TPP: Australia could be “sued for billions”

By Leith van Onselen

A leading expert on intellectual property (IP), Associate Professor Kimberlee Weatherall, has warned that Australia “could be sued for billions” if it ratifies the Trans-Pacific Partnership (TPP) trade agreement. From The Canberra Times:

“The Intellectual Property (IP) chapter of the TPP is an extraordinarily complex, extremely prescriptive chapter that locks in IP settings established decades and even a century ago – at the very time that the Productivity Commission is looking critically at Australia’s entire IP arrangements,” Ms Weatherall said.

“[And] the adequacy of carve-outs for IP in the Investment Chapter is extremely concerning.”

“We could get sued for billions for making some change to mining law or fracking law or God knows what else. We could literally have damages of more than a billion, but we don’t actually know. And we won’t know until any [law] suit gets started, and then we won’t know for another five years while it works through the process.

Ms Weatherall’s criticism follows others such as Dr Matthew Rimmer, intellectual property law professor at the Queensland University of Technology, who says the section on foreign investors is “labyrinthine”.

In signing on to the TPP, Trade Minister Robb did at least achieve a ‘carve-out’ for tobacco, which is something. But it still leaves a bunch of areas where Australian taxpayers could be sued.

While Robb has labelled such concerns “scaremongering”, Canada’s experience with the US under the North American Free Trade Agreement (NAFTA) provides a stark warning of what could be in store for Australia if it ratifies the TPP. As explained last month by Kyla Tienhaara, Research Fellow Regulatory Institutions Network (RegNet), Australian National University:

Australia and Canada have a great deal in common – a British colonial past; large and sparsely populated territories; and resource-intensive economies.

Two other similarities also bear mentioning: the economies of both countries are dominated by US investors (27% of foreign investment in Australia and nearly half in Canada)…

But there is a one major difference: up until now, Australia has never agreed to provide American investors with access to Investor-State Dispute Settlement (ISDS), whereas Canada has…

In total Canada has faced 35 challenges, 23 of these in the last ten years. Australia has been subjected to only one ISDS case.

Canada has been sued more times than Mexico under the North American Free Trade Agreement (NAFTA) and at a global level it has been involved in more ISDS cases (35 in total) than any other developed country. Canada has already lost or settled seven claims, paid out damages totalling over CA$170 million and incurred untold millions more in legal costs.

At the same time, Canadian companies have been rather unsuccessful in ISDS. In general, the claim that ISDS will primarily benefit the “little guy” isn’t borne out by the statistics…

What kinds of policies are being challenged in ISDS? While much attention in Australia has rightly been given to Philip Morris’ challenge of the plain packaging legislation, many cases around the world actually focus on environmental protection and resource management.

Such cases account for 63% of disputes involving Canada. So carving out tobacco from ISDS, as has reportedly been done in the TPP, is like putting a Band-Aid on a bullet wound. If anything, it signals that the “safeguards” in place in the agreement are, on their own, insufficient to protect public policy.

Australia is opening a can of (really expensive) worms with the TPP. And significantly, it isn’t a can that can easily be closed again.

Clearly, Australians should be very concerned about the gremlins lurking in the TPP, the full extent of which are likely to come to light long after Trade Minister Andrew Robb has left his post.

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Leith van Onselen
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  1. Is it treachery for our politicians to sign away our national sovereignty like this? Is it time to erect a reminder out the front of Parliament House to remind our House of *Representatives* especially whom they are supposed to represent?

    Maybe a gibbet, or even a guillotine would be in order….

    • steven.grellman

      There is one already that is a stark reminder to politicians of the sacrifices Australians have made to protect our sovereignty. The Australian War Memorial.

    • I’d be curious about the constitutional basis for a judicature system outside of the Constitution.

      The Executive is well within its rights to sign up to a treaty but I’m not sure if they can sign up to something that is in conflict with Chapter 3… or if it is indeed in conflict.

  2. The question I have is, why does Minister Andrew Robb, in response to reasonable comments about the TPP, always turns to name calling like “scaremongering”. This is school boy bully techniques, if Minister Andrew Robb cannot openly debate and discuss the TPP, then he should resign his commission from Her Majesty’s Government.
    I would also request that the TPP be formally submitted to the Productivity Commission, and that Parliament should only debate and vote on the TPP bill once the Productivity Commission Report is received.

