Labor member for Fremantle, Melissa Parke, has posted a fantastic article in The Guardian warning of the dangers to Australia arising from the investor state dispute settlement (ISDS) clause in the Trans-Pacific Partnership (TPP):
ISDS clauses enable foreign corporations to sue a host country for laws or policies, or even court decisions, they find inconvenient and objectionable. This has the effect of giving foreign investors more rights than local investors; more influence than local citizens…
They were originally created to protect businesses that invested in foreign jurisdictions where there may not have been robust democracies and legal systems, so that investors would have international redress if there was a coup, a takeover of their investments or some other unforeseen negative impact on their business in the nature of sovereign risk.
Over time, the reasonable shield offered by ISDS clauses has become a sword, used by multinational corporations to extract profit and market advantage, against the legitimate interests and values of a nation, its government and people…
In fact, Australia is currently being sued by tobacco company Phillip Morris, pursuant to an ISDS clause in an obscure agreement with Hong-Kong in relation to our plain packaging laws (after Phillip Morris lost the case before the Australian High Court). El Salvador is being sued by an Australian mining company, OceanaGold, for refusing to issue it with a gold mining licence as a result of justified environmental and community concerns related to the last gold mining venture at that site (which left the local river running yellow with arsenic and other chemicals).
These are just two of the 568 challenges made under ISDS clauses since 1993. They demonstrate the perilous course the Abbott government has chosen for Australia.
Then there’s the chilling effect ISDS clauses can have on a government’s willingness to regulate. Canada withdrew a proposal for plain packaging of tobacco, following the threat of ISDS arbitration under NAFTA. Here in Australia, rural communities have successfully campaigned for improved state government regulation of coal seam gas mining, yet the inclusion of ISDS clauses in KAFTA [the Korea-Australia FTA] may mean that Korean mining investors could prevent further regulation.
The arbitration panels that decide the outcome of ISDS disputes aren’t independent: they’re made up of investment law experts, most of whom also represent investor complainants…
Proponents of KAFTA point to supposed safeguards in more recent agreements with ISDS clauses, which aim to protect public welfare in areas like health, safety and the environment…
[But] a submission made by 100 legal experts to the European Commission regarding an ISDS clause in the proposed TPP between the EU and the US concluded that the safeguards, which are more extensive than those in KAFTA, would not be sufficient to uphold health and environmental legislation…
The prospect of Australia’s regulatory framework, policy settings, and community values being chiselled away by legal action pursued in the interests of large multinationals or even state-owned foreign entities should be of enormous concern to all Australians.
Ms Parke is spot on. The ISDS clause in the TPP would sell-out the national interest for the benefit of foreign corporations.
But don’t just take our word for it. The Productivity Commission (PC) explicitly recommended that Australia not support ISDS clauses in its 2010 Research Report on Bilateral and Regional Trade Agreements (BRTAs).
Specifically, in Chapter 4, the PC noted:
1. There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS provisions within agreements. Available evidence does not suggest that ISDS provisions have a significant impact on investment flows.
2. Experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions.
The PC’s Findings underpin its Recommendation 4(c), namely: the Australian government should:
…seek to avoid the inclusion of investor-state dispute settlement provisions in BRTAs that grant foreign investors in Australia substantive or procedural rights greater than those enjoyed by Australian investors (p285).
It would be nice if trade minister, Andrew Robb, heeded these legitimate concerns rather than simply brushing them off as “deliberate scaremongering by those who have, fundamentally, an anti-trade agenda”.
