04 July 2015
by Phillip Dorling

Leaked negotiations from a key trade deal show radical plans to deregulate services in Australia, including banking and childcare.

WikiLeaks: Secret trade deal exposed

Jan Adams isn’t a household name. Even in federal parliament and among Canberra’s political insiders she’s barely known. Few press gallery journalists have heard of her. Fewer still know she’s the deputy secretary of the Department of Foreign Affairs and Trade (DFAT) with responsibility for the Abbott government’s ambitious free trade negotiation strategy.

Adams is a trade policy wonk. A former adviser to Labor trade minister Peter Cook, she was Australia’s lead negotiator in bilateral free trade talks with China, Japan, South Korea and India. Promotion of free trade has been the touchstone of her influential DFAT career, which has included a senior posting in Washington and work with the Organisation for Economic Co-operation and Development in Paris, but has never put her in the political limelight.

“It is incredibly dangerous that such critical public policy aspects are being discussed behind closed doors without any public scrutiny.”

Equally obscure is one of Adams’ major preoccupations. While some public attention has been directed in recent months towards the Trans-Pacific Partnership or TPP free trade negotiations, an even larger trade negotiation has remained in the shadows. This is the proposed Trade in Services Agreement (TiSA), a hugely ambitious effort promoted by the United States to liberalise trade in services between 52 countries, including Australia, Canada, Japan, South Korea, Taiwan and the European Union, representing its 28 member countries.

TiSA is potentially the largest “trade deal” in history, with its proposed members comprising two-thirds of global GDP.

Trade Minister Andrew Robb hasn’t said much about the TiSA negotiations, but when he has, he’s left no doubt the Abbott government sees a broad deal on trade in services as a great opportunity for Australia. Last year Robb declared TiSA will “strengthen job-creating services” and open the way for Australian banks and financial institutions to engage more deeply in Asia.

“Australia has a most enviable services sector, which includes financial services, and through our trade negotiations we are looking to open up new opportunities and advance their interests, particularly in the growing markets of Asia,” Robb said.

There are critics, however, and publicly available information about TiSA has been very limited.

Australian Greens senator Peter Whish-Wilson tried at a senate estimates committee hearing last month to get some insight from DFAT about where the TiSA negotiations were going after three years of talks.

DFAT is rarely enthusiastic about parliamentary scrutiny of diplomatic negotiations and Adams gave Whish-Wilson a series of barely informative replies. TiSA is nothing special, she told the senator. It’s “a fairly standard trade in services negotiation, where the objective is to facilitate international trade in services … standard in the sense that the objective is to allow international trade in services to be underpinned by certainty of access and predictability of operating regimes for international trade”.

Asked whether the proposed agreement would have any implications for the Australian government’s ability to regulate services domestically, Adams was less than forthcoming, simply answering “not necessarily”. She was careful to say there was no specific “deregulation and privatisation agenda” behind the TiSA negotiations, but she declined to give further details.

When Whish-Wilson raised the question of secrecy in trade negotiations, Adams couldn’t see any problem: “The draft negotiating texts are draft and confidential for a reason … draft positioning negotiating texts that might appear at any point in the life of a negotiation are kept confidential amongst negotiating parties by tradition.”

This week, however, there has been a major breach in the secrecy of the TiSA negotiations, with WikiLeaks publishing the secret TiSA “core text” as well as draft chapters on domestic regulation, government procurement, financial services, electronic commerce, telecommunications, maritime transportation and cross-border movement of persons engaged in trade in services.

As far as leaks go, it was very comprehensive and up to date.

The leaked texts show the state of negotiations following the last round of TiSA talks, chaired by the European Union in Geneva from April 13 to 17.

The timing of the publication was also quite deliberate – on the eve of the next negotiation round, which will be held in Geneva from July 6 to 10 and chaired by Australia. DFAT says the session will “chart a course towards conclusion”.

Most significantly, the leaked TiSA core text reveals this is no “standard” trade negotiation. It shows the sweeping ambition of the proposed agreement to liberalise trade in all services – banking, financial, e-commerce, professional consulting, transport, health and other human services – with implications for all levels of government defined as including “central, regional or local governments and authorities”.

The leaked draft shows Australia supports a draft clause that recognises the right of TiSA parties “to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet their public policy objectives”.

