Australia May Soon Regret Giving Up Its Refusal To Accept Corporate Sovereignty In Trade Agreements

from the why-on-earth-did-it-do-that? dept

Back in 2012, we wrote about Philip Morris suing Australia for requiring plain packets for cigarettes. Significantly, the company brought that action under a 1993 agreement between Australia and the government of Hong Kong. That's because Philip Morris was unable to use the far more important free trade agreement with the US, which Australia had wisely insisted should not contain a corporate sovereignty (ISDS) chapter. Given that experience of being sued by a company simply as result of introducing new laws to protect the health of its citizens, it's curious that the newly-installed Australian government seems to be reversing its position: Australia's new free trade agreement (FTA) with South Korea, promoted as a win for Australian exports, includes a clause that could spell big trouble for Australia's environmental movement and sovereignty.



The FTA, agreed upon by both nations but yet to be ratified by parliament, includes an Investor-State Dispute Settlement (ISDS) provisions that allows overseas investors to challenge threats to their business interests in international courts. As that article on newmatilda.com points out, if Australia does indeed ratify the agreement with South Korea, it may not have to wait long before ISDS gets used against it: There are currently three South Korean mining companies in NSW with significant interests in huge and environmentally controversial coal projects. Because of the environmental damage they cause, there is growing resistance to these kinds of projects in Australia: Over the past three years environmental campaigners in [New South Wales] have achieved some significant wins against coal seam gas mining companies including in the Northern Rivers, at Fullerton Cove and in the Illawarra and Sydney.



The O'Farrell government has also introduced some legislation, such as the No Go Zones for Coal Seam Gas (CSG) mining in Sydney, and a moratorium on CSG in Sydney Drinking Water Catchments. The [Environment Protection Authority] has also fined, albeit extremely modestly, a number of mining companies for pollution breaches.



These hard fought wins are all in jeopardy if the foreign-owned companies can sue for loss of financial return. The Australian Fair Trade & Investment Network (AFTINET) notes that the Department of Foreign Affairs and Trade in Australia claims public welfare, health and the environment have been excluded from ISDS in the South Korean agreement, and so there is no reason to worry that Australia will be sued because of environmental action against its coal mines, say. But AFTINET goes on to point out: Such "exclusions" in the Peru-US Free Trade Agreement and the US-Central America Free Trade Agreement didn't stop the Renco lead mining company from suing the Peruvian government when they were required to clean up their lead pollution, or the Pacific Rim company from suing the El Salvador government because it refused a mining license for environmental reasons. Investors have pursued cases in other countries by claiming the process of developing the law did not include "fair and equitable" treatment for them. Being sued by South Korean companies could be just the start. There are indications that Australia may also be willing to accept a corporate sovereignty chapter in TPP in exchange for better market access in the other TPP nations for Australian goods. In which case, US companies like Philip Morris wouldn't even have to use obscure treaties to sue Australia, but will be able to do so directly under TPP.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community. Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis. While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: australia, corporate sovereignty, isds, trade agreements