The Australia-India Migration and Mobility Partnership Agreement reconfirms that Australian Prime Minister Albanese stands for an ‘Excessively Big Australia’, according to Sustainable Population Australia (SPA). Voters are coming off third best.
This article was originally published at bloggerme.com.au Since Tony Abbott was elected, Australia has progressed with two trade agreements that place Australia at risk of Investor-State Dispute Systems (ISDS) — one already signed with Korea (which definitely includes ISDS) and another close to agreement with Japan (which may include an ISDS). ISDS creates a parallel legal system that allows foreign investors to sue Australian taxpayers if Australia passes laws that reduce the value of their investments or their profits.
ISDS is so controversial (dangerous) that popular resistance against it is holding up the Transatlantic Trade and Investment Partnership agreement between America and the E.U. Indonesia has just announced that it is terminating over 60 bi-lateral trade agreements due to its concerns about ISDS clauses in those agreements.
In Australia, Greens Senator Peter Whish-Wilson has introduced the Trade and Foreign Investment (Protecting the Public Interest) Act 2014 into the Senate. The Bill aims to protect Australian laws by banning ISDS provisions which enable foreign investors to sue governments (ours or others).
The Department of Foreign Affairs and Trade (DFAT) argues that the latest ISDS agreements are "improved" versions that protect Australia's interests and that new ISDS agreements will replace. Others argue that old ones will still be in place, so the new ones can not offer any improvement.These statements were made at the recent DFAT stakeholder meeting for the TPP held in Melbourne on March 26. See the article TPP a high quality trade agreement - for multinationals, on the Independent Australia site for more information on this meeting and the TPP process in general.
There is an inquiry by the Senate Foreign Affairs, Defence and Trade Committee into the Bill and AFTINET has been asked to supply some points and references for people and organisations who want to make submissions.
Submission to the Senate Foreign Affairs, Defence and Trade Committee into the ISDS Bill close on 11 April 2014. The Reporting Date for the Report of the Inquiry: 16 June 2014, so public hearings will probably be held in May.
Below are 6 points (produced by AFTINET, with references) explaining why the government’s “safeguards “in the Korea FTA won’t work, and the latest information about Indonesia, Germany and France opposing ISDS in trade agreements.
1. ISDS has developed expanded legal rights for investors which are not found in national legal systems
ISDS enables foreign investors to sue governments for compensation in an international tribunal if they can claim that a domestic law or policy “harms” their investment. ISDS has expanded beyond its original intention, which was to pay monetary compensation to foreign investors in the event of the actual expropriation or taking of their property by host governments. There has been an expansion of legal concepts like “indirect expropriation” and “fair and equitable treatment” beyond the scope of their meaning in national legal systems, to enable investors to lodge claims against domestic law or policy on the grounds that it reduces the value of their investment.
(United Nations Committee on Trade and Development, (UNCTAD), 2000, p. 11)
2. Increasing numbers of ISDS cases against health and environmental legislation
There are increasing numbers of cases in which foreign investors are suing governments for hundreds of millions of dollars over health, environment and other public interest legislation. Recent examples include:
- the Philip Morris Tobacco Company suing Australia and Uruguay over regulation of tobacco packaging for public health reasons
- the Eli Lilly pharmaceutical company suing the Canadian national government over a court decision to refuse a medicine patent
- the US Lone Pine mining company suing the Québec provincial government of Canada over environmental regulation of shale gas mining
- the Swedish energy company, Vattenfall, suing the German government over its decision to phase out nuclear energy.
(Gaukrodger and Gordon OECD, 2014, p. 7, Public Citizen Table of Cases, 2014).
3. Costs to government and taxpayers
Both the costs of running cases(OECD estimates an average of $8 million per case, with some cases costing up to $30 million) and the compensation awarded to foreign investors, (often hundreds of millions and in some cases billions of dollars) can discourage governments from proceeding with legitimate domestic legislation. The highest compensation award so far is $1.8 billion against the government of Ecuador. This is damaging for any government, but particularly damaging for developing countries, and can have a freezing effect on legitimate domestic legislation.
