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Statements in the U.S. House of Representatives
during debate on the U.S.-Australia Free Trade Agreement

July 14, 2004

During the debate on the Free Trade Agreement between the United States and Australia, Representatives McGovern, Kennedy and Kucinich spoke about the Australia-East Timor impasse, and their remarks follow below, as does a "talking points" memo prepared by the East Timor Action Network.

James P. McGovern (D-MA)

Opening Statement on the Rule to H.R. 4759, the United States Australia Free Trade Agreement

Mr. Speaker, let me conclude my remarks with one final and very personal observation on a related matter. I have the greatest respect for the Government and people of Australia. I have every reason to believe this free trade agreement will be approved, further cementing the economic and political ties between our two nations. I am, therefore, deeply concerned by its ruthless treatment and disregard of East Timor's rights to oil and natural gas deposits in the Timor Sea.

We all remember how Australia led the international force to protect East Timor in 1999 from the bloody and devastating attacks by Indonesia-supported militias when the Timorese people first voted for their independence. However, ever since 1999, Australia has taken in, on average, one million dollars every day from petroleum extraction that may rightfully belong to East Timor.

At the root of this problem is Australia's refusal to negotiate and resolve maritime boundaries with East Timor. The U.S. and Australia scarcely took one year to negotiate a free trade agreement. Australia has been dragging its heels since 1999 to resolve this dispute with East Timor. Australia even unilaterally withdrew from the dispute resolution mechanisms established under international law to avoid having to act in good faith on this issue. Meanwhile, Australia keeps pumping out the oil from undersea deposits and even selling the rights to exploit even more of these deposits to foreign companies.

Australia is the wealthiest nation in its region, and one of the wealthiest nations in the world. East Timor, the world's newest democracy, is also the world's poorest nation. Currently, 41 percent of East Timorese live on less than 55 cents a day.

East Timor's elected president Xanana Gusmao has said the boundary dispute "is a question of life or death." The people of East Timor do not want to be poor; they do not want to be begging for charity from wealthy countries, they do not want to end up as a "failed state." They want to be self-sufficient. Australia needs to do the right thing by East Timor: Rejoin the international dispute resolution mechanism for maritime boundaries; refrain from offering disputed areas for new petroleum contracts; and expeditiously negotiate in good faith a permanent maritime boundary in the Timor Sea.

The U.S.-Australia Free Trade Agreement was negotiated between two sovereign nations for their mutual benefit and respecting each others rights and interests. It exemplifies good relations between nations. Australia needs to show the same respect for the rights and interests of its newest democratic neighbor, East Timor.

Patrick Kennedy (D-RI)

Mr. Speaker, I would like to commend the hard work and leadership of the Chairman and Ranking Member in producing this Australian Free Trade Agreement.

It is a credit to the diligence and dedication of the Australian government that this complex Free Trade Agreement was completed in under a year.

That is why I'm hopeful that the Australian government will employ that same diligence and dedication in resolving a dispute over maritime boundaries with its neighbor, East Timor.

Fifty-three of my colleagues have already joined in supporting East Timor's call for a fair and expeditious resolution to this dispute.

These disputed boundaries are a reminder of the invalid agreements made between Indonesia and Australia during the Indonesian military occupation of East Timor.

The East Timorese struggle for independence will not be complete until East Timor, a fully sovereign country, no longer has to bear that lingering reminder of subjugation.

To be sure, there is tremendous enormous financial benefit dependent upon how these maritime boundaries are drawn.

Rich with oil and natural gas reserves, these critical areas are an economic resource for a struggling country of very little economic activity.

A country struggling with high maternal mortality, widespread malaria and tuberculosis, rampant poverty, and desperately needed education.

The Australian government was a leader in assisting East Timor's transition to democracy. It provided peacekeepers and foreign aid. But since 1999, Australia has acquired an average of $1 million a day in petroleum from the disputed areas, exceeding the amount of assistance it provided to East Timor.

The Free Trade Agreement today between our two countries are a mark of respect we have for each other. A fair and equitable resolution of this boundary dispute with East Timor honors Australia's leadership and commitment to fostering a strong and enduring democracy.

As a friend of Australia, I respectfully urge its government to rejoin the international dispute resolution mechanisms and expeditiously negotiate a permanent maritime boundary in the Timor Sea in good faith, according to the established principles of international law.

Rep. Dennis J. Kucinich (D-OH)

In Opposition to H.R. 4759, the United States-Australia Free Trade Agreement

Mr. Speaker, I rise today in opposition to H.R. 4759, the United States-Australia Free Trade Agreement, and I wish to draw members' attention to Australia's unauthorized oil drilling for resources in the Timor Sea, at the expense of the world's poorest and newest nation, East Timor.

