Australia May Soon Regret Giving Up Its Refusal To Accept Corporate Sovereignty In Trade Agreements

from the why-on-earth-did-it-do-that? dept

Back in 2012, we wrote about Philip Morris suing Australia for requiring plain packets for cigarettes. Significantly, the company brought that action under a 1993 agreement between Australia and the government of Hong Kong. That’s because Philip Morris was unable to use the far more important free trade agreement with the US, which Australia had wisely insisted should not contain a corporate sovereignty (ISDS) chapter. Given that experience of being sued by a company simply as result of introducing new laws to protect the health of its citizens, it’s curious that the newly-installed Australian government seems to be reversing its position:

Australia’s new free trade agreement (FTA) with South Korea, promoted as a win for Australian exports, includes a clause that could spell big trouble for Australia’s environmental movement and sovereignty.

The FTA, agreed upon by both nations but yet to be ratified by parliament, includes an Investor-State Dispute Settlement (ISDS) provisions that allows overseas investors to challenge threats to their business interests in international courts.

As that article on points out, if Australia does indeed ratify the agreement with South Korea, it may not have to wait long before ISDS gets used against it:

There are currently three South Korean mining companies in NSW with significant interests in huge and environmentally controversial coal projects.

Because of the environmental damage they cause, there is growing resistance to these kinds of projects in Australia:

Over the past three years environmental campaigners in [New South Wales] have achieved some significant wins against coal seam gas mining companies including in the Northern Rivers, at Fullerton Cove and in the Illawarra and Sydney.

The O’Farrell government has also introduced some legislation, such as the No Go Zones for Coal Seam Gas (CSG) mining in Sydney, and a moratorium on CSG in Sydney Drinking Water Catchments. The [Environment Protection Authority] has also fined, albeit extremely modestly, a number of mining companies for pollution breaches.

These hard fought wins are all in jeopardy if the foreign-owned companies can sue for loss of financial return.

The Australian Fair Trade & Investment Network (AFTINET) notes that the Department of Foreign Affairs and Trade in Australia claims public welfare, health and the environment have been excluded from ISDS in the South Korean agreement, and so there is no reason to worry that Australia will be sued because of environmental action against its coal mines, say. But AFTINET goes on to point out:

Such “exclusions” in the Peru-US Free Trade Agreement and the US-Central America Free Trade Agreement didn’t stop the Renco lead mining company from suing the Peruvian government when they were required to clean up their lead pollution, or the Pacific Rim company from suing the El Salvador government because it refused a mining license for environmental reasons. Investors have pursued cases in other countries by claiming the process of developing the law did not include “fair and equitable” treatment for them.

Being sued by South Korean companies could be just the start. There are indications that Australia may also be willing to accept a corporate sovereignty chapter in TPP in exchange for better market access in the other TPP nations for Australian goods. In which case, US companies like Philip Morris wouldn’t even have to use obscure treaties to sue Australia, but will be able to do so directly under TPP.

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Comments on “Australia May Soon Regret Giving Up Its Refusal To Accept Corporate Sovereignty In Trade Agreements”

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That One Guy (profile) says:

Follow the money

For something so clearly against the best interests of the people, and the country itself, I’d say the best way to find out just where such insistence on screwing the country over is coming from would be to find out just who was donating to the newly elected government, and for how much. Would probably make for some interesting, and illuminating, reading.

Alternatively, or additionally, the cause could simply be the mindset of ‘It’s not my backyard being trashed, and it won’t be my money paid out to the suing companies, so why should I care?’ that so many politicians seem to have.

Candescence (profile) says:

It's because Tony Abbot is a buffoon.

That’s the long and short of it, really. Labor was opposed to ISDS provision in trade agreements, but the recently-elected Coalition, who have embraced the “the free market can do no wrong” ideology, doesn’t care.

The new government’s policies have been nothing but disaster since they came into power.

Anonymous Coward says:

Re: It's because Tony Abbot is a buffoon.

It’s more then the majority coalition not caring.

If you oppose more environmental or safety regulations then corporate sovereignty is a backdoor way to prevent the opposition from undoing whatever you do when you inevitably lose power one day.

So corporate sovereignty is effectively a backdoor power grab by some political parties.

Anonymous Coward says:

Australia holding out for sovereignty on broad issues was an exception and it appears, the few or in the case of TPP, the only one. That’s sad. None of these trade agreements come before a public debate, with full documentation. They are used as an end run around democracy (meaning majority rules, will of the people and all those silly 19th century ideals).

Corporations have more money and power than government. It appears that ISDS agreements do little more than allow corporations to come out of hiding concerning what’s already happening. I doubt if Australia crumbling will barely make a ripple.

Doug D says:

A natural experiment!

Some of the arguments around corporate sovereignty center around whether or not market forces are sufficient to punish “naughty” nations.

Well, let’s watch! If Australia accepts corporate sovereignty and many others do not, the logic sometimes used would dictate that investment in Australia would skyrocket, since conditions are so much more favorable.

And the theory says this would bring more benefit than detriment, because… rah rah free market sis boom bah regulatory certainty rah rah reasons, I think? (I honestly couldn’t follow this part.)

So, who brought the popcorn?

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