The latest round of negotiations for the controversial Trans Pacific Partnership starts today in Lima, Peru. The TPP is a multinational trade deal involving 12 countries, including the US and Australia, and if finalised it will account for 40 per cent of the global economy. Cathy Van Extel reports that the outcome of the Australian federal election is likely to have a big impact on the terms of the deal.

The latest round of negotiations for the controversial Trans Pacific Partnership is kicking off in the Peruvian capital of Lima today.

The TPP is a multinational trade deal involving 12 countries including the US and Australia. If finalised it'll account for 40 per cent of the global economy.

The trade talks are heavily shrouded in secrecy—and critics are concerned the TPP will benefit multinational corporations at the expense of existing labour and social protections.

The US has been pushing for an agreement by October this year and the Australian federal election is likely to have a big impact on the terms of the major trade deal. The wide ranging trade deal has been under negotiation since 2010 behind closed doors, and that's a worry for critics like Jane Kelsey, professor of law from the University of Auckland and an activist academic. She says it's being rushed through with no public scrutiny.

Australia has been a beacon of good sense. As I understand it, a number of other countries would really like to follow suit if they thought they had the leverage to negotiate that position with the US.

‘There's going to be a huge amount of political pressure brought to bear on the negotiators in this round because they have set an informal deadline for signing a deal, or at least something, at the APEC leaders' meeting in Bali in October,’ Professor Kelsey says. ‘However, the negotiations are still stuck on a number of key points and so there will be quite a bit of public posturing and quite a lot of pressure behind the scenes.’

The TPP involves the US, Canada, Chile, Mexico, Peru, Australia, New Zealand, Brunei, Malaysia, Singapore and Vietnam. Japan has recently asked to join—although it won't sit at the negotiating table until the next round of talks in July. Notably, China has not been invited.

One of the key sticking points is Australia's opposition to the US push for an investor-state dispute settlement clause.

An investor-state dispute settlement clause gives a multinational company which believes its investment has been harmed by a government decision the right to sue a state in an international arbitration tribunal—which would have the power to overrule local laws.

In recent years these arbitration tribunals have broadened the range of potential claims that can be made against a state and this has led to a rapid increase of investor interest in this form of dispute settlement. Multinationals can now sue states for damages if legislative changes may make their profits lower than expected.

Critics are also concerned that arbitrations are carried out in secret by trade lawyers who earn income from the parties and are not accountable to the public or required to take into account broader constitutional and international law human rights norms. Under the TPP it's proposed tribunal hearings would be held in public.

In 2011 the Australian government issued a new trade policy, in which it ruled out supporting such clauses, arguing they ran the risk of giving foreign business greater legal rights than domestic businesses (who must operate within local law).

For Australia, it's an issue of national sovereignty. The federal government argues investor state dispute provisions infringe on a government's right to legislate. A case in point is tobacco company Philip Morris's legal case against Australia's plain cigarette packaging legislation. After losing a High Court challenge here the company moved its Australian headquarters to Hong Kong and is continuing the legal battle under the terms of a 20-year-old Australia–Hong Kong investment treaty which included an investor-state dispute provision.

But while Australia is fighting to preserve its right to make laws on social, environmental and economic matters, New Zealand has been critical of the Australian stand.

‘Really it comes down here to if we can get a whiff of getting a slab of butter into the US dairy market the government will give up almost anything, including the rights of investors to sue, and we suspect erosion of our equivalent of your pharmaceutical benefit scheme,’ Professors Kelsey says of her country's government. ‘Australia has been a beacon of good sense. As I understand it, a number of other countries would really like to follow suit if they thought they had the leverage to negotiate that position with the US.’

But Australia's position could change if the Coalition wins the September 14 federal election. Opposition trade spokeswoman Julie Bishop has said the Coalition will, as a matter of course in trade talks, put investor-state dispute settlement clauses on the negotiating table and negotiate provisions on a case-by-case basis.

Professor Kelsey says there are many examples of multinational companies undermining national sovereignty via investor-state dispute provisions, and any change in the Australian position would be significant.

‘Indeed in Lima during the rounds there will be a large amount of focus on a particularly notorious mining case that has dragged now through the investment tribunals for a number of years—where indigenous peoples and the environment in Peru are being traded off potentially against the rights of the mining companies. So they are very sound reasons for us frustrated to stick to its position, as even your productivity commission concluded several years ago.’

The timing is awkward with the federal election in September 14—if there is a change of government it will collide with the October dates for resolution on this TPP. But Professor Kelsey says that’s unlikely to slow the US down.

‘I'd be very surprised if US trade representative is not already having the cash discussions with your opposition trade spokespeople, and that [they] have something lined up ready to roll out immediately after the election should they win,’ she says.

‘The timing of the September round, which would be the last round before TPP leaders meet in October, will therefore be crucial. If that round occurs after the election there will be a real risk that a new Australian government would concede the position on investor-state disputes at that stage and that would run against the kind of rethinking that a range of other countries are now saying is sensible; India, Korea, Brazil, South Africa have all be making noises about the need to re-evaluate any existing commitments of this kind.’

Another contentious issue under negotiation is intellectual property and copyright, which could have far-reaching impacts on Australia's pharmaceutical benefits scheme, and access to material on the internet.

Electronic Frontiers Australia, which represents internet users, says while the trade talks are being kept secret, there's concern US corporations are pushing a well known agenda for heavy restrictions and criminal sanctions.

‘Many of those controls already exist but we are certainly seeing attempts to criminalise acts which we would argue probably don't deserve criminal sanctions,’ EFA’s CEO John Lawrence says. ‘The general thrust of these things does really hamper innovation and development of content outside the US.’

Mr Lawrence says that while Australia has its own well balanced review of copyright underway, the TPP has the ability to override and scupper that process.

‘Things like TPP (which of course the negotiation’s secret), have the potential to stop any reform there, or constrain any reform, that Australia as a sovereign entity may choose to take.’

Find out more at RN Breakfast.