPS-plus agreements. The fifth section assesses the PTAs involving other technology-rich countries. The sixth section considers developing countries and their role in the diffusion of TRIPSplus provisions on patents. The last section focuses on provisions that are of particular interest for developing countries. The conclusion identifies directions for future policy-oriented research.

They conclude

The proliferation of TRIPS-plus and TRIPS-extra provisions in PTAs requires further research. At least three main areas of research would have clear added value for policy making. The first involves exploring the domestic consequences of TRIPS-plus provisions on patent protection. As yet, it is unclear how far these commitments reflect pre-existing legal standards or whether they require domestic reforms. In the latter case, it would be interesting to study if and how the reforms are being implemented. Developing countries that are compelled to implement TRIPS-plus obligations might take advantage of these legal reforms to include new exceptions and exclusions in their domestic legislation. Case studies might also be useful for investigating the social and economic consequences of implementing TRIPS-plus provisions. 

A second stream of research concerns the global and strategic consequences of TRIPS-plus provisions. These consequences would include processes such as regulatory competition across countries with different standards, norm diffusion driven by the desire to level the playing field and the reverberation from bilateral initiative to multilateral negotiations. The existing literature also tends to portray developed and developing countries as antagonistic actors in international patent law making. It is time to debunk this apparent oversimplification. The pro-patent posture of some developing countries, the nuanced policy of some high-income countries and the rise of emerging countries raise new questions that should be explored. 

A third avenue for future research concerns the potential alternative to existing TRIPS-plus provisions on patents. The current debate on international patent protection has focused on the flexibilities already provided in the TRIPS Agreement and on TRIPS-plus provisions. However, the example of TRIPS-extra provisions on TK and GRs shows that trade negotiators have the capacity to be creative and think outside the TRIPS box. Nothing precludes trade negotiators from addressing issues such as licensing pools, open science and scientific collaboration in their future PTAs. Provisions on these issues might actually do more for technological innovation than TRIPS-plus provisions on patents.

'Strategic Export Controls: A Case Study of Regulation of Executive Power and Parliamentary Accountability in the United Kingdom' by John F McEldowney in Daniel Joyner (ed), Non-Proliferation Export Controls Origins, Challenges, and Proposals for Strengthening (Routledge, 2006) comments 

Export controls received concentrated media attention during the Arms to Iraq saga played out in all its detail before the Scott Inquiry in 1996. The inquiry revealed a complex and detailed regulatory structure overseeing exports that lacked transparency, was of dubious legality and was subject to only weak parliamentary accountability. The focus of this chapter is on the command and control system of regulation over export control within the United Kingdom post the Scott Inquiry and the enactment of the Export Control Act 2002 which came into force on 1 May 2004. In the last annual Report on Strategic Export Controls (United Kingdom 2005; see also Taylor 2003), it was estimated for the year ended 2003, the value of exports of strategically controlled goods was £992.4 million. These exports make a significant contribution to the defence and security of the United Kingdom, as well as contributing to the multi-various international obligations to be met by the armed forces. In considering the regulation of strategic exports, an historical approach is adopted in drawing out the tensions between executive discretion and parliamentary controls. The main question addressed is how accountable is the new regulatory system? The main thesis advanced is that the system of export control is linked to the policy of the government of the day. In its early legal construct, it reflected the legal culture of the UK. Formally legalistic and highly structured in form, the actualité is of a pragmatic system that also reflects many of the strengths and weaknesses of a parliamentary system of ad hoc accountability. Thus the system of control is strongly driven by the government of the day, sustainable through political oversight and pragmatic decision-making subject to market forces. Party political decisionmaking is often interspersed with balancing different shades of multi-nationalism, especially in terms of the influences of the United States and Europe.

Trade, Training and Trade Practices

Having recently read Globalists: The End of Empire and the Birth of Neoliberalism (Harvard University Press, 2018) by Quinn Slobodian I was interested to see 'What Do Trade Agreements Really Do?' by Dani Rodrik in (2018) 32(2) Journal of Economic Perspectives 73-90.

Rodrik comments 

Economists have a tendency to associate "free trade agreements" all too closely with "free trade." They may be unaware of some of the new (and often problematic) beyond-the-border features of current trade agreements. As trade agreements have evolved and gone beyond import tariffs and quotas into regulatory rules and harmonization—intellectual property, health and safety rules, labor standards, investment measures, investor-state dispute settlement procedures, and others—they have become harder to fit into received economic theory. It is possible that rather than neutralizing the protectionists, trade agreements may empower a different set of rent-seeking interests and politically well-connected firms—international banks, pharmaceutical companies, and multinational firms. Trade agreements could still result in freer, mutually beneficial trade, through exchange of market access. They could result in the global upgrading of regulations and standards, for labor, say, or the environment. But they could also produce purely redistributive outcomes under the guise of "freer trade." As trade agreements become less about tariffs and nontariff barriers at the border and more about domestic rules and regulations, economists might do well to worry more about the latter possibility.

Last week the ACCC announced that the Federal Court found training college Cornerstone Investments Aust Pty Ltd, trading as Empower Institute (Empower), had in unconscionable and misleading or deceptive conduct, and made false or misleading representations when enrolling consumers into VET FEE-HELP Diploma courses that cost up to $15,000 per course.

Empower marketed and sold these courses to consumers in remote communities and low socio-economic areas (including Indigenous communities) using face-to-face marketing, including door-to-door sales.

Empower enrolled over 6,000 new students  in its courses March 2014 and October 2015.

Many of these students were vulnerable consumers and were signed up using incentives such as free laptops and cash, unaware they were incurring a significant debt. 

“Empower misled vulnerable and disadvantaged consumers into enrolling in courses they would likely be unable to complete. Many consumers it enrolled had poor literacy and numeracy skills. Some who enrolled in online courses could not even use a computer and did not have access to the internet,” ACCC Chair Rod Sims said. 

“Empower also failed to provide clear and accurate information about the price of the courses and the nature of the VET FEE-HELP loan.” ... 

 “Empower was paid more than $64 million by the Government under the VET FEE-HELP scheme for enrolling students using these appalling tactics, while the students were left with large debts."

 The ACCC is seeking remedies from Empower, including redress for affected consumers and pecuniary penalties.

The ACCC notes that it has taken action against a number of private colleges and can seek remedies from the court in those cases, but cannot itself, cancel the debts of affected consumers.

RCEP

"The RCEP Negotiations and Asian Intellectual Property Norm Setters' by Peter K Yu in Liu Kung-Chung and Julien Chaisse (eds.) The Future of Asian Trade Deals and Intellectual Property (Hart, 2019) comments

This chapter closely examines the negotiations on the Regional Comprehensive Economic Partnership (RCEP) and the Asian countries' recent efforts to set regional intellectual property norms. The RCEP negotiations are particularly important to Asian intellectual property developments because the RCEP remains the first and only mega-regional agreement that Asian countries have negotiated without the participation of either the European Union or the United States. 

The chapter begins with a brief discussion of the evolution of the RCEP negotiations, noting the initial rivalry between the Trans-Pacific Partnership (TPP) and the RCEP, the United States' withdrawal from the former and the adoption of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). 

This chapter then highlights the different intellectual property provisions in the draft RCEP intellectual property chapter, focusing on the four main branches of intellectual property law as well as the areas of intellectual property enforcement and pro-development measures. Although this chapter analyses the only publicly available text of that chapter, which was dated October 2015, it takes into account the CPTPP partners' suspension of a significant number of TPP intellectual property provisions as well as the time elapsed since the development of the draft text. 

The chapter concludes by outlining the role of each Asian norm setter in the RCEP negotiations – namely, the Association of Southeast Asian Nations (ASEAN), China, India, Japan and South Korea. Except for China, all of these negotiating parties have advanced draft negotiating texts for the development of the RCEP intellectual property chapter.

Australian Copyright Exceptions

'Calculating the consequences of narrow Australian copyright exceptions: Measurable, hidden and incalculable costs to creators' by Patricia Aufderheide, Kylie Pappalardo, Nicolas Suzor and JessicaStevens in (2018) Poetics comments

The kind and extent of exceptions and limitations to copyright monopolies are a major focus of copyright reform discussion worldwide. The debate is often portrayed as pitting the interests of creators against users. Australian copyright law features narrow and limited exceptions. Australian creators benefit from copyright monopolies; but do they suffer any costs for lack of flexible exceptions? A national survey of creators showed that they experience significant costs in time and money in making work; avoid or abandon projects because of copyright problems; and avoid developing ideas for projects that involve use of third-party copyrighted materials. These costs have previously been uncalculated and not included in national policy debate. The results provide information not only for the Australian context but for policy discussion internationally. 

