Australia appears to be the lone holdout – for now – to a key section of the Trans-Pacific Partnership that details how multinational companies could take legal actions against governments over decisions they consider detrimental to their interests.
WikiLeaks today revealed the controversial investment chapter of the TPP, which shows the intent of negotiating parties, led by the US, to create a supra-national court where foreign firms could sue states using investor-state dispute settlement (ISDS) clauses and overrule their national court systems.
The chapter is available to read on the .
ISDS clauses are a class of provisions sometimes included in free-trade agreements that, broadly speaking, allow companies to take legal action against decisions by a government that is party to the agreement, if they feel those decisions are detrimental to their investments.
However, footnote 29 of the leaked chapter states that Australia does not agree to the ISDS process – unless certain conditions are met.
Section B does not apply to Australia or an investor of Australia. Notwithstanding any provision of this Agreement, Australia does not consent to the submission of a claim to arbitration under this Section. <<xx note: deletion of footnote is subject to certain conditions>>
“No other country has listed an objection to being subject to the private investor-state corporate enforcement regime,” Public Citizen’s Lori Wallach and Ben Beach wrote in analysis of the TPP chapter.
“A note in the leaked text indicates that even Australia is considering subjecting its laws and taxpayers to ISDS under the TPP, ‘subject to certain conditions.’ This would impose novel obligations on Australia, as Australia successfully resisted U.S. pressure to include ISDS in the existing U.S.-Australia FTA.”
Matthew Rimmer, an Australian Research Council Future Fellow and associate professor at the ANU College of Law, said that Australia’s position is significant.
“It seems that Australia is playing hardball in relation to the Trans-Pacific Partnership,” he said.
“It’s really using it as a bargaining chip and Australia seems to be taking the attitude that they’re not going to agree to the deal unless conditions are satisfied.”
Australia has been directly affected by ISDS clauses in the past. The most prominent recent use of an ISDS clause in Australia has been the attempt to roll back legislation that enforced plain packaging for tobacco products. Tobacco company Philip Morris Asia took legal action against the Australian government under provisions of the free trade agreement Australia signed with Hong Kong in 1993.
Critics of the TPP have said that the inclusion of ISDS clauses in agreements has potential ramifications for Australia's intellectual property regime as well as future government action to address the high cost of software and other digital goods.
Another problem cited by the detractors of ISDS clauses is so-called 'regulatory chill': The impact on law-making of potential legal action by corporations.
For the Australian IT sector, ISDS clauses in the TPP agreement could have an impact on IT pricing and the alleged “Australia tax” charged by large multi-national IT vendors like Adobe and Microsoft, said Rimmer.
“Multinational companies that are cashed up will be able to deploy [ISDS actions] throughout the Pacific rim,” he said.
If the Australian government were to take action on IT pricing, for example, the TPP could allow multinational companies to bring action and overrule the new policy, he said.
“But really it covers the whole sweep of possible regulatory issues affecting information technology and communications companies.”
Rimmer said the release of the secret TPP investment chapter could lead to its deletion.
“It’s really a bombshell that the key chapter of the Trans-Pacific Partnership should be published by WikiLeaks,” he said.
“The release of the full text may harden opposition” in the US Congress, he said.
“There will be a greater amount of pressure placed upon the negotiating parties to cut the investment chapter altogether or else massively revise the agreement in terms of the text of the [ISDS].”
Australian Greens Senator Peter Whish-Wilson condemned ISDS clauses in the TPP. Whish-Wilson has previously attempted to legislate against the inclusion of ISDS clauses in free trade agreements.
“The Senate recently heard evidence that ISDS clauses are now proving dangerous, with hundreds of cases proliferating around the world in recent years,” the senator said
“They are completely unnecessary and represent a clear threat to the sovereignty of our nation, simply in order to satisfy powerful corporate interests and their deregulation agendas.
“Australia should not enter into any trade deal that gives special rights to corporations to sue a government simply for making decisions in the public interest.”