TPP: the free-trade threat to Australia’s environment

Australia is preparing to sign an agreement that would give international corporations the power to go over the government’s head on environmental issues. Here’s what you need to know about the Trans-Pacific Partnership Agreement.

STRETCHING WIDE, blue and deep, the St Lawrence River in Canada drains America’s Great Lakes to the sea. Along its shores, painted weatherboard cottages cradled by vibrant autumnal trees take in the view of the vast body of water.

This peaceful scene belies the legal battle for what lies underground along this river basin. The Canadian state of Quebec is being sued for CAD$250 million of taxpayers’ money after putting a pause on fracking.

To be clear, Quebec hasn’t decided to ban fracking, it’s simply asked for time to conduct environmental studies to find out whether the process is safe, but mining company Lone Pine Resources has taken the government to an international court, claiming it’s lost millions of dollars in profits as a result of the snap decision.

And if previous trials are anything to go by, there’s a good chance Lone Pine will win, even if it turns out fracking is dangerous to the environment and public health.

It sounds crazy, but it’s legal. And under an agreement Australia is set to sign within 12 months, companies operating in Australia will be able to sue the Government if it makes decisions that hurt their profits, for example, putting in new policies to protect the environment.

The Trans-Pacific Partnership Agreement (TPP) is being negotiated between 12 countries, Australia, Brunei, Chile, Japan, Malaysia, Mexico, Peru, Singapore New Zealand, the US, Vietnam and Canada, with the aim of freeing up and regulating trade between the signatories.

The agreement contains ‘Investor State Dispute Settlement’ (ISDS) clauses. These give big companies who are invested in Australia permission to sue the government in international tribunals if it puts in place new regulations that hurt their profits. These are the same clauses that allowed Philip Morris International to sue the Australian Government for installing plain-packaging tobacco legislation.

“The agreement poses a very real risk to the environment,” says Professor Jane Kelsey, an expert on globalisation and economic regulation from the University of Auckland in New Zealand. “If Australia signs an agreement with these mechanisms in place it will make it harder for the government to put new regulations in place.”

That includes any subsidies we might put on renewable energy, or protection we might put in place to save an endangered species.

Such law suits are already happening all over the world. Using an ISDS clause, an international tribunal recently forced Ecuador to pay US$1.76 billion (plus interest) to US petroleum company Occidental for a loss of profits after Ecuador cancelled its contract. And Germany was sued €1.4 billion by energy giant Vattenfall for trying to put in place new water quality standards for a coal-fired power plant. The government only managed to avoid the fine by agreeing to weaken its environmental standards, and now the same company is suing Germany an additional €3.7 billion for deciding to phase out nuclear power.

Tom Warne-Smith, a policy and law reform lawyer at Environmental Justice Australia, believes these mechanisms threaten Australia’s democracy. “If you recognise that there are areas where the government shouldn’t be able to freely legislate what’s in the best interest of the people, then how can we say the government represents our best interests in other areas?” he says.

“Now not only will the environmental minister have to consider the environmental impacts when putting in place new regulations, they also have to consider they might need to pay millions of dollars to an international company, that’s what we call regulatory chill.”

‘Secret’ negotiations

So why isn’t there outrage about the TPP? Kelsey believes it’s because the governments have kept the agreement’s early drafts secret. Environmental groups are only on high alert after Wikileaks released the environment and investment chapters earlier this year.

A spokesman for Trade Minister Andrew Robb disagrees that the negotiations are being held “in secret”.

“It is normal practice in trade negotiations to keep negotiating text confidential until an agreement is completed as this facilitates candid and productive negotiations and negotiating text is dynamic and often does not provide an accurate picture of the state of negotiations,” he said in a statement.

He pointed out that the Department of Foreign Affairs and Trade has provided more than 700 ‘stakeholder briefings’ since May 2011.

“The TPP offers an opportunity to strengthen job-creating trade and investment, and to further integrate Australia into the fast-growing Asia-Pacific region by pursuing common and liberalising policy outcomes,” he said.

Investor-State Dispute Settlement (ISDS) clauses are not new. They’ve been around for three decades and Australia has ISDS provisions in place with 28 economies. But this would be our first with the US, whose companies are historically the most eager to sue.

“Contrary to some public commentary, ISDS does not protect an investor from a mere loss of profits and does not prevent a Government from changing its policies or regulating in the public interest. A loss of profits, by itself, does not amount to a breach of a free-trade agreement,” Minister Robb’s office said.

But it’s not just a risk to Australia’s environment that is at stake. Michael Kennedy, director of Humane Society International in Australia says the TPP could be used to strengthen environmental protection in all the affected countries. But the leaked environmental chapter of the TPP contains no regulations that could be enforced due to weak wording. In this sense it’s a missed opportunity, says Kennedy.

“[Australia] even opposed slightly stronger wording on the protection marine sharks and turtles and sea birds. We were hopeless,” says Kennedy. “At the moment Australia is ensuring the TPP is no more than a soft bit of paper that does the bidding of multinationals. The investment chapter is written in their favour and the environmental clauses have been written so they won’t get in their way.”

Even if future governments wanted to back out of the agreement, these clauses would allow Australia to be sued by international companies via third party countries, says Kelsey. “The Abbott government is basically be binding the hands of all future governments on environmental issues.”

So what is the likelihood of Australia ending up signing the agreement as it stands? Prime Minister Tony Abbott has indicated he’s extremely supportive of signing the deal, and Andrew Robb, has stated that negotiations are in the final stages and the treaty is “ready to be sealed”.

Once countries have signed on the public will be given 14 working days to review the agreement.

“When you do get to see the thing it’s basically signed and there’s relatively little you can do. We need pressure and public action from citizens against these ISDS mechanisms now,” says Kelsey. “Particularly with the G20 summit on the doorstep, which will involve discussion on the TPP.”

Kennedy agrees. “We need to make sure we’re aware what these changes really mean for our environment.”

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