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Countries rejecting investor-state dispute settlement, writes Sierra Club Canada

Janet Eaton writes in her Sierra Club Canada blog this week of a growing global awareness “that NAFTA-style foreign investor privileges and their private investor-state dispute system [ISD]… should be rejected in trade and investment agreements.” Australia continues to resist U.S. efforts to include investor-state in the Trans-Pacific Partnership talks. The government, “was not only concerned about the loss of public policy sovereignty but was also taking seriously the advice of the Australian Productivity Commission which concluded there were few clear benefits, and several worrying risks, associated with such provisions,” writes Eaton. Now, she adds, India seems to be indicating it will “abolish the investor-state dispute system and renegotiate FTAs with South Korea, Singapore, and other countries.”

Indian Express, a leading English-language daily in India, “named India’s Comprehensive Economic Partnership Agreement (CEPA) with South Korea as a representative example of a trade agreement permitting foreign companies to challenge New Delhi’s policies,” wrote Jung Eun-joo in The Hankyoreh last week. “A CEPA is a trade agreement with a broader scope than an FTA. It encompasses all areas of economic relations, including trading of goods and services, investment, and economic cooperation. The CEPA signed between South Korea and India went into effect in January 2010.”

The article explains that the Indian government’s decision to abandon the investor-state process “is its first-hand experience with the potential threat foreign companies pose to public policy on the grounds of investment agreement violations. Since January, multinational corporations have been waging an assault on Indian government policy. The UK telecommunications company Vodafone announced plans to take various international and domestic measures, arguing that the Indian government violated its investment pledge by changing its tax policy. Norway’s Telenor and Russia’s Sistema also launched legal battles, and India’s state-run Coal India Limited recently lost an international arbitration case to an Australian company.”

Brent Patterson, director of campaigns and communications with the Council of Canadians, has commented on the potential of India’s new tax on corporate mergers could affect the Canada-India free trade negotiations. Canada was not able to conclude a Foreign Investment Protection Agreement (FIPA) with India and the government will be putting pressure on Indian trade negotiators to include an investor-state process in any final deal.

“Meanwhile in the US and Canada,” writes Eaton in her blog, “both President Obama and Prime Minister Harper are pushing Investor State Dispute settlement in their frenzy to initiate free trade deals in every corner of the world. In the case of Obama – this is in spite of his Presidential campaign promises to review NAFTA Ch 11 [investor state] and other harmful aspects of Free Trade Agreements in general and in spite of over 100 Congress persons and many progressive NGOs support of the TRADE [Trade Reform, Accountability, Development and Employment ] Act tabled by Representative Michael Michaud [D- Maine] and Sen. Sherrod Brown (D-Ohio).”

Eaton says she hopes the global momentum against investor-state will eventually be powerful enough to influence the Harper government to reject the process and renegotiate agreements where it already exists.