The Commonwealth moves to rein in agreements with foreign governments

The Commonwealth moves to rein in agreements with foreign governments

The Australian Commonwealth Constitution (the Commonwealth) has an interesting history including its development through a series of Constitutional Conventions between the representative of state governments and other interested parties.

At one stage, New Zealand was considering joining the Commonwealth and Western Australia only joined at a relatively late stage. Its structure is in many ways a compromise of many parties with the Crown and its representative in the Governor-General having a senior role (our Constitution Act was a schedule to an Act of the United Kingdom which has since been remedied), with some powers reserved to the Commonwealth, some powers reserved to the states and territories (including income tax which the states relinquished during the Second World War) with other powers reserved both to the Commonwealth and the states and territories (such as in health) with a provision for the Commonwealth laws to prevail over state and territorial laws in the event of any inconsistency. The states and territories then generally legislate for the local government level in their states and territories.

There is significant jurisprudence on the various provisions and relative rights including cases currently headed to the High Court on how state border controls on COVID–19 interact with the freedoms of interstate trade and commerce and movement of persons provided in the Constitution. Sadly, few (if any) of those cases create as much popular interest as that portrayed in the movie The Castle although, in its day, the decision of the High Court in the Franklin Dams case extended the Commonwealth’s “external affairs” power to allow it to stop the Franklin Dam based on the Commonwealth’s powers and obligations under international environmental agreements. The “external affairs” power in particular, have expanded over time.

The national press on 27 August 2020 carried stories of moves by the federal government to increase its controls by allowing the Commonwealth Foreign Minister to cancel agreements, including the memorandum of understanding’s (MOUs) that states, territories, local governments and universities enter into with overseas governments where that cancellation is believed to be in the national interest.

While the obvious issue of the Victorian government’s signing of the Chinese Belt and Road Initiative has caused public tension, the levels of control of foreign interests have been increasing. While our free trade agreements had relaxed the controls of foreign investment requiring review by the Foreign Interest Review Board and Commonwealth approval, that role has been increased in recent times. For example, very recently the Commonwealth Treasurer rejected the proposed deal by a Japanese-owned beverage company to sell its Australian dairy and fruit juice business to a Chinese company. Kirin struck a deal in November to divest its Lion Dairy and Drinks subsidiary to the China Mengniu Dairy.

The Australian Competition and Consumer Commission approved the sale on competition grounds in February 2020 but the deal has now been terminated due to the failure to secure approval from the Federal Treasurer. Other increases in control have included 2018 legislation for the Foreign Influence Transparency Scheme and the Security of Critical Infrastructure Scheme. The aim of both pieces of legislation was clear – to make it clearer who represented foreign interests in dealings with the Commonwealth government and to ensure that foreign interests could not acquire assets known as “critical infrastructure”.

States and territory governments with existing agreements directly with a foreign government will have to report back to the Commonwealth Government within three months. All states and territories, local councils and universities will have to complete a review of all their agreements within a six month period. A division will be established within The Department of Foreign Affairs and Trad to review the existing agreements and advise the Foreign Minister whether the agreement, MOU or other understanding is in the national interest. The decision would then fall to the Foreign Minister based on the advice.

The new regime will also apply so that approval by the Foreign Minister will be required before negotiations can commence and the final form of document and arrangement will also require approval by the Foreign Minister. The new laws will exclude commercial corporations and state-owned enterprises and universities that are not arms of a foreign government such as military universities. This will create a significant new level of review and control of agreements struck by our Universities and State and Territory Governments which are already in place and provide funding and other support which may now become unavailable – at the same time as those parties need that funding.

Final thoughts underlying all of these different forms of scheme and government control, while it is clear that Australia “remains open for business” for foreign interests, the regulation of that involvement has moved beyond competition concerns to the wider (and more uncertain) concerns of “national interest” which could change over time and also change with the interests of politics and the electorate. For now, we will watch the new legislation carefully and if the legislation does pass then it will need to be added to the due diligence checklists of government officers, investors, lawyers and foreign parties looking to enter into agreements of whatever type with State, Territory or local governments.

This article was first published in August 2020 by Daily Cargo News.