 The authors state

This study analyzes how Australian creators negotiate a highly restrictive copyright regime, in which they cannot use copyrighted material without licensing it in many situations where international colleagues, particularly those in fair use jurisdictions, can. 

The question is relevant to international scholars concerned with the relation of creative practice generally to the regulatory contexts that variously stimulate and inhibit it. This concern has been raised with rising frequency since the passage of U.S. copyright legislation in 1976, which vastly extended and expanded copyright monopoly, while also codifying 135-year-old judge-made law in fair use. From the early 1990s, U.S. international treaty negotiations routinely have included clauses that harmonize national practice on the monopoly side, without harmonizing it on the exceptions side (Burrell and Weatherall, 2008; Drahos and Braithwaite, 2003). 

With this broad and international expansion of copyright monopoly, legal and communication studies scholars have postulated a cost to cultural circulation, to creative expression, and innovation. Some have described this as an encroachment on a metaphorical cultural commons (Benkler, 2006; Bollier, 2001; Boyle, 2008; Cunningham, 2015; Greenleaf and Bond, 2013; McLeod, 2007). Others have described copyright law as unbalanced, or as tight, or strong (Aufderheide and Jaszi, 2011; Fisher, 2004; Fitzgerald, 2008; Flew, Suzor, and  Liu, 2013; Flew, 2015; Geiger, 2017; Giblin and Weatherall, 2016; Patterson and Lindberg, 1991). Recent empirical research with creative communities in the U.S. has documented costs of copyright confusion or uncertainty around employing fair use, among documentary filmmakers, media literacy teachers, librarians, musicians and visual arts professionals among others (Aufderheide & Jaszi, 2004; Aufderheide, Hobbs, & Jaszi, 2007; Franzen et al., 2010). It has also documented expansion and innovation in creative practice with fair use knowledge and with institutional acceptance of fair use claims (Aufderheide and Jaszi, 2011; Aufderheide and Sinnreich, 2015; Sinnreich and Aufderheide, 2015). Interviews conducted with a small pool of creators who recycle copyrighted material into new work in Australia has also demonstrated that confusion over exceptions and limited exceptions have creative costs (Pappalardo, Aufderheide, Stewart, and Suzor, 2017). Other empirical research, including experimental research, demonstrates an uncertain and contingent relationship between copyright incentives and actual production, thus challenging the notion that copyright is inevitably a driver of creative production (Sprigman, 2017). As well, scholars have charted creative expression that moves beyond or outside copyright law, in areas as diverse as tattoos, vidding, fan fiction and cooking (Coppa, 2011; Darling and Perzanowski, 2017; Suzor, 2014; Tushnet, 2010). 

Copyright policy is thus directly implicated as a governmental and institutional policy affecting freedom of expression (Sunder, 2000; Tushnet, 2011). How it is administered, debated and changed is inevitably a battle not only between economic stakeholders but also about who can speak and create. The current Australian debate is a political conflict in which creator agency has been invoked by publishers and licensing interests, which have also assisted in directing positions for creator organizations. However, creator practices in using current Australian exceptions to make new work, employing licensed copyrighted materials in making new work, and in shaping projects around the exigencies of accessing copyrighted material have not been documented or presented to policymakers. 

The question of how creators in particular cope with this regime is of urgent and practical significance in the Australian context, where a 20-year-long debate over reform of the outdated and inflexible law has recently been renewed. As recent research has shown, Australian copyright debates have typically opposed the benefits of flexible exceptions for technology (e.g. online search, protections for hosts of user-generated content, non-consumptive uses for artificial intelligence) and for consumers, educators and libraries against the interests of creators in protecting their copyright monopolies (Aufderheide & Davis, 2017). Some researchers have explored how copyright works within the creative process in specific areas, e.g. (Bowrey & Handler, 2014). But until this study, there has been no systematic, detailed inquiry into how Australian cultural creators experience exceptions in this regime during the creative process itself. 

Australian copyright law is ‘TRIPS+’ (Frankel, 2008) following the implementation of the Australia – United States Free Trade Agreement in 2004. Copyright in original works lasts for 70 years after the death of the Author; there are extensive criminal offences for commercial and commercial-scale infringement; and there are criminal and civil prohibitions on circumvention of Digital Rights Management technologies. Australia has a moral rights regime, introduced in 2000 (Adeney, 2006), and a (limited) performers’ rights regime, introduced in 2005 (Weatherall, 2005). The moral rights regime confers on individual authors and performers three non-economic rights: a right of attribution, a right against false attribution, and a right of integrity, being the right not to have a work or performance subject to derogatory treatment (Copyright Act 1968 (Cth), Part IX). Derogatory treatment is defined as treatment resulting in a material distortion of, mutilation of, or material alteration of the work/performance that is prejudicial to the author or performer’s honor or reputation (ss. 195AI – 195ALB). The rights of attribution and integrity are subject to a reasonableness requirement, such that there is no infringement if the person’s conduct was reasonable in all of the circumstances (Copyright Act 1968 (Cth), Part IX, Div. 6). Thus, moral rights generally are congruent with a decision to employ third-party unlicensed material, if credit is given and use is not derogatory.

Australian copyright exceptions fall into six general categories. The fair dealing exceptions permit uses of copyright material for the purposes of news reporting, criticism and review, research and study, parody and satire, for disability access, and for professional legal advice (Copyright Act 1968 (Cth), ss. 40–43; 103 A – 104; 113E). These are supplemented by a narrow set of personal use exceptions (e.g. time-shifting in limited circumstances), specific exceptions for computer programs, a ‘flexible dealing’ exception for libraries, educational institutions, and the disabled, and a set of statutory licences for educational copying, re-transmission of broadcasts, and the recording of musical works (Copyright Act 1968 (Cth), Part III, Div. 3–7; Part IV, ss. 104 A – 112 A; Part A; Pa rt )

Unlike many European and Commonwealth countries, Australia has no right of quotation (Adeney, 2013). The six categories of permitted ‘fair dealing’ purposes are exclusive, and unlike in Canada, courts have interpreted them narrowly. People who would legally reuse copyright material must be able to show that their use is genuinely for one of the permitted purposes and that they used no more than necessary for that purpose (Suzor, 2008). There is no exception for informational work outside of the business of immediate news. There is no exception that permits search or machine learning (artificial intelligence); thus, all companies operating Internet search functions serving Australia operate offshore. Unlike the U.S., Israel and some Asian nations, which have fair use, Australia must redesign its exceptions after innovation in communication, expression and technology occurs. For instance, the VCR, which was first made available commercially in 1971, was not legally useable to record free-to-air television for personal use in Australia until 2006, when a specific exception precisely for that purpose was created (Copyright Act 1968 (Cth) s 111). At the same time, digital production and distribution are only accelerating the pressures for change. As far back as 2010, 38% of Australian artists made their art directly using the Internet (Throsby and Zednick, 2010). As of 2015, 14% of Australian creators were turning to Internet-based collaboration, building new platforms and projects on the Internet, reaching audiences and networking in their fields (Australia. Australia Council for the Arts, 2015). 

