Trade deal may come at expense of sovereignty

By Geoffrey Murray Source:Global Times Published: 2013-10-21 20:48:02

Illustration: Lu Ting/GT

Illustration: Lu Ting/GT

Passions are rising as the proposed Trans-Pacific Partnership (TPP) - a "free trade" agreement initially involving 12 nations - enters the final stages of negotiation.

The US-initiated TPP would be a binding international governance system requiring participants to accept rules going far beyond trade matters?to include areas such as food safety, Internet freedom, medicine costs, financial regulation and the environment.?

The initial grouping involves the US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, with provision for other countries to join later on if they are willing to adapt their domestic policies to conform to the rules.

One of the prime objections is that the TPP framework is being shaped largely in secret, and even national legislatures not really knowing what is going on.

In Australia, the newly elected Prime Minister Tony Abbott has raised the temperature of the political debate by claiming his sweeping election victory last month has given him a clear mandate from the electorate to sign the TPP agreement. However, it's clear a significant number of Australians don't agree with his interpretation and are deeply concerned that Abbott, a man who likes to conduct politics by stealth, is about to "sell the nation's birthright."

Not surprisingly, the Australian Labor Party (ALP), who formed the previous administration, is strongly opposed. ALP documents I have obtained show it objecting on the grounds that the US, "on behalf of its major industries, wants to change Australian law in many areas of domestic policy. These policies should be decided through public and parliamentary processes, not through trade negotiations conducted behind closed doors."

The key concern is a proposal that foreign investors in a TPP member country be enabled to sue the government for damages through international tribunals if a domestic regulation is seen as harming their investment - a process known as investor-state dispute settlement (ISDS).

The ALP argues the ISDS "reduces the ability of governments to regulate the activities of foreign companies even if these activities harm our health or the environment."

One example of this comes from the multinational tobacco manufacturer Philip Morris, which is currently using the ISDS provision buried in an obscure Australia-Hong Kong investment agreement to sue the Australian government over legislation aimed at curbing smoking by insisting that tobacco companies use plain packaging to make their products less alluring. The same provision could undermine bans on cigarette advertising now in place across a number of countries.

Likewise, Canada agreed to an ISDS provision in its deal with the US for creation of the North American Free Trade Agreement (NAFTA). Now, a US-based shale oil company is suing the Quebec provincial government because it is conducting an environmental review of shale gas mining.

A similar case is now unfolding in Australia, where farmers are demanding new regulations to tighten controls on coal seam gas mines they believe will poison the environment and harm agriculture. Foreign mining companies with operating licenses could sue if the farmers get their way. This, surely, is tantamount to inference in domestic affairs.

If you want to see a vision of the future under the TPP you only have to look to the aforementioned NAFTA. Its rules make it easy for American companies to cut costs by shifting their operations offshore (to low-cost countries) with virtual impunity. American labor unions claim this alone has destroyed 5 million US manufacturing jobs and seriously eroded the tax base of many local communities.

There are other examples. Loss of national sovereignty in terms of laws and regulations is undoubtedly one of the key causes of unhappiness within the European Union (EU).

In my own country, the UK, there is a movement to opt out of the EU because of interference from Brussels-based "eurocrats" in what Britons rightly feel are their own affair - in areas such as the judiciary, labor legislation, protection of the environment, rights of the central government to give financial aid to local depressed areas, etc. The list is virtually endless.

Is the TPP going to follow the same route?

The author is a lecturer at China Foreign Affairs University.

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