TPPA – A Stealth Attempt to Undermine Democracy

The below article was gernerously shared by Lori Wallach, the director of the USA organisation, Public Citizen’s Global Trade Watch.
Lori was recently in Melbourne for the TPPA talks and spoke at OccupyFriday on 2 March 2012. 

It takes quite a “trade” agreement to undermine financial regulation, increase drug prices, flood us with unsafe imported food and products, ban Buy America policies aimed at recovery and redevelopment, and empower corporations to attack our environmental and health safeguards before tribunals of corporate lawyers. Trade, in fact, is the least of the TPP.

Backdoor deregulation and imposition of new corporate investor and patent rights via “trade” negotiation began in the 1990s, with the “mission creep” of the World Trade Organization and North American Free Trade Agreement. But the TPP now threatens a slow motion stealth attack against a century of progressive domestic policy, of an unprecedented scope. At stake is nothing less than a democratic society’s ability to regulate a market economy in the broad public interest.

Under the framework now being negotiated, U.S. states and the federal government would be obliged to bring our existing and future policies into compliance with expansive norms set forth in 26 proposed TPP chapters. These include domestic policy on financial, healthcare, energy, telecommunications, and other service sector regulation; patents and copyrights; food and product standards; land use and natural resources; professional licensing and immigration; government procurement, and more.

The obligation that signatory countries “ensure conformity of their laws, regulations and administrative procedures” to these terms would be strongly enforced, including by our own government. Failure to do so would subject the U.S. to lawsuits before dispute resolution tribunals empowered to authorize trade sanctions against the U.S. until our policies are changed. Attacks against our non-trade laws could also be launched by any “investor” that happens to be incorporated in any one of these countries. And the TPP is being designed so that other countries – China, Japan, you name it – could join in the future.

We know this much only thanks to a combination of rare text leaks and grilling of trade negotiators. As trade lawyer Gary Horlick, a former U.S trade official with four decades in the game, recently noted: “This is the least transparent trade negotiation I have ever seen.” In fact, a recent text leak revealed that the parties signed a special secrecy Memorandum of Understanding that forbids released of negotiating documents for four years after a deal is done or abandoned.

Such an extreme proposal could only get this far under cover of unprecedented secrecy. Important policy decisions that could affect us all in myriad ways are now being made by executive branch trade officials and corporate allies, without public access to any documents or details, or input from members of Congress serving on most of the Committees whose jurisdiction is directly implicated. The involved governments have ignored a global “release the texts” campaign led by unions and civil society groups. This is especially appalling for the Obama administration, given its stated priority of enhancing government transparency. The opaque process has contributed to a near total absence of press coverage.

Meanwhile, more than 600 business representatives serving as official U.S. trade advisors have full access to an array of draft texts and an inside role in the process. The strategy is to squelch informed congressional and public debate until a deal is signed and any alternations become extremely difficult..

The implications for the principle and practice of democratic governance are especially dire. Setting binding rules in trade pacts does not facilitate later modifications even when governments or the public demands change. Not only would a vast array of decisions affecting our daily lives be made in venues where we have no role, but alterations to an adopted pact require consent by all signatory countries. Thus, accompanying the imposition of specific retrograde policies would be an unprecedented shift of power towards locking in corporate rule insulated against the normal means of democratic accountability, such as elections, advocacy and public protest.

If this description of the proposed TPP sounds far-fetched, consider the consequences of other “trade” pacts sold under the appealing brands of “trade expansion” and “free trade.” Canada is threatening key aspects of the Dodd-Frank financial reregulation package as violating NAFTA while Texas oil and gas tycoon T. Boone Pickens is using NAFTA to attack Canadian renewable energy policies. The European Commission staff contends that the proposed financial transaction tax conflicts with European WTO commitments. Billions in U.S. stimulus money leaked offshore, because of limits on Buy America procurement preferences already established in past trade pacts. Last year alone, the WTO struck down U.S. dolphin-safe-tuna and country-of-origin meat labeling and the ban on candy-flavored cigarettes, which is aimed at curbing youth smoking, as violating U.S. “trade” obligations.

Now, the TPP threatens to combine the most damaging elements of past pacts and expand on them. And, with the later addition of Japan, China, Russian, Indonesia and other Pacific Rim nations a large swath of the world’s nations could end up under this retrograde corporate rule regime. This is precisely the vision for TPP former U.S. trade officials and corporate lobbyists presented to the Obama transition team in their ultimately successful push to get Obama to engage in these talks: a Pacific region NAFTA-on-steroids that can increase offshoring while rolling back domestic consumer safety, financial, environmental and other safeguards.

Investor Rules to Facilitate Offshoring, Undermine Domestic Law

Past U.S.-sponsored “free trade” agreements have included a set of extreme foreign investor rights and U.S. negotiators are looking to use TPP to expand these terms. This package includes many special protections that incentivize offshoring of U.S. jobs, by eliminating risks typically associated with relocating to developing countries with rock bottom wages, while significantly handcuffing domestic regulatory officials from implementing even the most essential environmental, land use, health and safety laws that apply equally to domestic and foreign firms,

Under the U.S. FTA investment model, foreign firms are guaranteed a “minimum standard of treatment” that extends beyond being treated the same as local firms. And, a U.S. firm could obtain this treatment, effectively a pass on regulation, by simply selling some portion of its shares to a foreign subsidiary incorporated in one of the TPP nations. Such firms  also are granted new rights to obtain compensation from host governments for loss of “expected future profits” due to  health, environmental, zoning, labor, or other policies. Compensation can be obtained for indirect or “regulatory” takings, a concept championed by extreme conservatives but generally not recognized under the robust property rights provided by U.S. law.

The U.S. proposes that this chapter also forbid host countries from limiting capital transfers. This removes a prospective complication for U.S. firms considering relocating, and poses a risk to global financial stability. In an era when even the International Monetary Fund has reversed its traditional opposition to capital controls, imposing such limits via “trade” pact is both disingenuous and reckless policy.

The chapter also would establish new rights for foreign investors to acquire land, natural resources, factories and more. All performance requirements, including domestic content rules, would be forbidden. Freign firms or foreign subsidiaries of domestic firms would have new rights under the deal to operate such mines, polluting industrial facilities, toxic waste dumps, coal power plants – whatever investment they have acquired – under the terms of the agreement that limits domestic regulation. If the same policies applicable to domestic firms are applied to them, they can demand compensation from us taxpayers.

This raises concerns about our ability to determine what sorts of investment from what sorts of countries is best for our country, and to regulate foreign firms operating here so that they operate on equal terms with domestic firms and in compliance with our land use, environmental and health laws.

Most stunningly, these new rights in a public treaty could be privately enforceable. The U.S. is pushing for inclusion of “investor-state” enforcement. This little-known mechanism allows foreign firms to bypass domestic court systems and directly sue governments for cash damages (our tax dollars) over alleged violations of their new rights before UN and World Bank tribunals staffed by private sector attorneys who rotate between serving as “judges” and bringing cases for corporations. The scope of domestic policies that would be exposed to such attacks is vast, including government procurement decisions, regulatory permits, intellectual property rights, regulation of financial instruments such as derivatives, and more.

Avoiding domestic courts not only eliminates another major risk for firms seeking to relocate, but inclusion of this regime in past pacts is establishing an alarming two-track system of justice privileging corporations. Chevron is now asking one of these corporate tribunals to invalidate 18 years of U.S. and Ecuadorian court judgments that resulted in the company being ordered to pay for clean-up of horrific Amazonian toxic contamination. In other kangaroo trade courts, Philip Morris International is attacking Australian and Uruguayan cigarette plain-packaging policy.

Under similar NAFTA provisions, over $350 million has been paid to investors by governments over toxic waste dump permits, logging rules, bans of toxic substances and more. Currently, there are over $12 billion in pending corporate attacks on environmental, public health and transportation policy under existing U.S. free trade agreements—and the proposed TPP would create vast new opportunities for litigation. Even when governments win, they waste scarce budgetary resources defending national policies against these corporate attacks.

Green Procurement Policies Threatened

The pact’s procurement chapter would require that all firms operating in any signatory country be provided equal access to government procurement contracts over a certain dollar threshold. These rules not only constrain how our national and state governments may use our tax dollars in local construction projects and purchase of goods. They also limit what specifications governments can require for goods and services and the qualifications for bidding companies. Thus requiring that electricity come from renewable sources or that uniforms meet sweat-free standards could be forbidden. Rules excluding firms that refuse to meet prevailing wage requirements or that are based in countries with terrible human or labor rights records could be challenged. Effectively, these rules expropriate our tax dollars and transfer them into new private units for corporate profit, while eliminating important policy tools for job creation, development of green economy capacity and the building of demand for preferred business practices.