(Gaukrodger and Gordon, OECD, 2012, p. 19, UNCTAD, 2013a, p. 3)
4. Lack of legal protections found in domestic legal systems
The disputes are heard by international investment tribunals, operating in under different sets of rules, but all of which lack the safeguards of national legal systems in the following ways.
- The proceedings are not made public unless both parties agree and even the results of proceedings can remain secret, unlike national legal systems, where proceedings and results are public
- The arbitrators can also be practising advocates, and so lack the independence of judges in national legal systems
- There is no system of precedents, and no appeal system, so decisions lack consistency
- Third-party funding of cases, described by the OECD as “a new industry composed of institutional investors who invest in litigation by providing finance in return for a stake in a legal claim” has encouraged a growing industry of investment law firms which actively solicit business and encourage large claims.
(UNCTAD, 2013b, p. 1, Gaukrodger and Gordon, OECD, 2014, p. 36)
5. Recent “safeguards” in ISDS clauses to protect health, environment and other public interest legislation have not been effective
There are claims that recent changes to the wording of ISDS clauses in trade and investment agreements like the Korea-Australia Free Trade Agreement (KAFTA) are “safeguards” which will prevent foreign investors from suing governments over health, environment or other public interest legislation.
But the first “safeguard” sentence in the KAFTA reads: "except in rare circumstances non-discriminatory regulatory actions by a party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, do not constitute indirect expropriations" (KAFTA chapter 11, annex 2B). Many legal experts have pointed out that the phrase "except in rare circumstances" leaves a very big loophole, which recent cases have used to advantage. The second “safeguard” is a more limited definition of "fair and equitable treatment" for foreign investors (KAFTA chapter 11, clause 11.5.2 and Annex 2A). However tribunals have ignored these limitations and applied the previous higher standard. A third “safeguard” is a reference to the general protections for “human, animal or plant life” in article XX of the WTO General agreement on Tariffs and Trade (KAFTA Article 22.1). This article has only been successful in one out of 35 cases in the WTO which have attempted to use it to safeguard health and environmental legislation.
These same “safeguards” in recent trade agreements like the Central American Free Trade Agreement and the Peru-US Free Trade Agreement have not prevented foreign investors from launching cases against environmental legislation. For example:
- the Government of El Salvador has been sued by Pacific Rim Mining Corporation under the Central American Free Trade agreement, over a ban on mining to protect the nation’s limited groundwater resources
- the US-based Renco Group is using ISDS in the Peru-US free Trade Agreement to contest a local court decision that it was responsible for pollution from its lead mine. Both cases are ongoing and may take several years.
(see case studies in Public Citizen, 2010, 2013, 2014)
6. Increasing numbers of governments are withdrawing from ISDS
Increasing numbers of governments are reviewing and terminating their involvement in ISDS. These include members of the European Union like France and Germany, Brazil, Argentina and eight other countries in Latin America, India and South Africa. Indonesia has recently announced it will terminate all 67 of bilateral investment treaties.
