Labor is promising to review three of the major free trade agreements signed by the Abbott and Turnbull governments in the hope of removing a controversial clause that allows foreign corporations to sue the Australian government.

It will also make Australia’s involvement in a proposed huge free trade zone in the Asia Pacific – dubbed the Regional Comprehensive Economic Partnership (RCEP) – subject to stricter entry conditions than those the Coalition demanded.

The opposition’s trade spokeswoman, Penny Wong, said Labor would try to remove so-called investor state dispute settlement (ISDS) clauses from every trade agreement, and every bilateral investment treaty, that Australia has signed.

It means Labor plans to review three major trade agreements concluded by the Abbott-Turnbull governments – with China, Korea, and the Trans-Pacific Partnership – that have ISDS provisions.

ISDS clauses allow foreign corporations to sue the Australian government in an international tribunal if they think the government has introduced or changed laws that significantly hurt their interests.

The tobacco giant Philip Morris used an ISDS provision in the Hong Kong-Australia bilateral investment treaty, signed in 1993, in its attempt to sue the Australian government over the introduction of plain-packaging laws by former prime minister Julia Gillard in 2012.

The proceedings went for years, but in December 2015 an international tribunal ruled in Australia’s favour, saying Philip Morris Asia’s claim was an abuse of process.

Wong says Labor would develop a “negotiating plan” to remove such ISDS provisions from every agreement Australia has signed.

Where it proves impossible to remove them, she said, Labor would try to put stronger safeguards into existing agreements to make it harder for corporations to sue the government.

“The former Labor government determined it would not accept ISDS provisions in new trade agreements,” Wong said.

“The Abbott-Turnbull government reversed this policy and has agreed to ISDS provisions in three new free trade agreements, including the proposed Trans-Pacific Partnership.”

The announcement angered the Coalition, with the trade minister, Steve Ciobo, warning Labor would wreck the government’s hard-won trade agreements.

“Bill Shorten and Labor are threatening to tear up Australia’s free trade agreements with China, Japan and South Korea, three of our four largest export markets, putting thousands of jobs and growth opportunities for small businesses at risk,” Ciobo said.



Australia’s agreement with Japan does not include an ISDS provision.

“By reopening our trade agreements, to backtrack on our commitments on dispute settlement, Labor will jeopardise preferential access for all Australian businesses into foreign markets,” he said.



“Labor will remove the safety net provided by the dispute settlement provisions in our agreements – provisions that have already helped Australian companies in often uncertain and sometimes transparent legal systems.”

Wong says a Labor government would not accept ISDS provisions in new trade agreements.

That means Australia’s involvement in a proposed huge free trade zone in the Asia Pacific – the Regional Comprehensive Economic Partnership (RCEP) – would be subject to strict entry conditions from a Labor government.

Negotiations over the design of RCEP are ongoing, but they have included questions about whether or not to include an ISDS provision.

The RCEP will involved 16 countries, including Australia, China, India, Japan, South Korea and New Zealand. The US is not included.

The Howard government refused to include any ISDS provision in its free trade agreement with the United States.