Backdoor Financial Deregulation

U.S. trade officials engaged in the TPP are seeking to extend older trade deals’ ban on capital controls, even as Rep. Barney Frank (D-Mass.) has demanded a review of whether the past pacts require changes. U.S. negotiators are also pushing for additional expansive limits on domestic financial regulation which conflict with policies now being implemented by many countries to get banks, insurance and securities firms under control.

This includes a prohibition on bans of risky services and financial products. It would expose to challenge domestic policies that set limits on firms’ size, the types of services any one firm may offer and the legal entity through which a service or product may be provided. This would foreclose many policy tools aimed at dealing with too-big-to-fail firms, limiting risk via firewalls or, for instance,  requiring clearing facilities for derivatives. These would be absolute bans on certain forms of regulation which countries would be forbidden to “adopt or maintain,” not requirements to treat domestic and foreign firms the same.

Higher Medicine Prices

The notion that any “free trade” agreement would expand monopoly rights for “rent seeking” (excess profits) would induce Adam Smith and David Ricardo to rotate in their graves.

But that’s exactly what our current trade policy does and TPP is poised to go further. According to a study conducted by the University of Minnesota, U.S. drug prices increased $6 billion when WTO patent rules required the U.S. to change its patent term from 17 to 20 years. The TPP would be even more of a gift to drug companies at the expense of consumers and taxpayers.

Leaked negotiating texts show that the TPP would extend monopoly controls over drug safety testing data, which could cut off millions of people from access to life-saving drugs. (Even when a patent monopoly ends, lower cost generics cannot be marketed because the safety data is withheld.) A majority of target TPP countries are developing nations with significant HIV-AIDS rates, so this is a particularly depraved proposal. Thanks to a leak, we know that U.S. negotiators are proposing to roll back even the modest trade pact access to medicine reforms obtained during the George W. Bush administration!

The U.S. proposal could also undermine the drug formularies of Australia, New Zealand and other countries that have successfully controlled drug costs. This could also boomerang home. State officials participating in the development of formulary rules for Medicare and Medicaid have reacted with alarm about how this proposal could undermine possible gains hard won here in the epic health care reform battle.

And there’s more…

Even given the lack of access to actual negotiating texts, we know that the scope of domestic policy space that could be foreclosed by this deal is immense.

The pact’s coverage of the service sector would include basically anything you can’t drop on your foot, from an education to healthcare. The rules would not be limited to trade in services, but would limit how we can regulate foreign service firms operating here. This would mean foreclosed domestic policy space for critical sectors such as health, energy, education, water, transportation and more. Even local land use and zoning policy is implicated.

These rules would even cover the movement of natural persons across borders to deliver a service, otherwise known as immigration and visa policy. Some past U.S. trade deals have guaranteed specific numbers of U.S. work visas. Other countries are demanding the same in the TPP. Whatever your view on immigration policy, obviously setting it behind closed doors in a trade pact whose terms cannot be altered without consent of all parties is a very bad idea.

We also know that there are several chapters that would impose limits on product environmental, health and safety standards. The U.S. has proposed a new “Regulatory Coherence” chapter that would require each signatory country to establish an agency to do cost-benefit analysis of regulation. And, we know that constraints on food and product safety and inspection are being negotiated, including a requirement that the U.S. accept imported food that does not meet our actual safety laws.

Consider just seafood, a lot of which is imported from TPP target countries. Before WTO and NAFTA, half of the seafood consumed here was imported. Today that figure is 84 percent, while the FDA only tests 0.1 percent of it. Rep. Rosa DeLauro (D-Conn.) uncovered that, even with this lax inspection, last year FDA issued numerous import alerts for Vietnamese seafood detained for misbranding, E. coli, antibiotic residues, microbial contamination, and other serious safety problems. Yet, the TPP could undercut even our current safety rules.

And, thanks to leaked texts, we know that the same provisions deemed to be a threat to Internet freedom and innovation found in the discredited Stop Online Piracy Act (SOPA) are lurking in TPP. This includes a requirement that each country establish large mandatory fines for unintentional, non-commercial, small scale copying of Internet content protected by copyright. Also forbidden would be circumvention of digital locks, even for lawful uses such as running the DVD you purchased on your computer running on Linux. As well as exposing us all to personal liability, the technology industry says these policies stifle innovation, given the threat of a multi-million dollar lawsuits.

Why Obama, Why Now?

All this begs an obvious question: why are Obama trade negotiators pushing a NAFTA-on-steroids deal that could potentially include China and the rest of Asia? Certainly the White House policy team does not want international preemption of the domestic agenda it is fighting to enact. Nor must the Chicago reelection campaign team be celebrating a deal that will infuriate its base while benefitting only Obama’s most implacable corporate opponents.

The most hopeful explanation is ignorance made possible by the sad habit of elite fealty to the “free trade” brand and extraordinary secrecy that has forestalled the external alarms that might otherwise warn officials outside of the “trade” policymaking silo of what is really at stake. Those in the U.S. government who are positioned to know the expansive non-trade policy implications are also those who support this approach, including many Clinton-era retreads connected to the passage of NAFTA.

Yet, if these talks result in the adoption of a final agreement based on the framework now under negotiation, it could lock our country onto a future path devastating to most of us.

The only good news is that, in the past, some attempts to use the Trojan Horse of “trade” negotiation to impose and lock in massive deregulation have been foiled. Citizen activism and pubicity derailed the proposed Free Trade Area of the Americas in 2005, the aborted Multilateral Agreement on Investment in 1998 – and the original attempt to negotiate a free trade area for APEC nations, many of who are parties to the TPP. Then, as now, the public, policymakers and the press can help derail these stealth attempts to undermine democracy by awakening to the threat before it is too late.

Pirate Party Australia’s Presentation to Trans-Pacific Partnership Stakeholders Meeting in Melbourne

Here is the speech that was presented by Pirate Party Australia President David Campbell at 11.45am at the TPPA stakeholders meeting in Melbourne. Thanks to Simon Frew (Deputy President) for authoring the speech and Mozart Palmer (Media Relations) for his contributions.

Pirate Party Australia, like many other attendees at the intellectual property section of this Agreement negotiation, first became aware of the proposed intellectual property provisions of the Trans-Pacific Partnership Agreement when the United States negotiating position was leaked last year.[1]

Much of the content of the leak is a wish-list for old media corporations who refuse to adapt to the Internet and instead pay massive “donations” to their government in order to push their legislative agenda against the interests of modern society. This wish-list echoes that of the intellectual property segments of the Stop Online Piracy Act – known as SOPA – and the Anti-Counterfeiting Trade Agreement – known as ACTA. The US TPPA provisions have been nicknamed “the son of ACTA”. The proposed solutions to online file-sharing will fundamentally change the operation of the Internet, to its detriment.

The extreme position of the leaked United States’ Intellectual Property chapter is highlighted by the unprecedented request for the negotiating texts to remain secret for four years after the agreement is signed. This secrecy is a perversion of democracy. The public would not be given a chance to oppose such a draconian attack on both the Internet and the civil liberties of citizens in all of the signatory countries. All of this to protect the corporate interests of a small sector of one industry? What about the cost to our democratic rights?

Considering the widespread international opposition to ACTA and SOPA, any secrecy around this agreement will discredit the TPPA in the eyes of many. We demand that a draft agreement be released before the treaty is finalised and signed to ensure our rights are adequately protected from marauding United States media conglomerates.

Transparency is the only way the Agreement will have any legitimacy. It is the 21st century and the time for secret negotiations on behalf of cashed up special interests has passed. The technology exists for governments to carry out these negotiations with complete transparency and it is time for citizens to have the right to know what is being carried out in their names. Our representatives cannot represent us if we are blind to their choices.

The secrecy surrounding the content of the negotiations makes discussing the Agreement extremely difficult. We are not exactly sure what we are arguing against. Our only verifiable guide is a leaked position paper provided to the citizens of the world by a non-profit whistle-blowing website – the same whistle-blowing website that is under constant attack by the United States for obeying the letter of the law and shedding light where corruption and greed have cast their sinister shadow. We would be able to provide a much clearer argument about what the Agreement should and should not include if we knew what was on the table. If negotiations were transparent, and if access to information was properly provided, the contributions from stakeholders & delegates at this consultation would be vastly improved.

