TPP: five things you need to know
It’s a 12-country trade pact that accounts for 40 per cent of world GDP, but what does it mean for Australia?
Should a huge trade deal be ratified, the Australian government could be sued by foreign companies if it introduced or strengthened food labelling and product safety laws, says Choice.
In its submission to a committee examining the yet-to-be-ratified Trans-Pacific Partnership, the consumer group has urged the government to opt out of a clause that gives foreign companies the right to sue it if a new law harms their interests.
It says Australia has opted out of the clause with New Zealand, and should do the same with the 10 other signatories, including the United States and Japan.
Consumer groups protesting the TPP claim to favours business interests. Photo: AAP
“A deal with the ‘investor-state dispute settlement’ clause threatens future laws to protect and inform consumers,” said Choice’s chief executive Alan Kirkland.
“Laws that require food companies to list specific ingredients, meaningful country of origin statements, and health and nutritional information on food packaging could all be on the chopping block.”
But Trade Minister Steve Ciobo said it was unlikely a foreign company could successfully sue the government for passing laws that protect consumers, because those laws would be non-discriminatory and follow due process.
Then Trade Minister Andrew Robb signs the TPP in New Zealand in February.
“ISDS is only available to investors who have suffered loss or damage as a result of a breach of an investment obligation,” said Mr Ciobo, who took over the trade portfolio last month.
“It is difficult to envisage any scenario is which domestic consumer protection laws would violate an investment obligation under the TPP or any other trade and investment agreement.”
To reassure the public, the TPP includes two carve-outs: one for tobacco control measures, and one general carve-out for public health and the environment, “except in rare circumstances”.
New Trade Minister Steve Ciobo said it was unlikely a foreign company could successfully sue the government for passing laws that protect consumers. Photo: ABC
“But they’re of little value. The fact the negotiators felt they had to put in a special provision about tobacco says they don’t think the general carve-out is strong enough,” said Mr Kirkland.
Mr Ciobo said the line “except in rare circumstances” was not a loophole, but designed to prevent a foreign company from using the clause “in a manner inconsistent with its intention, which is to protect legitimate regulation”.
He added the clause was excluded between Australia and New Zealand because both parties agreed, which wasn’t the case with the other signatories.
Choice also raised concerns about procedural problems with ISDS, including the enormous costs to taxpayers, the vagueness of the clause, and the absence of review and appeal processes.
Tobacco multinational Philip Morris brought a lawsuit against Australia using ISDS for introducing plain-packaging laws, which cost the government about $50 million in fees.
It pointed to Canada’s experience, saying under the North American Free Trade Agreement the country had paid US corporations more than $CAD200 million in seven ISDS cases.
“Just defending cases that may not be successful for the US claimants has also been extremely expensive for Canada, costing over $CAD65 million to date. Canada and Australia are both dominated by US investors,” the submission reads.
Mr Ciobo said there were more safeguards in the TPP than in other international deals, including NAFTA.
Remy Davison, a politics and economics expert at Monash University, said it could take up to 18 months for a case to be heard by a tribunal, under a process that encourages governments and firms to mediate.
He said there were 2700 international agreements with ISDS clauses. As of December 2014, there had been 608 cases, with only 87 ruled in favour of corporations.
“On average, corporations were awarded financial compensation of less than 10 per cent of the dollar amounts they sought. Of these 608 cases, European corporations were responsible for more than half,” he said.
“Australia’s food and health standards remain governed by the provisions of the World Trade Organisation, which gives Australian governments the power to legislate in all areas of food standards. The TPP agreement does not change this.”
Once the TPP is ratified, it will become the world’s biggest trade deal, involving 12 Pacific Rim nations and covering 40 per cent of the global GDP.
Choice’s analysis of the TPP also found Australia could be sued if it banned the import of potentially dangerous products or strengthened Australian Consumer Law to, for example, ban unfair trading.
It said it was only granted access to the formal text in late January and only had a month to analyse and make a submission to the joint standing committee, which stopped accepting submissions on Friday.
A World Bank report earlier this year found Australia would gain a paltry 0.7 per cent lift in its gross domestic product by 2030 from the trade pact.
The TPP involves Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, and covers a wide range of areas, from labour mobility to pharmaceutical patents.
Critics have expressed fears the TPP will also affect intellectual property and domestic copyright law, access to medicines, investment and environmental protection.