New trade agreement could "expose taxpayers" to financial risk

Australian taxpayers are being warned they are at risk of picking up the bill if Australia is sued by multinational corporations under a new international trade agreement to be signed this week.

Under the Trans Pacific Partnership to be signed in Chile on March 8, Australia has committed to allowing the employment of workers from six new countries without requiring them to first check if there is an Australian who could do the same job. The six new countries granted waivers to requirements for labour market testing are Mexico, Chile, Japan, Canada, Malaysia and Vietnam.

Replay

The ACTU said the Australian government has also chosen to give up Australia's sovereignty to being sued by foreign corporations when they believe a change in Australian laws are affecting their profits. This had left "the taxpayer open to picking up the bill for [multinational corporations] if they disagree with our public policies".

The ACTU said the government could exclude future tobacco control laws, but Australia could be vulnerable to being sued for other legislation changes.

Sally McManus, Secretary of the Australian Council of Trade Unions

"Multinationals should not have the power to sue our leaders for making laws they don't like," ACTU secretary Sally McManus said.

"Our democratically elected governments must be free to make laws that put people first without fear of being sued in a secret court.

"These are bad clauses that sell out our sovereignty and we shouldn't agree to deals that include them."

An Australian government spokeswoman said Australia and New Zealand have agreed not to make the TPP’s ISDS mechanism available to investors from their respective economies. However, Australia would still be subject to ISDS actions from other TPP partners.A foreign investor in Australia, or an Australian investing overseas, can use ISDS to seek compensation for certain breaches of a country's investment obligations.

Australian Trade Minister Steven Ciobo said the ACTU was "mischaracterising the TPP-11’s important outcomes for Australia’s services suppliers".

He said ISDS provisions in the TPP protect Australian companies in economies that don’t have the same transparency and predictability as Australia.

“The Coalition ensured the ISDS provisions include modern safeguards that ensures the government can regulate in the national interest," he said.

“The government cannot be sued for a mere loss of profits if it decides to change its policies or regulations, or if the investor disagrees with the government’s policies.

“Once again, the unions are trying to spread fear and mistruths about trade to benefit their extreme political agendas.”

Stuart Rosewarne from the University of Sydney's department of political economy described the ISDS provision in the TPP as "quite scary" because it effectively allows a foreign-owned company to challenge Australian laws, including enhanced labour laws that are considered to impose additional or onerous obligations on a company's employment practices."It would mean, for instance, if the Federal government decided to introduce a law that provided increased protection for temporary migrant workers, such as an administrative requirement for a company to report on how it is meeting an Australian labour law, the law could be challenged under the ISDS," Dr Rosewarne said.Dr Patricia Ranald, convener of the Australian Fair Trade and Investment Network, said she did not think ISDS should be included in the TPP."ISDS gives special legal rights to global corporations that already have enormous market power to bypass national courts and sue governments for millions over democratic regulation that communities have struggled to achieve in areas like the environment, labour rights and public health," she said. "This undermines national sovereignty and democracy”.

Convener of the Australian Fair Trade and Investment Network Patricia Ranald

Dr Ranald said the only clear exclusion of public interest regulation in the trade agreement is tobacco regulation, which was prompted by the Philip Morris plain packaging case against Australia.

Tobacco companies lost their claim under Australian law for billions of dollars of compensation for the 2011 plain packaging legislation. Philip Morris used ISDS in an attempt to bypass that Australian High Court decision.

Dr Ranald said the French Veolia Company is suing the Egyptian government over a rise in the minimum wage. The Chevron Company lobbied for ISDS to be included in EU trade agreements as a deterrent against environmental protection laws.

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Anna Patty

Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.

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