In Australia, we have seen the harm that tighter intellectual property restrictions can cause through the Australia–US Free Trade Agreement. The Productivity Commission, a body that investigates the economic benefit or hindrance of various Australian economic policies, warned that agreeing to intellectual property provisions in free trade agreements needs to be subjected to a rigorous cost/benefit analysis.

The Australia–US Free Trade Agreement is believed to cost the Australian economy between 88 million and 763 million dollars a year in copyright enforcement alone. This is wealth being directly transferred from Australia to the United States – there is no net benefit to Australia derived from the tighter restrictions.[2]

If the US delegation gets its way, that and more will be forced upon your people and local economy, to what benefit? We urge delegates to reject the inclusion of any intellectual property provisions in your own national interests as they WILL harm your economies.

The intellectual property section of the Agreement as pushed for by the US in our leaked copy, will force Internet Service Providers along with large online content service providers such as Facebook, Google and other similar companies, to be liable for what their users access using their services. As an example, this in itself will make it impossible for Facebook to exist in its current form, as each photograph posted by every single user will need to be moderated to weed out copyright infringement before Facebook can host it. The same is true of YouTube, a Google owned service, in regard to video content. Their servers receive user content well in excess of an entire days worth of footage, every 60 seconds.

What is being proposed will not only harm the interests of the vast majority of countries at the negotiations, it will harm the interests of many companies in the United States. SOPA was opposed by the likes of Google and Facebook precisely because such a regime will make it difficult for these companies to maintain their current business models.

I will now proceed with an examination of the individual articles and paragraphs we have objection to.

Article 4.2 grants rights holders the right to control their products entry into each countries’ markets. Essentially this bans parallel imports, which is a direct attack on free trade. Australian consumers already suffer at the hands of unfair pricing of goods, services and cultural artifacts. Without some ability to access goods from other countries, the rights holders can dictate pricing on a country-by-country basis, being able to milk maximum profit from each customer.

Allowing parallel imports keeps prices down because retailers and consumers can find the lowest price for a product. The right to find the cheapest price for a good is one of the fundamental tenets of free trade, and the emerging global economy.

Another issue relating to parallel imports regards globalised communications – particularly the use of social media – and the need for people in ‘foreign’ markets to have access to content as soon as possible. One of the biggest motivations for people to share content online is the artificial and unnecessary delay of release times on a country-by-country basis.

As an aside, it makes sense for media companies to adopt synchronised global release dates, because any social media buzz, which will be global whether you like it or not, will help promote the product globally. Staggered release dates weaken any benefit from social media, and people denied access for living in the ‘wrong’ geographical region will be coerced by social pressures and advertisement displayed on globally available websites to access the material in the only way available to them – through online file-sharing.

Article 4.5 of the draft US intellectual property chapter extends copyright terms across the TPPA countries. For most countries involved in the negotiations, plans to extend copyright terms will directly harm your economies. As discussed earlier, these provisions in the Australia–US Free Trade Agreement had a negative impact on the Australian economy and will on all signatory countries except the US.

Article 4.9 proposes that circumventing copy protection on any media would be a criminal act. There are currently fair use exemptions for a range of reasons, from software experiment and study, to fair use for parody or comment and so on. Using a work for any reason other than as stated in the licence would risk criminal charges, even if the use is considered legal under current arrangements. This directly assaults the rights currently enjoyed by citizens in signatory countries to use media they have purchased how they wish. Rights could be locked up and sold once for each device, requiring consumers to purchase multiple licences to any media they wish to access. If they purchase a new iPod for example, they can no longer access their music collection on their new device and would need to re-licence all of their music.

Article 6 discusses fair use. There is currently a fair use exception for the transient copying of a file, which is removed from the US proposal. This is one of the most ill thought-through changes to the current system. All media streamed online is temporarily cached on the users’ computer so the video software can play it. This would become not only illegal, but criminal. More broadly the US draft intellectual property chapter removes many of the current fair use exceptions to copyright. This would harm peoples’ ability to interact with culture, which needs to be resisted.

Article 10.2 states that there must be a presumption that the rights holders’ claims to the right is valid, unless evidence to the contrary is produced. Aside from turning “innocent until proven guilty” on it’s head, this policy gives credence to various versions of “graduated response,” where a user has themselves removed from the Internet via cancellation of their Internet service based on a predetermined number of accusations, not proven violations of copyright.

In terms of patent law, this presumption is extremely problematic, as many granted patents have no actual basis for the claim. The effects of these policies can be witnessed primarily in the US, where there is a plethora of frivolous lawsuits around patents relating to computer software. Companies known broadly as ‘patent trolls,’ apply for patents on broad, obvious and fundamental ideas, violating the principle that a patent should be granted for only original and innovative developments. Recently a company called Eolas Holdings attempted to claim ownership of a patent for “any program that allowed access to the interactive web”.[3] This means that basically any program that uses the Internet would be required to pay Eolas Holdings a licencing fee to be able to distribute their products.

Thankfully they lost the case, yet it highlights the danger and cost of dealing with a presumption in favor of the organisation claiming the rights. A claim like this would need to be fought in court because the burden of proof would fall on the defendant to show the patent is invalid.

A similar trend can be found in copyright law. YouTube has an automated take-down system that allows rights holders to remove material that they hold copyright for. In the last week, a company called Rumblefish had a YouTube video taken down for breaching copyright on a ‘sound recording’. The closest thing to a recording in the video was a real bird call, which according to copyright law cannot be copyrighted as it occurs in nature.

This is precisely the sort of thing that will eventuate from the assumption in favour of rights holders, as proposed. Ordinary people who post videos for friends and acquaintances are not in a financial position to challenge such claims. Wrongful claims are a way for old media to directly obliterate the competition. As this is already happening, any claim that the TPPA would not cause such problems is patently (excuse the pun) ludicrous. This would just export the problem to all signatory countries.

Article 12.8 gives rights holders the right to demand personal information about customers of Internet Service Providers – or other service providers – on a mere accusation. This is a fundamental attack on the privacy of the citizens of all signatory countries. There is nothing to stop rights holders going on extensive fishing expeditions, searching through millions of users, looking for people to sue. This power is not granted to law enforcement without due process. Handing such powers to corporations without any requirement to show a breach has occurred is an attack upon the process of law. We have a right to not be placed under surveillance by companies based upon their word that illegal activity has occurred.

Article 14 contains border enforcement provisions which grant customs authorities the right to seize and destroy goods at borders, where they suspect the goods are infringing copyright, trademark or patent law. There is significant risk for goods to be wrongfully seized in transit, posing significant risk for any company engaged in global trade. This further exacerbates the situation of generic medicines, where seizures can negatively impact the health of citizens of signatory countries and beyond.

The agreement will result in funnelling vital health money out of developing countries, directly into the coffers of US pharmaceutical companies. There is no benefit in adopting any of these provisions for any participant country EXCEPT for the United States. It will have serious negative impacts on the health of many millions of people around the world, not just the countries in this agreement.

This has been shown through the experience of many participants in the TRIPS Plus agreements. A case in point is the US free trade agreement with Jordan. According to a study produced by Oxfam, the cost of medicine in Jordan has risen by an average of 20% as a result of the agreement. It is also threatening the viability of many government health programs in the country.[4]
Medicine Sans Frontier are deeply concerned with the impact this agreement will have upon their health programs. Over 80% of all medicine used by MSF is generic. Losing access to this source of medicine will result in literally millions of deaths. As an example, the introduction of generic medicines for AIDS patients reduced the cost of medicine by approximately 99%.[5] We must ask the delegates: “can your country afford such a drastic increase in health costs with no benefit in return?”

Just as the copyright section transfers value directly from each countries’ economy to the United States, the attacks on cheap medicine will result in much higher health costs in all signatory countries, with the extra costs being poured into the coffers of rich US pharmaceutical companies. For the good health of your citizens, we urge the delegates here to reject any attempt to crack down on generic medicines.

Article 15 is fraught with issues regarding what activities are to be considered criminal under the agreement.

Article 15.1 sets out criminal liability provisions that include criminal provisions for people engaged in copyright, trademark or patent violations on a “commercial scale”. Commercial scale includes: “significant willful copyright or related rights infringements that have no direct or indirect motivation of financial gain;” in other words, people not engaged in any sort of commercial activity at all. This is essentially to criminalise non-commercial file-sharing by stealth. This could lead to people being held criminally liable for copying a CD for a friend. Sharing should never be considered a criminal act.

Article 15.3 criminalises the use of camcorders in cinemas, regardless of intended use of said video, whether for personal or private use. There are already a raft of agreements and laws that cover this issue, and such a proposal would complicate an already confusing aspect of law.

