Politics

A matter of sovereignty (Part 3): No transparency or self-respect

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(Image via @rebwithacorse)

Dr Evan Jones completes his three part analysis of the influence of corporate interests on so-called "free" trade agreements and their effect on Australia's sovereignty. 

Read Part One Here and Part Two Here

THE GUNG-HO Coalition Trade Minister Andrew Robb, with Department of Foreign Affairs and Trade (DFAT) “expertise” in tow, appears to have learnt no lessons from the adverse experience of trade treaties, both internationally and domestically.

Blind agreement

It is not surprising that the Senate Foreign Affairs, Defence and Trade References Committee should consider it appropriate to inquire into Australia’s treaty-making processes. The June 2015 report is appropriately titled Blind Agreement.

The committee report (directed by its Labor opposition chair) highlighted the lack of transparency of the negotiation process. It found the reigning confidentiality conditions unacceptable and their defense indefensible.

The committee noted that:

The committee heard consistent evidence that the current process falls short on a number of counts. First and foremost, all treaties, including complex free trade agreements, are only presented to the parliament and subject to scrutiny after they are signed by the government. That parliament is faced with an all-or-nothing choice when considering legislation to bring an agreement into force prevents it from pursuing a key scrutiny and accountability responsibility. It is no longer satisfactory for parliamentarians and other stakeholders to be kept in the dark during negotiations when Australia's trading partners, including their industry stakeholders, have access under long-established and sensible arrangements.

Second, it is pointless for JSCOT [Joint Standing Committee on Treaties] inquiries to begin after agreements are signed. This does not provide an adequate level of oversight and scrutiny. Parliament should play a constructive role during negotiations and not merely rubber-stamp agreements that have been negotiated behind closed doors. Third, the department's process of consultation is not working. … Finally, there is an insufficient amount of publicly available information about agreements under negotiation and independently sourced economic analyses of their likely benefits are not mandatory. …

It is counter-intuitive for complex trade agreements which are years in the making to be negotiated in secret, subject to stakeholder and parliamentary scrutiny for a few short months with no realistic capacity for text to be changed, and then for implementing legislation to be rushed through parliament unamended. This comes very close to making a mockery of the process and of parliament's involvement.

Greens committee member Scott Ludlam found the recommendations for improving transparency, consultation and the procedures for evaluating economic, environmental and social impacts were in the right direction, but they remained too weak and required strengthening.

By contrast, the Coalition senators dissented — their minority report claiming that everything was in perfect order. The report claims that the system in place since 1996 has been bipartisan, culminating in the Coalition’s "successful" negotiation of the Japan, South Korea and China Free Trade Agreements (FTAs). This is incorrect.

Labor explicitly declined to be a party to the insertion of any "investor state dispute settlement" (ISDS) provisions in any treaty. Much as I have had little time for Labor MP Craig Emerson, Emerson as trade minister listened to reason on this issue. The negotiations under Coalition Trade Minister Andrew Robb have succumbed to the inclusion of such provisions in both the South Korea and the China FTAs.

The Coalition sellout under Andrew Robb

Moreover, the China FTA is unique. As Joanna Howe confirms (in a report for the Electrical Trades Union), labour importation provisions in the treaty both deny access of Australian workers to Chinese investment projects and facilitate the employment of imported workers on sub-standard wages and conditions. An article by Howe and Stuart Rosewarne at The Conversation adds further details. Indeed, the terms are not even up to the terms of the 457 visa system, which system in operation is known to be comprehensively rorted.

Trade Minister Robb has, on various platforms (a 6 September interview on the ABC Insiders program is representative), claimed that Australian workers will not be disadvantaged by provisions for the employment needs of Chinese investment projects, and that critics of the treaty on this score are disingenuous.

The Government’s response to criticism of the China FTA has been both quintessentially dishonest and hysterical. Robb could have readily stood up in parliament and soberly defended his stance with chapter and verse from the treaties. He has declined to do so.

The critics – as with Howe and Rosewarne above – merely point to the terms of the treaty itself. Australia Fair Trade and Investment Network (AFTINET) has reproduced the relevant terms in one convenient document — involving terms in the treaty and in the accompanying Memorandum of Understanding for the Investment Facilitation Agreement (IFA) for large investment projects.

The IFA in the China FTA is unique for Australian trade agreements. Its character (essentially in which the host country is irrelevant, save for granting access to the desired resources) is common to Chinese direct investment elsewhere, not least in Africa. The IFA would have been incorporated into the China FTA at China’s request.

The Coalition brandishes the China FTA as providing a bonanza for jobs. This is a lie. The evidence indicates that a key agenda for the Coalition is the destruction of the union movement in Australia, and if that intent necessitates the destruction of jobs themselves, then so be it.

