The federal government's proposed Australia's Foreign Relations (State and Territory) Arrangements Bill 2020 (Foreign Relations Bill) would have broad implications for public and private sector entities entering into arrangements with certain foreign entities. It would also apply to any 'subsidiary arrangements'.

The Foreign Affairs Minister would have a range of powers if the arrangements could be inconsistent with Australia's foreign policy or adversely affect Australia’s foreign relations.

On the face of the initial draft of the Foreign Relations Bill, there may be broad application (and potentially unintended consequences) for governments, universities and industry. A Senate committee is currently consulting on the Foreign Relations Bill with its report due on 5 November 2020. The concepts set out in this article will likely be subject to additional changes and guidance.

Our foreign investment and trade team takes you through what the Foreign Relations Bill may mean for governments, government entities, universities and other industries.

Aiming to foster a systematic and consistent approach to foreign policy engagement

The Foreign Relations Bill would apply for existing or future arrangements where it:

• has been entered into between State/Territory entities and foreign government entities; or
• is an arrangement made under the auspices of those government to government arrangements.

The purpose of the Foreign Relations Bill is to foster a systematic and consistent approach to foreign policy engagement across all levels of government in Australia.

What agreements does the bill cover?

The rules will cover foreign arrangements and related arrangements, being:

• Core foreign arrangements (those between core State/Territory entities and core foreign entities – see below for the scope of each of these concepts)
• Non-core foreign arrangements (all other arrangements between State/Territory entities and foreign entities)
• Subsidiary arrangements (those entered into under the auspices of a foreign arrangement, and can capture commercial arrangements).

For example:

• Core foreign arrangements between a State government and a foreign government
• Non-core foreign arrangements between a university and a foreign government or between a State government and a local government of a foreign country
• Subsidiary arrangements between a commercial contractor and a university.

Core State/Territory entity includes:

• a State or Territory
• the Government of a State or Territory
• a Department or agency of either of the above

Non-core State/Territory entity includes:

• a body established for the purposes of local government by or under a law of a State or a Territory
• an Australian public university
• an entity prescribed by the rules to be a State/Territory entity

Core foreign entity includes:

• a foreign country
• the national government of a foreign country
• a Department or agency of either of the above
• an entity external to Australia that may be prescribed by the rules

Non-core foreign entity includes:

• a province, state, self-governing territory, region, local council, municipality or other political subdivision (by whatever name known) of a foreign country
• a local council, municipality or other political subdivision (by whatever name known) of the above
• the government of any of the above
• a Department or agency (however described) of any of the above
• an authority of certain entities established for a public purpose (except universities)
• a foreign university that does not have institutional autonomy
• an entity external to Australia prescribed in the rules to be a foreign entity.

What would the Foreign Affairs Minister’s powers be?

If the Minister considers that a foreign or subsidiary arrangement could be inconsistent with Australia's foreign policy or adversely affect Australia’s foreign relations, they may declare it invalid and unenforceable, not in operation, or required to be varied or terminated.

The powers extend to arrangements that are legally binding under Australian or foreign laws, as well as arrangements that are not legally binding.

Entry into core foreign arrangements without the Minister’s approval would be prohibited. The Minister must be notified of non-core foreign arrangements and may make declarations in respect of those arrangements.

Review rights for decisions of the Minister would be very limited. The rationale for this is that decisions made under the Foreign Relations Bill will involve complex foreign policy considerations within the exclusive remit of the federal government and the Foreign Affairs Minister to determine and manage.

What steps should my organisation start considering?

State and territory government departments and agencies should start to consider:

• any core foreign arrangements that need to be notified within three months of commencement of the Foreign Relations Bill
• any non-core foreign arrangements that need to be notified within six months of commencement of the Foreign Relations Bill
• procedures for notification and approval of future arrangements
• potential impact on existing and future subsidiary arrangements.

Local governments and universities should start to consider:

• any non-core foreign arrangements that need to be notified within six months of commencement of the Foreign Relations Bill
• procedures for notification of future arrangements
• potential impact on existing and future subsidiary arrangements.

Industry should consider:

• any arrangements (including commercial arrangements) that implement a foreign arrangement
• processes for review of such arrangements.

While the proposed bill is still under consultation, it will have impacts across a range of entities and industries. For a more detailed discussion on how to manage the impacts for your organisation, please contact our team.