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Canada says dispute settlement mechanisms in new Trans-Pacific Partnership apply to environment & labour rights

How should we understand the status of the investor-state dispute settlement (ISDS) provision in the Trans-Pacific Partnership-11 agreement?

What was agreed to?

The Globe and Mail reports, “The deal announced Friday removed 20 sections of the original TPP deal, including provisions related to pharmaceutical products, patent protection, copyright and intellectual property. Another section lists four categories as areas where ‘substantial progress was made but consensus must be achieved before signing’: the treatment of state-owned enterprises, services and investment, dispute settlement and culture. A Canadian government official said rules related to the auto sector continue to be part of the TPP but will be the subject of a ‘work plan’ to reach an agreement on details.”

What was the ‘substantial progress’ on ISDS provisions?

The New Zealand-based independent news website Newsroom notes, “Most relevant to New Zealand are the suspensions relating to the [ISDS] clauses. Leading up to the talks, [Prime Minister Jacinda] Ardern said [her negotiators] had been successful in narrowing the ISDS provisions in three areas: they no longer apply to investment screening (which will protect the Government’s restriction on foreign buyers from challenge), will not allow a company that takes up a contract with a government to sue through the ISDS, and changes to the way it applies to financial services.”

The National Business Review (NBR) adds, “To try to counter domestic disappointment among its supporters if it signs a TPP-11 agreement with ISDS clauses, the [Ardern] government has already announced how it will effectively ban sales of existing homes to non-resident foreign investors and signed a side letter with Australia agreeing not to use TPP ISDS clauses against one another.”

Ardern also noted that a three-year review provision built into the TPP-11 agreement would eventually see the ISDS provisions further eroded or abandoned.

Are these amendments just spin?

TPP critic Jane Kelsey writes, “Some of what [Ardern] referred to as potential protections, such as a three-year review that would hypothetically allow removal of the [ISDS provision] and protection of investor screening under the Overseas Investment Office from ISDS, were not in the Annex of agreed suspensions.”

She adds, “[The trade minister] claims that investors with government contracts cannot now use the ISDS provision to enforce those contracts. He needs to acknowledge they can still bring a dispute relating to those contracts where they allege a breach of the investment chapter’s rules. That is where the real power lies.”

Kelsey also notes the side agreement with Australia not to use ISDS against each other was in the original TPP agreement.

What about ISDS vs environment and labour rights?

On Friday, a Global Affairs Canada media release noted, “Environment and labour rights will form crucial pillars of a new agreement and will be subject to dispute settlement mechanisms.”

Kelsey further highlights the circular argument that Article 9.16 in the TPP only allows governments to adopt health, environment other regulatory measures provided they are consistent with the agreement.

What’s next?

NBR reports, “By Saturday morning, a ‘settled text’ had been agreed but that included four areas of contention that will need to be resolved before signing can occur and the agreement can proceed to ‘enter into force’ on a date that has yet to be agreed. It appears that a trade ministers’ meeting is likely in Japan before the end of the year to try to progress the four areas: carve-outs for subsidies to sustain local culture, labour standards and state enterprises and coal production.”

Radio New Zealand adds, “Officials and Trade Ministers are expected to work out a timeline shortly for finalising a deal, which could come as early as February. The onus will be on Vietnam, Malaysia, Brunei and Canada to resolve their outstanding issues in time, or the provision will stay as it currently stands.”

Further reading
What did Trudeau & Champagne agree to in the ‘Comprehensive and Progressive Trans-Pacific Partnership’?