No foreign investor rights to sue in new agreements

13 June 2016

For immediate release

Australian Labor Party says no foreign investor rights to sue in new agreements, including RCEP

The Australian Labor Party has promised not to give foreign investors the right to sue the Australian government in any future free trade and investment agreements. That policy would include the Regional Comprehensive Economic Partnership (RCEP) currently being negotiated in Auckland this week, says Auckland University law professor Jane Kelsey.

The promise forms part of the ALP’s policy platform in the current general election campaign. Latest polls have Labor slightly in the lead for the election on 2 July, which makes this a real possibility.

‘Presumably the Australian government is now in caretaker mode and can’t make commitments to the controversial investor-state-dispute settlement (ISDS) mechanism in RCEP’, Professor Kelsey said.

According to Professor Kelsey, a leaked text of the RCEP investment chapter from last October showed Australia – and New Zealand – had yet to table a position on ISDS. India proposed quite radical moves to strengthen governments’ rights to regulate, while Japan and South Korea sought to transfer some of the worst parts of the TPPA investment chapter across to this deal.

‘A change of government would shift the balance in the investment negotiations and provide important impetus to other countries, and the New Zealand Labour Party, to follow suit’.

Background

Previous ALP governments had a similar policy, following the Howard Liberal government’s position that produced the only US free trade agreement not to contain ISDS. The Philip Morris dispute against Australia over plain packaging tobacco deepened opposition to the use of offshore investment arbitration.

The current Liberal-led government took a case by case approach, including ISDS in the agreement with South Korea and in the Trans-Pacific Partnership Agreement but not in the deal with Japan.

Successive reports by the Australian Productivity Commission have challenged the value of ISDS in such agreements.

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