Article 15.4 criminalises “aiding and abetting” intellectual property crimes (sic). There is no definition of what this means, and is so broad that it could mean anything from imposing liability upon intermediaries, such as Facebook and Google, to prosecuting the owners of a compromised wireless Internet hotspot that has been used to download copyrighted content. This poses a serious risk of inadvertently criminalising a significant portion of the population.

Trade negotiations are meant to provide mutual benefits to all signatory countries. The US draft intellectual property chapter will only benefit a few companies in the United States and will have a negative impact upon the culture and health of all signatory countries. As the primary exporters of intellectual property, the United States of America has the most to gain from the intellectual property segments of this agreement. All other members of this agreement are primarily importers of intellectual property. We urge all participating delegations to reject every aspect of the draft US intellectual property chapter as it will directly harm your economies and the well-being of your citizens.

pp xxxii & 166

Other sources and further reading

Access to Lifesaving Generic Medicines Threatened by US Trade Pact

PRESS RELEASE – Doctors without Borders


Public Health Safeguards Could Erode Under Trans-Pacific Partnership Agreement

New York, September 8, 2011 – Access to affordable lifesaving medicines will be threatened where they are needed most—in parts of the developing world—if the U.S. insists on implementing restrictive intellectual property policies in the Trans-Pacific Partnership (TPP) trade agreement, the international medical humanitarian organization Doctors Without Borders/Médecins Sans Frontières (MSF) warned today.

As the eighth round of closed-door TPP negotiations begins in Chicago this week, a leaked draft of the U.S. position indicates that the U.S. Trade Representative (USTR) is demanding aggressive intellectual property provisions that go beyond what international trade law requires, and is turning its back on previous commitments to safeguard public health in trade agreements.

For additional details, please view MSF’s TPP Issue Brief.

“Our experience around the world shows that MSF’s treatment programs – and our patients’ lives – depend on the availability of quality and affordable generic medicines,” explains Sophie Delaunay, executive director of MSF-USA. “What we’re seeing here is the U.S. and the pharmaceutical industry looking to impose some of the most stringent patent protections we’ve seen to date, significantly delaying introduction of generic medicines in the countries that sign up to the TPP and creating a fundamental contradiction between U.S. trade policy and U.S. commitments to global health.”

Encompassing nine countries to start (Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States), the TPP is billed as a vehicle for economic integration across the Asia Pacific region and a template for successive future regional trade agreements. As such, if hard-line intellectual property policies are included, the TPP has the potential to greatly diminish access to affordable medicines for millions of people in developing countries where MSF works and beyond.

The leaked USTR position paper, now available to the public, reveals that the U.S. is pushing its trade partners, including developing countries, to effectively lower the bar for granting patents, limit the capacity to challenge patents, and impose new forms of intellectual property enforcement – all measures that delay the introduction of more affordable generic drugs.

Correspondence and discussions between Congress and the USTR indicate that the U.S. will demand other harsh provisions that effectively delay the introduction of generic medicines. These could include “patent extensions” that extend monopolies beyond 20 years, “patent linkage,” which delays regulatory approval of generic drugs, and expanded “data exclusivity” terms, which further restrict access to the clinical data necessary for expedient generic drug approval.

Taken together, these provisions, if adopted, represent a major retreat from previous U.S. commitments to global health, including the 2007 bipartisan New Trade Policy, in which Congress and the Bush administration agreed to abide by important public health safeguards in future trade agreements. These safeguards give governments and patients in developing countries some relief from the most stringent intellectual property regulations when urgent public health needs are at stake.

Competition among generic manufacturers, for example, is what brought the price of the first generation of HIV medicines down by more than 99 percent over the last decade, from $10,000 per person per year in 2000 to as low as $60 per person per year today. This dramatic price drop has played a major role in helping scale up HIV/AIDS treatment to more than six million people in developing countries.

Stifling generic competition also has implications for the U.S. government’s own foreign aid policies. The U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) relies predominantly on the purchase of generic antiretroviral medicines, and has reported significant savings through the purchase of generic medicines. Vietnam, a TPP participant, is a PEPFAR-grant recipient.

“MSF urges the U.S. to stop chipping away at hard-won public health protections, including those enshrined in international law and the 2007 New Trade Policy, and to uphold its previous commitments to support generic competition and promote access to medicines,” said Judit Rius Sanjuan, U.S. manager of MSF’s Campaign for Access to Essential Medicines. “Policies that restrict competition thwart our ability to improve the lives of millions with affordable, lifesaving treatments.”

TPP negotiating parties are under no obligation to subject their negotiating positions to public scrutiny; only the final agreed-upon text will be made publicly available. MSF believes that regional and bilateral trade negotiations, including the TPP, should be conducted in an open and transparent manner that allows for participation by civil society and other relevant stakeholders, and ensures that public health needs are given adequate attention.

For more information, please see MSF’s Issue Brief on the TPP.


Trans Pacific Partnership Agreements and Big Pharma power over patents


This opinion piece first appeared in Crikey on 26 October2011.

US proposals give Big Pharma more power over patents, prices Dr Deborah Gleeson, a Research Fellow in the School of Public Health and Human Biosciences at La Trobe University, writes:

Leaked documents from the Trans Pacific Partnership (TPP) Agreement negotiations currently under way in Peru show the US is seeking to use the agreement to increase the monopoly rights of pharmaceutical companies and undermine the effectiveness of pharmaceutical reimbursement programs such as Australia’s Pharmaceutical Benefits Scheme.

The TPP is a proposed regional trade agreement involving Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the US and Vietnam.

The texts, leaked over the weekend, include an annexe on “transparency and procedural fairness for healthcare technologies” and extra provisions for an intellectual property rights chapter that was leaked in February this year.

The annexe includes clauses that would undermine the ability of schemes such as the PBS to set prices for medicines that are affordable to governments and consumers. Particularly concerning is a clause specifying that prices paid to drug companies must be based on “competitive market-derived prices in the party’s territory”, or other benchmarks that “appropriately recognise the value” of the patented product.

Currently the price paid to pharmaceutical companies under the PBS for most drugs is determined by comparison with the lowest price for similar drugs with the same therapeutic effect and similar effectiveness and safety. A requirement to use market-based pricing would see costs go up for many drugs and medical devices. The annexe also provides for extensive appeals processes for manufacturers to
challenge reimbursement decisions.

Australia has already seen increasing involvement of the pharmaceutical industry in the operation of the PBS as a result of the Australia — United States Free Trade Agreement, which came into force in 2005. There is some evidence that costs for some drugs have risen as a result. But the proposed provisions for the TPP would constrain the operation of pharmaceutical reimbursement schemes to a much
greater extent.

The intellectual property provisions the US is proposing for the TPP would also contribute to higher medicine prices. Patented drugs can be many times the cost of generic versions. Proposed provisions would lower patent standards, extend the scope of patent monopoly rights and remove public rights to object to new patents before they are granted. Provisions such as additional terms of “data exclusivity” for new versions of existing drugs (where generic manufacturers cannot use
clinical trial data to register cheaper generic versions of patented drugs) would delay the entry of cheaper medicines into the market.

Adopting US proposals for pharmaceuticals and intellectual property in the Trans Pacific Partnership Agreement would undermine access to affordable medicines in Australia and the other participating countries, which include some of the world’s poorest countries. This would present a major setback to efforts to stem the tide of non-communicable diseases, which are predicted by the World Health Organisation to account for 73% of deaths and 60% of the global burden of disease by 2020.

The negotiations for the TPP are conducted in secret. Apart from the occasional leak, negotiating documents are not available for public scrutiny. The Australian public should demand that proposals are released and made available for analysis and debate.

The leaked Trans Pacific Partnership texts can be found

Dr Deborah Gleeson is a research fellow in the School of Public Health and Human Biosciences at La Trobe University and convenes the Political Economy of Health Special Interest Group of the Public Health Association of Australia

Dr Deborah Gleeson

Trans-Pacific Partnership Free Trade Agreement: Don’t Trade Away Health


The Australian government is negotiating a Trans-Pacific Partnership (TPPA free trade agreement with the US, New Zealand, Chile, Peru, Brunei, Singapore, Malaysia and Vietnam, with proposals for Japan, Canada and Mexico to join later this year. But the agenda on health issues is being set by giant US pharmaceutical and tobacco corporations. They have made submissions stating that they want to use the negotiations to:

• Increase intellectual property rights, which would enable pharmaceutical corporations to charge higher prices for longer periods for medicines;
• restrict the ability of governments to provide medicines at affordable prices through schemes like the Australian Pharmaceutical Benefits Scheme (PBS);
• give corporations like Philip Morris the right to sue governments for millions of dollars when they try to protect public health through regulation like the tobacco plain packaging legislation.