The lack of a quotation exception or an open-ended fair use exception in Australian law has been the subject of policy debate over the last two decades. In 1998, the Copyright Law Review Committee’s ‘simplification review’ recommended the introduction of an ‘open-ended’ fair use style exception (Copyright Law Review Committee, 1998). In 2000, the Ergas Committee reported that the costs of introducing fair use would likely outweigh the benefits (Australia. Intellectual Property & Competition Review Committee, 2000). In 2005, following the conclusion of the Australia – United States Free Trade Agreement, the Attorney-General’s Department conducted a review of whether a Fair Use provision should also be introduced into Australian law, following criticisms that while Australia imported the extra enforcement strength of US law, it did not import the counter-balancing limitations (Weatherall, 2007). The most comprehensive review was completed in 2014 by the Australian Law Reform Commission, which recommended that Australia should introduce an open-ended fair use style exception (Australia. Australian Law Reform Commission, 2014). Rather than implement its recommendations, the Government then referred the issue to the Productivity Commission, which also recommended that Australia should introduce a fair use style exception (Australia. Productivity Commission, 2016). The Government’s response to the most recent Productivity Commission report notes that it will conduct further consultations on whether or not to introduce a fair use style exception in 2018 (Department of Industry, Innovation & Science, 2017). These policy debates took place in the context also of high profile and controversial litigation, including the ‘Kookaburra’ case, where Men At Work’s iconic anthem ‘Down Under’ was found to infringe copyright in a 1932 folk song by copying the folk song’s melody in an eight second flute riff – in a form changed so much that it went undiscovered for nearly twenty years (Collins, 2010; Rimmer, 2012). These debates have been heated and protracted, and the issue remains deeply politically contested. There has also been a tendency by copyright interests to conflate focused recommendations for more flexible copyright exceptions with broader and far more complex concerns about how creators can earn a living from their work in the digital age, how existing production models can adapt to changes in online media markets, and how Australia’s IP system can better respond to the needs of Indigenous Australians to protect their traditional culture (Aufderheide & Davis, 2017 #1620). The Australian Government implemented some of the recommendations of the Australian Law Reform Commission in 2017, when it simplified the statutory licenses and introduced new exceptions for disability access and for libraries and cultural institutions, but it has recently announced yet another round of consultations on fair use, orphan works, and the ability to override exceptions through contract (Australia. Department of Communications and the Arts, 2018). 

The Australian creative industries have a small but significant role in the Australian economy and a larger one in the expression of Australian national identity and culture. The Australia Council for the Arts estimates that the economic and cultural benefits of the arts account for $66 billion AUD annually (Australia. Australia Council for the Arts, 2015). Australian creators strive not only to serve the national market but to orient their work toward international markets as well. In those markets, they face competition from creators who work under conditions where they pay less to create their work, and take less time, because of the ability to use unlicensed material. 

Nonetheless, there has been virtual silence on the topic of the cost to creators during their production process of such narrow exceptions, perhaps because of the political context of the policy debate. In that debate, creators’ interests have been largely represented by collecting societies, whose interests lie predominantly in licensing, and publishers, including newspaper publishers concerned to recoup or stem losses to a disrupted business model. Collecting societies, and particularly the Copyright Agency, have taken the lead in developing arguments and materials for the creators’ guilds, unions, and associations, many of which are, compared with the collecting societies, under-resourced. Their core argument, made without evidence or with evidence that has been repeatedly debunked (Australia. Australian Government Productivity Commission, 2016, pp. 178–179), has been that the cost to creators of losing license fees from uses that might be made under exceptions (as opposed to other licensing) would be devastating. The Copyright Agency’s main response to the Productivity Commission’s inquiry was to equate the limited right of fair use with unfettered free use, and many arts organizations and creators adopted the ‘free is not fair’ slogan in their submissions (Aufderheide and Davis, 2017 #1620). Individual creators and leaders of their guilds have largely seen copyright reform, therefore, as threatening. Thus, the question of what today’s system costs them as creators rather than copyright holders has gone unasked, although it is immediately relevant to policymaking. This study was designed to address that lack.

Trade challenges and public health

'Trade challenges at the World Trade Organization to national noncommunicable disease prevention policies: A thematic document analysis of trade and health policy space' by Pepita Barlow, Ronald Labonte, Martin McKee and David Stuckler in (2018) PLOS Medicine comments

It has long been contested that trade rules and agreements are used to dispute regulations aimed at preventing noncommunicable diseases (NCDs). Yet most analyses of trade rules and agreements focus on trade disputes, potentially overlooking how a challenge to a regulation’s consistency with trade rules may lead to ‘policy or regulatory chill’ effects whereby countries delay, alter, or repeal regulations in order to avoid the costs of a dispute. Systematic empirical analysis of this pathway to impact was previously prevented by a dearth of systematically coded data. ... 

Here, we analyse a newly created dataset of trade challenges about food, beverage, and tobacco regulations among 122 World Trade Organization (WTO) members from January 1, 1995 to December 31, 2016. We thematically describe the scope and frequency of trade challenges, analyse economic asymmetries between countries raising and defending them, and summarise 4 cases of their possible influence. Between 1995 and 2016, 93 food, beverage, and tobacco regulations were challenged at the WTO. ‘Unnecessary’ trade costs were the focus of 16.4% of the challenges. Only one (1.1%) challenge remained unresolved and escalated to a trade dispute. Thirty-nine (41.9%) challenges focussed on labelling regulations, and 18 (19.4%) focussed on quality standards and restrictions on certain products like processed meats and cigarette flavourings. High-income countries raised 77.4% (n = 72) of all challenges raised against low- and lower-middle–income countries. We further identified 4 cases in Indonesia, Chile, Colombia, and Saudi Arabia in which challenges were associated with changes to food and beverage regulations. Data limitations precluded a comprehensive evaluation of policy impact and challenge validity. ... 

Policy makers appear to face significant pressure to design food, beverage, and tobacco regulations that other countries will deem consistent with trade rules. Trade-related influence on public health policy is likely to be understated by analyses limited to formal trade disputes.

FTAs and EU Data Protection

Trade and privacy: complicated bedfellows? How to achieve data protection-proof free trade agreements (Institute for Information Law, 2018) by Kristina Irion, Svetlana Yakovleva, and Marija Bartl for BEUC, CDD, TACD and EDRi assesses

how EU standards on privacy and data protection are safeguarded from liberalisation by existing free trade agreements (the General Agreement of Trade in Services (GATS) and the Comprehensive Economic and Trade Agreement (CETA)) and those that are currently under negotiation (the Trans-atlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TiSA)).

The report

was jointly commissioned by the European Consumer Organisation (BEUC), the Center for Digital Democracy (CDD), the Transatlantic Consumer Dialogue (TACD) and European Digital Rights (EDRi), and executed by the Institute for Information Law (IViR) at the University of Amsterdam. Based on the premise that the EU does not negotiate its privacy and data protection standards, the study clarifies safeguards and risks in respectively the EU legal order and international trade law. 

In the context of the highly-charged discourse surrounding the new generation free trade agreements under negotiation, this study applies legal methods in order to derive nuanced conclusions about the preservation of the EU’s right to regulate privacy and the protection of personal data. The EU legal order itself carries robust safeguards that protect EU privacy and data protection standards from (involuntary) liberalisation via the international trade agreements to which the EU is party. Not only are the fundamental rights to privacy and the protection of personal data well entrenched in EU primary law, but the principle of “autonomy of the EU legal order” and the lack of “direct effect” in conjunction with international trade law moreover preclude EU law from being automatically changed. International trade agreements to which the EU is or will become a party should be consistent with all aspects of EU legislation on data protection, which vests, by international standards, the highest level of protection. Even when it cannot overturn EU legislation, international trade law should not become a venue for challenging the EU approach to the protection of personal data. The EU’s global policy model and its legitimacy vis-à-vis its trade partners must not be undermined. The contemporary ubiquity of the processing of personal data in cross-border trade in services renders data protection measures especially susceptible to being probed for their compliance with the EU’s commitments in international trade agreements. The potential for trade disputes is not just an issue of the EU entering into further commitments on data flows, but a current risk with existing commitments in core disciplines in international trade agreements. The EU’s right to regulate, as recognised in international trade agreements, is subject to certain trade-conforming limitations and conditions. Under the GATS, for example, a party may adopt measures that are not inconsistent with the obligations and commitments assumed under this agreement. In the case that measures are found to be GATS-inconsistent, the general exceptions are the central bulwark for defending a party’s right to regulate, and the only context within which regulatory objectives and concerns can be deliberated. As a concrete example, the EU rules on transfers of personal data to third countries (Chapter IV of the Data Protection Directive), which aim to protect the remainder of EU data protection law from circumvention, have been exposed to a finding of GATS inconsistency. This means that the requirements of the general exceptions must be met in order to defend this EU measure. Entering into additional commitments on free data flows without a prudential carve-out for a party’s privacy and data protection laws would only raise the bar for justification, and compound pressure on the general exceptions. 

