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Issue #1754      October 26, 2016

Corporate dictatorship

TPP – Entrenching corporate power

The following is a submission by the Communist Party to the Committee Secretariat Foreign Affairs, Defence and Trade Committee, Department of the Senate, on the Trans Pacific Partnership (TPP) trade agreement.

The Communist Party of Australia welcomes the opportunity to make this submission to the Department of the Senate.

We are concerned that there have been no independent studies of the impact of the TPP on the Australian people. The government’s National Interest Assessment assessment provided to Senators was done by the Department of Foreign Affairs and Trade, which negotiated the agreement. This cannot be considered an independent assessment.

The assessment made by a World Bank study that the TPP will deliver only a tiny 0.7% growth in the Australian economy after 15 years should inform the Senate when weighing up the risk of locking Australia into an agreement with destructive rules that would continue to have an impact for decades. There is much at stake; the TPP is much more than a trade deal.

We assert that if Senators make the Australian people’s interests a priority when considering this agreement there can be no other course than to vote against this agreement.

The TPP is a framework for global corporations to operate in which they could prevent future governments elected by the people of Australia from protecting the public interest. Benefit for corporations does not translate into good outcomes for most Australians and there is a body of evidence and opinion to support our position. The TPP will deliver a Trojan horse for the enhancement of the power of international corporations at the expense of national sovereignty and interests.

The Productivity Commission and the ACCC [Australian Competition and Consumer Commission] have said that the Investor State Dispute Settlement clause (ISDS) in the TPP gives foreign investors special rights to sue governments over domestic laws and regulations at all levels of government.

It will allow the US to set the rules for the region and for foreign corporations to bypass domestic courts and sue governments over changes to domestic law in unfair international tribunals which have no independent judiciary, no precedents and no appeals. Arbitral tribunals set up under ISDS provisions are not courts. Nor are they required to act like courts but their decisions can significantly impact on national economies and on regulatory systems within nation states.

The value of such a clause was highlighted when Phillip Morris moved part of its operations to Hong Kong to access just such a clause to sue against the plain packaging laws the Australian Government had brought in out of concern for the health of its people. After 4 years and at a cost of $50 million the Phillip Morris case was dropped because of a jurisdiction issue, not because the case was tested. There were no winners when the cost and time taken in defending the government’s right to make such laws.

Globally there are an increasing number of cases against health, environment and other public interest laws. As we move further towards the challenges that climate change will present, the government must be free of externalities that can and should be avoided that may impact on the government’s ability to respond.

Under the TPP, challenges to a range of government measures can be made including against measures relating to renewable energy, measures affecting expropriation of assets, revocation of licences and permits, regulation of energy tariffs, wrongful criminal prosecutions, land zoning decisions, invalidation of patents and sovereign bonds legislation. Such provisions would also act as a deterrent to all levels of government when considering changes to regulations or legislation.

The TPP’s definition of “investments” by transnational corporations includes stocks, bonds, speculative financial instruments like derivatives, licences, franchises, permits as well as intellectual property. The application of the ISDS provisions to the financial services, in particular, could have alarming consequences for the economy and people of Australia. It would give transnationals the right to challenge regulatory measures which fail to meet their “expectations” or a “minimum standard of treatment.”

For example, it could put the government at considerable risk of being sued for taking measures to address growth of shadow, unregulated offshore banking systems or take measures during a financial crisis such as imposing movement of capital in and out of Australia. Foreign banks and other financial institutions could sue the government for millions or even billions of dollars for allegedly breaching their profit-making “rights”.

The Commonwealth must not enter into any agreement with one or more foreign countries that includes an investor-state dispute settlement provision.

The ISDS will also impact on federal/state relations and expose policy legislative and decisional outputs of its politicians at every level of government to challenges by global corporations with no obligation to take account of domestic or international governance arrangements beyond the narrowly focused investment obligations.

It is interesting to note that when the Howard Government negotiated the US/Australia FTA an ISDS was deemed to be unnecessary on the grounds Australia and the US have well developed court systems that can provide fair decisions in disputes between investors and governmental entities. The TPP has long-term implications for our national judicial systems and even wider concerns about democratic governance. ISDS clauses cannot only be used to challenge legislative and administrative acts by governments but can be also used to call into question the decisions of national courts.

The “safeguards” provided for in the agreement for other health, environment, labour rights and public interest regulation are weak and not enforceable. This contrasts with the legal rights of corporations to sue governments over environmental regulations which are enforceable.

The TPP also gives more monopoly rights to big pharmaceutical companies, so that they can charge higher prices for medicines for longer.

Here in Australia this means our health system could pay hundreds of millions of dollars a year more for lifesaving biologics medicines (the kind that can treat serious diseases like cancer). In developing countries it means millions of people will simply go without the treatment they need.

Any democratic government should have the right to introduce new regulations or legislation or change existing ones without the threat of being sued by foreign corporations. It locks in existing market models.

Despite promises, expert analysis shows that labour rights in the TPP are not effective or enforceable. Products of child or forced labour are not banned, and not all workers are protected. The agreement expands the use of temporary migrant labour here in Australia but provides no protections for their rights and removes the requirement that we test for whether local labour is available first.

The TPP is not in the public interest; it is a deal that is bad for democracy, health, workers’ rights and the environment. The TPP was negotiated behind closed doors with detailed input from US corporate advisers, but with no public input.

This agreement was signed by cabinet without the scrutiny of the Parliament or the Australian people. The Communist Party of Australia calls on the Senate to protect the interests of the Australian people, for the elected government to make laws and policy in their interest and reject the TPP.

We would welcome the opportunity to give evidence at a public hearing.

Next article – Eliminate the blockade – Solidarity call

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