Trade agreements and Indigenous policy: implications

The Government recently (4 March 2019) announced the finalisation of negotiations with Indonesia on a proposed trade agreement (link here and here), the Indonesia – Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

The agreement is highly significant, as the following two paragraphs form the Minister’s statement (link here) indicate:

The deal marks a new chapter in Australia’s partnership with one of our closest friends and neighbours. Indonesia offers significant economic opportunities right on our doorstep. Our neighbour has one of the fastest-growing economies in the world, averaging five per cent growth over the past two decades.

Most predictions have Indonesia on track to be the world’s fifth-largest economy by 2030. With a population of 270 million people – an expanding middle-class – the world’s third-largest democracy and most populous Muslim nation – our agreement with Indonesia helps build economic prosperity for both our nations and the region.

The agreement is yet to come into force, as it requires further ratification steps in both Australia and Indonesia (link here).

The DFAT summary of the agreement (link here) notes, under the heading Services and investment, that:

Australia’s services and investment commitments in IA-CEPA lock in Australia’s existing open policy settings, similar to those in other trade agreements. These commitments include exceptions that preserve policy flexibility in sensitive areas such as: • public health and education • social services • culture and broadcasting • indigenous policy • maritime transport (emphasis added).

The text of the agreement (Annex II: Schedule of Australia) states, inter alia:

Trade in Services and Investment

Australia reserves the right to adopt or maintain any measure according preferences to any Indigenous person or organisation or providing for the favourable treatment of any Indigenous person or organisation in relation to acquisition, establishment or operation of any commercial or industrial undertaking in the service sector.

Australia reserves the right to adopt or maintain any measure with respect to investment that accords preferences to any Indigenous person or organisation or providing for the favourable treatment of any Indigenous person or organisation.

For the purpose of this entry, an Indigenous person means a person of the Aboriginal and Torres Strait Islander peoples.

Existing Measures: Legislation and ministerial statements at all levels of government including Australia's Foreign Investment Framework, and the Native Title Act 1993 (Cth).

Implications

I wanted to make just three broad points regarding these developments.

The first is to acknowledge the preparedness of Australian negotiators involved in the IA-CEPA to carve out an exception that will allow continued policy measures designed to support Indigenous inclusion in economic and commercial development.

Second, and of most policy significance, the negotiation of these provisions by the Australian negotiators is tangible demonstration that mainstream policy settings, and in this case, mainstream international policy settings, have an increasing potential to impact on Indigenous issues.

For example, one of the current Government’s most successful policy initiatives has been the Indigenous Procurement Policy. The Government has recently published new data on the performance of the program and adopted new targets (link here and here). I remain concerned that the IPP may operate in many cases to benefit non-Indigenous firms more than promote Indigenous business engagement (link here and here). The only evaluation of the program so far published by PMC (link here) noted:

It is acknowledged that business structures will continue to vary, and some arrangements will continue to raise questions about alignment with the ‘spirit’ or ‘intent’ of the policy. The qualitative data suggested that the 50 per cent ownership structures may not work in the interests of Indigenous business partners, and due diligence was required by all parties to ensure no disadvantage.

Notwithstanding these concerns, there is little doubt that the IPP has substantial potential and has already taken Indigenous business policy to new levels. In these circumstances, it is extremely important that Australia’s international trade agreements do not constrain the capacity to strengthen the Indigenous economic policy sector further.

Third, it follows on from point two that Indigenous advocacy bodies and peaks will increasingly be required to build their capability to engage with mainstream policymakers, including international trade negotiators, to ensure that Indigenous policy interests are protected. My guess is that the provisions in the IA-CEPA related to excluding Indigenous related policy measures are not the result of lobbying or advocacy from Indigenous interests, but rather have been included at the instigation of Australia’s negotiators to ensure that existing government policies are not adversely affected. This is positive as far as it goes, but provides little guarantee that in the future, Indigenous interests will be prioritised.