The GATS carries an explicit exception on privacy that is subject to a series of tests, leaving a certain margin for interpretation that cannot be fully anticipated from a solely EU-centric perspective. There is an entire spectrum of opinions as to whether or not some measures of EU data protection law would meet the general exceptions. In addition, EU policy and practice could fall short of the required level of consistency, for example in how the Commission administers adequacy decisions. Not only is there a need to update trade rules for the digital economy and cross-border data flows but, from an EU perspective, it is also necessary to upgrade the exception for privacy and data protection. Entrusting the EU’s right to regulate in new generation free trade agreements to the general exceptions, which are modelled after the GATS, would perpetuate a residual legal risk. Note in this respect that EU negotiators injected an additional safeguard for EU rules on the transfer of personal data to third countries in CETA’s Financial Services Chapter. 

This study underscores the formula of the European Parliament that new free trade agreements should contain “a comprehensive, unambiguous, horizontal, self-standing and legally binding provision based on GATS Article XIV which fully exempts the existing and future EU legal framework for the protection of personal data from the scope of this agreement, without any conditions that it must be consistent with other parts of the [agreement].” As long as this is not granted, the EU should not enter into additional commitments concerning free data flows in new and enhanced disciplines that lack any reference to the party’s privacy and data protection laws. In relation to new provisions that each party shall adopt or maintain a privacy and data protection legal framework, they should not be linked to any qualitative conditions (e.g. “adequate”, “non-discriminary”), nor to principles and guidelines of international bodies if these would introduce a ceiling for the acceptable level of protection. The table below [not copied in this blogpost] lists all of the safeguards and risks identified in the study. The recommendations that follow are addressed to EU decision makers and trade negotiators respectively, and list practical steps for how to strengthen and modify existing safeguards on privacy and data protection in order to make them fit for purpose in next generation free trade agreements.

The report offers the following recommendations for EU decision makers and trade negotiators as 'practical steps for how to strengthen and modify existing safeguards on privacy and data protection in order to make them fit for purpose in next generation free trade agreements'.

1. Underscoring the formula of the European Parliament that new free trade agreements better entrust their right to regulate in the field of privacy and data protection to ... a comprehensive, unambiguous, horizontal, self-standing and legally binding provision based on GATS Article XIV which fully exempts the existing and future EU legal framework for the protection of personal data from the scope of this agreement, without any conditions that it must be consistent with other parts of the [agreement]. 

2. Underscoring the European Parliament’s position that additional commitments concerning free data flows in new and enhanced disciplines should not be disconnected from any reference to the party’s privacy and data protection laws. CETA’s Chapter on Financial Services, for example, introduces an exception for regulating the cross-border transfer of personal data.

3. In relation to new positive obligations that each party shall adopt or maintain a privacy and data protection legal framework, these should not be linked to any qualitative conditions (e.g. “necessary”), nor to the principles and guidelines of international bodies if these would introduce a ceiling for the acceptable level of protection. 

4. Pursuant to the EU’s current practice, insert “no direct effect” clauses in free trade agreements and Council decisions approving these free trade agreements. In order to forego any finding of “direct effect”, avoid reference in EU legal acts to specific provisions in free trade agreements.

5. With a view to protecting EU privacy and data protection standards, it should be incumbent on the European Data Protection Supervisor (EDPS) to issue opinions on the texts of free trade agreements that the EU plans to adopt. 

6. When there is reason to believe that a new free trade agreement to which the EU will become a party negatively affects EU privacy and data protection standards, a Member State, the European Parliament, the Council or the Commission should initiate an advisory opinion procedure at the Court of Justice as provided for in Article 218(11) of the TFEU. 

7. Adequacy assessments and decisions by the Commission must not grant differential treatment to some third countries and not to others. The Commission should adopt procedural rules for the administration of the assessment of adequate levels of protection for third countries, thereby facilitating “consistency of enforcement”.

8. The Commission should publish impact assessments on preserving the EU’s right to regulate in areas of public interest and legal reasoning based on which it concludes, with sufficient certainty, that EU data protection law in all aspects satisfies the requirements of the general exceptions modelled after GATS Article XIV(c)(ii).

9. EU institutions should commission a study into enterprise customers’ preferences in the outsourcing and provisioning of computer services involving the personal data processing in order to build an evidence base supporting the fact that EU data protection law is a differentiating factor in the competitive relationship between services and service suppliers.

JSCOT endorses ChAFTA

The Joint Standing Committee on Treaties has released an anaemic report on the China-Australia Free Trade Agreement (aka ChAFTA, recently noted here), which will presumably be echoed in an endorsement of the TPPA.

The report concludes -

China is currently Australia’s largest trading partner with two-way trade worth $160 billion in 2013-14. It is both Australia’s largest export market and its largest source of imports. On entry into force of China Australia Free Trade Agreement (ChAFTA), more than 85 per cent of Australia’s trade to China will have tariffs reduced to zero and, on full implementation, 95 per cent of trade will enter China duty-free. The Agreement is expected to promote closer economic integration and further enhance this significant bilateral economic relationship.

In theory, inclusive multilateral trade agreements are the preferred route to trade liberalisation and economic growth. However, bilateral, plurilateral and regional trade agreements are often a more practical way to achieve results. Australia is losing market share in the burgeoning Chinese economy because of existing preferential trade agreements with some of Australia’s major competitors such as New Zealand, Chile and ASEAN. The negotiation of a preferential trade agreement with China appears the most realistic option to combat Australia’s growing competitive disadvantage.

There has been considerable public debate on the advantages and disadvantages of entering into preferential trade agreements. Such agreements involve negotiations and compromise; inevitably some sectors of the economy gain and some lose. ChAFTA has proved more controversial than previous agreements, particularly regarding the provisions for labour mobility.

Labour mobility

The Committee acknowledges the extent of the public concern generated by the labour mobility provisions in ChAFTA and the underlying fear that Australian jobs are threatened. However, promoting temporary entry access to facilitate labour mobility—within the context of robust immigration and employment frameworks—is considered essential to support increased trade and investment.

The Committee recognises that increasing labour mobility comes with risks but is confident that, providing the relevant monitoring organisations are adequately resourced, those risks can be mitigated.

The Committee understands that the classification changes provided in ChAFTA will open up access to temporary entry to a broader range of workers. However, there is no ‘right of entry’ to Australia for Chinese workers. Safeguards remain in place to ensure strict entry criteria are adhered to and enforced.

No immigration system can entirely prevent deliberate unlawful activity. However, Australia’s system for ensuring compliance—including the Fair Work Ombudsman, corporate regulation and the Department of Immigration and Border Protection (DIBP)—can manage and contain these breaches. The Committee reiterates that it is essential to adequately resource all government organisations with responsibility for curbing unlawful immigration activity and recommends that the Government ensure that sufficient funding is provided for this purpose.

The Committee recommends that all government departments and agencies responsible for curbing unlawful immigration activity, particularly the Department of Immigration and Border Protection, are adequately resourced to carry out their functions effectively and efficiently.

Skills assessment

The Committee is satisfied that the administrative changes to the skills assessment process contained in the side letters to ChAFTA do not remove the need for skills assessment for affected occupations. Although the timing of skills assessment has been shifted, licence and regulatory requirements must be met before applicants can commence work in Australia.

Access and utilisation

If the full economic potential of the Agreement is to be achieved, the negotiation and implementation of ChAFTA is only the starting point. The Committee remains concerned that FTAs in general are underutilised and Australian business and industry are not accessing the new opportunities. According to recent research, only 19 per cent of Australian exporters make use of Australia’s existing FTAs.1 To take full advantage of ChAFTA, and the other FTAs Australia has negotiated, Australian business and industry must be provided with the education and support required to understand, navigate and comply with the FTAs’ complexities.

Many small businesses, in particular, have neither the time nor resources to dedicate to untangling the requirements of FTAs. Asked to identify the reason for the lack of utilisation of FTAs, HopgoodGanim lawyers said that there is a knowledge-gap that needs to be addressed:

We find that the main barrier is information and knowledge. A lot of clients do not actually know how to avail themselves of the benefits of those free trade agreements. To be honest, the process itself is not difficult, but it is a process of education, I believe.

In this regard, the Committee notes the work being undertaken by DFAT through the development of the FTA Dashboard and the continuing rollout of the FTA Seminars.

The Committee notes that ChAFTA Article 2.10.2 should also encourage utilisation and access of the Agreement:

In accordance with Article VIII of GATT 1994, neither Party shall impose substantial penalties for minor breaches of customs regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in customs documentation, which is easily rectified and obviously made without fraudulent intent or gross negligence, shall be greater than necessary to serve merely as a warning.

