Australia-US Free Trade Agreement Research Articles

The China-Australia Free Trade Agreement (ChAFTA): its implications for Australia-United States relations

Australia is currently faced with a strategic and economic dilemma regarding its interactions with China and the United States (US). On the one hand, it should maintain and strengthen its strategic relations with the US as an ally in order to contain a rising China. On the other hand, Australia should ensure its economic growth by strengthening trade relations with China. This paper aims to examine the implications of the new China-Australia Free Trade Agreement (ChAFTA) for the ANZUS strategic alliance. Through Qualitative Approach, this article analyzes the issues with the use of realist and liberal perspectives in international relations. By assessing two previous events involving the triangular Australia-US-China relationship (the case of the Taiwan conflict, and the US development of a National Missile Defense system), this paper concludes that ChAFTA may tend to undermine the ANZUS alliance. Three reasons for this conclusion are identified: a fundamental shift in the way Australia perceives China; ChAFTA offers more benefits to Australia than the Australia-US Free Trade Agreement (AUSFTA); and finally Australia may consider ChAFTA as being more in its national interests in the international system than the ANZUS alliance.

The Language of Security: Reassessing Australia's Policies of Free Trade and Offshore Detention

Offshore detention and bilateral free trade constitute hallmarks of Australia's international policy. This paper explores how these policy directions were originally justified in the Pacific Solution and the Australia‐US Free Trade Agreement (AUSFTA). In the literature both policies are theorised as security offerings but whilst the Pacific Solution is obviously exclusionary, AUSFTA aimed at including Australia in the US's orbit. This suggests that security as a justification for policy is flexible, complex, and warrants closer observation of its practical articulations. Reviewing the speeches with which the relevant Ministers introduced their legislation, I argue that offshore detention and bilateral free trade derive from a specific language of security in which policy‐makers view individual actors as the basis of national threats. The language of security invokes a threatening international environment by focussing on the selfish and amoral components of human behaviour whilst diminishing social institutions and collective structures. Vague anarchy and simplified individualism position the state as a righteous protector rather than a rational policy‐maker. I conclude by questioning whether this is a sound basis for policy and canvass options for escaping the language of security.

The economic impact of the Australia–US free trade agreement

The Australia–United States Free Trade Agreement (AUSFTA) came into effect in 2005. It was the second preferential trade agreement that Australia signed, after its agreement with Singapore, and marked a departure from the primacy of Australia's previous trade policy of unilateral and multilateral trade liberalisation toward preferential liberalisation. This paper assesses the economic effects of AUSFTA by applying the Productivity Commission's gravity model of trade from its Bilateral and Regional Trade Agreements review. The evidence reveals AUSFTA resulted in a fall in Australian and US trade with the rest of the world—that the agreement led to trade diversion. Estimates also show that AUSFTA is associated with a reduction in trade between Australia and the United States.

10 years after the Australia-US free trade agreement: where to for Australia’s trade policy?

To mark the 10-year anniversary of the Australia-US Free Trade Agreement (AUSFTA), this Special Issue is dedicated to evaluating the impacts of the past decade of preferentialism on Australia and t...

The Australia-US free trade agreement’s impact on Australia’s copyright trade policy

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 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.

How the Australia-US free trade agreement compromised the pharmaceutical benefits scheme

Australia's Pharmaceutical Benefits Scheme (PBS) has unquestioned democratic legitimacy as a piece of public health policy. The PBS was approved by a majority of people in a majority of States in t...

Trade time bombs: the dangers of ‘harmonisation’

Ten years on from the Australia-US Free Trade Agreement (AUSFTA) the level of concern it generated among some community sectors has broadened as other preferential agreements have emerged, not least the Trans-Pacific Partnership (TPP). The AUSFTA established obligations far beyond the scope of traditional bilateral deals—as many articles in this Special Issue have noted. Its critics claim that this Agreement placed Australia on a trajectory that fundamentally undermines our sovereignty, or more specifically our ability to legislate to protect our nation’s economic, social and environmental wellbeing. But these outcomes are not so easily identified. Many of the embedded rights, obligations, dispute and consultative mechanisms accorded to the foreign government and its corporations under the AUSFTA may remain passive into the future—but still implementable.