(Gaukrodger and Gordon, OECD, 2012, p.7, European Parliamentary Research Service, 2014. p.2, Bland and Donnan, 2014)
Ben Bland and Shawn Donnan, (2014) “Indonesia to terminate more than 60 bilateral investment treaties” Financial Times, March 27 http://www.ft.com/intl/cms/s/0/3755c1b2-b4e2-11e3-af92-00144feabdc0.html?ftcamp=published_links/rss/asiapacific/feed//product&siteedition=uk#axzz2x5CRbtpN
Donnan, S., and Wagstyl, S., (2014) “Transatlantic trade talks hit German snag” Financial Times, March 14 found at http://www.ft.com/cms/s/0/cc5c4860-ab9d-11e3-90af-00144feab7de.html#axzz2xCOjUOBt
European Parliamentary Research Service, (2014) “Investor-State Dispute Settlement (ISDS): state of play and prospects for reform” European Parliamentary Research Briefing, Brussels. January. www.europarl.europa.eu/.../LDM_BRI(2014)130710_REV2_EN.pdf
?David Gaukrodger and Catherine Gordon, (2012), “Investor-state dispute settlement: a scoping paper for the investment policy community”, OECD Working Papers on International Investment, no. 2012/3, OECD Investment Division, Paris, December. www.oecd.org/daf/inv/investment-policy/WP-2012_3.pdf
Public Citizen, (2010) CAFTA Investor Rights Undermining Democracy and the Environment: Pacific Rim Mining Case, Washington found at http://www.citizen.org/documents/Pacific_Rim_Backgrounder1.pdf
Public Citizen, (2013) Only One of 35 Attempts to Use the GATT Article XX/GATS Article XIV “General Exception” Has Ever Succeeded https://www.citizen.org/documents/general-exception.pdf
Public Citizen, (2014) Table of Foreign Investor-State Cases and Claims under NAFTA, August, Washington, found at http://www.citizen.org/documents/investor-state-chart.pdf
United Nations Committee on Trade and Development, (UNCTAD) (2000) "Taking of property", Issues in International Investment Agreements, UNCTAD, Geneva.
United Nations Committee on Trade and Development, (UNCTAD) (2013a) Recent Developments in Investor-State Dispute Settlement, IIA Issues Note, UNCTAD, May, found at http://unctad.org/en/PublicationsLibrary/webdiaepcb2013d3_en.pdf
United Nations Committee on Trade and Development, (UNCTAD) (2013b) Reform of investor state dispute settlement: in search of a roadmap, IIA Issues Note, UNCTAD, June, found at http://unctad.org/en/PublicationsLibrary/webdiaepcb2013d4_en.pdf
Will our sovereign rights be signed away with the Trans-Pacific Partnership (the TPP) Agreement? Matthew Mitchell examines the likelihood in this article. Originally posted on the Australian Independent Media Network
Currently our government is negotiating the TPP with America (and other nations) in a secret process. This process and many proposed elements of the agreement have been universally condemned by civil society. In particular the Investor-State Dispute Settlement (ISDS) system, which the Abbott government has indicated it may accept. The ISDS has been protested against by over 30 civil society organisations in Australia (in a letter published by AFTINET) and also by judges, lawyers and academics globally (in an open letter) arguing that it:
“threatens to undermine the justice systems in our various countries”
“the increasing use of this mechanism to skirt domestic court systems and the structural problems inherent in the arbitral regime are corrosive of the rule of law and fairness.”
In fact, if agreed to, the ISDS would effectively sell out our sovereignty over our nation as described in the Huffington Post:
“From leaked drafts, terms of the Trans-Pacific deal have come under fire for proposing to grant corporations the political power to directly challenge government regulations in international court. This sovereignty issue has long been a sticking point for both conservatives and progressive members of Congress, as the right to challenge government rules had been restricted to sovereign nations under World Trade Organization pacts and other deals.”
How is it that a government of a democratic country with a constitution can consign its populations to a system of law that sits above the country’s own constitution and legal system? Effectively signing away the democratic and constitutional protections that people thought they had, and believed could only be changed by referendum?
The answer is: Through treaties. And, as I will argue, this is a fault (or loophole) in our current constitution.
The Productivity Commission’s 2010 Trade Report explains the process of joining treaties. The report indicates that an agreement is signed before being tabled in Parliament with the approval of Cabinet (Chapter 15, p 298):
“The power to enter into treaties is an executive power within Section 61 of the Australian Constitution and accordingly, is the formal responsibility of the Executive rather than the Parliament”.
But even though Cabinet has approved the Prime Minister to sign the treaty, Australia is not formally committed until the implementing legislation is passed as is explained in the report: “However, the power to implement treaties is a legislative power, conferred on the parliament by section 51(xxix) of the Constitution.”
This same process is described by DFAT as follows (bold emphasis my own):
“Once the parties agree on the final text of the TPP Agreement, the Government will make the agreement available publicly and open to scrutiny before the Parliament considers passing it into law.
