US senator Mark Warner has emerged as one of Australia’s great friends in Washington, arguing strongly that our country should not be hit with Donald Trump’s tariffs. So why did the Albanese government sabotage his efforts?

Instead of doing everything possible to strengthen Warner’s case for a tariff exemption, federal Labor undermined one of his main arguments.

It refused to address a long-standing grievance by American investors who were stripped of assets by the NSW government without just cause, were denied compensation, refused due process and treated like mugs for more than a decade.

Federal Labor’s inaction on this issue is just as damaging as that of the former Coalition government. Both sides of politics, in NSW and federally, have let down our friends and advocates in Washington.

Warner’s case for Australia was well-meaning, passionate and should not be forgotten. But long before he argued for this country to be exempted from the tarrifs, US investors and government officials failed to make headway in their request for compensation over American assets that had been seized by NSW.

This was the subject of representations by the US government in 2017 and was the focus of discussions in March between US trade representative Jamieson Greer and his Australian counterpart, Don Farrell.

Here’s the problem. Warner’s argument rested on two pillars: America enjoys a trade surplus with Australia and the two countries are already bound by a free trade agreement.

The first leg of his argument is sound. Figures from the Australian Bureau of Statistics show this country’s exports to the US were worth $37.5 billion in 2023-24.

But we imported massively more from America: goods and services worth $88.2 billion – and the rate of growth also favours US exporters, 12.8 per cent compared to 7 per cent for Australian exporters.

It’s a different story when it comes to the United States-Australia Free Trade Agreement.

Article 11.7 of that treaty says neither party may expropriate an investment unless it is followed by payment of prompt, adequate and effective compensation and is done in accordance with due process of law.

Those treaty obligations cannot be reconciled with what happened in NSW back in 2014 when Barry O’Farrell’s Coalition government stripped mining company NuCoal Resources of its main asset, an exploration licence.

NuCoal had done nothing wrong.

Americans owned 30 per cent of NuCoal which had a peak valuation of $400 million before the NSW government cancelled its licence. So Australia has taken about $120 million from Americans and refuses to give it back.

When Trump unveiled his tariffs, he brandished the US government’s annual report on foreign trade barriers which includes a reatively slim chapter on Australia.

The section of that chapter that covers investment barriers has just one entry: the expropriation of US assets by NSW in 2014.

Without identifying O’Farrell or NuCoal by name, that trade barriers report amounts to a warning for Americans who might be considering investing in this country. 

It relates how a NSW parliamentary committee recommended in 2019 that the state government “address the issue of compensation for certain investors, including US shareholders in a mining project that was cancelled in 2014”.

“When cancelling the licence, the NSW government also passed legislation precluding the payment of compensation relating to such cancellation.

“To date, the NSW government has not acted on the parliamentary committee’s recommendation to provide shareholders, including US investors, with recourse to seek compensation,” the trade barriers report says.

If Labor and the Coalition are serious about securing a complete exemption from Trump’s tariffs, why not give an undertaking to fix this problem by living up to the terms of the treaty with the US?

The Americans have been pressing Australia to address this issue for years. On October 26, 2017, former US trade representative Robert Lighthizer raised it in a letter to the Coalition’s Steve Ciobo, who was then his Australian counterpart.

The response from the Coalition government that was then in office in Canberra was, in essence, the same as Albanese’s Labor government: nothing. It’s as if due process and fair dealing are concepts from another planet that are beyond their comprehension.

Lighthizer’s letter made it clear the Americans were not happy. He told Ciobo:

“As we have discussed, the US investors in NuCoal Resources Ltd allege that the cancellation of the licence was inconsistent with Australia’s obligations in the investment chapter of the FTA . . . 

“ . . . the United States is compelled to request consultations with a view towards allowing the US investors to arbitrate their claims due to the longstanding lack of resolution of this matter, notwithstanding several years of engagement between the US investors and state and federal officials in Australia, and also between our governments”, Lighthizer wrote.

When he wrote that letter litigation about this affair was still under way. Those proceedings are now complete so there is nothing to prevent Labor or the Coalition from agreeing to his request arbitration.

They should make that undertaking now, today, while Trump is wavering on his tariff scheme. That would give our friends in Washington much-needed ammunition.

Australia is in the wrong on this issue and needs to make amends – not just to the Americans but to thousands of Australian families whose investments were wiped out by the O’Farrell government’s catastrophic decision to abandon due process and seize NuCoal’s licence.

Arbitration under the terms of the US-Australia Free Trade Agreement, followed by adequate compensation, would be a face-saving method of restoring due process and fair dealing to relations with the Americans.