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The ABC, SBS and Australia Post could lose special regulatory treatment under trade measures being pushed for by the US. By Philip Dorling.

TPP negotiations threaten to forcibly commercialise state-owned bodies

Leaked details of the controversial Trans-Pacific Partnership trade negotiations, published today by WikiLeaks, reveal that the futures of publicly owned enterprises such as Australia Post, the ABC, SBS and state power utilities may be on the negotiating table in secret talks under way in Hawaii this week. 

WikiLeaks has published previously unknown details of the Trans-Pacific Partnership (TPP) negotiations relating to the treatment of state-owned enterprises (SOEs) – publicly owned corporations that do not operate along strictly commercial lines and deliver benefits to the community as a whole. 

The confidential leaked text, titled "SOE Issues for Ministerial Guidance", reveals for the first time that TPP negotiators have been considering proposed rules, pushed strongly by the United States, that would impose “additional disciplines” on the commercial activities of SOEs and that these would “go beyond existing obligations” under World Trade Organisation rules and other free trade agreements. 

The text states that most TPP countries have supported such an approach, which would include new obligations to ensure state-owned enterprises act on the basis of commercial considerations, comply with the non-discriminatory provisions of the TPP, and are accorded no special regulatory treatment by governments while being subject to increased scrutiny from commercial competitors. 

Earlier this week, anonymous Australian officials sought to take credit for the SOE provisions, telling another newspaper that the TPP in part designed to make it harder for the kind of state-owned enterprises that dominate China's external investment profile.

“One rule is that governments can't give SOEs benefits that allow them to undercut the market,” a source reportedly close to the negotiations said.

However, University of Auckland trade expert Jane Kelsey said the draft SOE text appeared to be “totally US-driven” and raised a wide range of concerns about putting corporate interests ahead of the delivery of public services.

“‘Commercial considerations’ is a vague term that could have far-reaching consequences,” Professor Kelsey observed. “That is intrinsically problematic. SOEs are almost always state-owned because they have functions other than those that are merely commercial, such as guaranteed access to important services, or because social, cultural, development and commercial functions are inextricably intertwined.

“[An] SOE engaged in public broadcasting, railways, or research may have hybrid roles, some being commercial and some not. Would the entire enterprise have to act on the basis of ‘commercial considerations’? 

“There is an additional trap that once SOEs and private firms are ‘competitively neutral’ the advocates of privatisation will say there is no justification for retaining state ownership because the private sector can bring efficiency gains, choice and competition to the provision of the public service.”

Professor Kelsey also highlighted the leaked paper’s references to “transparency” provisions designed to give foreign companies “increased opportunities to exercise leverage over a government’s domestic decisions”.

The leaked paper on the TPP’s treatment of SOEs was prepared for a meeting of trade ministers from the 12 countries negotiating the agreement in Sydney on December 7-10, 2013.

Previous leaks from the TPP negotiations, and the closely related Trade in Services Agreement negotiations, have led critics to charge that current international trade talks are being driven by a strong deregulation, pro-privatisation agenda, backed by US corporate interests. This has been denied by the Australian Department of Foreign Affairs and Trade, but Trade Minister Andrew Robb is insistent the negotiations must remain secret until a final deal is done.

Australian Greens trade spokesperson Peter Whish-Wilson said the TPP negotiations were shaping up as “a direct assault by corporations trying to limit the role of government”. 

“This chapter will constrain the ability of future Australian governments to provide services via state-owned enterprises… It will not only directly challenge a government's right to own and operate any enterprise such as Australia Post, the ABC or power utilities that compete with corporate entities, but ultimately also the provision of public good services including healthcare, education,” he said.

“We don’t know how far this SOE chapter will reach. Will it stop at federal government entities? Or will it reach state-level entities such as Tasmanian Hydro?”

Before departing for the current round of TPP talks in Hawaii, Robb expressed confidence that a final deal could be close, especially after the US congress voted to give US President Barack Obama’s administration so-called “fast-track” trade negotiation authority. 

"It could be done this week," he said. "There's no guarantees, but the whole mood has shifted." 

The 12 negotiating parties are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.

The latest TPP leak, published by WikiLeaks, is available at www.wikileaks.org

This article was first published in the print edition of The Saturday Paper on Jul 30, 2015 as "TPP negotiations to forcibly commercialise state-owned bodies". Subscribe here.

Philip Dorling
is a journalist and UNSW visiting fellow in the school of humanities and social sciences at the Australian Defence Force Academy.