East Timor gained independence in 1999, and since then, has received a great amount of aid from the international community.  Australia has been one of the more generous nations.  East Timor is still one of the most impoverished nations in Asia however, and despite its modest government budget, it will accrue an estimated deficit of US$126.3 by 2007.  This deficit cannot be good for East Timor.

Close off the coast of East Timor lies many rich oil and gas fields.  But East Timor does not stand to profit.  Instead, Australia claims sovereignty over the fields and is only half-heartedly negotiating with East Timor to arrive at an equitable sharing of the oil.  In 2007, East Timor is expected to start collecting a small amount of revenue from just some of rich oil and natural gas resources that exist in the Timor Sea, just off the coast of East Timor.  East Timor's rightful claim is protected by international law, the 1982 UN Convention of the Law of the Sea, which specifically says that the maritime boundary between two countries exists halfway between the countries.  Despite this law, Australia has laid claim to the resources, citing an illegitimate treaty with Indonesia from 1972 that delimited Australia's maritime boundary as the continental shelf line, which exists much closer to East Timor than Australia.  At the time the treaty was signed, East Timor was occupied by Indonesia.  East Timor gained independence in 1999 thereby invalidating the treaty between Indonesia and Australia.

Between 1999 and 2002, Australia made $638 million from the Laminaria-Corallina oil fields, even though these fields are twice as close to East Timor than Australia.  By 2007, Australia is expected to make $1.266 billion from these fields.

The Laminaria-Corallina oil fields are just some of the many rich resources that exist in the Timor Sea.   The Greater Sunrise fields, located 150 km south of East Timor, and 400 km north of Australia, although not yet tapped, are expected to bring in over $30 billion.  Certainly East Timor's economic future could improve considerably with these resources included in its territory.

Australia has proposed a Joint Petroleum Development Area, an area covering 40% of the energy fields in the Timor Sea, and specifically the Bayu-Undan field.  In this Area, East Timor would receive 90% of the oil production, estimated by the Australian government to be valued at $300 million.  The success of this production, however, is yet to be determined, as the resources will not bring in revenue until 2007.  But as for the much richer Greater Sunrise field, expected to yield $30 billion, Australia claims the right to over 80%.

Australia claims to be negotiating with East Timor about their much-needed maritime boundary in "good faith."  Yet it took over of year of pleading by the East Timorese government in order for the Australian government to finally concede to the negotiation process, and they only conceded to meet twice per year.  East Timor has requested that the maritime boundary be determined within 3-5 years, a reasonable amount of time for settling this type of dispute, yet Australia has refused, claiming this dispute is much too complicated for a time limit to be set.  In the meantime, Australia only benefits from time passing, as it continues to drill in the Laminaria-Corallina oil fields and has taken initial steps to guarantee drilling in the Greater Sunrise fields.  It has been suggested to the Australian government that revenue from the resources extracted in the disputed area be held in escrow until the maritime border is determined between East Timor and Australia.  Once again, the Australian government has refused, displaying "bad faith" in the negotiating process.

Australia is a strong and wealthy country, certainly the stronghold of the region.  East Timor has very little, and any leverage it may have in negotiating with Australia over its rightful claim to the resources in the Timor Sea lies completely in its moral claim.  I urge my colleagues to support the efforts of the world's newest independent state.

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Suggested Talking Points on the Timor Sea Issue
for the U.S.-Australia Free Trade Agreement floor debate in the U.S. House of Representatives

The following are points which Members of Congress can use during the debate on the Australia Free Trade Agreement to signal Congressional displeasure to the Australian government over its behavior in current negotiations with East Timor on a permanent maritime boundary in the Timor Sea. East Timor by itself has limited capability to persuade Australia to negotiate fairly, but support from the United States Congress can be effective, just as it was in helping to end Indonesia’s 24-year occupation.

  1. East Timor became independent on 20 May 2002. The new nation has no maritime boundaries, as its former colonial power (Portugal) never negotiated any with its neighbors. Agreements between Indonesia and Australia before and during the illegal Indonesian military occupation of East Timor are invalid and cannot be applied to the new nation. By its words and conduct, Australia has repeatedly disrespected the sovereignty and independence of the new nation. The inability to establish a permanent maritime boundary leaves many in East Timor feeling that their struggle for independence is not complete.

  2. Under principles of international law widely accepted since the 1982 United Nations Convention on the Law of the Sea, maritime boundaries between nearby countries should be drawn along the median line, half-way between their coastlines, without regard to the topography of the sea floor.