After Ministers table the final TPP text in the Parliament, the Parliament’s Joint Standing Committee on Treaties will coordinate a public review of the agreement.
The Committee can then invite submissions and evidence at public hearings, to help determine whether it should recommend to Parliament that the TPP be ratified.”
Thus once the required implementing legislation is passed by Parliament, the treaty is ratified and comes into effect. There are two important catches here. These are explained by AFTINET and I will include AFTINET’s explanations below (bold emphasis my own):
“The Trade Minister presents the text to the Cabinet, which is made up of the Prime Minister and other Cabinet Ministers. The decision to sign the text is made by Cabinet, not the whole Parliament.
The text cannot be changed after it is signed.”
“Parliament only votes on the implementing legislation, not on the whole text of the agreement. The Trans-Pacific Partnership (TPP), for example, has 29 chapters and only a few of these will require changes to legislation.”
“However, many other chapters will restrict the ways in which current and future Australian governments can legislate, but will not require legislation. For example, the inclusion of the right of foreign investors to sue governments over domestic legislation (investor-state dispute settlement or ISDS) does not require a change to Australian legislation. Other changes, like changes to the Pharmaceutical Benefits Scheme, could be done by changing regulation rather than through legislation.
In other words, Parliament may never see, or vote on, the Investor-state Dispute Settlement system. And perhaps there are many other nasties hidden in the agreement that Parliament will never see or debate. Just a fraction of the treaty will pass through Parliament, but once that happens all the others aspects come into play as commitments we will have made, including elements that may diminish, restrict or penalise the actions and powers of our own Parliament.
Now, this may not always be a bad thing. Australia has made a commitment to be part of the UN, and has signed UN treaties on human rights and other issues. These also give up elements of our sovereignty, requiring our government to meet certain international standards and obligations. There is of course, an important different in being held to account by a body run by other sovereign and (mostly) democratic nations rather than a tribunal convened, run and filled by corporate lawyers – such as the ISDS would require. But in relation to signing away sovereignty the two are similar. The main difference is that in one case our rights are protected, in the other they are weakened.
So how do we ensure that our sovereign rights are only signed away when it benefits citizens? In relation to this, perhaps keep in mind that constitutions are a mechanism to restrict the powers of governments (so as to protect the rights of the people governed). If we had a perfect constitution and government that completely represented the will of the majority of people, then perhaps no other protections would be needed. But the experience of the world is different, often governments do pass legislation that deprives people of their rights and of justice (and the TPP is perhaps an example of that). So what can be done to ensure that the only treaties that are signed are those that are approved by the people? I suggest that requires a change to our constitution. If governments are going to sign away our sovereignty at least let that depend on the result of a referendum. I would suggest that this would be appropriate following the signing (so that it clear what is agreed and proposed) during what is now the public review conducted by the Joint Standing Committee of Parliament.
Of course, even with the addition of a referendum, the success of this process would depend on the public having full and reliable information on what is being signed, and its implications. This requires a somewhat unbiased and open press, reaffirming the need for public broadcasters such as the Government owned ABC, and perhaps other alternatives also. Given our highly concentrated media ownership, access to unbiased information is an issue Australia needs to address, and perhaps a system of grants to support independent media (based on readership) may be something to be considered as an option here.
Further reading: TTP Australia
I am leveling the following charge against our Australian constitutional system: Everyday Australians must follow the rules, but they cannot change them. Australians have no real say over their own system of government, at either state or federal level.
If this accusation is correct the implication is that Australians are not free, they are subjects of the Elite.
Do we need to change our Constitution? Considering that it is over a century old and not a Constitution for the ‘people’, Matthew Mitchell, in this post says “yes, we certainly do”.
I am leveling the following charge against our Australian constitutional system:
Everyday Australians must follow the rules, but they cannot change them. Australians have no real say over their own system of government, at either state or federal level.
If this accusation is correct the implication is that Australians are not free, they are subjects of the Elite.