TPP Australian Section-by-Section Analysis of the Enforcement Provisions

This paper analyses the leaked 30 August 2013 text of the TPP IP Chapter from an Australian perspective, focusing on the enforcement provisions only. The goal is to assess the compatibility of provisions in the current draft with Australian law and Australia’s international obligations: including TRIPS and the Australia-US Free Trade Agreement (AUSFTA). The review has several key purposes: 1. To contribute careful analysis to the current debate on the TPPA IP proposals; 2. To offer input into the Australian processes considering the TPPA; 3. To demonstrate to an international audience the relationship between these provisions and TRIPS; and 4. To demonstrate the relationship between these provisions and existing US Free Trade Agreements like AUSFTA. A surprising number of the provisions go beyond AUSFTA.Reading the IP provisions of the TPP IP chapter leak dated August 2013 is a maddening, dispiriting process. The provisions are written like legislation, not treaty, suggesting a complete lack of good faith and trust on the part of the negotiating countries. There are subtle tweaks of language, the phrases included or not included from previous treaties; the subtle re-wordings that might give a treaty provision an entirely different meaning. Working out the scope of a country’s obligations if even half of this text becomes treaty is going to be extremely difficult. A range of big picture questions arise as to the relationship between any TPP IP chapter and other obligations to which countries may be subject, and I’m not at all convinced we know the answers. On a substantive level, much about the language of these provisions has changed since the US proposals dated February 2011. Some more extreme elements of the US proposals have been removed or watered down; some safeguards or qualifications have been inserted that preserve domestic flexibility or require consideration of user interests or civil liberties and fair process. Despite this, the chapter is still radically unbalanced. There are still far too few safeguards for defendants and third parties in the context of IP litigation. And there are many specific proposals with potentially negative impacts on the litigation process and on the balance of IP law.

Update from Australia: the copyright cloud hanging over our national collections

Purpose – High-speed internet and digital technology offer new ways of accessing and interpreting collection material in our cultural institutions. The ability of cultural institutions to unlock access to their collections online is constrained by copyright law. This paper examines the push in Australia for cultural institutions to “set collections free” online, and copyright law reform developments that hinder or facilitate making comprehensive online experiences of collections a reality. Design/methodology/approach – It considers constraints in Australian copyright law following the adoption of increased IP enforcement and protection standards under the Australia-US Free Trade Agreement, in light of internationalisation of these standards through recent multi-lateral trade agreements. Finally, it considers copyright law reform options to better “unlock” or “set free” collections in cyberspace. Findings – It recommends the inclusion of safeguards for copyright exceptions and limitations in trade agreements, and reaffirmation of user and public institution rights of access to information. It warns against the adoption of onerous anti-circumvention provisions. It also recommends various domestic law reform options to free up access to cultural collections. Originality/value – Australia was one of the early adopters of the US-IP model that is fast becoming the international standard for enforcement and protection of IP rights. As such, looking at current Australian copyright law may help us better understand the effect IP-maximalist chapters being promoted in multilateral trade agreements may have on similar net-IP importing countries.

Foreign Direct Investment in Australia Following the Australia–US Free Trade Agreement

AbstractA model of inward foreign direct investment for Australia is estimated. Foreign direct investment is found to be positively related to economic and productivity growth and negatively related to foreign portfolio investment, trade openness, the exchange rate and the foreign real interest rate. Foreign direct investment is found to be a substitute for both portfolio investment and trade in goods and services. The exchange rate and the US bond rate affect foreign direct investment through the relative attractiveness of domestic assets. Actual foreign direct investment outperforms a model‐derived forecast in recent years, consistent with the liberalisation of foreign investment screening rules following the Australia–US Free Trade Agreement.

The Trans‐Pacific Partnership Agreement: challenges for Australian health and medicine policies

Four formal rounds of Trans-Pacific Partnership Agreement (TPPA) negotiations took place in 2010. They involved over 200 officials from Australia, the United States, New Zealand, Chile, Singapore, Brunei, Peru, Vietnam and Malaysia. Future negotiations officially are set to include three issues with public health and medicines policy implications for Australia and our region: ways to approach regulatory coherence and transparency; how to benefit multinational and small-medium enterprises; and multilateral investor-state dispute settlement. US-based multinational pharmaceutical companies are lobbying for TPPA provisions like those in the Australia-US Free Trade Agreement, which reduce government cost-effectiveness regulatory control of pharmaceuticals, threatening equitable access to medicines. They also advocate increased TPPA intellectual monopoly privilege protection, which will further limit the development of Australian generic medicine enterprises and restrict patient access to cheap, bioequivalent prescription drugs. Of particular concern is that proposed TPPA multilateral investor-state dispute settlement procedures would allow US corporations (as well as those of other TPPA nations) to obtain damages against Australian governments through international arbitral proceedings if their investments are impeded by Australian public health and environment protection legislation.