The Committee concurs with the Export Council of Australia (ECA) that, in accord with the spirit of this provision, the Department of Immigration and Border Protection (DIBP) should exercise leniency when dealing with minor or inadvertent compliance errors.

Business initiatives

The Committee is encouraged by the initiatives instigated by the business community to inform and educate stakeholders. HopgoodGanim hosts regular information events and have structured processes in place to alert their clients to the opportunities available through FTAs. The Australia China Business Council organises approximately 200 events annually around Australia, including business-to-business briefings and roundtables, to disseminate information.

ThomsonAdsett have had a long association with the Asian and Chinese markets and, some time ago, developed a professional tour education service, SAGE (Studying and Advancing Global Eldercare). The program provides an opportunity for professionals in the aged care sector to experience the market firsthand:

The purpose of [SAGE] was to gather together professionals and senior leaders in the industry and travel to different countries to look at what they do in their marketplaces. We have now been to China four times ... and in that process we have developed a very strong relationship with the China National Committee on Ageing, which is one of their peak bodies; it represents and develops policy for China in this space.

The ECA has developed an online FTA Tool designed to assist the trading community to understand the basics of FTAs.

Austrade

The Committee acknowledges the work currently being done by Austrade to educate business and industry regarding FTAs. The Committee received positive feedback on Austrade’s relationship with business and industry and its existing initiatives. For example, ANZ singled out Austrade’s report on E-commerce in China – a guide for Australian business for special mention as it provides a guide to preparing, selling and distributing a product for the Chinese market as well as explaining Chinese regulation.

Businesses indicated Austrade’s pivotal role in promoting the Australian brand in foreign markets:

Austrade is principally used ... as a vehicle for marketing these programs in countries like China, Korea and Japan. They do a good job of branding Australian education as a high quality provider, which I think is one of the reasons why Australia punches above its weight internationally. So my personal opinion and my experience with them is that they are easy to engage with and do a good job.

However, there is some concern that the demands imposed by Australia’s growing FTA commitments is putting strain on Austrade’s ability to provide targeted, sector specific information. ThomsonAdsett praised Austrade’s role in assisting the company in the past but warned that more will need to be done to ensure that frontline staff have the skills and knowledge to be useful in the complex Chinese market:

... increasingly Austrade cycles staff through its offices quite regularly. I have more knowledge than almost all the staff and I have been telling them where to go rather than the reverse ... the government should ensure that, through Austrade, trade offices are appropriately skilled and knowledgeable in the aged-care and healthcare services sector and understand clearly the different roles and responsibilities of facility operators and professional advisors.

The Committee recognises the central role that Austrade plays in both facilitating access to markets for Australian exporters and promoting the Australian brand in those markets. The Committee recommends that Austrade is sufficiently resourced to support dedicated officers, with the sector specific expertise required to provide information and assistance to access the Chinese market.

The Committee recommends that Austrade is sufficiently resourced to support dedicated officers, with the specific expertise required to provide information and assistance to individual sectors to facilitate access to the Chinese market.

Non-tariff barriers

The Committee recognises that non-tariff barriers continue to present the biggest impediment for many sectors wishing to take advantage of ChAFTA. Although many of these barriers will require government-to- government negotiations and may take considerable time to address, the Committee is aware that some domestic issues can be directly addressed by the Australian government.

The Committee understands that the Department of Agriculture has an ongoing program in place to address non-tariff barriers including sanitary and phytosanitary (SPS) issues, as well as import protocols and export processor accreditation, and that delays are often determined by the priorities of foreign governments. Nonetheless, the Committee urges the Department to make every effort to expedite the negotiation of the required import protocols and export processor accreditation and the removal of SPS barriers.

The Committee recommends that the Department of Agriculture develop a set of performance indicators to measure the Department’s progress in tackling non-tariff barriers and ensure external accountability. The Committee also recommends that both the Department of Agriculture and the relevant sections of DFAT are adequately resourced to ensure that work on reducing non-tariff barriers is prioritised and effective progress made as quickly as possible.

The Committee recommends that: the Department of Agriculture develop a set of performance indicators to measure progress on the removal of non-tariff barriers; and the Department of Agriculture and the relevant sections of the Department of Foreign Affairs and Trade are adequately resourced to enable effective progress to be made in removing non-tariff barriers.

The Financial Services Council reiterated issues it has previously brought to the Committee’s attention regarding the need for domestic regulatory reform to facilitate access to foreign markets.

The Committee recommends that the Government take steps to complete the implementation of the remaining recommendations of the 2010 Johnson Report and tax-related initiatives such as the development of a collective investment vehicle regime and the reduction of withholding tax rates.

Recommendation  ... the Australian Government prioritise implementation of the recommendations of the Review of the Tax Arrangements Applying to Collective Investment Vehicles report and Australia as a Financial Centre — Building on our Strengths (the Johnson Report) in order to achieve full utilisation of the China Australia Free Trade Agreement for Australian financial services.

Antimicrobial resistance

The Committee has been alerted to the dangers presented to the health security of Australians by antimicrobial resistance. The Committee recognises the link between microbial resistance and Australia’s current regulatory framework which enables Australia to control antibiotic use. The Committee is aware that this regulatory framework must not be threatened by Australia’s commitments under FTAs and will be monitoring this area during its examination of future agreements. Framework for review

The Committee welcomes the framework for review built into ChAFTA and urges government, business and industry to fully utilise the framework to address the issues that have been raised during this inquiry. In particular, the Committee encourages government to ensure that comprehensive, structured consultation processes are in place to guarantee effective input from stakeholders.

Conclusion

The Committee acknowledges the widespread community disquiet that has been generated by ChAFTA but considers that many of the concerns are unfounded. The Committee recognises that broad sections of Australian business and industry are expected to receive substantial benefit from greater access to one of the world’s largest economies.

The Committee supports the Treaty and agrees that binding treaty action should be taken.

The Committee supports the Free Trade Agreement between the Government of Australia and the Government of the People’s Republic of China and recommends that binding treaty action be taken.

ChAFTA, Labour Mobility and Employment

The Impact of the China-Australia Free Trade Agreement on Australian job opportunities, wages and conditions, a report by Joanna Howe at the University of Adelaide, comments

Significant controversy surrounds the impact of the China-Australia Free Trade Agreement (ChAFTA) in a number of areas. This report focuses on two of these areas by examining the ChAFTA’s provisions on labour mobility.

The first area of controversy is whether the ChAFTA will enable Chinese workers to replace local workers in the Australian labour market. This question hinges upon whether the Australian Government can impose labour market testing to determine whether a genuine skills shortage exists in the local labour market. Without labour market testing there is no regulatory mechanism to ensure that local job opportunities are protected.

The second area of controversy is whether the ChAFTA allows for, or will result in, Chinese workers receiving poorer wages and conditions than local workers in the Australian labour market.

This report is structured in two parts. Part One considers the three provisions in the ChAFTA that provide the opportunity for Chinese workers to access the Australian labour market. The labour mobility clauses in Chapter 10 and the two memorandums concerning largescale infrastructure development projects and the annual entry of working holiday makers each facilitate this opportunity. This report identifies each of these entry pathways into the Australian labour market and examines how they will operate in practice.

Part One of the report makes a number of findings. Firstly, the report finds the ChAFTA greatly increases the access of Chinese workers to the Australian labour market. The report recommends the Australian Government use its enabling legislation to clarify that labour market testing will apply to certain categories of Chinese workers. In particular, there needs to be labour market testing in a manner that is consistent with Australia’s 457 visa program, before employers can access Chinese workers who are ‘contractual service suppliers’ or ‘installers and servicers’. Without labour market testing, there is no regulatory mechanism to prevent an employer from preferencing a Chinese worker over a local worker for these two categories. Secondly, the report also finds that there needs to be greater protection to ensure Chinese workers are not used as a way of undercutting local wages and conditions. This can be done by making it a requirement that Chinese workers be paid the applicable market salary rate and not merely the award rate for their occupational category. The market salary rate can be determined through taking into account the current major employing collective agreement registered by the Fair Work Commission in the sector and/or region, ABS average salary rate data and the Department of Employment’s Job Outlook data.