  3. My gut reaction is that yeah, I hope we do get sued for billions, that’d expose our lying weasel politicians! Then I think, WTF is wrong with me, getting sued isn’t good for anyone except the lawyers, of course we don’t want that. I think it is really just a case of having no faith that our politicians are genuinely and without compromise looking after our best interests. Then I wonder, am I just being cynical, or is my attitude a reasonable position based on past behaviours? Eh, it’s probably a bit of both.

  4. It is quite clear why Mr Robb has been so keen to sign up to every defective FTA and TPP he can lay his hands on.

    He is deliberately trying to strap Australia into a bunch of international agreements that have a rock solid core of extremist neo-liberal ideology regarding:

    * international capital flows.
    * limiting the sovereignty of government to make laws in the interests of its citizens
    * increasing the freedom of action for private corporations
    * increasing protection for the property rights of our large trading rivals

    He knows that once they are signed they are going to be extremely difficult to unravel for any subsequent government.

    It is a disgraceful and extreme ideological performance that should be offensive to LNP voters as much as supporters of the ALP and the Greens.

    Sadly the ALP is so completely lost that they are now trying to out-do Mr Robb in their commitment to neo-liberal economic policies concerning the regulation of unproductive capital inflows.

    Penny Wong apparently intends to trump Mr Robb’s playing of the race card with one of her own in a loony attempt to force the government to allow even faster imports of unproductive capital and the easier sell off of productive agricultural land and other assets.

    Penny if discrimination between different sources of unproductive capital is a concern for you (and it clearly is not and just an exercise in wedge politics) then the solution is to call for the restrictions to be tightened for ALL past agreements.

  5. Had a quick flip through Chapter 9 of the TPP document:

    What stood out to me was “Article 9.6: Minimum Standard of Treatment
    1. Each Party shall accord to covered investments treatment in accordance with applicable customary international law principles, including fair and equitable treatment and full protection and security.”

    Wish my insurance policy was as bullet proof as the clause “full protection and security”.
    The upshot of this clause is that local Aus businesses cannot sue government, but foreign entities can.
    Interesting that a number of countries in Africa and Europe have opted out of this type of clause in their trade agreements, see following:

    International Institute for Sustainable Development

    If states choose to retain the classically formulated full protection and security provision in their investment treaties, then they could be undertaking a duty to act in a manner that will protect the investment in accordance with international standards, and not just in line with national treatment standards, irrespective of the resources available to them. In view of the recent rulings on the full protection and security standard, states may wish to consider the following options.

    First, they can avoid including an obligation to provide protection and security in their treaties. This approach has been used recently in the Common Market for Eastern and Southern Africa (COMESA, 2007) and Southern African Development Community investment treaties (SADC, 2006).

    Second, if states decide to include a protection and security obligation, then it is important to define the standard with care, in particular stating clearly whether it applies only to physical protection (for example, as the U.S. Model BIT (U.S. State Department, 2004) does in relation to police protection). Leaving it undefined and broad will allow arbitral tribunals to include legal, commercial and regulatory security, as they have indeed done in recent awards.

    Third, states may choose to limit the scope of the standard to national or most-favoured-nation treatment. This will peg the standard of obligation to the treatment given to nationals or other foreign investors.

    Finally, if states wish to provide protection and security pursuant to an international standard, incorporating a reference to the standard of customary international law for the treatment of aliens lends some clarity. However, the customary international law standard itself is an evolving one, and therefore an arbitral tribunal may well find that the “modern” interpretation of this obligation is higher than states may have thought was in the case in its more classical form.

    The recent arbitral awards show that the standard can be onerous for states to meet, particularly states with limited resources. However, the controls to a large extent are in the hands of the states, which can take steps to minimize their exposure under this treaty obligation. With respect to existing investment treaties, states retain the option to delete this standard or to define it narrowly through an amendment of the treaty. The amendment would require the consent of both parties to the treaty. If an amendment is not possible, states can also issue an interpretive statement, as the NAFTA parties did in 2001 (if this can be accomplished with the consent of the other party). In the event that the other treaty party is not willing to make a joint statement, states may wish to issue a unilateral interpretive statement, which could have some influence over tribunals interpreting future disputes. If states do not take control, then tribunals will decide what this standard means for them. This may lead to unpleasant and costly surprises in investment treaty awards, in the form of hefty damages.

