|Home > Asia Pacific|
Multinationals launch 50 lawsuits worth $31b against Asian nations
ABC Radio Australia - December 8, 2016
The countries affected are currently negotiating the Regional Comprehensive Economic Partnership (RCEP) agreement for at least $US31 billion.
RCEP is being negotiated between 16 countries in the Asian region, including China, Australia, Japan, India and members of the Association of Southeast Asian Nations (ASEAN).
RCEP is being negotiated in Jakarta this week and includes an investor-state dispute settlement mechanism (ISDS) which allows foreign investors to sue states and claim compensation if they deem their investments "are adversely affected by the introduction of regulatory or policy changes in the host state".
That number of lawsuits could balloon if the RCEP is signed, because the proposal would grant corporations an exclusive right to bypass domestic legal systems.
"When the state loses an ISDS case or settles a dispute with an investor, governments can be forced to foot the bill with public money," the report observed. "In other words, ISDS effectively allows foreign investors to pass their investment risks on to citizens and public budgets."
The report titled "The hidden costs of RCEP and corporate trade deals in Asia", is a joint briefing by Friends of the Earth International, Transnational Institute, Indonesia for Global Justice, Focus on the Global South and Paung Ku.
The report found there has been exponential growth in the number of cases filed against RCEP countries, from six cases between 1994 and 2003, to 27 between 2004 and 2013. From 2014 to now, there have been 17 lawsuits.
"The secrecy surrounding investor-state arbitration means these figures could be just the tip of the iceberg," said Sam Cossar-Gilbert, trade campaigner at Friends of the Earth International in a statement.
"The huge sums of money involved leave no doubt about the unacceptable burden that this dangerous mechanism puts on countries across Asia. "If the RCEP trade deal goes ahead as planned, we expect to see an increase in multi-billion dollar claims – and citizens being forced to foot the bill."
The report showed there was one dispute in Australia relating to the country introducing plain packaging for tobacco products launched by Philip Morris.
The tobacco giant's total claim was for $US4.2 billion, equivalent to public health spending for 1.5 million people for a year, the report said.
The Australian High Court rejected the domestic challenge and the international arbitration case was eventually dismissed.
"Despite the ultimate failure of the case for Philip Morris, it illustrates the risk of ISDS when it comes to the state's ability to enact legislation for the benefit of its citizens," the report stated.
"The threat of having to spend billions in lawsuits puts a chill into other countries decisions to move forward with similar legislation. New Zealand for example, delayed the introduction of plain packaging in response to the Philip Morris claim."
Growing opposition worldwide
There is growing worldwide opposition to ISDS mechanisms, and the report found that RCEP countries have been sued for measures taken to protect public health, adjust corporate taxes, promote industrialisation and review contracts acquired through allegations of corruption.
"Investors are already using investment agreements to raid cash-strapped public budgets in Asia," said Cecilia Olivet, researcher at Transnational Institute in a statement. "It is time to reject a privatised justice system that can undermine crucial regulation in the public interest."
Around 68 per cent of cases filed against RCEP countries have been initiated by European-based investors, the report found.
Medicins sans Frontieres earlier this month had reiterated its concerns about the RCEP agreement, saying harmful intellectual property provisions involved would increase market monopolies for pharmaceutical corporations and delay or block access to affordable generic medicines.