Thirdly, the report finds that the current regulatory framework for Investment Facilitation Arrangements (IFAs) requires reform in order to ensure it is a legislated framework that mandates labour market testing, market salary rates and the achievement of greater public accountability and transparency around IFAs. Part Two of the report examines two key issues concerning the ChAFTA’s impact on Australian labour standards. The first issue pertains to the role and importance of labour market testing in determining the composition of Australia’s migrant worker intake. This section finds that both the OECD and two independent Australian government reports published in the last two years suggest that it is necessary for countries to have a clear and concrete process for determining which occupations are eligible for temporary migration. It is essential, therefore, that the Australian Government relies on labour market testing to assess whether Chinese workers are filling genuine vacancies in the Australian labour market. The report recommends that Australia adopt a consistent approach to labour market testing so that workers entering Australia via a free trade agreement are subject to the same labour market testing requirements as under Australia’s 457 visa program.

The second issue concerns whether temporary migrant workers from China can and/or will be paid less or treated differently to local workers performing equivalent jobs in the Australian labour market. Although it is true that Chinese workers will be required to be employed in accordance with Australia’s employment laws and are entitled to Australian wages and conditions, it is equally true that where these workers are being exploited or being used to undercut local wages and conditions, it is highly unlikely this will be uncovered by authorities, due to the inadequacies of existing regulatory enforcement arrangements. This section explores the myriad reasons why this is so, including the significant wage differentials between China and Australia, the employer-driven nature of Australia’s temporary migrant worker program and the limited resources of our enforcement inspectorate, the Fair Work Ombudsman. It is also highly unlikely that Chinese workers themselves will raise the alarm about underpayment of wages or exploitative treatment because of structural reasons inherent in temporary migrant worker programs, relating to the precarious position of migrant workers, especially those on temporary and employer-sponsored visa arrangements.

Although advocates of the ChAFTA will point to the text of the agreement that requires Chinese workers be employed according to Australian law, and government policy which currently stipulates labour market testing for labour agreements, neither of these are sufficient to ensure that the ChAFTA’s operation in practice does not place downward pressure on Australian wages, conditions and labour standards.

Increasingly, there is an unquestioned economic philosophy that systems need to be less regulated by government and driven by the needs of employers, with market responsiveness, timeliness and flexibility as the drivers and indicators of success. Be that as it may, there is a strong case for government regulation to ensure that temporary labour migration is used to address genuine skill needs in the local labour market, without being used as a vehicle to unnecessarily increase labour supply and reduce local wages and conditions. Without clarification in the enabling legislation, the ChAFTA does not achieve the right balance between these two needs. Not only does the ChAFTA attempt to prevent the Australian government from regulating its temporary labour migration program with respect to Chinese workers to include some form of labour market testing, but it greatly increases the entry pathways for Chinese workers to enter the Australian labour market. Taken together, these two provisions make it extremely hard for the Australian Government to determine the scope and composition of its temporary migrant workforce, which is an important sovereign right and responsibility for any national government.

Thus, it is vital that the ChAFTA’s implementation be accompanied by enabling legislation that stipulates the application of labour market testing and market salary rates to Chinese workers, greater public accountability and transparency around investment facilitation arrangements and a substantial increase in the enforcement capacity and powers of the Fair Work Ombudsman.

The report features the following recommendations -

R1:  the Government clearly establish in its enabling legislation that labour market testing will apply to all Chinese workers coming into Australia as contractual service suppliers or as installers and servicers via Annex 10-A in the China-Australia Free Trade Agreement.

R2:  the requirement of labour market testing in free trade agreements be consistent with the 457 visa program. This requirement of labour market testing for certain categories of temporary migrant workers should be enshrined in the Migration Act 1958 (Cth).

R3:  This report recommends that contractual service suppliers and installers and services be subject to a market salary rates requirement as stipulated under the 457 visa program.

R4:   the Australian Government strengthen the application of labour market testing for the 457 visa, and consistent with the UK approach, adopt a model that is primarily predicated on independent labour market testing but which can be supplemented, where necessary, with employer-conducted labour market testing.

R5:   that Chinese workers receive the same wages and conditions as equivalent local workers for each occupational category specified in the investment facilitation arrangement. The process for determining the applicable local wage and employment conditions for each occupation should take into account, but is not limited to the following:

• the current major employing collective agreement registered by the Fair Work Commission in the sector and/or region; 

• ABS average salary rate data; and 

• the Department of Employment’s Job Outlook data.

R6:  the requirement for labour market testing for labour agreements signed under an investment facilitation arrangement become a legislated requirement through an amendment to the Migration Act 1958 (Cth).

R7:  once an investment facilitation arrangement is in place it must be made publicly available by the Department of Immigration on its website. This should be accompanied by a public statement stipulating:

• the concessions which are granted under the IFA with regards to wage levels, skills and English language ability

• justification of why each concession has been granted and the circumstances surrounding the grant 

• how compliance with each concession will be monitored 

• the occupations which are covered by the IFA 

• the salary rates to be paid out to workers for each occupational category under the IFA 

• the proportion of overseas workers to be employed under the arrangement compared with local workers

8: This report recommends that any labour agreements negotiated under the investment facilitation arrangement should be made publicly available by the Department of Immigration on its website. This should be accompanied by a public statement stipulating:

• the concessions which are granted under the labour agreement with regards to wage levels, skills and English language ability 

• justification of why each concession has been granted and the circumstances surrounding the grant 

• how compliance with each concession will be monitored 

• the occupations which are covered by the labour agreement 

• the salary rates to be paid out to workers for each occupational category under the labour agreement 

• the proportion of overseas workers to be employed under the arrangement compared with local workers

R9:   the Government review the Work and Holiday Visa and the Working Holiday Visa to ensure this visa scheme meets its central purpose of being for cultural exchange rather than as a general labour supply visa. In particular, this review should address the following:

• the need to protect local job opportunities; and 

• the need to protect working holiday visa holders in the Australian labour market from exploitative arrangements.

R10:   the Government substantially increase the enforcement capacity of the Fair Work Ombudsman, its powers under the Fair Work Act 2009 (Cth) and its ability to impose penalties on employers who breach Australian employment law.

R11:   the increasing of civil and criminal penalties for employers found breaching Australian law with respect to the hiring and employment of temporary migrant workers.

12:  all temporary migrant workers, including Chinese workers entering the Australia labour market via the ChAFTA, be given an induction in their own language which details their workplace rights under Australian law and advises on support services available in the event of a breach of these rights or any other workplace issue.

R13  the identities of migrant workers who report instances of exploitation to the Fair Work Ombudsman or to any other body should not be provided to the Department of Immigration and Border Protection.

FTA, Copyright and Libraries

'The Australia-US Free Trade Agreement's Impact on Australia's Copyright Trade Policy' by Kimberlee G. Weatherall in (2015) 69(5) Australian Journal of International Affairs 538-558 comments 

The Australia-US Free Trade Agreement (AUSFTA) required extensive changes to Australian copyright law. This paper assesses the impact of these changes one decade on. It considers, first, whether the costs and/or benefits predicted in 2004 have eventuated, finding clear evidence that AUSFTA has undesirably constrained domestic copyright policy, but no clear evidence either of the feared financial costs to society, or, importantly, the touted benefits to copyright owners. The most significant impact of AUSFTA’s copyright provisions, however, appears to have been their impact on Australia’s copyright trade policy. Pre-AUSFTA, Australia promoted multilateral standards and mostly sought to comply with, but not exceed international IP standards. Post-AUSFTA, Australia has pursued an approach akin to that of the US: endorsing international copyright rules that are significantly stronger, and more detailed. The paper queries whether this shift has been in Australia’s national interest, and raises interesting questions of path-dependence in policymaking and trade negotiations that warrant more, and broader attention in the literature.

'At the Intersection of Public Service and the Market: Libraries and the Future of Lending' by Rebecca Giblin and Kimberlee G. Weatherall in (2015) 26 Australian Intellectual Property Journal 4-26 comments

Most library uses of books occur outside the purview of copyright and the market. Loans fall outside copyright’s exclusive rights; libraries have exceptions for many activities that involve copying. Author remuneration for library uses via the public lending right is governed by distinctly non-market considerations. This changes when works take digital form: electronic lending involves copies and transmissions which copyright owners have a right to license. As a result, libraries’ ability to engage in electronic lending is governed by private contract, which means market forces largely determine the terms on which libraries can provide access – and whether they may do so at all. This has potentially significant implications: libraries have traditionally played an important role in furthering the public’s interest in access to content and other societal goals including the encouragement of Australian authorship. This article provides a doctrinal mapping of the regulation of physical and digital lending. It also identifies avenues of investigation which need to be explored to inform the practices of libraries and policymaking. What could we lose by a wholesale operation of market forces? And what could we gain?

