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No trust in the TPP

It's hard to believe that the Trans-Pacific Partnership will be in the best interest of consumers when it's shrouded in secrecy.

September 2016

Trade used to be the plaything of diplomatic negotiators, kept well away from the prying eyes of the public. But increasingly, the public is demanding the right to have a say.

The best example of how this is playing out is in the US election campaign, where the Trans-Pacific Partnership (TPP) – an agreement negotiated between the US, Australia and ten other countries – is a central issue.

I hope never to need to reach to the arguments of Donald Trump for support but I'm happy to defer to those of Hillary Clinton, who like Trump opposes the deal negotiated by the Obama administration.

Clinton has raised a range of concerns about the TPP – including the good deal given to pharmaceutical companies at the expense of consumers.

She has also highlighted CHOICE's greatest concern: an Investor-State Dispute Settlement clause that allows big business to sue any government that is a party to the agreement, where the business says its investments have been harmed by government action.

These clauses already exist in some other agreements, and you don't have to go far to find examples of companies using them. The Canadian government has been sued over 20 times under a similar clause in the North American Free Trade Agreement. Australia was taken on by Philip Morris for daring to introduce plain packaging of tobacco products. This was the legitimate action of an elected government, so why should any company, here or abroad, have the right to challenge it?

While allowing foreign companies to sue our government fails to pass a basic 'sniff test', the economic case doesn't stack up either. The Productivity Commission – the government's principal independent economic adviser – has repeatedly raised concerns about these arrangements. In its most recent Trade and Assistance Review, the Productivity Commission said that the clause in the TPP was 'of questionable benefit'.

Trade officials really don't like the level of public debate and scrutiny that these deals are now attracting. Earlier this year, I was challenged by a government representative about why CHOICE had not done more to promote the benefits of the TPP for consumers. I said I'd never seen these benefits articulated anywhere – and five months later, I'm still waiting to receive the details that were promised in that meeting.

The reality is that CHOICE isn't pro-trade or anti-trade. It all depends on what's on the table. Trade agreements can be good for consumers where they encourage the free flow of goods and services in a way that increases competition. This ideally leads to more choice and lower prices for Australian consumers.

But when the advocates of trade agreements can't articulate the benefits, we've got a right to be sceptical.