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Australian government “will not move” on investor-state dispute process in Trans-Pacific Partnership

An 11th round of Trans-Pacific Partnership Agreement (TPPA) talks is underway this week in Melbourne, Australia. Though staunchly pro-free trade, the Australian Labour government is standing firm against U.S. pressure to include an investor-to-state dispute settlement process in the nine-country deal.

“There are issues on which we will not move, including investor state dispute settlement procedures,” Australia’s Trade Minister Craig Emerson told reporters in Canberra. “This is government policy, it is as a result of a cabinet decision in April last year. We do not and will not support investor state dispute settlement provisions.”

Sarah Anderson, the Global Economy Project Director at the Institute for Policy Studies, explains the Australian opposition in a blog post this week:

…Australia is now the target of a high-profile investor-state case. Philip Morris, of the Marlboro empire, filed a suit against Australia last year, demanding compensation for that country’s plain packaging laws for cigarettes. Oops — while Australia had kept investor-state out of the U.S.-Australia trade deal, it allowed it in some other treaties. Philip Morris simply used a subsidiary in Hong Kong to file the claim under a bilateral treaty between that nation and Australia.

So last April the Australian government issued a trade policy which not only expressed concern about the impact of investor-state disputes on environmental and public health policy at home, but stated, “If Australian businesses are concerned about sovereign risk in Australian trading partner countries, they will need to make their own assessments about whether they want to commit to investing in those countries.”

Here’s Anderson again:

Corporate America’s hair has been on fire ever since. In the lobby group’s letter to Obama, they warn ominously that “Australia’s rejection of investor-state dispute settlement is not only thwarting the ability of the TPP negotiations to produce strong enforcement outcomes, it is also having a corrosive effect on the level of ambition and other key aspects of the TPP negotiations. If Australia were able to extract such a major exemption, other countries would press forward to seek their own major exemptions from core commitments.”

Translation: they fear if the United States goes all soft on the Australians on investor-state, the other countries will smell blood and demand similar rules that are pro-public interest, but corporate-unfriendly. Several of the other governments are already attempting to stand up to U.S. pharmaceutical company proposals that would reduce access to affordable medicines.

Public Citizen, a U.S. social justice organization, has produced a new series of fact sheets on how investor-state provisions in the TPPA would affect environmental policy, public health and essential services. These fact sheets explain:

Over $350 million in compensation has already been paid out to corporations in a series of investor-state cases under NAFTA-style deals alone. This includes attacks on toxics bans, natural resource policies, health and safety measures, and more. In fact, of the over $12.5 billion in the 17 claims now pending under NAFTA-style deals, all relate to public health, environmental, and transportation policy – not traditional trade issues. Even when governments win, they waste scarce budgetary resources defending national policies against these corporate attacks.

But Public Citizen also reassuringly talks about the global backlash to this corporate rights regime that started with NAFTA and has now found its way into thousands of bilateral investment treaties, including dozens signed by Canada (in free trade agreements and Foreign Investment Promotion and Protection Agreements, or FIPAs):

The investor-state system is so extreme that it is losing whatever small political support it ever had. Australia has said it will not include investor-state in its trade deals, and the Korean opposition parties are promising to derail the pending Korea-U.S. trade deal unless investor-state is removed. Latin American countries are pulling out of various arbitration agreements that provide venues for these private corporate attacks. President Obama even campaigned against this system! But career bureaucrats and big business want to stay the course, no matter the cost.

So does the Canadian government on behalf of Canadian mining firms and the banks that finance extraction abroad. For example, Canadian mining company Copper Mesa has apparently filed a lawsuit against Ecuador under a bilateral investment treaty with Canada related to problems with mining concessions it owned in Ecuador prior to the firm losing its listing on the Toronto Stock Exchange. (We’re looking into this case and will report with more details soon.) Protecting Canadian oil, gas and extraction projects in eastern Europe is also a major driving force behind the Harper government’s insistence on an investor-state dispute process in the Canada-EU Comprehensive Economic and Trade Agreement (CETA).


Prime Minister Stephen Harper expressed Canada’s interest in joining TPPA talks during an APEC meeting in Honolulu last November. While the topic of new entrants, including Canada, Mexico and Japan, will come up at this week’s TPPA meeting, Inside U.S. Trade reports there won’t be any decisions made.

Most of the news about the new entrants has focused on what Canada and Japan would have to promise as a “down payment” to joining the talks. For Japan it’s autos, agricultural protections and insurance sector opening. For Canada it’s supply management of eggs, poultry and dairy with the big bulls eye on milk products, and possibly copyright and patents.

Canadian media commentators fanatically obsessed with paying a few dimes more for their cartons of milk than the Americans have been leading a disorganized but loud campaign to encourage Harper to force non-exporting, non-subsidized Canadian dairy farmers to compete with their subsidized global counterparts. The Dairy Farmers of Canada have responded with a campaign of their own defending the system, which isn’t market based but needs-based, designed to ensure stability of prices for producers and consumers.

In the meantime, Harper could launch free trade talks with Japan as early as this month, according to reports at the end of February. The Toronto Star reported:

A joint study of the feasibility of a Canada-Japan Economic Partnership Agreement in the past year has reportedly gone well and Japanese Prime Minister Yoshihiko Noda and Harper agreed in a telephone call in December to decide quickly whether to launch free-trade talks. As a result, sources say Harper could kick off negotiations with Japan next month (March). He is scheduled to attend a summit on nuclear security in South Korea in late March and there is speculation he will add on a visit to Tokyo for that purpose.

Feasibility studies being mere formalities designed through mathematical bias to prove a case for freer trade, we should expect these talks to move ahead while both Canada and Japan fumble with entry into the TPPA.