Labor must amend trade deals that allow foreign companies to sue government over energy and climate policies | Patricia Ranald

An article in the Conversation with the catchy headline ‘Hey Minister, leave that gas trigger alone’ urged the Labor government not to extend the Turnbull government’s gas trigger, which could be used to force foreign gas companies to retain reserves of gas for use in Australia in certain circumstances. It warns that the actual use of the trigger could inadvertently allow these companies to seek to sue the government under Australia’s existing international agreements.

Many Australians don’t know this, but some of our trade agreements give foreign companies special legal rights to sue the federal government if a change in law or policy reduces their profits, even if the change is in the public interest. The mechanism is known as Investor-State Dispute Settlement (ISDS).

It was this mechanism in a Hong Kong-Australia trade deal that allowed Philip Morris to sue the Australian government over plain packaging laws in 2012. The Gillard government persisted with the legislation because it was an important public health policy. Successive governments fought and won the Phillip Morris case, even though it took more than five years and cost taxpayers $12 million in legal fees.

In light of the ISDS risk, the Conversation article urges the government to seek alternative solutions to the trigger mechanism to protect gas supplies, such as Western Australia’s gas reservation model, which requires companies reserve supplies for the local market before other transactions. However, ISDS also raises a broader question of principle. Should governments simply accept the threat of being sued by a foreign company when we determine our own public policy?

I would say no – it is not acceptable for corporations to use this legal tool to restrict the democratic rights of governments to act in the interests of their citizens, especially on such important issues as energy supply and change climatic.

A recent study has shown that mining companies are increasingly willing to use this arcane legal tool to sue governments for billions of dollars in compensation for decisions to phase out fossil fuels to fight climate change. , and recommended that ISDS be removed from trade agreements. The Intergovernmental Panel on Climate Change (IPCC) has warned that climate action is under threat from ISDS clauses in trade agreements.

Cases already underway around the world include US coal company Westmorland suing the Canadian government because the province of Alberta is phasing out fossil fuels, and German energy companies RWE and Uniper suing the Dutch government over similar policies. European governments want to pull out of the Energy Charter Treaty because it includes ISDS provisions that are being used against climate change policies.

In Australia, the Coalition’s government policy on ISDS has varied over the years. The Howard government has not agreed to include ISDS in the free trade agreement between Australia and the United States. But successive coalition governments have agreed to include it in the comprehensive and progressive Trans-Pacific Partnership between 11 Pacific Rim countries, including Japan, as well as bilateral agreements with China, Korea and Hong Kong. Companies from all of these countries have fossil fuel or energy investments in Australia.

Discover the Australia Weekend app

However, the coalition government was influenced by growing sentiment against ISDS. More recent agreements, including the Comprehensive Regional Economic Partnership between 15 Asia-Pacific countries, the Australia-UK Free Trade Agreement, the Australia-India Interim Economic Cooperation Agreement and the Free Trade Agreement -Australia-EU exchange still under negotiation does not include ISDS.

The political platform of the Albanian government explicitly opposes the inclusion of ISDS mechanisms in new trade agreements and commits to reviewing and removing ISDS from existing trade agreements.

“Labour considers these provisions to be contrary to the national interest and fundamental principles of democratic sovereignty and will not accept such clauses in any trade agreement,” the policy said. “Labour will not be asking this of Australia’s trading partners in future trade deals.”

But what about ISDS in existing agreements? Labor promised to review existing trade agreements and “seek to work with Australia’s trading partners to remove these provisions”.

There is growing evidence that ISDS provisions pose a real threat to governments wishing to act on climate change. Negotiations with other governments to withdraw them from trade agreements should take place urgently.

This would allow the Australian government to develop effective policies to tackle climate change, without the threat of being sued by foreign companies.

Leave a Comment

Your email address will not be published.