Will Abbott hand power to multinationals?

Last month I argued there was little difference between Australia’s two major political parties at this election, but I’ve recently discovered there is actually a big difference. It’s called the Trans-Pacific Partnership (TPP), and it could take away Australia’s power to regulate transnational corporations, yet few citizens have even heard of it.

The TPP is a “free trade agreement” being negotiated in intense secrecy between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The public, journalists, parliaments, and NGOs are not privy to the negotiations, but hundreds of multinational corporations and business lobby groups are. The negotiations have been going for several years and are expected to be concluded in Bali next month. The TPP is just one of many free trade agreements being negotiated around the world.

I am generally inclined to be suspicious of free trade agreements because they are negotiated in intense secrecy, the intention behind them seems to be to increase the power of big business, and anyone who questions free trade is demonized with labels such as “extremist”, “populist”, and “xenophobic”. And although “free trade” used to refer to a relatively limited set of policies (such as removing border tariffs and cutting industry subsidies), leaked drafts of the TPP have revealed a far more radical anti-regulation agenda that extends to all areas of policy.

Most frighteningly, the US is advocating “investor-state dispute settlement” (ISDS), an international tribunal which would give transnational corporations the power to legally challenge domestic laws and court decisions which endanger their “expected future profits”. Governments would not have the power to sue corporations. This tribunal, to be based in Washington and run by international trade lawyers, would have the authority to overrule a national government and force it to pay unlimited compensation to companies, with no appeal process or precedents.

The tribunal would be unaccountable and non-transparent. Friends of the Earth argues it will be a “kangaroo court” because the lawyers may rotate between acting as independent arbitrators and corporate prosecutors. In any case, rulings would be based on whether the policy hurt investment, with little regard to the policy’s reason for existence.

Stop and think for a moment about the sweeping potential implications of ISDS. Any number of policies in the public interest could threaten corporate profits, and hence could be overturned through an investor-state tribunal. Policies at risk could include carbon taxes, mining taxes, restrictions on coal seam gas, anti-tobacco laws, and laws against tax evasion. Worse, ISDS will have a chilling effect on the development of new environmental policies, such as the rapid phaseout of all fossil fuels we urgently need to undertake to solve climate change.

Apparently there are existing ISDS provisions in some past free trade agreements, which have already led to unexpected consequences in some cases. For example, Philip Morris is currently suing the Australian government over its plain packaging legislation, on the basis of an obscure 1993 agreement with Hong Kong which included ISDS. (To its credit, the Howard government rejected an ISDS proposal in the 2004 Australia-United States Free Trade Agreement, so Philip Morris had to move assets to Hong Kong in order to sue.)

The 1994 North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico also included ISDS, and has already forced governments to pay out billions of dollars.

Other aspects of the TPP could involve:

Australia is the only country in the TPP negotiations which has ruled out agreeing to ISDS, a position which has been reaffirmed by recently-appointed Trade Minister Richard Marles. Despite all Labor’s faults, this is one policy I have to congratulate them on! The Greens also oppose ISDS, and have argued if Labor is serious about opposing ISDS it should pull Australia out of the TPP negotiations altogether. Many other minor parties are also opposed to the TPP, including the Wikileaks Party.

However, if the Liberals win the election they are prepared to negotiate on ISDS:

[O]pposition foreign affairs and trade spokeswoman Julie Bishop said a Coalition government would be prepared to consider including these provisions in a range of bilateral and multi-lateral trade talks.

“By not even including it in the first round, we have no bargaining position on the issue. The beef exporters are furious the government has backed itself into a corner and proven to be so inept at negotiating a deal with South Korea when the United States has achieved one,” Ms Bishop said.

“The Coalition would, as a matter of course, put ISDS clauses on the negotiating table and then negotiate ISDS provisions on a case-by-case basis.”


Ms Bishop said [Labor’s] argument was “unacceptable” and that a willingness to discuss inclusion of ISDS provisions could prove a breakthrough in deadlocked trade talks. “The government is putting its political fortunes ahead of the interests of exporters and their employees,” she said.

ISDS would be perfectly in line with the Liberals’ ideology of deregulation. I’ve accused the Liberals of a radical agenda to transfer power from government to corporations, but even I never imagined ISDS.

The TPP could be agreed before most Australians even realize what is happening. Investor-state dispute settlement represents an attack on national sovereignty and on the very heart of democracy, at a time when we need accountable government more than ever. We should be decarbonizing the Australian and global economy as rapidly as possible to prevent climate change spiralling out of our control. If governments sign away their power to regulate transnational corporations, then it will become virtually impossible to solve climate change and the other problems we face in the 21st century.

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  1. […] also including ISDS. Investor-state dispute settlement would give multinational corporations the power to sue a government for any policy that hurts their profits in an unaccountable tribunal with unlimited powers. Any […]

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