Black box FTA negotiations

The Senate Committee on Foreign Affairs, Defence and Trade in its report on The Commonwealth's Treaty Making Process has criticized what I've elsewhere described as a black box approach to trade negotiations in connection with the proposed Transpacific Partnership Agreement (TPPA).

The report offers the following recommendations -

R1 - that parliamentarians and their principal advisers be granted access to draft treaty text upon request and under conditions of confidentiality throughout the period of treaty negotiations. The committee recommends that the government provides an access framework and supporting administrative arrangements.  

R2 - that the Joint Standing Committee on Treaties adopt a process of ongoing oversight of trade agreements under negotiation. This process is to include: private briefings from the Minister for Trade and Investment and the Department of Foreign Affairs and Trade under conditions of confidentiality at key points during negotiations; consultation with stakeholders with confidential access to negotiating texts, to enable JSCOT to form an evidence-base for its oversight work; writing to the minister and inviting the minister to respond to its concerns; and a summary of its ongoing oversight role, including relevant correspondence with the minister, as an annex to its public report on the agreement.  

R3 - that the Parliamentary Joint Committee on Human Rights consider the human rights implications of all proposed treaties prior to ratification and report its findings to parliament.  

R4 - that on entering treaty negotiations, Australia seeks agreement from the negotiating partner(s) for the final draft text of the agreement to be tabled in parliament prior to authorisation for signature. In the absence of agreement, the government should table a document outlining why it is in the national interest for Australia to enter negotiations.  

R5 - that, subject to the agreement of negotiating countries, the Department of Foreign Affairs and Trade publish additional supporting information on treaties under negotiation, such as plain English explanatory documents and draft treaty text.  

R6 - that stakeholders with relevant expertise be given access to draft treaty text under conditions of confidentiality during negotiations. The committee recommends that the government develop access arrangements for stakeholders representing a range of views from industry, civil society, unions, consumer groups, academia and non-government organisations.  

R7 - that the government, prior to commencing negotiations for trade agreements, tables in parliament a detailed explanatory statement setting out the priorities, objectives and reasons for entering negotiations. The statement should consider the economic, regional, social, cultural, regulatory and environmental impacts which are expected to arise.  

R 8 - that a cost-benefit analysis of trade agreements be undertaken by an independent body, such as the Productivity Commission, and tabled in parliament prior to the commencement of negotiations or as soon as is practicable afterwards. The cost-benefit analysis should inform the government's approach to negotiations.  

The committee further recommends that: treaties negotiated over many years be the subject of a supplementary cost-benefit analysis towards the end of negotiations; and statements of priorities and objectives and cost-benefit analyses stand automatically referred to the Joint Standing Committee on Treaties for inquiry and report upon their presentation to parliament.  

R9 -  that the government develop a model trade agreement that is to be used as a template for future negotiations. The model agreement should cover controversial topics such as investor-state dispute settlement, intellectual property, copyright, and labour and environmental standards and be developed through extensive public and stakeholder consultation.  

R10 - that National Interest Analyses (NIAs) be prepared by an independent body such as the Productivity Commission and, wherever possible, presented to the government before an agreement is authorised by cabinet for signature. NIAs should be comprehensive and address specifically the foreseeable environmental, health and human rights effects of a treaty.

The Committee concludes -

The committee is left in no doubt that in respect of the Commonwealth treatymaking process there is a groundswell for change backed by compelling evidence and practical suggestions for improvement. The committee received evidence from leading industry bodies, the union movement, academic experts and other stakeholders voicing frustration with the lack of effective consultation and parliamentary engagement during treaty negotiations. 

Much was made 20 years ago of a so-called 'democratic deficit' surrounding treaty-making. The reforms introduced in the mid-1990s, following the landmark Trick or Treaty? report, strengthened the treaty-making process and gave parliament a greater say through the establishment of the Joint Standing Committee on Treaties (JSCOT) and the mandatory tabling of treaties in both houses of parliament. However, a 'democratic deficit' has remained a feature of the process, albeit with a different complexion today as the scope and reach of trade agreements into domestic law is unlike anything previously seen. While the 1996 reform package was undoubtedly ground-breaking at the time, twenty years on the global environment in which trade agreements are negotiated and community expectations of transparency and accountability have changed to such an extent that the case for review and further reform is compelling. 

Debate on treaty-making no longer revolves around the underlying issue of the role of the executive versus parliament and the use of the external affairs power. The committee chose not to address parliament's constitutional reach into treatymaking, other than to note that there may be no constitutional barriers to parliament playing a greater role in the treaty-making process. 

In recent years the debate has shifted direction—to consider the way that large and complex free trade agreements such as those with Korea, Japan and China and the Trans-Pacific Partnership (TPP), are encroaching on the Australian domestic sphere without an adequate level of stakeholder engagement, public consultation, parliamentary oversight and executive accountability. The committee agrees with Associate Professor Weatherall's contention that balancing transparency and accountability in treaty-making with the need for government to negotiate and secure outcomes that further Australia's national interests is a conundrum that does not lend itself to easy resolution. 

The committee found it significant that nearly all witnesses challenged two major claims by the Department of Foreign Affairs and Trade (DFAT): that Australia's current treaty-making process is effective, workable and reflects a careful balancing of competing interests; and that the parliament plays a significant role in relation to the scrutiny of treaties. The evidence was overwhelmingly critical, and occasionally scathing, of these claims. Three key points were raised in evidence to the inquiry. First, that there needs to be a significantly higher level of consultation in treaty-making before agreements are signed and that more information should be communicated to stakeholders and the public about how agreements will affect them. Second, that parliament should have opportunities to play a constructive role during negotiations that goes beyond rubber-stamping agreements after they are signed. Third, that proposed treaty action should be subject to independent assessment at the commencement of negotiations and monitoring and evaluation after implementation, to ensure that mistakes and unintended consequences are not repeated. 

This is precisely the space where the committee has sought to add value. The package of recommendations in this report address the following issues around the treaty-making process: • transparency: ensuring a higher level of transparency through parliamentary and stakeholder access to draft treaty text on a confidential basis during negotiations; • consultation: improving the effectiveness of parliamentary and stakeholder consultation during negotiations; and • independence: ensuring independent analysis of treaties at the commencement of negotiations and, if required, post-implementation. 

Transparency 

A major sticking point for stakeholders was being kept in the dark about the text of draft treaties during negotiations and having to voice concerns 'blindfolded', as one industry group put it. The committee heard a range of evidence on this issue, most of which was critical of the negotiation process in one way or another. The committee does not accept that the process is as 'open' as DFAT makes out, or agree with the department's inference that a large number of stakeholders who have been consulted, possibly in the hundreds of thousands, had no reason to make a submission to the inquiry because they were satisfied with the process. Openness implies access to information and this is not occurring during the negotiation of free trade agreements as the committee heard from stakeholders. The committee is unable to speculate on the views of stakeholders that did not present evidence. 

While the committee accepts that absolute transparency in treaty making is an unrealistic expectation, absolute secrecy in the current globalised environment of treaty-making is equally unrealistic and therefore in need of changing. The argument that it is in Australia's national interest for texts of bilateral and plurilateral treaties to be kept confidential prior to signature is increasingly under challenge. The committee acknowledges that the practice of keeping aspects of trade negotiations secret has a long history going back to the original General Agreement on Tariffs and Trade negotiations in 1946–47, but it has not always been so and international best-practice appears to be heading in the opposite direction. Criticism from academic experts and consideration of contemporary international practice demonstrates that absolute secrecy in trade negotiations is a relatively recent development reflecting the proliferation and complexity of agreements where significant and long-term commercial interest are at stake. 

The committee believes that the benefits of increased transparency during free trade negotiations outweigh a perceived risk to the national interest from public disclosure. However, the committee has not recommended publication of draft text before negotiations are completed as there are other ways of sharing information short of publication. Divulging draft text may be detrimental to achieving the best outcome possible and may breach confidentiality agreements signed when negotiations begin. Other more sensible and practical suggestions were raised in evidence that could be implemented during future trade agreement negotiations. 