Coalition thuggery

To all criticism and to all critics, Robb has a simple hysterical answer – the CFMEU is behind the criticism and the CFMEU is a body comprising criminals and thugs. Opposition leader Bill Shorten, and Victorian Labor MP Kelvin Thomson (also a key figure as deputy chair of Joint Standing Committee on Treaties) have both been tarred with the “fronts for union thugs” brush.

Robb has also claimed AFTINET’s Patricia Ranald to be a union flunkey. Ranald happens to be Australia’s most well informed expert on Australian trade treaties and the most trenchant critic of same. On the ABC in April, Ranald highlighted her credentials and experience. On that occasion she also highlighted the range of professional bodies which have strongly dissented regarding the content and process of the bilateral treaties that Australian governments have concluded.

It is instructive that the ultra dry Productivity Commission (PC) – of which I am a fierce critic on other matters – is among the strong critics of the bilateral (and trans-Pacific) treaties. The PC’s stance is from the conventional orthodox position which envisages (formally non-discriminating) multilateral forums as the only respectable arena for reform of international commercial relations. Ditto the adverse response of Peter Dixon and Maureen Rimmer, specialist econometric model-builders whose analytical vision is also strictly orthodox. No flunkeys for union thuggery in these eminently respectable circles.

Another reflection of the hysteria emanating from official circles is the claim that FTA detractors are racist and xenophobic. Opposition has arisen, it is implied, because the proposed deal is with an Asian country and facilitates the employment of Asian workers. Well, no. The claim is a disgrace and a mark of the utter lack of principles of the agreement’s progenitors and supporters.

The "xenophobia" attribution is not new. When Shell launched a bid for total control of Woodside Petroleum in 2001, the same epithet was thrown at detractors. It was instructive to observe how pea-brained were many financial commentators who have long been sold to the uninstructed public as experts. Shell (then a minority shareholder in Woodside) had at that stage run down its Australian operations, had dropped the ball internationally, and was hoping to pick up and plunder a company of enormous national significance. Treasurer Peter Costello’s rejection of that bid was one of the few worthwhile things Costello did in office.

Ditto with Archer Daniel Midland’s (ADM) bid for significant grain merchant, Graincorp, in 2012. ADM, with Cargill and Bunge, are global commodity trading giants that have always coveted Australian grain assets, but were long impeded by the centrality of the statutory authority Australian Wheat Board (established historically precisely to keep such predators from dominating Australian farmers). Treasurer Joe Hockey’s rejection of that bid in late 2013 was one of the few worthwhile things Hockey did as treasurer.

And ditto again for the xenophobia tag raised against supporters of local artists and the local film industry in the face of the Hollywood octopus.

The propaganda imbalance

The supporters of local interests are perennially labeled as protectionist, insular, backward if they dare to question unconstrained global commercial integration. But it is one thing to be fertilised from abroad, and it is quite another to be overwhelmed, subjugated, disarticulated, dismembered. It is staggering how deep is the colonial and cultural cringe that prevails in Australia, and the extent and prominence of the flunkeys who perpetuate it. Murdoch’s “flagship”, The Australian, is at the forefront of flunkeydom.

Symptomatic of this mentality is a recent book by longtime economic journalist at Murdoch’s Australian, David Uren. Uren’s book is titled Takeover: Foreign Investment and the Australian Psyche. Simply, the Australian psyche is unhealthy, irrational, because perennially it has had a jaundiced attitude towards foreign investment. Rather, claims Uren, foreign investment has been an unmitigated bounty delivering the high standard of living that Australians enjoy today. Well how does he know?

I haven’t had the stomach (and life is short) to read Uren’s book; some delving while in bookstores is sufficient to discern the thrust.

Uren wants no fetters on foreign investment. He also thinks that ISDS clauses in trade treaties are harmless (and digs up a "dissident" voice within the antagonistic PC to support his purist stance).

The substantive question is: foreign investment on what terms? Regulatory structures to channel investment to attempt a broad public interest are entirely reasonable, sensible, essential. That Uren can take a purist line in the context of widespread and massive tax evasion and tax avoidance by corporates is bizarre.

Chinese investment projects under the proposed China FTA will be vertically integrated projects, and tax evasion and avoidance will be an integral part of the package. It is the same stunt that the Japanese pulled, via their trading companies, in the 1980s. The Australian Tax Office, in spite of its best efforts, did not manage to hold the Japanese companies comprehensively to account.

