Summary
The Australian Greens maintain that the inclusion of Investor-State Dispute Settlement (ISDS) in trade and investment agreements pose significant risks to human rights and environmental protections, and they impinge on national sovereignty by restricting the regulatory capacity of governments. Further, ISDS tribunals are not independent, they lack impartiality, and they do not meet basic standards of domestic judicial systems. ISDS is a mechanism which expands the legal rights of multinational corporations and offers advantages beyond those available to domestic investors. For these reasons, the Greens disagree with the inclusion of ISDS provisions in trade and investment agreements.
The Greens note that the Productivity Commission has recommended that the Australian Government avoid the inclusion of ISDS provisions in our trade negotiation processes where foriegn investors have access to privileges not afforded to domestic investors.
The Greens note that the ISDS system is central to both the Agreement between Australia and the Oriental Republic of Uruguay on the Promotion and Protection of Investments (the Uruguay Agreement) , and the United Nations Convention on Transparency in Treaty-based Investor State Arbitration (the Convention). We note the extensive analysis of the majority committee report on this issue and we seek to add analysis and recommendations to this.
Agreement between Australia and the Oriental Republic of Uruguay on the Promotion and Protection of Investments
The Australian Greens note with concern the evidence given in a submission by the Australian Fair Trade and Investments Network (AFTINET) that the Department of Foreign Affairs and Trade (DFAT) did not provide an opportunity for members of the broader community to engage with this agreement prior to it being signed on the 5 April 2019. This is demonstrative of a lack of transparency and public scrutiny involved with the current procedure for making trade agreements. It is essential that any proposed agreement be tabled in Parliament and open for wide public consultation prior to signing, in order to ensure consistency with domestic democratic policy-making principles and practice.
The Greens acknowledge that this agreement seeks to improve on the 2002 agreement by implementing a range of safeguards including provisions which limit the scope of what investor rights can be defined as, provisions outlining expropriation obligations, and includes a WTO-style general exception and broad security exception which seeks to reflect the sovereignty and regulatory right of governments. Further, the Greens note that this agreement provides some limitations on ISDS claims which we characterise as an improvement upon the 2002 agreement.
However, the Greens are deeply concerned by the lack of consistency in the ISDS provisions within the Uruguay Agreement and other trade agreements Australia has.
This agreement contains no explicit exclusions for the Pharmaceutical Benefits Scheme, Medicare Benefits Scheme, Therapeutic Goods Administration, and the Office of the Gene Technology Regulator. There are also no explicit exclusions for control measures relating to tobacco. ISDS provisions contained within other trade agreements Australia has, including the Australia-Hong Kong Free Trade Agreement (pending ratification), contain these specific carve outs.
We acknowledge that within the fifth paragraph of the Uruguay Agreement preamble that there is an extrapolation of what a ‘legitimate public welfare objective’ is. It broadly encompasses ‘public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals.’ Further, we note that whilst a WTO-style ‘general exception’ provision exists within the agreement, in our view references to a right to regulate for ‘legitimate public welfare objectives,’ are not sufficient protections and the lack of explicit language in these provisions leaves a vulnerability for arbitration.
United Nations Convention on Transparency in Treaty-based Investor-State Arbitration
The Australian Greens acknowledge that where trade agreements contain ISDS provisions, any measures to enhance transparency are positive. Therefore, we support the Convention in its aim to increase transparency and public accessibility to ISDS proceedings through expanding the application of the United Nations Commission on International Trade Law Rules on Transparency in Treaty-based Investor-State Arbitration (Rules on Transparency) to include treaties concluded both prior to 1 April 2014.
We note, however, that there are a number of limitations which pertain to the application of the Rules on Transparency, and the practical application of the Convention. It was made clear during the hearing and in the submissions that whilst the Convention automatically applies to ISDS arbitration between two states which are signatories, where only one state is a signatory to the Convention it is at the discretion of the investor as to whether or not they agree to submit to the Rules on Transparency. If a signatory chooses not to submit to Rules on Transparency, then existing treaty provisions for ISDS arbitration prevail, and these may indeed be less transparent that those outlined in the Convention.
In addition, the Greens agree with concerns raised in evidence regarding the potential misuse of protected information provisions within the Convention. AFTINET stated in their submission that the “inclusion of exemptions for confidential business information and protected information without defining these terms opens up a scope for corporations to claim that documents submitted to the tribunal should not be made public. Arbitration tribunals may then be required to interpret these provisions. This could limit public access to arbitration documents and reduce oversight of arbitration proceedings.”
Further, we note that the application of the Rules on Transparency have been inconsistently applied across different agreements which Australia has signed since 2014. As detailed in evidence presented to the committee, this inconsistency can undermine and limit efforts to address deep concerns about the legitimacy of ISDS processes.
The Greens also note the evidence given by the Law Council of Australia who state that the treaty ‘will be most effective if widely adopted by states.’ We are concerned that the practical effect of this treaty is limited as evidence provided to the committee during the hearing determined that only five states have ratified the Convention, and that Australia is not currently in agreements with any of these states.
Recommendation
The Australian Greens recommend that ISDS provisions be excluded from all trade agreements and that any existing trade agreements including these provisions be renegotiated to remove them.
The Greens recommend that ISDS provisions be excluded from the Uruguay Agreement.
The Greens do, however, accept that where ISDS are included in trade agreements that any measures to increase transparency constitute an improvement. Therefore, we support the expansion of the United Nations Commission on International Trade Law Rules and we recommend that the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration be ratified. Any inconsistencies in the application of the Rules on Transparency within existing agreements should subsequently be remedied.
Senator Jordon Steele-John