Tuesday, October 25, 2016

Lesson for Malaysia on Trans-Pacific Partnership

From the (Australian Edition) Guardian:

Trans-Pacific Partnership makes Australia vulnerable to court challenges, report claims

Australia could face a growing number of expensive legal claims from foreign corporations if the Trans-Pacific Partnership (TPP) comes into force, a new report has warned.

Dr Kyla Tienhaara, from the Australian National University, said Australia ought to learn from Canada’s experience after it signed the North America Free Trade Agreement (Nafta), which came into force in 1994 and led to dozens of legal cases against Canada by US corporations.

She said the frequency of trade-based legal cases against Canada had increased significantly since 2006, in line with the global trend of such disputes, and warned a similar thing might happen to Australia under the TPP, because it has an investor state dispute settlement (ISDS) provision similar to Nafta’s.

Tienhaara’s research has informed a report, The Canary in the Coalmine, commissioned by the activist group GetUp. It warns Australia risks facing multimillion-dollar legal cases if the Senate passes the TPP, and shows ISDS disputes have been rising worldwide, hitting a record 72 cases in 2015.

US vice-president Joe Biden and Australian PM Malcolm Turnbull

It says governments lose or settle ISDS cases much more often than they win them. Cases were settled, or the corporation won, in 52% of global ISDS cases, while the state won in 36% of cases, it says.

The ISDS provision in the TPP excludes tobacco companies from potential legal action, but investors from a wide variety of other industries could still use it, the report warns.

It says Australia’s Senate ought to learn from Canada’s experience before passing the trade agreement.

Canada has been hit with 39 separate legal cases under Nafta – all from American corporations and investors – with 69% of those cases having been initiated since 2006, the report says.

“The similarities between Canada and Australia in terms of the regulatory environment suggest that Australia is likely to face the same kind of disputes [under the TPP] as Canada has [under Nafta] – that is, disputes over regulatory issues rather than direct expropriations or other interferences in the operation of an investment,” the report warns.

Natalie O’Brien, GetUp’s economic fairness campaigns director, said the report demonstrated the “enormous risks” Australia faced under the TPP.

“Multinationals based in the USA and Canada are the most litigious in the world by an enormous margin – the Trans-Pacific Partnership would leave Australia exposed to both,” O’Brien said.

“Perhaps the most terrifying finding is the evidence of ‘regulatory chill’, where governments back away from critical health or environmental regulations because of the threat of ISDS.

“The Quebec government revoked fracking rights in St Lawrence after an assessment that it would impact local marine life. Now they are being sued under ISDS by an American corporation seeking US$118.9m in compensation.” [...]


  1. Not one country who is on the list to be potential TPP members, can boast of having their politicians or electorate behind them.Every country's pro or anti TPP advocates are in a gridlock.Every country's opponents of the TPP are screaming that they are getting the end of the stick.So which country is the beneficiary of the TPP?I still cannot figure it out?Anybody got any answer?

  2. As usual...there are two sides to every story....

    Foreign companies which find themselves in a legal dispute with the host government often find themselves in a legal minefield.

    Laws may be highly unfavourable to foreign entities. Governments sometimes act in a highly arbitrary manner against foreigners, betting that the foreigners will just lick their wounds and leave rather than fight it out in a costly and lengthy legal process which may take years.

    Quite a number of countries have dodgy legal systems that are highly susceptible to pressure from their Executive, Bolehland being a good example.

    To its credit, both Australia and Canada have a good record of their legal system dealing with foreign entities impartially, based on the law, but that is OFTEN NOT the case with many other trading countries.

    China , not a party to TPP, is a well documented example of a dodgy legal framework. Such is the draw and allure of China as an investment destination, most foreign companies ignore such risks....until the day they run into a dispute with either the China central government or any one of provincial or local governments. Then they have to scream and cry in silence.

    So, a fair and equitable legal playing field between host governments and foreign entities is a necessary part of any trade deal.
    If necessary, an independent arbitration entity may be required, because the Host country's judicial system may be stacked in favour of the Executive.

    You may not realise it, many Foreign contracts with Malaysia government or Malaysia corporations now require legal disputes to be tried in Courts outside of Malaysia.

    Once, when we had a proudly independent judiciary modelled on the British court system, this would have amounted to an insult. Now its just the reality of how Malaysia is perceived by foreigners.

  3. http://www.financetwitter.com/2016/10/wikileaks-soros-slammed-obama-of-trading-tpp-for-a-racist-extreme-corrupt-najib.html