The committee accepts that transparency is not an all or nothing proposition and may apply at different levels in treaty negotiations. A more flexible approach to transparency may be preferable to mandating the public release of every draft treaty, depending on the nature of the agreement. This is consistent with the negotiation process followed by some of Australia's trading partners which vary to a significant degree. The committee believes that this report's careful approach balances confidentiality with the desirability for transparency and is in tune with emerging international practice. 

An additional concern for the committee is that community confidence in the negotiation of FTAs is probably at its lowest ebb in Australia, fuelled in part by excessive secrecy around TPP negotiations, the content of leaked draft chapters and the politicisation of debate. Accusations of scaremongering against those asking reasonable questions and voicing their concerns are not helpful either. 

Consultation 

That DFAT consults widely and uses the resources available to pursue the best outcome is not in dispute. The committee accepts that gaining access to DFAT negotiators for private briefings was not a major problem for stakeholders, but the effectiveness and usefulness of the briefings was called into question by many. In consulting with stakeholders, quantity was a poor substitute for quality. One witness valued the opportunity for occasional meaningful engagement with DFAT negotiators, but observed that discussions with DFAT around their negotiations '…have only convinced me that we can do better'. In a similar vein, another witness recalled: 'It is nice to have the conversation but it is not a very high-value engagement at the moment'.  And still another expert lamented that DFAT consultations are very much 'one way' with negotiators 'listening but rarely responding'. 

At issue for the committee is the lack of meaningful and effective two-way communication. Stakeholders are at a distinct disadvantage in not having access to treaty text, negotiating positions and policy frameworks during negotiations. A challenge for DFAT is that its negotiators are not subject matter experts across the latest developments in Australia and other jurisdictions. The committee is concerned that the size and reach of modern FTAs and the interplay of chapters dealing with complex issues such as copyright and intellectual property (IP) is creating policy and administrative challenges which DFAT does not yet fully understand. 

The committee believes there is an urgent need for DFAT to rethink and review its negotiation strategy from the perspective of stakeholder expectations and internal departmental resourcing priorities. This is why the committee recommended that DFAT put in place a process for sourcing expert advice and assistance in areas that may be beyond the technical competency of its negotiating team. 

Access for members of parliament 

The committee is concerned that Australian federal parliamentarians are not generally able to access treaty text at any stage before an agreement is signed and tabled in parliament. This is unacceptable given that the negotiators and elected officials (and their staff) of Australia's trading partners have long had varying degrees of access under strict conditions of confidentiality. The trend in trade negotiations on both sides of the Atlantic has seen a gradual move away from secrecy towards transparency and controlled access to treaty text by parliamentarians and industry stakeholders. In this context, it is significant that the Obama administration has recently endeavoured to entrench practical access arrangement into domestic law through its 2015 TPA bill. 

While the committee welcomes reports of belated access for Australian parliamentarians to the draft negotiating text of the TPP, this development has definitely come too late in the process, given that negotiations are nearing completion and have taken place in secret since 2008. 

The committee heard no evidence that access arrangements for parliamentarians are in any way preventing governments from negotiating agreements in the national interest. Yet this continues to be Australia's official line of resistance to change. There is an opportunity for Australia to follow the European Union (EU) and the United States in making the negotiation process more inclusive, less secretive and, ultimately, more accountable to parliament. 

At the other end of the policy spectrum, the committee was not convinced by renewed calls to legislate for parliamentary approval of treaties. Evidence to the inquiry relied on the view of some legal experts that limiting the power of the executive by making treaty action conditional upon approval by both houses of parliament would be consistent with the Constitution. Interesting as this may be, it is not an argument for why Australia should proceed down the path of parliamentary approval. The committee is of the view that the arguments add nothing new to the current inquiry, ignore the political reality of their likely rejection by government and provide an easy target for those opposed to change of any kind. Now is not the time to be distracted by the issue of parliamentary approval, which has not been able to gain political traction in Australia, as demonstrated by parliament's rejection of a private member's bill mandating parliamentary approval as recently as 2012. 

A role for parliamentary committees 

There are other practical and incremental ways to improve parliament's engagement in treaty-making. This report has pointed out the way of the future, building on the work of existing parliamentary committees and their expertise accumulated over many years. Most importantly, there is more that JSCOT can do as a specialised and expert committee to scrutinise and review proposed treaties during the negotiation process. It is not lost on the committee that JSCOT already has the means within its resolution of appointment to undertake inquiries into agreements at any stage during their negotiation, but only if matters are referred by either house of parliament or by a minister. It would appear that a lack of political will may have prevented JSCOT from realising its full potential in this regard. 

Evidence to the committee confirmed that JSCOT is a respected committee with a significant body of work and precedent behind it. However, the committee sensed that, over time, confidence in JSCOT's role may be eroding as the scrutiny work it performs on behalf of the parliament is increasingly seen as 'too little, too late' and 'rubber-stamping' agreements already signed by the executive. With regard to the work of the Parliamentary Joint Committee on Human Rights (PJCHR), this relatively new committee has an opportunity to extend its reach into treaty-making and align its existing mandate to the scrutiny of proposed treaties against the backdrop of Australia's international human rights obligations. 

The committee has made recommendations for how JSCOT and the PJCHR can play more constructive roles in shining a spotlight on treaties, including issues and documents pertinent to them, during their negotiation and before they are signed. There is also scope for the two committees to work more closely together in the treaty-making space and benefit from sharing each other's experiences and expertise. 

Independent analysis and monitoring 

Executive responsibility for treaty-making should not prevent independent assessment and monitoring of treaties, especially large and complex FTAs. Equally, it should mandate that government be more up-front with parliament and the public about the national interest reasons for pursuing an agreement. Parliament and the executive should not be seen as mutually exclusive players in treaty-making—a greater role for one does not automatically diminish the authority of the other. The executive should not continue to use its constitutional power over treaty-making as an excuse for rejecting further change. 

The committee recommended that government prepare and table in parliament two documents at the commencement of negotiations: a detailed explanatory statement setting out the government's priorities, objectives and reasons for entering into negotiations; and a cost-benefit analysis prepared by an independent body such as the Productivity Commission. Both documents should stand referred to JSCOT for inquiry and report. 

These documents and their referral to JSCOT will significantly improve the level of information available at the commencement of negotiations and go some way to restoring public and stakeholder confidence in the process. The cost-benefit analysis should be reviewed when an agreement is finalised, but before it is tabled in parliament, and a supplementary analysis undertaken if circumstances warrant it. This is especially important for free trade agreements which are many years in the making and where the economic and social forecasts underpinning an agreement change significantly over time. 

The committee did not hear one positive word about the National Interest Analysis (NIA) and regulatory impact statement which accompanies each treaty. They do not appear to add much value to the process and, in the absence of a cost-benefit analysis, bring to the table an insufficient level of detail. During the inquiry, stakeholders drew the committee's attention to the negative effects of agreements such as the AUSFTA and KAFTA and the fact that these negative outcomes were not even included as a possibility in the NIAs which accompanied them. 

It is not surprising that NIAs paint a favourable picture of a trade agreement's potential benefits—that they are prepared by the department responsible for negotiating, consulting and finalising FTAs was singled out for criticism by witnesses. The committee believes that NIAs should be prepared by an independent body such as the Productivity Commission and their scope considerably expanded to include human rights, environmental and health impact assessments (consistent with the domestic reach of current international agreements). The committee believes that its recommendation in relation to the NIA should allay the concerns of stakeholders on this particular issue. A more comprehensive NIA, prepared at arms-length from government and accompanied by an independent cost-benefit analysis, would represent a significant improvement on the current process. 

The committee was somewhat dismayed to learn that, given the high volume of treaties Australia has negotiated since 1901, of which 1800 remain in force, DFAT negotiators commence each new free trade agreement with a 'blank piece of paper', as described by one witness. The end result is the accumulation of vertical isolated agreements which must be horizontally navigated by business. To address this phenomenon, the committee recommended that the government create what was referred to in evidence as a template or framework agreement developed by a consensus of industry bodies and other stakeholders through a negotiated process. The point of template agreements is to create loose frameworks and the necessary parameters to enable parties to debate the merits of particular treaty proposals without having to speculate in the dark on the fundamental policy parameters set by the government.