Trans-Pacific Partnership

The Department of Foreign Affairs and Trade will appear at the opening public hearing today for an Australian parliamentary inquiry looking at the merits of expanding the membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The CPTPP agreement signed in 2018 is a trade bloc of 11 countries that includes Australia and is an export market of 500 million consumers worth nearly $14 trillion. The parliamentary inquiry will examine the scope for expanding the TPP beyond the existing membership of Australia, Canada, Japan, Mexico, New Zealand, Singapore, Vietnam, Brunei Darussalam, Chile, Malaysia and Peru to include new members. Find out how to view the inquiry by video at http://www.aph.gov.au/jfadt

Chair of the Trade Sub-Committee of the Joint Foreign Affairs, Defence and Trade Committee, Ted O’Brien, welcomed the opportunity to investigate the process of how the current members of the CPTPP can agree on expanding the trade pact to include other economies, and understanding what the benefits of new members joining will be.

‘On the back of this week’s historical agreement to progress a FTA with the United Kingdom, between Prime Ministers Morrison and Johnson, it is timely to consider expanding the most comprehensive plurilateral trade agreement in existence, the CPTPP,’ Mr O’Brien said.

‘Before we can assess the merits of aspiring economies that could accede to the CPTPP, it is important to baseline everyone’s understanding of the agreement, and that starts today when hearing from DFAT.’

Representatives of DFAT will appear at the public hearing at 9:50 am, Thursday 17 June 2021 in Committee Room 1R4, Parliament House.

Further details about the about the inquiry, including terms of reference, details on how to contribute a submission and, when available, details of public hearings and roundtable discussions, can be obtained from the http://www.aph.gov.au/jfadt, the Committee’s website.

The text of a 19-page, international trade agreement being drafted in secret was published by WikiLeaks on Thursday as the transparency group's editor commemorated his two-year anniversary confined to the Ecuadorian Embassy in London. Fifty countries around the globe have already signed on to the Trade in Service Agreement, or TISA, including the United States, Australia and the European Union. Despite vast international ties, however, details about the deal have been negotiated behind closed-doors and largely ignored by the press.

In a statement published by the group alongside the leaked draft this week, WikiLeaks said "proponents of TISA aim to further deregulate global financial services markets," and have participated in "a significant anti-transparency manoeuvre" by working secretly on a deal that covers more than 68 percent of world trade in services, according to the Swiss National Center for Competence in Research.

Touting the deal earlier this year, the United States Chamber of Commerce said a successful TISA agreement would benefit America's services industry and its 96 million, or 84 percent, of the nation's private sector workers. "As its chief goals, the TISA should expand access to foreign markets for US service industries and ensure they receive national and most-favored nation treatment," the chamber said of the deal in February. "It should also lift foreign governments' sectoral limits on investment in services," "eliminate regulatory inconsistencies that at times loom as trade barriers" and "prohibit restrictions on legitimate cross?border information flows and bar local infrastructure mandates relating to data storage."

WikiLeaks warns that this largely important trade deal has been hardly discussed in public, however, notwithstanding evidence showing that the policy makers involved want to establish rules that would pertain to services used by billions worldwide.

"The draft Financial Services Annex sets rules which would assist the expansion of financial multi-nationals – mainly headquartered in New York, London, Paris and Frankfurt – into other nations by preventing regulatory barriers," WikiLeaks said in a statement. "The leaked draft also shows that the US is particularly keen on boosting cross-border data flow, which would allow uninhibited exchange of personal and financial data."

Additionally, the current draft also includes language inferring that, upon the finishing of negotiations, the document will be kept classified for five full years.

In Australia, journalists at The Age_{#fnWiki1" id="txtWiki1">1} reported that experts say the proposed changes included within the WikiLeaks document "could undermine Australia's capacity to independently respond to and weather any future global financial crisis."

Dr. Patricia Ranald, a research associate at the University of Sydney and convener of the Australian Fair Trade and Investment Network, told the paper that the documents suggest the US wants to "tie the hands" of other governments, including allied ones, by way of sheer deregulation.

"Amendments from the US are seeking to end publicly provided services like public pension funds, which are referred to as 'monopolies' and to limit public regulation of all financial services," she said. "They want to freeze financial regulation at existing levels, which would mean that governments could not respond to new developments like another global financial crisis."

Earlier this week, US Trade Representative Michael Froman said the TISA deal was already well on its way to being put together.

"The basic framework of the agreement is in place, initial market access offers have been exchanged, and sector-specific work in areas like telecommunications andfinancialservices is in full swing," Froman said, according to Reuters.

The document published this week by WikiLeaks is dated April 14 – two months before Froman last weighed in on the progress of the negotiations and six months after his office hailed previous re-write to the proposal. Along with representatives from Canada, Israel, Mexico, New Zealand, Turkey and dozens others, American policy makers will meet in Geneva, Switzerland later this month starting June 23 to begin the next round of negotiations.

WikiLeaks founder Julian Assange, meanwhile, remains confined to Ecuador's embassy in London where two years ago this Thursday he arrived seeking asylum. Assange, 42, is wanted for questioning in Sweden but fears his arrival there would prompt a swift extradition to the US due to his role in exposing American state secrets.

Footnote[s]

#fnWiki1" id="fnWiki1">1. #txtWiki1">↑ This helpful report by Peter Martin is an exception to the Age's typical misreporting of all the critical local, national and international issues. The Age can usually be depended upon to to misreport to serve interests of the local elites and the New World Order against the interests of the local people. An example is the Age's repeated calls for the overthrow of President Bashar al-Assad since the proxy war aginst Syria started in March 2011. However, after Syrians overwhelmingly voted for the allegedly corrupt and brutal tyrant Bashar al-Assad in the Presidential elections of 3 June 2014, the Age and other mainstream media presstitutes have toned their deceitful narrative. For now, they are confining their deceit to other conflicts such as Ukraine and the new insurgency in Iraq.

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)

References

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”

And that:

“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