With the recent change of government, there is likely to be a change in attitude to some slightly arcane Free Trade Treaty regulations. One such regulation that the Howard, Rudd and Gillard governements all seemed to agree on is that including a Investor State Dispute Settlement (ISDS) regulation wasn’t always in the best interests of Australia. The Abbott government doesn’t seem to hold the same opinion.
The ISDS provides a mechanism for companies to seek compensation from a country where they feel they were penalised due to the laws of that country. How is that a bad thing? Well, take the case of Phillip Morris, the tobacco company that lost it’s case in the High Court of Australia. They argued that the Gillard government’s crackdown on cigarette packaging was unconstitutional because it infringed their right to trade. The High Court felt otherwise and ruled in favour of the government.
The highest court in a country rules against you, so you should suck it up and leave it be, right? Well, not if there’s a 24 year old free trade agreement that includes an ISDS provision.
Less publicised is the fact that having failed in the High Court, the company now is pursuing the matter via a bilateral trade agreement signed between Australia and Hong Kong in the early 1990s, which includes ISDS provisions.
The contempt such an action shows for Australian legal process and sovereignty, says Patricia Ranald, is plain.
“They’re saying: ‘We’re going to ignore the High Court, when it says we’re not entitled to compensation; we’re going to go off and find an obscure trade agreement to sue you under’.”
Australia is about to become a member of one of the largest free trade regions in the world, the Trans Pacific Partnership Agreement. The US is pressuring Australia to agree to the ISDS provisions, which would allow, say, a coal-seam gas mining company to sue the government if our environmental regulations prohibit them from operating in Australia.