Impact of the Australia—US Free Trade Agreement on Australian Medicines Regulation and Prices

The Australia—United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. Before and subsequently to the AUSFTA being concluded, controversy surrounded the debate over its impact on Australia's health policy, specifically on regulation of pharmaceutical patents and Australia's cost-effectiveness system relating to prescription medicine prices known as the Pharmaceutical Benefits Scheme (PBS). This article examines the expectations of both parties in the pharmaceutical sector with regard to the AUSFTA, as well as how successfully they were achieved. It seeks to analyse important relevant outcomes for regulators, the public and pharmaceutical industry, as well as lessons about how trade negotiations relating to health and medicines policy should be approached in future. To investigate whether AUSFTA-related regulatory changes may lead to higher medicines prices in Australia, we looked at recent PBS Public Summary Documents to discover examples of PBS-approved FI (patented) drugs, over the period from July 2008 until June 2009, that failed to establish cost-effectiveness over F2 (generic) comparators (with mandated price cuts) and were thence cost-minimised. This period was chosen because the major price effects of the potentially AUSFTA-related National Health Amendment ( Pharmaceuticals Benefits Scheme) Act 2007 (Cth) came into effect from August 2008.

Dynamic Gains and Market Access Insurance: Another Look at the Australia–US Free Trade Agreement

Abstract We revisit the benefits of the Australia–US Free Trade Agreement (AUSFTA) and, in particular, evaluate the insurance value of this agreement in the face of regional and global trade wars. The insurance benefits are quantified by comparing the AUSFTA against alternative scenarios where some or all regions raise tariffs by 10 percentage points. Issues regarding expectations and the timing of potential trade wars are considered by using a dynamic model. The potential gains relative to these alternative trade war status quo scenarios are found to be as much as four times larger than the traditional efficiency gains.

The Copyright Clink1 Conundrum: Is Chan Nai-Ming the Modern Day Josef K.?2

A study of the plight of the unfortunate3 Mr Chan Nai-Ming of Hong Kong leads the authors to conclude that a by-product of the digital age is the increasing criminalisation of copyright law. Increasingly, there is a worldwide trend to impose criminal liability for copyright infringement. For instance, in Australia broad ranging amendments to the Copyright Act, which (in part) implement obligations under the Australia–US Free Trade Agreement (AUSFTA) were introduced into parliament on 19 October 2006.4 This is part of a growing trend that originated in the United States with the introduction of harsh criminal laws to prohibit the infringement of copyrighted works to prevent piracy.5 However, according to the Law Society's intellectual property working group an EU directive intended to target organized crime could see innocent victims face criminal proceedings for intellectual property infringement.6 Significantly, it would appear that few have considered the absurd ‘full-on’ ramifications of this attempt to impose criminal sanctions on those who commit minor infringements of copyrighted works.

Trade Liberalisation and Australia’s Television Cultural Policy: Power and Interest in National Television Policy

In the development of national television policy Australian governments have placed considerable importance on the television system reflecting national culture. Commercial television is regulated for minimum levels of Australian content and direct subsidy is available for the production of certain types of content. Yet, despite this the participation of Australia in recent international trade agreements has constrained the power of the state to act in this area of national television policy. This paper examines the Australia US Free Trade Agreement and the Closer Economic Relations Trade Agreement with New Zealand for their impact on national television cultural policy. The paper proceeds from the proposition that policy change involves the exercise of power by organised groups within the policy domain, who seek to influence the terms of the policy development. It identifies Australian commercial broadcasters, Australian television producers and workers, foreign production industry groups and foreign governments as actors in this policy domain. It argues that each had differential power to influence the outcomes of the process of policy change and decision making by the state, but that willingness to exercise that power depended on their interest in intervening. Australian producers/workers had the most interest, but their power was weaker relative to that of commercial broadcasters. In comparison, the broadcasters and the USA had stronger power but only the USA was willing to exercise it to change Australia’s television cultural policy.

Challenges for Australia's Bio/Nanopharma Policies: trade deals, public goods and reference pricing in sustainable industrial renewal.