  3. The Timor Sea between Australia and East Timor contains significant seabed deposits of oil and natural gas, which constitute East Timor’s principal exploitable natural resource. The 2002 interim Timor Sea Treaty provides the basis for the development of an area in the Timor Sea known as the ‘Joint Petroleum Development Area’ (JPDA). This arrangement allows East Timor to receive only 41% of its revenue entitlement under international law.  The Timor Sea Treaty will lapse when a permanent maritime boundary is set. The treaty is without prejudice to a permanent maritime boundary settlement. East Timor signed the treaty because it desperately needs revenue from an oil and gas field (Bayu Undan). Those funds will reduce a major budget deficit caused by the scarcity of other taxable economic activity.

  4. In total, Australia has taken possession of some 59% of the oil and gas reserves that should legally belong to East Timor. Australia continues to extract oil from this area, receive revenue, and sign new exploration contracts, while stalling on agreeing to a permanent boundary. The single biggest resource in the Timor Sea is the Greater Sunrise field. Under interim arrangements East Timor will receive only 18 percent of this revenue.

  5. East Timor currently receives no revenue from other oil and gas fields (Buffalo and Laminara-Corallina), despite the fact that they are twice as close to Timor as to Australia. Australia has taken in over $1 billion in revenue from these fields since 1999.  Because these fields lie in an area of overlapping claims, Australia’s continued issuance of licenses to petroleum companies is illegal under international law.  The East Timor government has asked the Australian government to stop unilaterally exploiting these resources. A boundary drawn according to international law would give East Timor a significantly wider area than the JPDA, encompassing the entire Greater Sunrise field and the other fields.

  6. Australia has rejected international legal processes for settling maritime boundary disputes. Two months before East Timor’s independence, Australia unilaterally withdrew from maritime boundary dispute resolution mechanisms of the International Court of Justice and the International Tribunal for the Law of the Sea. This withdrawal leaves East Timor without legal recourse should Australia refuse to negotiate expeditiously and in good faith, which is the current situation.

  7. When both sides approach negotiating a permanent maritime boundary in good faith, an agreement usually takes 2-3 years to negotiate. When Australia and Indonesia resolved their competing claims and agreed on a seabed boundary in 1972, it took less than three years to negotiate two treaties covering a much larger area than the Australia-East Timor border. Australia and the U.S. completed negotiations of the complex FTA in under a year.

  8. More than a year after East Timor’s Prime Minister requested that Australia begin maritime boundary negotiations, Australia came to the table for preliminary discussions last November. East Timor has requested monthly meetings. However, Australia refuses to meet more than twice a year. At the first substantive meeting in April 2004, Australia stated that it will not discuss areas on East Timor’s side of the median line outside of the JPDA

  9. Australia’s claim of “sole Australian seabed jurisdiction” outside the JPDA because “Australia has exercised exclusive sovereign rights over this area for an extended period of time” is based on the illegitimate “Timor Gap Treaty” signed between Indonesia and Australia in 1989, which has no validity.

  10. According to East Timor’s President Xanana Gusmão, the boundary dispute "is a question of life or death, a question of being continually poor, continually begging, or to be self-sufficient." Australia is relatively affluent with a strong infrastructure and social system, while East Timor is not. Maternal mortality in East Timor is nearly 150 times higher than it is in Australia or the United States. Malaria and tuberculosis are widespread. Education is desperately needed for future development. At present 41% of East Timorese people live on less than 55 cents per day, the national poverty line.

  11. According to East Timor’s government, Australia has acquired an average of one million dollars every day since 1999 from petroleum that belongs to East Timor. This revenue far exceeds the foreign aid and other assistance given to East Timor by Australia since 1999. This makes East Timor the largest (albeit unwilling) donor of foreign aid to the Australian treasury. Australia expects to take in more than $20 billion from fields in disputed areas over the next four decades, money which could otherwise provide a decent life for East Timor’s citizens and ensure that their new country does not become a “failed state.”

  12. Last March, 53 members of the U.S. Congress supported East Timor’s call for a fair, expeditious resolution of the boundary dispute. This would enable East Timor to manage its own affairs as a self-sufficient, peaceful and stable democracy. Australia should:

    a)      Rejoin international dispute resolution mechanisms for maritime boundaries.

    b)      Refrain from offering disputed areas for new petroleum exploration contracts, and place any revenues received from disputed areas in escrow pending establishment of a permanent maritime boundary.

    c)      Expeditiously negotiate a permanent maritime boundary in the Timor Sea in good faith, according to established principles of international law.

  13. The U.S.-Australia Free Trade Agreement was negotiated between two independent nations, considering their respective rights and interests, for their mutual benefit. Such a compromise between sovereign nations exemplifies good diplomatic relations. Unfortunately, current negotiations between Australia – the richest nation in its region – and East Timor – the poorest – are not being carried out with similar mutual respect. Australia is using its superior size, affluence, and historical power to take advantage of its new, small northern neighbor.

East Timor Action Network
July 9, 2004

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