A safe harbour agreement is designed to protect citizens' data when it is transferred to another country.
Delia Browne, national copyright director for Australia's Copyright Advisory Group (CAG) told the Joint Committee on Treaties that Australia's current safe harbour scheme is based on a similar scheme in the US, which was required when signing the Australia-US Free Trade Agreement.
However, the Australian safe harbour scheme only applies to commercial internet service providers, and not to schools, universities and libraries that also offer internet services. This was caused by an "inadvertent error", Browne said.
"This means that commercial ISPs receive legal protection for complying with copyright infringement takedown notices, but there is no protection for schools and universities," she said.
The wording of the scheme must be rewritten if Australia is to be compliant with both the Australia-US free trade agreement and the TPP, Browne told the committee.
A Copyright Amendment (Disability Access and Other Measures) Bill has been drafted.
"We urge the committee to recommend the introduction of the bill into parliament, including the safe harbour provisions, as a priority", Browne said.
CAG represents schools in Australia on copyright matters to the Education Council.
Jessica Coates, executive officer of the Australian Digital Alliance told the committee that small internet start ups are also not covered by the scheme.
"This puts our start-ups, in particular, at a commercial disadvantage to their international counterparts, creating a substantial disincentive for tech companies to set up hosting services and other new technology services in Australia, and raising their risk compared to international groups that are working in the same area," Coates said.
The TPP will regulate trade between Australia, the United States, New Zealand, Canada, Singapore, Vietnam, Malaysia, Japan, Mexico, Peru, Brunei, and Chile.