Public consultations on possible reforms to geographical indications regulatory framework

Public consultations on possible reforms to geographical indications regulatory framework

DFAT have launched a public consultation process on possible reforms to Australia’s regulatory framework for the protection of geographical indications (GIs). Australia is currently negotiating a free trade agreement (FTA) with the European Union (EU). Consistent with its approach toward other FTA partners, the EU has identified the protection of GIs as one of its key goals.

Last year, the Australian Government ran a public objections process in relation to the specific terms the EU has asked Australia to protect as GIs. The Government has made no commitment to protect specific EU GIs, and has made clear it would only consider doing so if the overall FTA deal is in Australia’s interests. In particular, the final deal must provide Australia with commercially-significant, new market access, including for our agricultural products.

Should Australia agree to protect specific EU GI terms through the FTA and change the way we currently protect GIs, we would need to amend our law. The purpose of the new consultations process is to seek the views of Australian producers, businesses and consumers on policy considerations to inform the possible development of a new Australian GI right. Your views will help ensure any new regulatory framework, should one be developed, best serves the interests and the needs of Australian farmers, businesses and consumers.

Nothing in this consultation means the Australian Government has agreed or will agree, to make any changes to its existing GI regulatory framework or policy.
The consultation process will run until 30 November. There are a number of ways you can engage in the consultations process, including by providing a submission, completing an online survey, or attending an online webinar or roundtable.

Further details on the consultations process, including a consultation paper, can be found here.

The ECA encourages you to participate in this process. We also ask you to send your comments to us as well so we can continue to advocate on your behalf as the AU – EU FTA negotiations continue

Will China’s solid waste import ban apply to recycable materials?

Will China's solid waste import ban apply to recycable materials?

We advised in our last Global Trade Updates newsletter ( GTU) news of the upcoming ban on the import all solid waste into China effective 1 January 2021.
We highlight below an article from Shipping Australia that provides further updates on this topic.

Shipping Australia’s article also states that imports of all solid waste into China will be completely banned effective 1 January 2021, according to the Steamship Mutual P&I Club. The existing licensing regime for the import of solid wastes will therefore no longer apply from that date. The ban will even apply to solid wastes that can be reused or recycled into raw materials, such as cargoes of scrap metal, paper, cardboard and wood.
However, media reports indicate that scrap metals and other such goods may possibly be re-classified as recyclable materials and that would be subject to purity standards. China also intends to run down the import volumes of solid wastes during the remainder of this year. The whole article you can find here.

Economic recovery will require leadership in trade

Economic recovery will require leadership in trade

As the voice for Australian exporters, the Export Council of Australia calls on the Australian Government to take immediate action to develop and implement a comprehensive and practical trade-led economic recovery package.  We recognise the challenges and constraints faced by the Government but, now more than ever, they need to lead here and internationally.

Certain Aspects of the Treaty-Making Process in Australia

Certain Aspects of the Treaty-Making Process in Australia

In August the ECA presented a submission to the Joint Standing Committee on Treaties (JSCOT) regarding certain aspects of the treaty-making process in Australia.

Treaties strengthen commercial ties between nations, improve market access through the reduction and removal of tariffs and address a multitude of other trade issues including intellectual property, standards, investments and government procurement.

We know that Free Trade Agreements and other trade-related treaties are not silver bullets for international success. However, they are vital to the strength and growth of the Australian economy.

Australia has been an active international actor supporting trade liberalisation through FTAs. As of August 2020, Australia has an FTA in force with eight of our top ten trade partners and is in current FTA negotiations with the remaining two (India and the United Kingdom).

In this submission, the ECA made several recommendations to increase the active involvement and participation of key stakeholders throughout the treaty-making process, notably small and medium enterprises (SMEs) involved in international trade.

Greater engagement with SMEs during the negotiation stage of trade agreements serves to strengthen the utilisation and participation rates of trade treaties.

SMEs should be a key consideration for Government bodies who manage and have oversight over the process. Especially as they represent 87% of all exporting businesses.

We argued in our submission that increasing the scope and range of voices included in the negotiation process of treaties will enrich the treaties and also generate an enhanced understanding of the treaty agenda, the benefits of treaties, the dates of adoption of treaties and success stories of Australian traders.

The full submission is available here.