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Australia: New Legislative Framework for Federal Assessments of Arrangements between State or Territory Governments and Foreign Governments Receives Assent

(Dec. 17, 2020) On December 10, 2020, Australia’s Foreign Relations (State and Territory Arrangements) Bill 2020 (Cth) (the act) received assent, having been passed by the Commonwealth (i.e., federal) Parliament on December 3, 2020. A bill containing consequential amendments to other legislation was also passed on December 8 and received assent on December 10. According to the Minister for Foreign Affairs, Marise Payne, the legislation aims to ensure “that arrangements entered into by States and Territories, local governments and Australian public universities with foreign governments are consistent with Australia’s foreign policy.”

The legislation establishes a new framework for the minister for foreign affairs to assess and approve relevant arrangements entered into by Australian subnational governments and public universities. The explanatory memorandum for the act outlines some of the key provisions as follows:

Part 2 of this Act prohibits core State/Territory entities from negotiating or entering an arrangement with a core foreign entity (a core foreign arrangement) if approval from the Minister is not in force (sections 15 and 22).

Core State/Territory entities are defined as the States and Territories themselves, their governments and related departments and agencies (section 10). Core foreign entities are defined as foreign countries, their national governments and related departments and agencies (section 10).

Under Part 2, core State/Territory entities are required to notify the Minister about proposed arrangements with core foreign entities prior to negotiating and prior to entering the arrangement (sections 16 and 23 respectively). After receiving notice from the relevant State/Territory entity, the Minister must make a decision as soon as practicable within 30 days (subsections 17(1) and 24(1) respectively). The Minister must give approval if he or she is satisfied that the arrangement would not adversely affect Australia’s foreign relations and would not be inconsistent with Australia’s foreign policy (subsections 17(2) and 24(2) respectively). If the Minister is not so satisfied, he or she must refuse to provide approval (subsections 17(3) and 24(3) respectively) and the State/Territory entity will not be able to commence negotiations or enter into the arrangement. If the Minister does not make a decision within the 30 day period, the Minister is taken to have approved the proposed negotiation or arrangement.

If a core State/Territory entity enters a core foreign arrangement in contravention of the prohibition in Part 2, the Act provides that the arrangement is invalid and unenforceable, not in operation or required to be terminated by operation of this Act, as relevant. The Minister may also enforce the prohibitions in this Part by seeking an injunction from the High Court or Federal Court.

Additional provisions, in part 3 of the act, relate to “non-core foreign arrangements,” which are arrangements between non-core entities, and between non-core and core entities. A state/territory entity must notify the minister before entering such arrangements, and the minister has “discretion to make a declaration that the State/Territory entity must not negotiate or enter the arrangement if the Minister is satisfied that the arrangement adversely affects Australia’s foreign relations or is inconsistent with Australia’s foreign policy (sections 35 and 36, respectively).”

Part 4 of the act applies to arrangements already in operation, allowing the minister to “declare that such arrangements are invalid and unenforceable, not in operation or required to be varied or terminated, as relevant, if the Minister is satisfied that the relevant arrangement adversely affects Australia’s foreign relations or is inconsistent with Australia’s foreign policy.”

The government will be required to report to Parliament annually on the decisions of the minister for foreign affairs made under the act (section 53A).

A new task force within the Department of Foreign Affairs and Trade has been established to implement the legislation, and a new website enables online notifications of arrangements and provides a public register of notified arrangements. The provisions regarding preexisting arrangements entered into force on December 10, with notifications of preexisting core arrangements required by March 10, 2021, and of non-core arrangements by June 10, 2021. The provisions regarding new core and non-core arrangements will come into force on March 10, 2021.

Currently a small number of relevant agreements have been signed by state governments and Australian universities, most involving China, which have reportedly “generated unease in Canberra.” This includes a memorandum of understanding between the government of Victoria and China, signed in 2018, regarding the Belt and Road Initiative. In addition, some universities have signed agreements with Chinese institutions and companies, “including those that have allowed Confucius Institutes to open on some Australian campuses.”

China has raised the new legislation “as one of 14 grievances damaging to relations with Australia.”