Delegates attending trans-Pacific free-trade negotiations in the United States are being warned their countries could end up like Australia if they agree to allow corporations to sue governments in international courts.
Australia is fending off a challenge to its plain cigarette packets legislation from Philip Morris International under the terms of an obscure Hong Kong investment treaty even though Philip Morris has lost its case against Australia in the High Court.
“The Philip Morris company’s persistence with the investor state dispute settlement case shows such procedures are a threat to democratically enacted legislation and national judicial decisions,” Australia’s Patricia Ranald told stakeholders forum at the negotiations in Leesburg, Virginia.
The United States is insisting on so-called investor state dispute settlement (SDS) provisions in the Trans Pacific Partnership even though it does not have them in its existing free-trade agreement with Australia and even though Australia has said it will not sign a deal that includes them.
The Trans Pacific Partnership will encompass Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, many of whom already have in their agreements with the United States clauses that allow corporations to sue governments in supra-national forums.
Philip Morris International moved the head office of its Australian subsidiary to Hong Kong shortly before it launched action against Australia under the terms of Hong Kong treaty in what Dr Ranald said was jurisdiction shopping.
“Philip Morris International described itself as a US-based company when it made a submission in 2010 to the US trade representative supporting an investor state dispute settlement process in the trans-Pacific partnership.”
“However, it claimed to be a Swiss-based company when it used an investor state dispute settlement process to sue the Uruguayan government for damages under a Uruguay-Swiss investment agreement when Uruguay introduced legislation restricting tobacco advertising.
“Philip Morris can also claim to be a Hong Kong company because Philip Morris Asia, incorporated in Hong Kong, invested in Australia by becoming the sole shareholder of Philip Morris (Australia) after the Australian government announcement of its intention to legislate for plain packaging of tobacco.”
Speaking as convener of the Australian Fair Trade and Investment Network the Sydney University academic told the forum Australia’s problems showed none of the eleven nations negotiating the treaty should agree to provisions that would allow corporations to sue them extra-nationally.
Sean Donnelly from the US Council for International Business told the forum investor state dispute settlements procedures did no more than give international investors access to the rule of law.
He said business would like more protections, but believed what the US was proposing struct the right balance.