EU-Australia Free Trade Agreement

Negotiations for an EU-Australia FTA began in July 2018 and are likely to continue for the next two years.

Australia is seeking greater market access for its agricultural goods and for manufacturing and services exports. The danger is that it will trade off other important policies in return for these. See AFTINET’s 2018 submission here.

The EU wants protection for its Geographical Indications for agricultural products (that only EU products can be called Prosecco, Feta cheese etc). It has demanded this as a condition for reduced tariffs and quotas for Australian agricultural exports. Australian farmers and food industries are saying no to this, but want more access to the EU for their exports. DFAT called for submissions on the EU list of over 400 products and submission closed on November 13, 2019.

The good news is that European Court of Justice decisions on ISDS mean ISDS will not be included on the agreement. Like all other trade agreements, there will be state-to-state disputes processes to enforce most chapters in the agreement. But the EU is still pursing separately its proposal for a Multilateral Investment Court in the UNCITRAL forum debating possible changes to ISDS and may seek a separate investment agreement in the future.

The EU also has a more transparent trade policy than Australia, is publishing its draft texts, and will publish the final text before it is signed.

Despite a more transparent process, the EU trade agenda is still dominated by corporate interests and there are still key issues of concern in this proposed agreement:

  • Restricting regulation of essential services The trade in services chapter is likely to be modelled on the controversial Trade in Services Agreement and services chapters in other EU agreements which open most services to foreign investment and restrict new government regulation of services. For example, it could prevent regulation of energy services in response to climate change or prevent improvements in staffing levels in aged care or childcare. It could also stop governments from regulating to fix privatisation failures, as have occurred in vocational education services and privatise hospitals.
  • E-Commerce rules to suit the needs of global digital companies and restrict governments from regulating them. The EU model has some privacy protections, but in the wake of Facebook and other data abuse scandals, we need stronger privacy and other protections for consumers. Some proposed e-commerce rules also reinforce the global dominance of existing digital companies.
  • The EU wants greater market access for its global firms to Australian government procurement by removing local preference provisions for Australian local small and medium-sized enterprises (SMEs). The EU has signalled in its conditions for the WTO Government Procurement Agreement that it wants to remove Australian provisions that allow federal and state governments to give preference for government procurement contracts to local SMEs. This Is extremely serious as it is this provision which has enabled state governments to give preference to local steel and other products. The danger is that the Australian government will trade this off for agricultural market access.
  • Enforceable labour rights and environmental standards. EU agreements have clauses on labour rights, environmental standards, gender equality, animal protection and other social clauses, but they are not fully enforceable through government-to-government disputes in the same way as other chapters in the agreement.

The challenge will be to ensure that these social clauses are genuinely enforceable.

The UK is was part of these negotiations until It formally left the EU on January 31, 2020.

Negotiations for a possible separate FTA with the UK will begin as soon as possible, but cannot be completed until the Brexit transition period ends at the beginning of 2021.

Updated January 2020.

 

European Court decision that ISDS is incompatible with national legal autonomy undermines ISDS in the TPP-11

April 3, 2018: The European Court of Justice ruled in March that Investor-State Dispute Settlement (ISDS) between two EU member states, which allows corporations to sue governments for damages over changes in domestic law, has an adverse effect on the autonomy of EU law, and is therefore incompatible with EU law.

European Court says States should decide on ISDS

On 16 May 2017, the Court of Justice of the European Union (CJEU) issued the long-awaited landmark Opinion 2/15 on the EU-Singapore Free Trade Agreement (FTA). According to the CJEU, the agreement falls under the EU’s powers, but not entirely. EU Member States’ national and regional parliaments and the European Parliament must ratify some important provisions regarding investors, particularly ISDS.

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