We need to ensure the Australian government stands by its policies and does not agree to these proposals.

Intellectual property law already gives the inventor of new medicines the right to a patent, which means they can charge high monopoly prices for 20 years before anyone else has the right to produce a cheaper generic form of the same medicine. US pharmaceutical companies are using the TPPA to get other countries to agree to changes which give more rights to patent holders.

US trade negotiators are making proposals which would extend patent rights and would delay cheaper generic drugs from becoming available1.

This is not about free trade, but about greater rights for these corporations to charge high prices for a longer time. This would also be a disaster for the developing countries in the TPPA, as it would make many medicines completely unaffordable for them.

In April 2011 the Australian government announced in its new trade policy that it would adopt the recommendations of the Productivity Commission, which were against increased intellectual property rights for medicines2. But US corporations and the US Trade Representative are still pushing for these rights in the TPPA negotiations.

The Australian government should not agree to increase intellectual property rights.

In the US where the national government does not have the same control over the price of medicines as the Australian Government, the wholesale prices of medicines are three to ten times the prices paid in Australia, and many people cannot afford to buy medicines.

In contrast to the US, the Australian PBS is based on the principle that everyone should have access to affordable medicines. Under the PBS, the wholesale price of medicines is lower than in the US because health experts compare the price and effectiveness of new medicines with the price of cheaper generic medicines with the same health effects. This results in a lower wholesale price for the pharmaceutical companies, which is why they oppose it. The government then subsidises the retail price we pay at the chemist, currently $5.80 for pensioners and $35.40 for others.

US pharmaceutical companies want more intellectual property rights to charge high prices for longer

US companies want to reduce access to affordable medicines through the PBS

As well as keeping the prices of medicines low for consumers, the lower wholesale price reduces the cost to the taxpayer. This makes the PBS more sustainable in the long term.
US pharmaceutical companies argue that the PBS is a barrier to trade. They want to be able to charge higher wholesale prices for new medicines, which would increase the cost of the PBS and lead to higher retail prices at the chemist.

US trade negotiators have proposed changes which would restrict price comparisons and result in higher prices. They also want to enable companies to advertise their products direct to consumers3. But health experts generally agree that this leads to overprescribing, and it is not an accepted practice except in the US. Australian government policy says that it will not agree to changes which would weaken the PBS, but the companies and the US Trade Representative are pushing for them in the TPPA negotiations. The Australian government should not agree to these changes.

US corporations like Philip Morris tobacco company want special rights in the TPPA for individual companies to sue governments for damages if their investments have been harmed by a particular law or policy4.

These disputes, known as investor-state disputes, are heard by international investment tribunals, which give priority to the interests of the corporations, not to the public interest. There are no health experts involved in these tribunals.

Using these special rights in the North American Free Trade Agreement, US corporations have sued governments for millions of dollars over health and environmental legislation. International corporations can use their subsidiaries to find a forum which allows them to sue. For example, Philip Morris is an international company based in the United States. However, it recently claimed to be a Swiss company in order to use a Swiss investment agreement with Uruguay to sue the Uruguayan government over restrictions on tobacco advertising. It has also claimed to be a Hong Kong company in order to sue the Australian government for its 2011 tobacco plain packaging legislation, using an obscure 1993 Hong Kong – Australia bilateral investment treaty. This case is ongoing5.

Australian trade policy states that Australia will not support these special rights for investors to sue governments and will not seek them from other trading partners. But US companies and the US trade representative are still pushing strongly for them in the TPPA. The Australian government should not agree to investor-state dispute processes being included in the TPPA.

The TPPA negotiations are continuing in 2012. The negotiations are held in secret and the danger is that the Australian government could agree to some of these policies in return for access to other US markets.

We must hold our government accountable and ensure that this does not happen.

The Australian Fair Trade and Investment Network has a website ( with resources that you can use to:
• Send a message to the Trade Minister and the Health Minister, and get your organisation to do so.
• Raise the issues with your local Member of Parliament. • Join our mailing list to get regular updates on the
campaign. • Donate to support the campaign.
The Australian Fair Trade and Investment Network, Level 3, 110 Kippax Street, Surry Hills NSW 2010. Email, website phone 02 9212 7242.
1Pharmaceutical Research and Manufacturers of America, March 10, 2009, Submission to the Office of the Trade Representative, found at home.html #docketDetail?R=0900006480fa6a1
Leaked US intellectual property and medicines proposals in the TPPA negotiations found at reveal-u-s-undermining-access-to-medicine/
2The government accepted the recommendation of the Productivity Commission Report Ch. 14 which recommended against stronger intellectual property rights, in its Aus- tralian Government Trade Policy, April 12, 2011, p.18 found at publications/trade/trading-our-way-to-more-jobs-and-prosperity.html
3See note 1 for link to leaked US TPPA proposals
4Submission of Philip Morris International in response to the request for comments concerning the proposed Trans-Pacific Partnership trade agreement, 25th January 2010,!documentDetail;D=USTR-2009-0041-0016
5For documents in the Philip Morris case see Investor-State-Arbitration—Tobacco-Plain-Packaging.aspx
What you can do
US Tobacco Corporations want special rights to sue governments for damages

Call to censure Mike Moore for TPP lobbying bash

Sunday, 26 February, 2012 – 16:08
New Zealand’s Ambassador to the United States, Mike Moore, went ahead an co-hosted a $1500 a head lobbying bash at the plush Willard InterContinental Hotel in Washington DC on Friday night, despite calls for him to follow the lead of Australian Ambassador Kim Beazley and decline to attend.

The “exclusive reception” was sponsored jointly by Philip Morris, PhRMA, Chevron Oil and Target, and was promoted as “a unique gathering designed to establish and strengthen the critical person connections at the highest level of state government with embassy and industry representatives”.

Moore was an official co-host representing the ambassadors from the nine countries involved in the Trans-Pacific Partnership agreement negotiations. Reportedly only five of the nine actually attended.

The event has outraged tobacco control advocates, public health campaigners, environmentalists and labour organisations who are campaigning against the TPPA.

Washington-based activists slipped past tight security at the Willard and handed spoof TPP menus to arriving guests with offerings that included

Offshoring Edameme a le GE, drizzled with Chevron Amazonian oil spills,

Teenage smoking salmon toast points a la Philip Morris, served with lawsuits against plain packaging laws, and

Pfizer Filet Mignon, with sauce of attacks on cost-savings medicine formularies.

University of Auckland Professor Jane Kelsey, who has been strongly critical of the TPPA negotiations, described it as “outrageous that the New Zealand ambassador was acting as host to corporate lobbyists who were buying access to TPP ambassadors, among others, to press their cause”.

In a last-minute letter to New Zealand’s ministers of foreign affairs and trade on Friday, New Zealand, time, she urged them to instruct Moore to pull out of the event, as Beazley had done.

Kelsey pointed to the government’s assurances it would defend Pharmac against concerted attacks from big PhRMA attack in the TPPA negotiations, and its obligations under the Framework Convention on Tobacco Control to protect tobacco control policies from influence by the tobacco industry – at a time when Philip Morris is suing the Australian government over its plain packaging laws.

“If the government wants us to take seriously their assurances that they are looking after New Zealand’s interests they need to censure Moore and ensure this conflict of interest never happens again”.

Investor-state dispute settlement (ISDS): the threat to health, environment and other social regulation

Paper presented at the Stakeholders Forum, eighth round of Trans-Pacific Partnership negotiations, September 10, 2011, Chicago, USA

Dr Patricia Ranald, Australian Trade and Investment Network Research Associate University of Sydney


1Summary: This paper provides a brief overview of the experience of investor state disputes settlement (ISDS) and the debate about ISDS in Australia, which resulted in its exclusion from the Australia-US Free Trade Agreement (AUSFTA) negotiated in 2004. The evidence on ISDS was re-examined by the Australian Productivity Commission in its 2010 Report, which found no evidence to justify ISDS but found evidence of considerable policy and financial risk to legitimate social regulation. ISDS action by the Philip Morris Company against Australian tobacco plain packaging legislation under a 1993 Hong Kong-Australia bilateral investment treaty has further influenced Australian government policy against ISDS, and has probably strengthened government and public opposition.

