I have written previously how the US is seeking to insert an Investor-State Dispute Settlement (ISDS) clause into the Trans-Pacific Partnership (TPP) agreement – the proposed regional trade deal between 12 Pacific Rim countries, including Australia – which could give authority to major corporations to challenge laws made by governments in the national interest in international courts of arbitration. Under such a regime, companies would be allowed to sue the Australian Government under international law – a move that is currently being pursued by Philip Morris against Australia on plain packaging and graphic warnings for cigarettes.
The Washington Post overnight ran an interesting article on the pitfalls of ISDS clauses creeping into modern free trade agreements, which are undermining government policy making throughout the world:
The mockery that the ISDS procedure can make of a nation’s laws can be illustrated by a series of cases. In Germany in 2009, the Swedish energy company Vattenfall, seeking to build a coal-fired power plant near Hamburg, used ISDS to sue the government for conditioning its approval of the plant on Vattenfall taking measures to protect the Elbe River from its waste products. To avoid paying penalties to the company under ISDS (the company had asked for $1.9 billion in damages), the state eventually lifted its conditions.
Three years later, Vattenfall sued Germany for its post-Fukushima decision to phase out nuclear power plants; the case is advancing through the ISDS process. German companies that owned nuclear power plants had no such recourse.
…an ISDS clause invites a massive end-run around national regulations: Public Citizen’s Global Trade Watch has counted 24,200 U.S. subsidiaries of E.U.-based corporations that could avail themselves of ISDS under the [E.U.-U.S.] treaty, and 51,400 E.U. subsidiaries of U.S.-based companies that could do the same…
Despite these clear cases of abuse by foreign corporations – including Philip Morris’ attempt to sue Australian taxpayers for plain packaged cigarettes under an obscure agreement signed with Hong Kong – trade minister, Andrew Robb, remains intent to sign Australia up to the TPP, willfully ignoring these and many other costs.
