australianvoice (australianvoice) wrote,


As explained in another article, the greatest danger in the TPP is that involves the Investor-State Dispute Settlement (ISDS) system.(1) In the ISDS system, a company can demand Australia pay compensation for law or regulation which they believe hinders their profits. This system of extreme corporate privilege is one of the central parts of the TPP. The ISDS provisions of the treaty authorize supra-national tribunals independent of any other judicial system to settle disputes between corporations and countries. These tribunals are in effect a private court system staffed by corporate lawyers paid by the muiltinational corporations who designed the TPP. Under the TPP, if a company believes an Australian law endangers its "expected future profits," it can take this dispute to an investor-state tribunal. This tribunal has the power to overrule Australian laws and levy fines against the Australian government. However this system cannot be used by Australia to sue any multinational company. The ISDS is a one-way street.

To see whats this will mean for Australia we can look at a few of the hundreds of examples of what has been, or what could be, demanded from Australia as part of an ISDS system:

1. Tax Rates: One obvious candidate for challenge would be tax rates for foreign companies. "We don't want to pay so much tax. It is bad for out bottom line." The less tax these companies pay, there will be either higher taxes on us or fewer services funded by tax.

2. Wage Rates: Another obvious candidate is rates of pay. Australia is somewhat unusual in having a centralised wage fixing system which is based on laws and regulations. The large foreign companies would love to destroy this system. The only obvious consequence would be lower rates of pay for most people covered by the system. How the Labor party, supposedly controlled by the unions, could even entertain an agreement which would have such a drastic effect in working people can only be answered by the leaders of that party themselves. There is also the issue of the use of foreign workers in dangerous jobs with low pay. It would be bad for our workers and bad for the people who are enticed to work here under these conditions.


3. Immigration Policies:
At the moment Australia has reasonably strict laws about granting visas. Suppose however that a foreign construction firm put in a bid to undertake a large public works project which contains a proposal to use foreign “guest workers” who would be paid less than they would be paid under Australian law. Such a bid would almost certainly win over any Australian competitor. The same is true for any other area of the economy, such as mining, agriculture, education or health. An ISDS treaty is a blank cheque. ANYTHING could be forced on Australia.

4. Food and Product Standards: We know from other countries that food and product safety standards will be challenged. In the process of "harmonising" food standards between Vietnam and Australia, who is going to insist that Vietnam raise its standards to ours? So it will legal to import and sell food from Vietnam and other countries which would be illegal to sell if they were produced here. Let the buyer beware. No need for protection of consumers by the "nanny state" is there? We will also have to kiss goodbye our plane cigarette packages and restrictions on media advertising for tobacco and alcohol. This is an obvious restraint of trade. What about age limits on the sale of these products?
There is also the issue of cheap irradiated imported foods. Not only would they be dangerous, it would almost certainly be illegal to inform customers of this fact. This amounts to a total rejection of the principle of "let the buyer beware", since it would be illegal to give customers the information necessary for them to make an informed choice. The principle is: "Buy this because it is cheap. You don't need to know anything about it. Just trust us." This is of course absurd as the "us" we are expected to trust are the same people who make in illegal for us to obtain relevant information. So the real policy is this: "Buy this. It is cheap at the moment. Otherwise you can starve."

5. Prices and Quality of Drugs:
Another obvious target would be our PBS system for drugs. Will the foreign pharmaceutical companies want to help us keep prices for drugs down, or subsidise certain ones? A subsidy distorts the market, and therefore reduces someone’s profits.

6. Restrictions on the Sale of Firearms: What do you think that the foreign companies who manufacture firearms would think of Australia’s restrictive laws on gun ownership? Clearly they restrain the liberty of consumers to purchase what they want. If someone wants a Glock in every room, why should the "nanny state" deny them this pleasure?
vii. Regulations about Land Use: There are laws in Australia to forbid mining in national parks, and there could be laws against fracking. Such laws have been challenged by the ISDS system in other countries. Australia would be no exception.

Enforcement: Suppose Australia does not wish to remove the law or regulation demanded by a foreign company. The penalty for such bad behaviour in the eyes of the ISDS system is a fine seen as compensation for loss of income. So who is going to collect the money? Does the ISDS system have a police force or army? If a handful of overpaid corporate lawyers think Australia should pay the MegaBig Corporation $100,000,000, what is going to happen if Australia decides to ignore this demand?

One obvious alternative for the MegaBig Corporation, other than sending some mercenaries to teach us a lesson, is to say that they will no longer invest in Australia. Some people might see this as a great disaster, but it is hard to understand why this is so.

People do not invest in Australia because they want to give us something. They invest money in Australia so they can take even more money out. Since modern Australia originated as a British colony, the idea of existing as a nation to create wealth for the mother country is almost second nature. However Australia has been occupied for 60,000 years without foreign investment, and clearly it is not going to sink into the Southern Ocean if it were to be removed. In fact, we might even be richer. The wealth created here could stay here and be spent on what we want to spend it on.

If the idea of just ignoring the demands of a treaty seems out of the question, we need only remember how Australia is happy to ignore its obligations under treaties relating to the treatment of refugees. Many countries ignore treaties and agreements all the time. Why would a treaty involving the ISDS system any different?

1. THE HIDDEN NASTY IN THE TPP: Investor-State Dispute Settlement (ISDS)

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Tags: australia, tpp

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