Summary of the experience of ISDS

The growth in ISDS through trade and investment agreements has provoked a corresponding growth in critical examination of the evidence of its outcomes. Many of the disputes have involved public policy measures ranging from restrictions on the use of dangerous chemicals, mining development in environmentally sensitive areas or on indigenous land and health warnings on cigarette packages. The critical discussion revolves around the issue of whether ISDS places unreasonable restrictions on the right of governments to regulate for legitimate health, environmental or other social policy objectives (Tienhaara, 2009, Schneider 2008, Capling and Nossal, 2006).

Historically the direct expropriation of foreign investment was the biggest risk for foreign investors, but this is now relatively rare. Many ISDS disputes are concerned with “indirect” expropriation. This does not involve the physical taking of property but results in “the effective loss of management, use or control or a significant depreciation of the value of the assets of a foreign investor” (UNCTAD, 2000:11).

UNCTAD defines indirect expropriation or regulatory takings as “those takings of property that fall within the police powers of the state, or otherwise arise from state measures like those pertaining to the regulation of the environment, health, morals, culture or economy of a host country”(UNCTAD, 2000:12).

Tienhaara distinguishes two approaches by tribunals in establishing whether or not a regulatory taking has occurred. One approach has tended to focus on the effect of the regulation on the investor, in terms of its economic impact and duration. Tribunals have also take into account the legitimate expectations of the investor. Another approach examines both the effect on the investor and the purpose of the regulation, including whether the stated purpose is proportional to the negative effect felt by the investor. In both approaches, it is arguable that there is insufficient attention to the public purpose of the regulation and the right of governments to regulate (Tienhaara, 2010: 12)

Once a regulatory measure has been defined as a regulatory taking, it can be assessed for legality in the same way as a direct expropriation. In order to be lawful, it must be for a public purpose, it must be non-discriminatory and compensation must be paid to the affected investor (Tienhaara, 2010: 13).


The definition in scope of police powers and the difficulty of distinguishing between genuine regulation not entitled to compensation and a regulatory taking which could be compensable is problematic. There is a growing body of opinion which argues that ISDS gives unreasonable powers to corporations to sue governments for damages over legitimate health, environment or other social regulation.

In North American Free Trade Agreement (NAFTA) countries, where over 60 cases have been filed against government parties, there have been a series of cases involving health and environmental regulation, including Ethyl versus Canada, SD Myers versus Canada, Dow Agro Sciences versus Canada, and Chemtura Corporation versus Canada (Tienhaara, 2010). Although many NAFTA cases have been unsuccessful, they have involved governments in expensive and protracted litigation. A 2009 survey of ISDS more generally found 33 cases involving claims of more than $1 billion, the highest being a claim for $50 billion and more than 100 additional cases where claims were between $100 and $900 billion (Productivity Commission, 2010:272).

The impact of these cases in NAFTA and through other investment treaties in which even larger damages have been paid has led to an effect described as “regulatory chill”. This is a situation in which governments are made aware of the threat and the costs of both protracted litigation and damages, and are discouraged from legitimate regulation because of these threats. There are a number of case studies that suggest that investors’ threats to use ISDS have discouraged specific types of regulation including the documented withdrawal by Canada of a proposal for tobacco plain packaging regulations following the threat of ISDS arbitration (Productivity Commission, 2010:271).

Legal Process issues

There is no single international investment institution which deals with ISDS disputes. Instead, they refer to one or more sets of procedural rules, used for the creation of specific panels for particular disputes.

The most commonly used rules are those of the UN commission on International trade Law (UNCITRAL) And the International Centre for the Settlement of Investment Disputes (ICSID), part of the World Bank group. There are a series of problems with these processes compared with most national legal processes.


No organisation keeps track of UNCITRAL disputes, so there is little public information about them. ICSID as part of The World Bank group has a website which lists disputes, and on which tribunal awards can be published, but only if the parties agree that they can be made public. This contrasts with most national legal proceedings, where proceedings themselves are public and records of proceedings and outcomes are publicly available (Productivity Commission: 273).


Composition of tribunals

The tribunals generally have three members: one chosen by the investor, one chosen by the government and the third that is mutually agreed. Unlike judges in most national courts, arbitrators can be practicing advocates. This means an individual can act as an advocate in one case, and an arbitrator in another. The composition of the tribunals which allow advocates to be arbitrators means that arbitrators lack the independence normally expected of members of national judicial systems, who are not permitted to be advocates (Productivity Commission: 273).

At the very least, both the legal framework and the composition of tribunals lead to a lack of proper consideration of public interest issues.

No binding precedents and inconsistency of decisions

Decisions are only binding on the parties involved in the dispute, the tribunal does not have to consider decisions of previous tribunals, and there is no appeal system to ensure consistency. There have been cases where panels have reached very different conclusions based on the same facts (Productivity Commission: 273).

In short, ISDS exposes governments to the risk of expensive litigation and huge potential damages which threaten legitimate public interest legislation in a secretive process without the legal safeguards of an independent judiciary, precedent setting, appeals processes and consistency of decision-making.

The Australia US free trade agreement (AUSFTA) Debate

The Australian Liberal-National (conservative) Coalition Government led by John Howard negotiated a free trade agreement with the US in 2003-4.

The US agenda was a much broader than trade in goods and agriculture, and sought to change a range of Australian health and social policies. This was based on the agenda pursued in the NAFTA and in other US bilateral agreements. Targets included wholesale price controls on medicines through the Pharmaceutical Benefits Scheme, Australian content laws for audio-visual services, quarantine laws, labelling of genetically engineered food and the Foreign Investment Review Board. These were all seen by the US as barriers to trade (Zoellick 2002). The US also wanted an ISDS which would give individual corporations the right to sue governments for damages if government law or policy harmed their investments.

AUSFTA prompted the biggest critical public debate ever held in Australia about a trade agreement. There were hundreds of community meetings, public rallies in many cities, many articles in community, union, local and specialised media, over 700 submissions to parliamentary inquiries in 2004 and thousands of letters, postcards and emails sent to politicians (Ranald, 2010). Two books critical of the agreement were subsequently published (Capling 2004; Wiess et al. 2004).


ISDS was a major topic of community debate, on the grounds that it would be a dangerous weakening of governments’ ability to regulate for social and environmental goals. The debate canvassed most of the issues raised in the above summary of ISDS experience (Australian Broadcasting Commission, 2003, Henry 2003).

The debate about AUSFTA in general and the ISDS influenced public opinion. Polls conducted by Hawker Britton showed a steady decline in support for the AUSFTA, from 65 per cent before negotiations started early in 2003 to 35 per cent in February 2004 when the deal was concluded. This lack of support was confirmed by a Lowy Institute poll in February 2005 showing only 34 per cent supported the agreement (Cook 2005, Hawker Britton 2004).

The public debate and decline in support for the agreement prompted the Opposition Australian Labor Party (ALP), and the Democrats and Greens to adopt policies critical of the AUSFTA. These parties together had a majority in the Senate, so their agreement was required to pass the AUSFTA implementing legislation. After a fierce internal debate, the ALP parliamentary caucus finally decided to endorse the AUSFTA implementing legislation with some amendments, on pharmaceuticals and Australian media content (Latham 2004). This was the first time the Australian Parliament had amended the implementing legislation for trade agreement.

The ISDS was a particular focus of the critics of AUSFTA, and was not included by the Howard government in the final agreement, which became public before the Parliamentary debate on the implementing legislation. The exclusion of the ISDS before the Parliamentary debate is an indication of the sensitivity of the issue, and possible government fears that its inclusion would make the agreement unacceptable. The AUSFTA is the only US bilateral free trade agreement which does not include ISDS.

Productivity Commission report recommends against ISDS

The Australian Productivity Commission is an arms-length advisory body set up in 1998 to conduct independent research on a range of economic, social and environmental issues. In 2009, the then ALP Government requested that the Productivity Commission undertake a study into the impact of bilateral and regional trade agreements on Australia’s economic performance. The Commission received submissions from business, government and non-government organisations and produced a final report in December 2010.

The study received a large number of submissions on the topic of ISDS, and reviewed these submissions in its report, some of which is quoted above.

After reviewing the evidence on ISDS, the report found no evidence that ISDS resulted in greater inflows of foreign direct investment. It also found no evidence for some of the other key arguments used to justify ISDS. For example, it found no evidence of market failure resulting from political risk to foreign investors, and no evidence that regulation is systematically biased against foreign investors (Productivity Commission 2010: 269-70).

On the contrary, the report concluded that that “experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions” (Productivity Commission 2010: 274).


The report recommended that “the Australian government should seek to avoid the inclusion of investor state dispute settlement provisions in bilateral and regional trade agreements that grant foreign investors substantive or procedural rights greater than those enjoyed by Australian investors” (Productivity Commission 2010: xxxviii).

