Brisbane Times, Australia
Concern Australia could get mauled by Japan free trade clause
By Peter Martin, Economics Editor
6 April 2014
Japanese companies would be able to sue Australian governments under clauses expected to be included in the Australia-Japan free trade agreement.
Agreement on the text is imminent and may be announced while Prime Minister Tony Abbott is in Tokyo on Monday.
The so-called investor state dispute settlement (ISDS) clauses would give Japanese companies the right to take Australia to international tribunals over decisions they felt impinged on their interests, a right denied to Australian companies.
An ISDS provision is being used by tobacco giant Philip Morris to challenge Australia’s decision to require plain packaging of cigarettes. Shortly before losing its case in the High Court, Philip Morris incorporated a company in Hong Kong to take advantage of ISDS provisions in an Australia-Hong Kong investment agreement.
The Howard government successfully resisted a US demand to include ISDS provisions in the US-Australia free trade agreement and the Rudd and Gillard governments successfully resisted pressure to include them in the Malaysia-Australia free trade agreement.
The Coalition allowed them to be included in the Korea-Australia free trade agreement and is open to including them in the 12-nation Trans-Pacific Partnership Agreement.
“Australia appears desperate to reach a deal with Japan at any price,” said Patricia Ranald, convenor of the Australian Fair Trade and Investment Network.
“But it shouldn’t agree to allow Japanese investors to sue our government over domestic laws.”
“The disputes are heard by international investment tribunals which lack the normal protections of domestic legal systems. The proceedings are usually secret and the judiciary is not independent because judges can also be advocates. The system also works without precedents or appeals meaning decisions can be inconsistent.”
Originally designed to allow foreign investors to sue governments for compensation if their investments were expropriated, ISDS clauses are now also used to challenge decisions “equivalent to such deprivation”. In Canada Eli Lilly is suing the government over a court decision to refuse it a medicine patent, in Peru a lead mining corporation is suing the government over a court decision that it was responsible for pollution from its mine and in El Salvador a mining corporation is suing the government over a ban on mining to protect the nation’s groundwater.
The Australian government believes the Korea Australia free trade agreement includes safeguards to prevent foreign corporations suing it over health, environmental and other public interest legislation except in what the agreement describes as “rare circumstances”.