Australia’s ‘coercive’ news media rules are the latest targets of US trade ire
- Written by The Conversation
As the United States recalibrates its trade policies to combat what the Trump administration sees as “unfair” treatment by other countries, two significant industries have complained to US regulators about their treatment in Australia.
The tech industry – particularly Big Tech platforms such as Google and Meta – says it is being “coerced” into handing cash to Australian media companies. And the pharmaceutical industry is upset about low prices and delays in getting new treatments into the Australian market.
Why are we hearing about these complaints now? And what will they mean for Australia?
The US Trade Representative requests a pile-on
In February, the Office of the United States Trade Representative (USTR) invited comments from the public to help it review and identify any unfair trade practices by other countries. The call was made “pursuant to the America First Trade Policy Presidential Memorandum and the Presidential Memorandum on Reciprocal Trade and Tariffs”.
The aim was to use this consultation to investigate potential harm to the US from any non-reciprocal trade arrangements. The consultation was designed to help the USTR recommend appropriate actions to remedy any such practices.
Essentially, it was an invitation to complain about any and all countries, including Australia. All the relevant industry associations have taken up this opportunity with a high degree of enthusiasm.
There have been 766 submissions.
Big Tech has complaints
A tech industry group called the Computer and Communications Industry Association (CCIA) made a submission raising concerns about the digital policies of several countries, including Australia.
The submission emphasised policies with what it calls “extractionary and redistributive characteristics” that force one set of market participants to subsidise the economic activities of another.
The association’s Australian concern focuses on the News Media Bargaining Code. This requires tech companies to pay for news that appears on their platforms.
The CCIA characterises the News Bargaining Code as:
a coercive and discriminatory tax that requires US technology companies to subsidise Australian media companies.
The CCIA argued that the financial burden imposed by the code is substantial. It said that two companies (Google and Meta, although the CCIA does not name them) pay A$250 million annually in deals “coerced through the threat of this law”. It also mentioned the planned “news bargaining incentive”, which aims to encourage platforms to do deals with media companies.
Regulation by default
The CCIA is also concerned about changes in competition law that will lead to platforms being regulated by default. That is, like telecommunications and electricity companies, designated platforms will be assumed to have a substantial degree of market power. (This was a finding made by the Australian Competition and Consumer Commission in 2019.)
The industry group argued that Australia’s regulatory regime is modelled on the European Union’s Digital Markets Act (DMA). In fact, Australia is likely to look closely at both the EU and UK regimes.
The CCIA says this default regulation would target specified US companies with discriminatory obligations.
However, any business that is “designated” – regardless of its host country – would have these obligations. The proposed approach does not target or discriminate against US businesses.
It is true the proposed approach will have heavy penalties for breach, and the CCIA complains about these “significant fines”. The CCIA correctly identifies that the regulations would empower the government to impose restrictions on how platforms use customers’ data, and whether they can preference their own products.
The CCIA says it is concerned that these measures, like similar ones in other jurisdictions, disproportionately target US companies. It says they would also impose significant compliance costs, and may serve as a backdoor for industrial policy designed to advantage local competitors. They argue that such rules can require changes to operating procedures and services, and that non-compliance can result in hefty fines.
The submission also addresses Australia’s proposed requirements for US online video providers, such as Netflix, to fund the development and production of Australian content, which could require these providers to allocate 10–20% of their local expenditure to Australian content. It does not note that the same is true for Australian streaming platforms.
Big Pharma also has complaints – and a local ally
Big Pharma, via the Pharmaceutical Research and Manufacturers of America (PhRMA) industry association, has also complained about various countries. Gripes about Australia include low prices under the Pharmaceutical Benefits Scheme (PBS) and delays to approval of new treatments.
Medicines Australia – a local organisation that represents pharmaceutical companies – agrees about the delays, citing a PBS review published last year.
Barriers to trade
The critical submissions should come as no surprise. Any industry group that passes up such a golden opportunity to complain on behalf of its members is arguably not doing its job.
In the case of both Big Tech and Big Pharma, Australia was only one of the targets. Yet the potential impacts are high.
The USTR is looking at treating any regulatory barriers faced by US companies as if they were tariffs. At least one Australian industry association is joining the pile-on.
How will the USTR respond? Given the White House’s current approach to trade, there is a significant risk it will recommend retaliatory tariffs on yet more Australian products.