Australian Labor Party policy on ISDS

Labor’s policy differences with the Howard government on the AUSFTA in 2004 were described above. The Australian Labor Party (ALP) came to office in 2007 with explicit trade policies to protect the right of governments to regulate on health, environment and other public policy issues. The policy also committed to improved consultation and parliamentary debate about trade negotiations (ALP 2009).

Before the TPPA negotiations began in March 2010 the Australian Trade Minister responded in answer to questions that ‘everything was on the table’. However, in response to concerns from unions and community organisations about ISDS, the Minister reported as saying:

“We continue to have serious reservations about the inclusion of investor-state dispute settlement provisions … and Australian negotiators will be making this clear” (Saulwick 2010).

New Australian Trade Policy on ISDS April 2011

A review of Australia’s trade policy was conducted by the new Trade Minister Craig Emerson following the 2010 election. The outcome of this review, announced in April 2011, included the adoption of many of the recommendations of the Productivity Commission Report on Bilateral and Regional Trade Agreements.

The policy rejects the inclusion in trade agreements of investor state dispute procedures. It states:

“The Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses. Nor will the Government support provisions that would constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses…In the past, Australian Governments have sought the inclusion of investor-state dispute resolution procedures in trade agreements with developing countries at the behest of Australian businesses. The Gillard Government will discontinue this practice. If Australian businesses are concerned about sovereign risk in Australian trading partner countries, they will need to make their own assessments about whether they want to commit to investing in those countries” (Emerson, 2011: 20).

The policy was also influenced by actions taken by the Philip Morris International tobacco company in February 2010 against the government of Uruguay, challenging tobacco advertising restrictions which were based on a World Health Organisation Convention. The company claimed that the measures violated the terms of the Switzerland Uruguay bilateral investment treaty by preventing it from displaying its trademark, which received media publicity in Australia (O’Malley, 2010, Davison 2010).


Shortly after the Uruguay legal action, Philip Morris International made a submission to the US trade representative, advocating strongly for ISDS to be included in the Trans-Pacific Partnership agreement (Philip Morris International, 2010).

The Australian government had already announced its intention to introduce tobacco plain packaging legislation. In January 2011 the trade Minister responded to media reports of the Philip Morris Uruguay legal action and its submission for an ISDS in the TPP by saying that “Philip Morris would be ‘whistling in the wind’ if it tried to undermine national anti-tobacco laws” (Rowbotham, 2011).

The Australian government also responded to these actions specifically in its policy announcement which mentions the ability of governments to regulate tobacco advertising:

“The government has not and will not accept provisions that limit its capacity to put health warnings or plain packaging requirements on tobacco products” (Emerson 2011:20).

Australian Tobacco plain packaging legislation

The plain tobacco packaging policy of the Australian Labor Party announced in 2010 was strongly supported by public health groups, all medical professional groups and consumer health organisations (Australian Health Care and Hospitals Association, 2011, Cancer Council, 2011a).

In April 2011 the Australian government announced that it would introduce legislation for the mandatory plain packaging of all tobacco products. The scheme, which will enter into force from July 2012, will apply to all tobacco products prescribing that the packaging must be a plain dark colour and that no trademarks except the business or company name may appear on the packaging. The legislation implements certain of Australia’s international obligations as a party to the World Health Organisation Framework Convention on Tobacco Control (World Health Organisation, 2011).

The legislation was also based on Australian research that showed that tobacco control measures, including restrictions on advertising, developed in Australia over the last 30 years had been successful in reducing numbers of smokers to less than 20% of the population. However, tobacco smoking continued to kill more than 15,000 Australians per year, at the social cost of $31.5 billion per year. Research showed that most new smokers are young people, many under the age of 18, and that particular tobacco brands shown through packaging were major form of advertising which attracted this group. (World Health Organisation, 2011, Parliament of the Commonwealth of Australia, 2011).

The tobacco industry immediately commenced a $20 million public campaign against the legislation, which included paid television advertisements and a public relations campaign involving carefully placed opinion pieces in the media. The main argument was the right to be compensated for loss of intellectual property rights involved in brand names and trademarks on packaging, which would cost taxpayers millions if not billions of dollars. At the same time, they threatened legal action against the legislation, mentioning a possible constitutional case in


Australian courts, exploring an intellectual property dispute in the WTO, and the possibility of pursuing ISDS through other trade agreements. (ABC Radio National, 2011, Institute of Public Affairs, 2011).

Despite the tobacco industry campaign, public opinion polls showed majority support (59%) for the legislation (Cancer Council, 2011a). After some prevarication, the Liberal-National opposition parties, influenced by public opinion, announced that they would support the legislation in principle (Thompson, 2011).

The government proceeded with the legislation. After the release of a consultation paper and an exposure draft, the revised legislation was introduced into the Australian Lower house of Parliament House of Representatives in July 2011.

Philip Morris ISDS case against Australia

Philip Morris International described itself as a U.S.-based company when it made a submission in 2010 to the US trade representative supporting an ISDS process in the TPPA.

However, it claimed to be a Swiss-based company when it used an ISDS process to sue the Uruguayan Government for damages under a Uruguayan-Swiss investment agreement when that government introduced legislation restricting tobacco advertising (International Centre for Trade and Sustainable Development, 2010).

Philip Morris can also claim to be a Hong Kong company because Philip Morris Asia, incorporated in Hong Kong, invested in Australia by becoming the sole shareholder of Philip Morris (Australia) on February 23, 2011. Philip Morris Asia’s investment in Australia therefore took place almost a year after the Australian government announcement of its intention to legislate for plain packaging of tobacco products (Voon and Mitchell, 2011:22).

It would therefore be difficult for the company to maintain that at the time of its investment in Australia, it had a legitimate expectation that plain packaging would not be introduced. On the contrary, it appears that the investment of Philip Morris Asia in Australia was part of a forum shopping strategy to enable the company to take action against Australia under the Hong Kong Australia bilateral investment treaty.

Philip Morris Asia Ltd launched an investment claim against Australia on 27 June 2011, under the terms of the Hong Kong Australia bilateral investment treaty. This was one month before the legislation was introduced in Parliament (Philip Morris Ltd, 2011, Kenny, 2011).

The timing of the claim followed the more general public relations and advertising campaign against the legislation by the tobacco industry, and appeared to be intended as an attempt to delay the legislation and/or prevent its passage through the Parliament through its argument that the legal action would cost taxpayers millions, if not billions of dollars.

There was a strong public reaction to the Philip Morris legal action from health and consumer organisations, and academics. (Heart Foundation and ASH Australia, 2011 Cancer Council, 2011b, Faunce and Tienhaara, 2011). There was also critical commentary from trade law experts.


One legal commentator, a supporter of ISDS, lamented the fact that the case could give an ISDS a bad name (Nottage, 2011).

The legal action has not had the results the company hoped for. On the contrary, the Prime Minister and the Health Minister made strong public statements saying that they would proceed with the legislation, were prepared to oppose any legal action and were confident that they could win the case on the grounds that the legislation was legitimate public health legislation based on the World Health Organisation Convention (Australian Associated Press, 2011).

The bill passed the House of Representatives on August 24, 2000, with the support of the Greens and independents on whom the minority Labor government relies to form a majority. The Liberal National Coalition proposed some unsuccessful amendments but did not oppose the legislation. In September, the legislation is expected to pass through the Senate, where the government and Greens have a majority.


In 2004 a strong public debate, based on the experience of ISDS in NAFTA and other trade and investment agreements, influenced the then Liberal-National government to exclude ISDS from the AUSFTA.

Under an ALP government, the evidence was reviewed in 2010 by the Productivity Commission, a body generally supportive of free trade, which concluded that there was no economic justification for ISDS, and that the public policy and economic risks of ISDS were such that Australia should not support its inclusion in trade agreements.

The campaign by the tobacco industry against the tobacco plain packaging legislation and the use of ISDS by Philip Morris under the Hong Kong Australia investment treaty has if anything hardened public opinion and the government’s position against ISDS in the TPPA.

This may prove to be a stumbling block in the TPPA negotiations, especially if other governments take a similar position.



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TPPA -“Trans Pacific Partnership Agreement” or “Toxic Profiteers Plunder Aotearoa”?

While this video is based in NZ and several years old but – the issues remain the same for all countries involved in this agreement, well worth the time to listen to. Below the video is a timeline of how this secret beast came about thank to TPPA Digest.


