Tag Archives: Free Trade Agreements

Abbott: Open For Business — And Multinational Lawsuits

By Mike Seccombe September 20, 2013

Labor rejected it outright. Even the Howard government issued America with a rare “no” over the legislation, declaring it contrary to national interests. But now the Abbott Coalition is flirting with a trade agreement that would allow companies, acting increasingly in secret, to sue Australia if they don’t like its regulations.

Australia’s government under Prime Minister John Howard was not notable for its willingness to say “no” to America. Consider, for example, its eager enrolment in the coalition of the willing-to-believe-anything, and in the war of false pretences in Iraq.

And then there was the matter of trade. Coincidentally, a major purpose of John Howard’s visit to Washington in September 2001, where he was when the terrorists struck, was the pursuit of a free-trade deal.

Reversing a long history of resistance to the prospect of a bilateral free-trade agreement with America (Australia had rejected previous overtures as being not in our national interest, and was a leading proponent of multilateral trade reform, through its leadership of the so-called Cairns Group of nations), the Howard government was at first almost pathetically keen to do a deal with the United States.

If a mining company is unhappy with environmental safeguards which inhibit its operations, if a tobacco company does not like laws restricting cigarette sales, ISDS provisions in trade agreements give them the means to challenge government policy and to seek compensation.

In the end, however, Australians’ growing hostility to the trade agreement forced Howard, for once, to say “no” to George Bush.

It wasn’t a blanket refusal of an Australia-United States Free Trade Agreement (AUSFTA); a deal was eventually stitched up and began operating in 2005. The “no” was to one of America’s key demands: a provision called Investor-State Dispute Settlement, or ISDS.

What this arcane phrase refers to is the right of foreign companies to sue national governments of the signatory countries, not in domestic courts, but in opaque international forums, if they think some element of that government’s policy is harming their interests.

If a mining company, for example, is unhappy with environmental safeguards which inhibit its operations, if a pharmaceutical company is unhappy with the prices it gets for its drugs, if a chemical company is upset with the banning of an agricultural pesticide, if a tobacco company does not like laws restricting cigarette sales, ISDS provisions in trade agreements give them the means to challenge government policy and to seek compensation.

And they do this increasingly often, sometimes claiming enormous amounts of money. According to a report in May 2013 by the United Nations Conference on Trade and Development, which monitors these things, a record 58 ISDS cases were begun in 2012. In the same year, decisions were made on 42 cases by an assortment of more or less credible international arbiters. Only 31 of these were publicly disclosed, but of those, 70 per cent went in favour of the corporations, at least in part; and nine resulted in significant awards for damages, including one – to an oil company which sued Ecuador – for a record US$1.77 billion.