However, critics of the TiSA negotiations warn that the newly disclosed documents reveal a strongly deregulatory agenda that is fully supported by the Australian government.

Dr Patricia Ranald, co-ordinator of the Australian Fair Trade & Investment Network, said WikiLeaks’ publication of the most recent negotiation texts confirmed the Australian government supports proposals that will “further encourage more commercialisation and foreign investment in all services, including human services such as aged care and childcare, and will limit the ability of future governments to regulate these services in the public interest. This will encourage the domination of giant global services companies in areas like childcare and aged care at the expense of public, local and not-for-profit services.”

The latest documents show Australian support for stronger limits on government regulation of licensing, qualifications and technical standards in all services, including human services such as childcare and aged care.

After examining the leaked draft texts, Whish-Wilson said it was “outrageous” to find that Australia is opposing inclusion of basic financial regulation standards such as tax avoidance and prudential measures in TiSA, including measures that were included in the recent agreement on tax avoidance by the G20 countries.

“Australia seems happy to sign up to binding agreements that lock in corporate profits, but oppose similar agreements that serve the public interest,” Whish-Wilson said.

The leaked core text indicates that agreement has been reached on a clause that provides TiSA parties “shall not maintain … unless otherwise specified … limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment”.

While it is understood that the Australian government has indicated a desire to obtain a “carve-out” for its “four pillars” banking policy, preventing the big four banks from merging, as well as legislation that limits foreign shareholdings in Australian financial sector companies to 15 per cent, it is unclear whether this will be accepted as part of a final TiSA deal.

“This agreement puts long-held financial regulation in Australia at risk, including the ‘four pillars’ policy,” Whish-Wilson said. “It is incredibly dangerous that such critical public policy aspects are being discussed behind closed doors without any public consultation or scrutiny.”

Whish-Wilson also argues that TiSA directly challenges the existing business model of Australia Post by not allowing it to cross-subsidise its basic services.

In what may prove to be another controversial measure, the draft agreement would allow foreign financial institutions to bring “temporary” workers into Australia, including computer, telecommunications, actuarial and legal specialists. “Temporary” is not yet defined, with proposals ranging from 90 days to up to a year.

Queensland University of Technology professor of intellectual property and innovation law Matthew Rimmer said TiSA had “a huge potential footprint – given the number of countries involved in the negotiations”.

“The Productivity Commission has recently complained that the Department of Foreign Affairs and Trade has failed to engage in a rigorous, open and transparent scrutiny of trade deals like TiSA,” he said.

Trade Minister Robb has no time for the critics. Last year he attacked an earlier WikiLeaks publication of leaked TiSA documents as part of a “reprehensible campaign being waged by anti-trade groups” to undermine trade liberalisation.

However, the government has been far from open about the negotiations. DFAT has run a series of pro-forma consultations with industry “stakeholders”. But this week the department admitted that, unlike the TPP negotiations, no federal MPs outside the government have been briefed on the draft TiSA treaty texts.

Significantly, a senate Foreign Affairs, Defence and Trade Committee report released last week heavily criticised the Australian government’s treaty-making process for “excessive secrecy”.

Labor senator Alex Gallacher, who chaired the committee, said it was “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”.

“Parliament should play a constructive role during negotiations and not merely rubber-stamp agreements that have been negotiated behind closed doors,” Gallacher said.

The senate committee has urged comprehensive reform of Australia’s treaty-making process, with greater parliamentary scrutiny of treaty negotiations, including a recommendation 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”.

This would be a significant change. But it is not expected that any government, Coalition or Labor, will embrace any reduction of executive authority over the treaty-making process. Nor do DFAT’s trade experts have any desire to allow parliamentarians to interfere in their very complex and arcane work.

Asked by Senator Whish-Wilson about who makes the decisions about what is included and what is excluded in the scope of trade talks, Deputy Secretary Adams was succinct: “The government parties negotiate them … In Australia, the constitutional responsibility for treaty-making does reside with the executive.”

The message was clear: parliamentarians, butt out.

DFAT says the TiSA talks are making “very good progress” and that they are encouraging other countries to bring the negotiations to a conclusion in 2016. Perhaps a few more leaks will be needed yet.