TPP Background

The Original P4 PDF Print E-mail
The Trans-Pacific Strategic Economic Partnership Agreement between Brunei Darussalam, Chile, New Zealand and Singapore was signed in 2005. The original Trans-Pacific Agreement negotiations were launched by Chile, New Zealand and Singapore at the APEC Leaders’ Summit in 2002. After attending a number of rounds as an observer, Brunei joined the Trans-Pacific Agreement as a “founding member”. It was given some flexibility to implement its commitments in light of its late joining; for example, it was given more time to negotiate its services and government procurement schedules. Negotiations on those schedules took place in 2008.The Trans-Pacific Agreement entered into force on 1 May 2006 for New Zealand and Singapore following the passage of implementing legislation and regulations, and entered into force for Chile on 8 November 2006. The Agreement provisionally applied to Brunei from 12 June 2006 and came into full force in July 2009.Negotiations on financial services and investment were deferred for two years. The Bush administration announced in February 2008 that the US would join those negotiations. Three rounds were held, in March, June and September 2008. The US announced in September 2008 that it would accede to the full P4 agreement and invited Australia, Peru and Vietnam to join them. The full participation of Australia and Peru was announced at the APEC Leaders’ meeting in Peru in November 2009, with Vietnam initially attending as an observer.

The first round of negotiations for the expanded the TPP to include the United States, Australia, Peru and Viet Nam was scheduled to take place in Singapore in March 2009. The proposal generated controversy in the US Congress, where 54 members wrote to President Obama opposing the agreement and 45 countered with a letter in support. In February 2009 the new US administration requested a postponement to allow time for a review US trade policy and priorities. The first round of negotiations was rescheduled for 15-17 March 2010 in Melbourne.



Free trade agreements between negotiating parties:

Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) (into force 1983)

ANZCERTA services protocol (into force 1989)

New Zealand Singapore Closer Economic Partnership Agreement (into force January 2001)
US – Vietnam Bilateral Trade Agreement (into force December 2001)

US – Singapore Free Trade Agreement (into force January 2004)
US – Chile Free Trade Agreement (into force January 2004)
Singapore Australia Free Trade Agreement (into force July 2003)

US – Australia Free Trade Agreement (into force January 2005)

Trans-Pacific Strategic Economic Partnership Agreement (P4) (into force May 2006 NZ and Singapore, November 2006 Chile, July 2009 Brunei)

US – Peru Free Trade Agreement (into force February 2009)
Peru – Chile Free Trade Agreement (into force August 2009)

Australia – Chile Free Trade Agreement (into force March 2009)
Peru – Singapore Free Trade Agreement (into force August 2009)

TPP Timeline
President Bush announces the US will join P4 negotiations on financial services and investment
Call for submissions by the NZ Ministry of Foreign Affairs and Trade on US/P4 financial services and investment negotiations

First round of US/P4 financial services and investment negotiations

Second round of US/P4 financial services and investment negotiations

Third round of US/P4 financial services and investment negotiations
President Bush announces negotiations for US to accede to P4 to form a Trans-Pacific Partnership
Bush invites Australia, Peru and Vietnam to join TPPA negotiations

NZ MFAT calls for submissions on the comprehensive US/P4 negotiations
Australia DFAT calls for submissions on Australia’s participation in the TPPA negotiations

Peru and Australia announce their participation in TPPA negotiations, with Vietnam initially as an observer
Barack Obama wins the US presidential election

USTR calls for public comments on proposed TPPA

Letter is sent by 54 Members of US Congress to Obama opposing the TPPA
Obama administration announces deferral of TPPA negotiations for an unspecified period

USTR hearings conducted on TPPA
Letter is sent by 45 members of the US Congress to Obama supporting the TPPA
First round of TPPA negotiations scheduled for 30 March is cancelled
US Public Hearings on TPPA held


US Congressional hearings on the TPPA held
First round of TPPA negotiations held 15-19 March in Melbourne, Australia

Beware the limits of latest free trade deal

by Russell Marks
November 15, 2011








Prime Minister Julia Gillard, Russian President Dmitry Medvedev and US President Barack Obama at APEC this week. The announcement of a Trans-Pacific Partnership is not all good news for Australia.

Prime Minister JUlia Gillard, Russian President Dmitry Medvedev and US President Barack Obama and Russian at APEC this week. The annoucement of a Trans-Pacific Partnership in trade is not all good news for Australia. Photo: Andrew Meares

Despite claims to the contrary by Prime Minister Julia Gillard, the nine-country Trans-Pacific Partnership announced this week is not good news for Australia.

Multilateral and bilateral free trade treaties form a major plank of what has variously been called neo-liberal economic policy or “economic rationalism”. This is based on the theory that the regulation of the economy by governments almost always results in inefficiencies and productivity losses, which in turn lead to higher consumer prices and slower rates of economic growth. One major aim of free trade agreements is to compel governments to remove themselves from their role as regulators, and to allow “market forces” to determine what is produced and consumed where, by whom and at what price.

It’s a neat idea, in theory. And it must have something going for it, considering that it’s been ascendant in government policy circles for the better part of 30 years. The trouble is that over the course of those 30 years, there are numerous instances of the idea having failed when it’s been put into practice. Many of the fundamental tenets of neo-liberalism were discredited in 2008, when the consequences of the global deregulation of the financial sector became apparent.
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The discrediting of neo-liberal ideas has occurred not least in the arena of international trade. It has become increasingly apparent that what free trade agreements do best is restrict governments from regulating the economy for public interest policy reasons, such as public health and the protection of the environment and local industry.

Australia has recent experience of the detrimental consequences of signing a free trade deal with a much larger “partner”. In 2004, neo-liberal ideologues in the Howard government engineered a bilateral free trade agreement with the US. Ostensibly, this was to allow Australian exporters greater access to American agricultural markets. However, the powerful agricultural lobby in the US was effective in preventing any real access. Famously, not one grain of Queensland sugar has seen entry into US markets. In the first three years of the operation of the AUSFTA, the Department of Foreign Affairs and Trade’s own figures show that Australia’s trade deficit with the US more than doubled.

Neo-liberal ideas are also referred to as “the Washington Consensus”, given the location of many of the major institutions – the International Monetary Fund, the World Bank and the US Treasury – which prescribe rationalist solutions for crisis-ridden developing economies. “Washington Consensus” is an apt term. Historically, the US has used its relative economic and political power to secure “free trade” deals that benefit it at the expense of its trading “partners”. This can most clearly be seen in America’s attempts to reclassify other governments’ public interest policies as forms of economic protectionism, which must be abandoned under the rules of “free trade” agreements.

In its negotiations over the AUSFTA during 2003-04, the office of the United States Trade Representative focused in particular on Australia’s Pharmaceutical Benefits Scheme (which provides heavily subsidised access for patients to listed medicines under patent), its process of blood procurement (which for health and security reasons is not open to international competition) and its laws mandating minimum levels of local broadcast content on television. The USTR sees these policies as “protectionist” and wants them abandoned, regardless of Australia’s arguments that they are in our national interest.

There has been very little media coverage of the Trans-Pacific Partnership negotiations. The TPP aims to build on a four-nation treaty originally signed by New Zealand, Singapore, Chile and Brunei. In September 2008, the new Obama administration announced that it would be seeking to join what was then called the P-4. Within two months, the governments of Vietnam, Peru and Australia announced that they would also join in negotiations, which formally started on March 15, 2010.

When the Rudd government committed Australia to the TPP negotiations (in the same year that he publicly declared that neo-liberalism was “little more than personal greed dressed up as an economic philosophy”), many outside DFAT scratched their heads. Yesterday morning, Gillard told ABC radio that “freer trade with our growing region means Australian jobs”. But at what cost?

Why, exactly, is the Australian government pursuing a TPP deal? It already has bilateral agreements with four of the negotiating countries – New Zealand, Chile, Singapore and the US – and with the 10-country ASEAN bloc. Australia claims that the TPP will result in greater access to Pacific markets for exporters. But it is highly unlikely that the US, in a presidential election year, will allow much further access to its own domestic markets, especially given that it is still facing 9 per cent unemployment and is at risk of a double-dip recession. It is also likely that the US will make a further push for the deregulation of Australia’s PBS, local content requirements and blood procurement system.

The New Zealand-born former British Labour MP Bryan Gould, who has been warning New Zealand against signing up to any free trade deal involving the US, argues that “free trade areas” effectively become single economies.

Australians should be aware that any Pacific-wide free trade area would inevitably drive wages down as part of the need to compete with Asian and South American industries. With this in mind, the neo-liberal “jobs at any cost” rationalisation of our own Labor Prime Minister has a very hollow ring.

Dr Russell Marks is a lecturer in Australian politics at La Trobe University.