U.S. wants special rights for investors to sue governments
The U.S. wants special rights for foreign investors included in the Trans Pacific Partnership (TPPA), which would allow corporations to sue governments for millions of dollars if their investments are ‘harmed’ by a law or policy, even if that law or policy is designed to protect public health or the environment. The proposal is known as Investor-State Dispute Settlement, or ISDS.
These disputes are heard by international investment tribunals, which prioritise investor rights above the public interest, and which do not have an independent judiciary or other safeguards of national legal systems.
Australia’s democratic parliament and court system is already being undermined by an ISDS provision in an obscure 1993 Hong Kong-Australia investment treaty. After a group of tobacco companies tried and failed to get compensation through the Australian High Court over the plain packaging legislation, US-based tobacco company, Philip Morris, moved some of its investments to Hong-Kong so it could use this agreement to sue the Australian Government. Philip Morris clearly believes that an international investment tribunal will give it a more favourable decision.
Under the North American Free Trade Agreement (NAFTA) US corporations have used ISDS to sue governments for tens of millions of taxpayers’ dollars over legitimate health and environment legislation. Currently, the US Lone Pine energy company is using ISDS provisions in NAFTA to sue the provincial government of Quebec for $250 million because it suspended shale gas mining pending an environmental study in response to community concerns.
In Australia, farmers and members of communities influenced the NSW government to regulate coal seam gas activity close to residential suburbs and rural industries. If Australia agrees to ISDS rules in the TPPA, foreign companies could sue state governments for damages over this kind of regulation. Even if the government wins the case, it can cost millions in legal fees.
The Howard government did not agree to ISDS in the Australia-US Free Trade Agreement in 2004. However, the Coalition’s trade policy is to negotiate on ISDS. We urge the Government to oppose clauses in the TPPA that grant special rights for foreign investors to sue governments.
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