Industrial renewal in the bio/nanopharma sector is important for the long term strength of the Australian economy and for the health of its citizens. A variety of factors, however, may have caused inadequate attention to focus on systematically promoting domestic generic and small biotechnology manufacturers in Australian health policy.Despite recent clarifications of 'springboarding' capacity in intellectual property legislation, federal government requirements for specific generic price reductions on market entry and the potential erosion of reference pricing through new F1 and F2 categories for the purposes of Pharmaceutical Benefits Scheme (PBS) assessments, do not appear to be coherently designed to sustainably position this industry sector in 'biologics,' nanotherapeutics and pharmacogenetics.There also appears to have been little attention paid in this context to policies fostering industry sustainability and public affordability (as encouraged by the National Medicines Policy). One notable example includes that failure to consider facilitating mutual exchanges on regulatory assessment of health technology safety and cost-effectiveness (including reference pricing) in the context of ongoing free trade negotiations between Australia and China (the latter soon to possess the world's largest generic pharmaceutical manufacturing capacity). The importance of a thriving Australian domestic generic pharmaceutical and bio/nano tech industry in terms of biosecurity, similarly appears to have been given insufficient policy attention.Reasons for such policy oversights may relate to increasing interrelationships between generic and 'brand-name' manufacturers and the scale of investment required for the Australian generics and bio/nano technology sector to be a significant driver of local production. It might also result from singularly effective lobbying pressure exerted by Medicines Australia, the 'brand-name' pharmaceutical industry association, utilising controversial interpretations of reward of pharmaceutical 'innovation' provisions in the Australia-US Free Trade Agreement (AUSFTA) through the policy-development mechanisms of the AUSFTA Medicines Working Group and most recently an Innovative Medicines Working Group with the Department of Health and Ageing. This paper critically analyses such arguments in the context of emerging challenges for sustainable industrial renewal in Australia's bio/nanopharma sector.

Supply and demand for commodity components: implications of free trade versus the AUSFTA for the US dairy industry*

During the negotiations on the Australia–US free trade agreement (AUSFTA), the US dairy industry vigorously opposed opening the US market to imports of Australian dairy products on the grounds that the US industry would be devastated. Subsequently, the agreement signed in February 2004 made an exception for dairy, providing for only limited quota expansion and no free trade, even at the end of the long implementation period. This paper presents a simulation model of world dairy markets, represented by supply and demand equations for fat and non‐fat components of milk and manufactured dairy products. We use the model to analyse the effects on US milk markets of both a hypothetical agreement, allowing free bilateral trade in dairy products, and the actual AUSFTA. An important contribution to the literature is the derivation of explicit supply and demand relationships for milk components. The components model allows an analysis of long‐term production, consumption, and trade patterns that is not tied to specific, fungible products. Simulations indicate that increased imports from Australia resulting from bilateral trade liberalisation would have resulted in small reductions in US milk prices and production. The much smaller increases in Australian access to the US market under the actual AUSFTA will have even smaller, almost negligible, impacts.

Blowback: Investor-State Dispute Mechanisms in International Trade Agreements

The North American Free Trade Agreement (NAFTA) gave unprecedented rights to private investors. These provisions quickly became entrenched in policy and practice, appearing in most multilateral and bilateral trade agreements in the 1990s as American investors began to bring Canada and Mexico to arbitration. However, the Australia–U.S. Free Trade Agreement (AUSFTA) of 2004 contained no such provisions. The purpose of this article is to explain why enthusiasm for NAFTA-style protections waned so dramatically after a decade of entrenched practice. We argue that the reason lies in the “blowback,” the unintended and negative consequences created by NAFTA’s Chapter 11, and conclude that the abandonment of NAFTA-style protections in the AUSFTA sets important precedents for the future of international free trade agreements.

A Fine Line Between Legal Access And Circumvention

The High Court of Australia's decision handed down on 6 October 2005 was a finely reasoned analysis concerning the fine balance within Australian copyright law and the rules of statutory interpretation. The Court sided with the appellant, Mr Stevens, when it held that his mod chip was not a circumvention device within the meaning of the Copyright Act 1968 (Cth) (the Act) as it did not function to overcome a technological protection measure as defined in s10(1) of the Act. Combined with its rejection of Sony's arguments relating to temporary copies in RAM, it would appear that this decision was a great victory for groups such as the Australian Digital Alliance. Nevertheless, with the signing of the Australia-US Free Trade Agreement (AUS-FTA), this victory is likely to be temporary at best.

The controversy over Japanese investment in Australia, 1987-1991: Context and lessons

The intense controversy over Japanese investment in Australia in the late 1980s continues to attract academic attention as a significant episode in Australia-Japan relations. This paper addresses two limitations of the existing literature. Firstly, it situates the controversy in the political economy of foreign investment policy liberalisation. This is important to an understanding of to what degree it was fundamentally a Japan-related or a foreign investment-related issue. How it became both provides insights into the dynamics of Australia-Japan relations in that era. Secondly, why the Australian government reaffirmed its commitment to liberal non-discriminatory policy in the face of popular disquiet is examined directly. This complements the existing rich literature on the negative reactions to Japanese investment and may help to provide a fuller picture of the domestic sources of stability in Australia-Japan relations in that period. It also highlights the historical magnitude of the Howard government's recent apparent abrogation of the non-discriminatory principle in foreign investment policy with the Australia-US Free Trade Agreement of February 2004 and the questions so raised about the Australia-Japan bilateral relationship.