australianvoice (australianvoice) wrote,


It is hard to understand why Australia or any other country would choose freely to enter into any treaty like the TPP which involves the Investor-State Dispute Settlement (ISDS) system. There are so many problems with ISDS system it is hard to know where to start.

1) Deregulation: The ISDS system is not about trade. Its sole purpose is to force deregulation on a country.

2) Sovereignty:
Such forced deregulation is a surrender of a nation's sovereignty, its power to frame and enforce legislation and policies.

3) No Consideration of Public Interest: Under the ISDS system, there is no possibility for consideration of what we all understand as public interest. The only reason relevant to remove a given law or regulation is that it will diminish the profitability of a foreign company.

4) Anti-democratic: The ISDS system is totally beyond the usual democratic processes of elections, advocacy and public protest. How a robust democracy could even consider accepting such a system is incomprehensible.

5) One-Sided:
The ISDS system does not allow for States to sue corporations. As a legal document, it is a one way street. It is incomprehensible how any government, democratic or not, would agree to the ISDS system without a gun being held to its head. So who is holding the gun?

6) Consider This Analogy: Perhaps the best way to illustrate the belligerent and aggressive approach embodied in the ISDS system is to consider an analogous situation in ordinary life. Suppose you invited one of your friends over for dinner. When they arrive, you explain politely to you that you do not like to have people smoking in your house. A normal response would be to accept your "house rules" and come in for dinner. However suppose instead they said that they were damn well going to smoke during dinner, and if you continue to protest they would smash down your door and break your windows. It is like the guest who won’t take off their dirty shoes at the door.

This aggressive behaviour resembles the actions of the corporations who are behind the ISDS system. Instead of realizing that it is a privilege to be allowed to invest in Australia, they think it is their right to invest here. Furthermore, it is their right to do whatever they want to in order to maximize their profits. How can the leaders of any self-respecting country tolerate such an arrogant approach by foreign corporations?

7) An ISDS Treaty is a Blank Cheque:
There is no limit to the laws or regulations which could be challenged and removed. People who believe such a system might be reasonable are either lying, kidding themselves, or seriously lacking in imagination. One of the early advocates of the deregulation which is the core of the ISAS system was the philosopher John Stuart Mill. In his essay On Liberty Mill defends the British position in the Opium War. He insisted the Chinese government was restricting the freedom of the people in China to buy what they wanted. He believed "that the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." From this, he argued against limitations on free trade in alcohol and opium as unjustified infringements on the rights of the buyer. That
is, one of the main advocates of "free trade" actually argued for complete deregulation of alcohol and drugs. His reasoning would apply equally to all the modern drugs such as ecstasy, ice, cocaine, heroin and amphetamines.

The point is that there is nothing in the ISDS system which could hinder a demand for the kind of deregulation advocated by Mill. The defenders of the ISDS system will say that this is extreme and nobody is going to suggest such changes be enforced by the ISDS system. This may seem extreme, however Mill was not speculating about possible laws. He was defending what was a real and very profitable policy of the British government and the East India Company, namely harvesting opium in India and selling it to China.

There is no place for what we call public interest in the ISDS system. In fact it is devised to avoid any such consideration. So, to repeat: it follows from the structure of the ISDS system that ANY law or regulation, however wise it might seem to the people of Australia, can in principle be overturned or used as a basis for a compensation payment. This system has absolutely no safeguards of any kind. It is a blank cheque which can be filled out in any way a foreign company sees fit. Only a fool or a fanatical supporter of deregulation could think the ISDS is good for anybody but the huge corporations that came up with the ISDS system.

Political life in today's democracies is made up of hundreds of decisions which balance what can be called the greater good with the legitimate interests of individuals and corporations. For example we have drawn the line between legal and illegal drugs and ignore the extreme position taken on this by J.S. Mill. But in the ISDS system, who is going to draw the line which restricts the interests of large foreign companies? Just the companies themselves and the handful of overpaid lawyers they have set up as their own private legal system? It certainly looks like the fox guarding the proverbial henhouse.

8) Some Results of ISDS Decisions:
Let us 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:
i. 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.
ii. 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 used for 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.
iii. 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. As explained above, an ISDS treaty is a blank cheque. ANYTHING could be forced on Australia.
iv. 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 question 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."
v. 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.
vi. 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 othercountries. Australia would be no exception.

9) 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 anydifferent?


10) The ISDS System Will Change Australia’s Political Landscape: The ISDS is a
giant deregulatory disaster which the leaders of the Liberals, Nationals and Labor should be ashamed of. Our leaders should realize that by accepting the ISDS system, they have put themselves out of a job, the job of framing laws which govern Australia. Even the current pretence of democracy will be removed. By adopting an ISDS system Australia’s political leaders are in effect tying their own hands about any issue that involves the regulation of foreign corporation. “We don’t deal with that any more. There is a higher authority we must answer to.”
Up to now, people in Australia have been able to come to their political leaders to push for legislative change on such issues. Under an ISDS system this is pointless, and people will soon understand that. If an ISDS agreement is accepted by Australia, people will realize that nothing is going to get better until all treaties involving the ISDS system are removed. Those who have stood up to defend and accept such treaties will find themselves increasingly unpopular. Our political leaders will not be part of the solution,
but part of the problem. Australia's politicians need to think very carefully. Is this what they really want? The choice is theirs.

Other Articles from Australian Voice on the TPP:

How the TPP Deregulation will Destroy Food and Product Standards in Australia

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





Tags: australia, tpp
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