Of course, any crude distinction between domestic capital ("good") and foreign capital ("bad) is naïve, both because the larger the entity (cf BHP Billiton), the more opaque the domestic to foreign divide and because domestic capital can be equally contemptuous of a broader national interest. The fundamental issue remains: public regulations are necessary to force capital, in the character of its investment, to serve broader constituencies than their senior management and major shareholders.

The whole and sole point of ISDS provisions in so-called trade treaties is to ensure that corporate capital has absolute prerogative to prevent any political constraints oriented towards a broader public interest.

So how can any politician or "expert" support or ignore ISDS provisions? Unconscionable and traitorous. 

Fairfax published, 7 October, an article by Donald Robertson, Freehills specialist in international law, defending the Trans-Pacific Partnership (TPP), and ISDS provisions besides. His article is comprehensively blather, and obsfucatory on essentials. Robertson notes, rightly, that the TPP is not about trade but about regularising “governance”. Governance indeed. As part of the problem, Robertson declines to outline in whose interests governance is being “reformed”.

On 8 September, the Sydney Morning Herald offered unstinting applause for the proposed China FTA.

The editorial concluded:

'Political point-scoring should not be allowed to derail a deal of such unambiguous value to Australia. Two parliamentary committees are scrutinising the FTA deal detail before the enabling legislation is put to a vote. The Herald notes that this and every other FTA more about trade-offs than free trade. The good for Australia of the FTA deal far outweighs the bad. The scare campaign should not obscure that fact.'

The editorial belittles union concerns about job losses, and assumes without foundation the “party line” about expected benefits. DFAT senior negotiator Jan Adams claims:

"China has given Australia the best package of services outcomes it has provided to any foreign country."

China has given Australian exporters nothing but hot air. Australian exporters have to compete with other nation exporters, as now. They will continue to have to negotiate the complex (and deeply corrupt) commercial environment in China. China, as with the US, will not feel bound by treaty provisions.

The dairy industry (half foreign-owned with the de-mutualisation of cooperatives) is ecstatic about the agreement. China is promising a reduction of dairy tariffs in a decade. Really? Meanwhile, Chinese personnel are buying up dairy assets and have just purchased the country’s largest dairy farm.

Where are the brains? The lack of intelligence, historical knowledge and political nous amongst DFAT personnel is itself a scandal.

The Herald gets one thing right:

'… this and every other FTA [is] more about trade-offs than free trade.'

Quite. So what about the losers? Have they been consulted? Have the communities whose employers have been sold out been reckoned with? 

China is already a major trading partner. A China FTA is superfluous. Let exporters sell their products and services on superior quality and follow-up.

By contrast with the Herald’s evaluation, the bad for Australia of the FTA deal far outweighs the good.

 

Coalition thuggery masks acquiescence

Trade Minister Robb calls the CFMEU thugs and labels all detractors from the proposed deal flunkeys of these thugs. Rather, the thuggery has come entirely from Robb’s quarter, because his defence comprises only abuse and obfuscation.

Robb has dissembled about “market testing” of employment of foreign nationals on Chinese investment projects. His conclusion of trade deals (South Korea, now China) with ISDS provisions included makes him a traitor to his country, unfit for public office.

ISDS provisions remove sovereignty from a country’s government. Remember that the sole reason for the initiation by the global heavyweights of the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment negotiations is because big nation and big corporate interests have been stymied under the World Trade Organisation and its Multilateral Agreement on Investment spinoff. The destruction of national sovereignty is at the heart of these treaties.

Why have governments at all, and the associated expense? Why bother voting when corporate prerogatives take precedence?

This month, the Labor opposition caved in to business and media pressure. The government, under a smarter prime minister, has accommodated token formal changes demanded by Labor. Substantively, little will change and it remains a sell-out, ostensibly for hypothetical gains to some agricultural industries. The dangerous ISDS provisions remain in the agreement, which Labor is happy to ignore after having rejected them when in government. A gutless cave-in.

The last word should rest with a letter writer to Fairfax, a certain William Blaxland, published on 22 September:

As a person who has negotiated hundreds of agreements with Chinese officials, I fully agree with Paul Sheehan that Beijing regards reliability and trust as central to the bilateral relationship. I am not so sure about continuity.

In any case Mr Sheehan misses the key attribute that always draws admiration from Chinese authorities: self-respect. A party that gives away bargaining advantages or sells out its stakeholders earns no points with Beijing and invites exploitation.

The question then is whether, in negotiating the trade agreement with China, the Abbott government sold out Australian workers to the Chinese negotiators in order to be able to brag about finally concluding an agreement. Given what I know about Chinese negotiators and what we all know about the Abbott government my money is on the Chinese.

Self-respect. When the colonial cringe is entrenched and rampant, self-respect is always a casualty. 

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