The United States has urged the Australian government to ditch draft media laws that would force tech giants Google and Facebook to pay news organisations for sharing their content. The US, in a submission to an Australian parliamentary inquiry, has said that the proposed legislation is unreasonable, impractical, “fundamentally imbalanced” and could run counter to the US-Australia free trade agreement. The media laws would impose a mandatory code of conduct on digital platforms which would allow for both individual and collective bargaining by Australian media companies to determine payment for displaying news content in Google Search and on Facebook. It also allows for an arbiter to have the final say if news companies and the US tech giants can’t agree on a fair price and it requires the latter to provide media outlets with 14 days advance notice of algorithmic changes that would affect their business. The laws were tabled in parliament in December and are currently before a Senate committee. In a submission to that committee, the office of the US trade representative said the proposed world-first laws “may result in harmful outcomes”. It called on the Australian government to shelve the proposal, arguing that directly intervening in the market to distribute advertising revenue was “extraordinary” and “a significant step that needs to be carefully thought through and justified”. “In the view of the United States, it would be preferable to pursue additional market study and consultation to identify a specific market failure that might be addressed first though a voluntary code, and if demonstrably ineffective, through Australia’s regulatory rule-making process where stakeholders can participate by weighing in on options and providing evidence in support of or opposition to specific proposals,” the submission states. “We respectfully request that Australia reconsider whether legislation is needed.” The Australian Competition and Consumer Commission was initially asked to develop a voluntary code but the federal treasurer, Josh Frydenberg, requested in April 2020 that it instead pursue a mandatory code following a sharp dive in advertising revenue and the closure of several regional newspapers in April. The mandatory code has broad support from the news industry in Australia including from Guardian Australia. The US made the same points in an earlier submission to the ACCC when the mandatory code was first announced. The submission to the Senate inquiry by the assistant trade representative for services and investment, Daniel Bahar, and the assistant trade representative for Southeast Asia and the Pacific, Karl Ehlers, said that while some changes had been made to the proposed legislation it “does not substantially address key US concerns”. The US is concerned the draft code grants the responsible minister broad discretion to nominate a tech company as being subject to “a highly prescriptive, burdensome code without having first established a violation of existing Australian law or a market failure”. The submission states the legislation is “designed to exclusively target (as an initial matter) two US companies”. It also said the process for determining compensation for news companies was “fundamentally imbalanced” in favour of media outlets to the point of “preferential treatment” because it requires the arbiter to take into account the cost of news production and its value to the digital platform – but not the cost of running and hosting content on a digital platform and the value that gives to the news company. The submission said the US government “urges Australia” to consider whether allowing an arbitrator to mandate remuneration would allow full compliance with article 20.5 of the Australia-United States Free Trade Agreement which “requires Australia and the United States to provide for appeals against administrative or bureaucratic decisions”. The US said it was “inappropriate” for the draft code to allow for collective bargaining, a measure introduced to allow smaller media players to band together, saying it was “a departure from broadly accepted competition principles”. It said provisions that effectively prevent Google and Facebook from circumventing the bargaining process by displaying content from aggregating news sites was “disproportionately punitive”. At best, it said, that measure should only apply to Australian media companies. “If the price of withdrawing from the Australian domestic news market is essentially a requirement to forgo making any news-related content available in Australia, that price appears both unreasonable and impractical,” the submission said. It said the requirement for tech companies to compensate Australian news companies for coverage – including coverage of international news – while foreign media companies offering the same news would not be compensated “could raise concerns with respect to Australia’s international trade obligations” The requirement that tech companies provide data on users accessing news content and advance notice of changes to proprietary algorithms could also be in breach of the Australia-US free trade agreement, the submission stated. “Given the United States’ significant outstanding concerns, we urge Australia not to rush the passage of this legislative proposal.” Submissions to the Senate committee closed on Monday. It will hold its first hearing on Friday.