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TPP: Australia could be “sued for billions”

A leading expert on intellectual property (IP), Associate Professor Kimberlee Weatherall, has warned that Australia “could be sued for billions” if it ratifies the Trans-Pacific Partnership (TPP) trade agreement. From The Canberra Times:

“The Intellectual Property (IP) chapter of the TPP is an extraordinarily complex, extremely prescriptive chapter that locks in IP settings established decades and even a century ago – at the very time that the Productivity Commission is looking critically at Australia’s entire IP arrangements,” Ms Weatherall said.

“[And] the adequacy of carve-outs for IP in the Investment Chapter is extremely concerning.”

“We could get sued for billions for making some change to mining law or fracking law or God knows what else. We could literally have damages of more than a billion, but we don’t actually know. And we won’t know until any [law] suit gets started, and then we won’t know for another five years while it works through the process.

Ms Weatherall’s criticism follows others such as Dr Matthew Rimmer, intellectual property law professor at the Queensland University of Technology, who says the section on foreign investors is “labyrinthine”.

In signing on to the TPP, Trade Minister Robb did at least achieve a ‘carve-out’ for tobacco, which is something. But it still leaves a bunch of areas where Australian taxpayers could be sued.

While Robb has labelled such concerns “scaremongering”, Canada’s experience with the US under the North American Free Trade Agreement (NAFTA) provides a stark warning of what could be in store for Australia if it ratifies the TPP. As explained last month by Kyla Tienhaara, Research Fellow Regulatory Institutions Network (RegNet), Australian National University:

Australia and Canada have a great deal in common – a British colonial past; large and sparsely populated territories; and resource-intensive economies.

Two other similarities also bear mentioning: the economies of both countries are dominated by US investors (27% of foreign investment in Australia and nearly half in Canada).

But there is a one major difference: up until now, Australia has never agreed to provide American investors with access to Investor-State Dispute Settlement (ISDS), whereas Canada has.

In total Canada has faced 35 challenges, 23 of these in the last ten years. Australia has been subjected to only one ISDS case.

Canada has been sued more times than Mexico under the North American Free Trade Agreement (NAFTA) and at a global level it has been involved in more ISDS cases (35 in total) than any other developed country. Canada has already lost or settled seven claims, paid out damages totalling over CA$170 million and incurred untold millions more in legal costs.

At the same time, Canadian companies have been rather unsuccessful in ISDS. In general, the claim that ISDS will primarily benefit the “little guy” isn’t borne out by the statistics.

What kinds of policies are being challenged in ISDS? While much attention in Australia has rightly been given to Philip Morris’ challenge of the plain packaging legislation, many cases around the world actually focus on environmental protection and resource management.

Such cases account for 63% of disputes involving Canada. So carving out tobacco from ISDS, as has reportedly been done in the TPP, is like putting a Band-Aid on a bullet wound. If anything, it signals that the “safeguards” in place in the agreement are, on their own, insufficient to protect public policy.

Australia is opening a can of (really expensive) worms with the TPP. And significantly, it isn’t a can that can easily be closed again.

Clearly, Australians should be very concerned about the gremlins lurking in the TPP, the full extent of which are likely to come to light long after Trade Minister Andrew Robb has left his post.

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