    So, the question: why has Australia shown less diligence in signing up for the TPP than 3rd world countries?
    Could be either our pollies:
    1. Easier to bribe
    2. Harder to bribe, but the bribes are bigger
    3. Do not understand the agreement
    4. Do not care

    And how is it I can spend one hour internet search locating the International Institute for Sustainable Development document above that highlights the costly downside of the “full protection and security” clause in the TPP and a host of employed bureaucrats cannot?
    Link incomes and pensions of Members of Parliaments to what the government gets sued for down the track and they might have come up with a better deal.

    • In my opinion the Investor-State Dispute Settlement concept is ridiculous.
      Looking at it one way it appears to be changing who controls our country. Instead of laws made by democratically elected members of parliament to suit a majority of voters, we will have laws controlled by an unelected bunch of foreign lawyer elites.

      However there is another way of looking at it. This ridiculous situation can be demonstrated in a fun way.
      Australia signs a new free trade agreement with Outer-Vulgaria whereby it is written and signed that any liabilities to any company arising out of any other free trade agreement must be payed in Australian Coal Vouchers. These vouchers can only be used to buy Australian coal in-country, all coal must be consumed before leaving the premises, and no takeaway will be allowed.
      Any consumer who been compensated with a store voucher could relate the terms of such payment.

      We have to wonder how these agreements will be enforced.
      A bunch of Monsanto elites fly to Australia asking to be paid the $10BN dollars a Belgian court has ruled the Australian govt owes them due to Aussie customs binning their seeds. They wave the judgement and show ex-Minister Robb’s signature on the TPP.
      In response $10BN worth of eat-in coal vouchers are waved at them, and they are shown the Outer-Vulgaria TPP signed by our very own ex-Minister Moronica Strine and by Outer-Vulgaria’s very own Jock McArsehole.

      I thought I had a good imagination, but you can’t make this stuff up.

    • Not sure where you are coming from. Microsoft don’t make open source routers, and it will cost them money responding to anti-spamming laws.

      • The clause will allow companies to steal GPL codes outright and claiming it as their own, as the law will override the need to comply with the GPL license.
        Routers ‘open source’ their firmware in response to cable/phone companies having unique requirements on their network (like Telstra’s “Heartbeat”), and it’s much cheaper to let user/telco to write the software rather than dealing with returns.

  6. For America to try and ram rod TTP through – is – a huge tell about how it feels about its long term economic geo-sociopolitical future.

  7. incoming cut and paste…

    November 8, 2015 at 8:47 am

    The urgency of defeating TPP is already apparent to many of us here at NC. This reaction of Chris H. to the release of the text helps put this in perspective:

    “If there is no sustained popular uprising to prevent the passage of the TPP in Congress this spring we will be shackled by corporate power. Wages will decline. Working conditions will deteriorate. Unemployment will rise. Our few remaining rights will be revoked. The assault on the ecosystem will be accelerated. Banks and global speculation will be beyond oversight or control. Food safety standards and regulations will be jettisoned. Public services ranging from Medicare and Medicaid to the post office and public education will be abolished or dramatically slashed and taken over by for-profit corporations. Prices for basic commodities, including pharmaceuticals, will skyrocket. Social assistance programs will be drastically scaled back or terminated. And countries that have public health care systems, such as Canada and Australia, that are in the agreement will probably see their public health systems collapse under corporate assault. Corporations will be empowered to hold a wide variety of patents, including over plants and animals, turning basic necessities and the natural world into marketable products. And, just to make sure corporations extract every pound of flesh, any public law interpreted by corporations as impeding projected profit, even a law designed to protect the environment or consumers, will be subject to challenge in an entity called the investor-state dispute settlement (ISDS) section. The ISDS, bolstered and expanded under the TPP, will see corporations paid massive sums in compensation from offending governments for impeding their “right” to further swell their bank accounts. Corporate profit effectively will replace the common good.”