Free trade is the oldest argument in federal politics and the issue that literally defined the federation era.

Australia's first two prime ministers, Edmund Barton and Alfred Deakin, both hailed from The Protectionist Party.

The fourth, George Reid, was from the Free Traders Party — Labor's Chris Watson was the third.

The argument was largely settled by the time Menzies signed a trade deal with Japan in 1958.

Over the decades, Australia's tariff wall slowly came down and local business was opened up to international competition.

In the globalised, modern economy where goods, services and money move across borders in the blink of an eye, free trade seems a no-brainer.

So why is there so much opposition to the biggest free trade deal of them all, the Trans-Pacific Partnership (TPP)?

From chief justice Robert French to the union movement and digital rights activists, concern centres on the blandly named clause dealing with Investor-State Dispute Resolutions (ISDS).

Controversial past of investor clauses

ISDS agreements in trade deals have a long and controversial past.

They began life as a means of encouraging foreign investment into developing countries, lowering the investor's risk by giving them a means to sue corrupt governments for arbitrary decisions that hit their bottom lines.

But over the decades, thanks to the creative legal skills of corporate lawyers, the boundaries have been pushed on what ISDS clauses can cover.

Even mature, democratically-elected governments, acting on what they judge to be in their citizens' interests, have fallen foul of investor clauses.

Australia's plain cigarette packing legislation, passed by the Gillard government, is one example.

Philip Morris is using an ISDS clause in an old and poorly-written trade deal to sue the government.

There are, according to some estimates, around 550 such cases against governments underway worldwide.

And it is not just public health initiatives.

Mining companies are suing governments over environmental regulations.

Pharmaceutical giants sue over drug patent rules that affect their bottom line.

American corporations have been especially active in using ISDS clauses to argue for compensation when governments do things they do not like.

Australia signed a free trade deal with the US 10 years ago and Washington pushed hard for an ISDS clause.

John Howard's negotiators, led by then trade minister Mark Vaile, pushed back, recognising heavy opposition at home.

At the time, Vaile argued state premiers would never agree to the deal, presumably because an ISDS clause would expose their laws also to compensation claims from American multinationals.

The Gillard government, during its TPP negotiations, flatly refused to support the inclusion of an ISDS clause.

But the current Government has softened that stance, signalling it can live with a clause as long as there is an exemption for health regulations, such as plain cigarette packaging and generic drug pricing.

How real is the threat of ISDS to Australian laws?

The Trade Minister said Canberra has 29 ISDS clauses with other countries, and the Philip Morris case is the only time one has been used to claim compensation.

It is also promised "safeguards" for other types of regulation, offering more limited protection for Australian laws from compensation claims.

And it argued Australian businesses could use ISDS clauses to enforce their rights with TPP trading partners if a deal is struck.

The Trade Minister accused opponents of the TPP of distorting ISDS concerns to undermine public confidence in a future deal.

The Export Council, which supports the deal, said signing an ISDS is a practical reality if a deal is to be done: No ISDS, no deal.

In its estimation, a deal is very much in the national interest overall, even if there is a downside.

That is of little comfort to community groups who do not see a direct benefit from free trade but who worry about the history of ISDS clauses.

Australia has some of the toughest data privacy, financial services and environmental regulations in the world.

Maintaining those regulations, and having the freedom to make more, will be more important to many than increasing the nation's export potential.

Opponents say ISDS clauses effectively undermine free trade, by giving an unfair advantage to global corporations who can dictate legislation and cement their market power.

Free trade deals are, by their nature and the secrecy with which most are negotiated, almost impossible to judge until several years after their implementation.

Even then the results are uncertain, as the Productivity Commission found when it recently looked at the value of the US Free Trade deal.

The arguments are complex, but would perhaps not be unfamiliar to prime ministers Barton, Deakin and Reid.