The obvious reply is that we have the ability to have referendums. Do we really? Even if a large number of citizens wanted a significant change what is the likelihood that change would occur? I claim it is zero. Referendums must first be approved by our parliament, thus any proposal is not put directly to the people, it is first filtered and modified, and likely rejected, by our parliamentary political system. The system preserves itself, and is immune to change proposals. The only ideas that even get close to referendum are proposals that entrench the status quo (eg: replacing the titular head of state); increase or preserve the powers of one or another levels of government (eg: recognition of local government), and even if well intentioned may be undermined (eg: constitutional changes proposed as part of the republic) or seen as coming from a
favoured political group. Thus it is no wonder that referendums usually fail, Australians are perhaps quite rightly innately un-trusting of any proposal that is put to referendum, suspecting that it serves one or another vested interest.
Thus Australians are not free – they have no say over what their political system is, or how it works. They are stuck with a system set up by colonial masters and elite citizens over 100 years ago. This system can only be changed with the consent of those privileged few that control the parliament (those who Govern us, the subjects) and it is highly unlikely – impossible even – that proposals from anyone who is not a member of the political or business elite will get attended to.
It does not have to be this way! In Switzerland the People are truly sovereign – they can force a referendum on any issue they choose, if they get 100,000 signatures. And they do it regularly. Sometimes more than 12 times a year! Relevant examples include:
It is claimed that this ability to change the constitution makes Switzerland a more stable country compared to countries like Australia whose constitutions are now well out of date. The fact is that Australia’s Constitution (at state and federal levels) is an undeniable mess, as Peter Olney discusses below (take for example, the ridiculous invention of a Queen of Australia).
If we are going to move to a republic, which really is a concept most Australian’s would support (if they trust the changes), then why not fix the whole constitution and perhaps introduce Swiss style direct democracy at the same time?
There was a vote to federate years ago (which was not that inclusive) but really there was no choice (for the people) of what constitution they may have. Thus no vote on this, as there were no choices! In any case, if we have at least one proposal that gives us some choice: the old or the new?
However, in this day and age, people trust grass roots movements more than proposals coming from the seats of power, or what are seen as the seats of power. Thus GetUp! campaigns have more legitimacy than government proposals for referendums on local government or anything else. So a new constitution is more likely to be trusted, and voted in, if it seen to come from the people: a People’s Constitution.
And the truth is that there are already several proposals that could form the basis of new People’s Constitution:
And perhaps this new constitution could include Indigenous people like never before and help correct some long standing injustices, such as Indigenous rights and recognition. There are also proposals to this effect such as one by UNILEX and another on Change.org.
But let us beware that in this process, there is a serious danger. It is likely that as discussion of proposals for a new constitution progresses, long brewing issues and injustices will also be highlighted. Make no mistake, there are issues that need to be discussed. They include not only Indigenous rights and recognition but also real or perceived threats to Australian values and culture from immigration and some minority groups (such as associated with the RestoreAustralia proposal).
But we must be very CAREFUL that we do not vilify immigrants who have come here under our past legal framework in good faith. If anything, or anyone, is to blame for our current situation and predicaments – it is our legal framework that may not allow sufficient democratic say on important national issues and the generations of politicians, lawyers and bureaucrats that have allowed this undemocratic system to continue for so long. In this regard I suggest we also look at Professor George William’s writing on the need for constitutional change as well as Justice Cheryl Saunders' speech on the need for a Bill or Rights.
However, there is a degree of urgency in this if we are to address pressing issues, such as growth, immigration and trade (such as signing away of our sovereignty with the TPP pact) whilst there is still time. But please let us do this with care, consideration and compassion for all who do, or may, call Australia home. Let Australians set an example of how societies can move forward peacefully – there has already been too much violence in the development of new nations like Australia and America. Time for a change!
[Ten News Sydney] Racist attack on Sydney Bus - 2/4/2013
(David Donovan and Peter Olney are acknowledged for their contribution to this article).