Her criticism of ISDS follows similar criticism of proposed provisions in the US-led Trans Pacific Partnership (TPP) from High Court of Australia chief justice Robert French and top economic advisers to the Abbott government including the Productivity Commission, the Australian Competition and Consumer Commission and the Harper competition inquiry.

Adding to the pressure on the still-secret TPP negotiations among 12 countries, US Trade Representative Michael Froman provided the strongest signal yet that the US is reluctant to allow Australian cane growers to sell more of their sugar in the US, saying the Obama Administration will not undermine American farmers during the final stages of negotiations for the TPP.

The warning from Mr Froman is a potential blow to broader agricultural trade liberalisation under the Trans-Pacific Partnership involving 12 countries.

Queensland sugar growers and many members of The Nationals are still smarting after failing to get better access for sugar in the 2004 US-Australia Free Trade Agreement signed by then prime minister John Howard and president George W. Bush.

'Outrage' at earlier sugar exclusion

Pressed in Washington about granting a better deal for Australian sugar, Mr Froman said the US was "talking to all parties".

"This is obviously an area of great sensitivity to our market here and whatever we do in that area won't undermine the sugar program," Mr Froman said.

He also confirmed the US was seeking to strengthen intellectual property protections for American inventors, particularly in the pharmaceutical sector.


However, one of Mr Froman's predecessor's, former World Bank president Robert Zoellick has also ramped up the pressure. Speaking at a United States Studies Centre event marking the 10th anniversary of the Australia-United States Free Trade Agreement, the former US trade ambassador lamented the US position on sugar.

"It was terrible that we didn't bring in any of your sugar, as somebody who believes in free trade, you know, this is an outrage but this is where the politics come in," Mr Zoellick said.

"To be honest we wanted to get the deal done and through, in 2004, an election year."

Mr Zoellick said it was critical to "keep on the offence" on free trade to prevent opponents to deals gaining traction.

"[It was] one reason during my time that I pushed a whole series of free trade agreements … I wanted to almost get it so that every year the congress had to do one or two FTAs. In a sense I wanted to keep beating down the opposition," he said.

The ACCI's Kate Carnell, joined both Mr Zoellick and Ms Ridout at the conference. She said that while also in favour of trade deals in principle, there was, paradoxically, a burden that FTAs could place on smaller businesses.

"It's true we've got a range of new agreements, and they are fantastic and we support them but they are very complex," Ms Carnell said.

"If you think about the fact that 96 per cent of Australian businesses are SMEs, 1700 page agreements that are fundamentally different makes it really difficult for the business."

TPP negotiations are about to enter the final phase after the US Congress granted President Barack Obama Trade Promotion Authority to cut a deal on a Pacific wide agreement, which its supporters say will transform the regional economy by going beyond trade barrier reduction to new areas such as regulation and government procurement.