Voters may rightly consider there's only a plain-packaged cigarette paper of difference between the major political parties. Yet, in the midst of all the guff, compromise and spin of the election campaign there is one stark difference critical for governmental shaping of Australia's future towards justice, economic security and environmental sustainability.
This issue concerns the political power of multinationals to not only take over large sectors of our critical economic infrastructure (in energy, water, agriculture, fisheries, transportation, communications, tourism, financial services, education and health) but to oppose democratic public interest regulation of those areas by invoking greater rights than those available to local businesses.
The focal point here is differing positions between Labor/Greens and Liberals on one key component of the controversial trade and investment negotiations with the United States over the Trans Pacific Partnership Agreement (TPPA). Other nations (including Brunei, Chile, Malaysia, Peru, Singapore, New Zealand, Vietnam, Mexico and Canada) are involved, but the main points of contention involve Australia standing up to US negotiators who receive their riding instructions from major US corporations through industry functional advisory committees.
Trade agreements these days are not so much about reducing subsidies among all the parties. Australia, for example, already has a completely unsubsidised sugar industry, but the US maintains massive subsidies in this sector and has no intention of removing them through the TPPA. Such trade agreements, from the point of view of the US, chiefly represent an opportunity to shape the regulatory architecture of other nations to create conditions more profitable for their companies.
Foreign investment is useful, of course, but must be circumscribed in the national interest. We cannot, for example, allow all banks in this country to be foreign owned and one day decide to grab a percentage of our citizens' deposits to cover their imprudent speculations. Neither can we allow foreign contractors hired by our public service to circumvent our privacy laws by exporting large data sets. Likewise, we can't allow claims of data exclusivity by pharmaceutical multinationals to prevent a future Australian government compulsorily licensing cheap production of generic drugs in a health emergency.
Indeed, are we comfortable with a future in which the vast majority of the Australian landmass, as well as our core economic infrastructure, is owned by foreign corporations who can challenge our capacity to regulate them, not before our own courts but by appealing to a group of international trade arbitrators based in Washington DC?
This is exactly what is at stake in the debate over excess investor rights in the TPPA. In the TPPA Australia is supporting a draft provision regulating state-owned corporations that enjoy discriminatory benefits such as exemptions from taxes, cheaper debt financing and absence of need for commercial rate of return. This is consistent with Australia's recent legislative approaches (making no distinction between domestic and foreign corporations) to regulate against adverse environmental consequences of coal-seam gas fracking, to obtain more tax from corporate multinationals who claim their profits on activities here are actually earned in overseas tax havens, to impose a mining super-profits tax and a price on industrially produced carbon.
Yet the US wants a provision in the TPPA allowing foreign corporations to challenge Australian federal or state legislation they consider reduces their investments before a panel of three trade arbitrators appointed by the International Centre for Settlement of Investment Disputes (ICSID) in Washington DC. These arbitrators will be paid by the hour (often over several years of proceedings) and will have a vested financial interest in verdicts for such foreign corporations (our government cannot initiate suits before this tribunal).
Their rulings will be ad hoc, with no requirement to take into account constitutional, legislative or international law obligations, or social and environmental benefits.
Threat of such investor-state claims will create a chilling effect on important public policy development, as has been proven under Chapter 11 of the North American Free Trade Agreement. Agreeing to such excess investor rights in the TPPA creates a significant expansion of the mechanism used to challenge our plain-packaging of tobacco legislation, even after it was proven constitutionally valid by our High Court.
New Labor Trade Minister Richard Marles has confirmed Australia's trade policy remains against such excess investor rights chiefly because of their capacity to impede our sovereign capacity for governance in the public and environmental interest. His position is supported by the Productivity Commission, which in a recent report found that, given the existing implementation of non-discriminatory regulation by a non-corrupt judiciary following the rule of law, there was no evidence that increasing rights of foreign investors lead to more longterm stable investment.
Coalition trade spokeswoman Julie Bishop has indicated her party is more open to such excess investor rights in the TPPA. The issue creates a major policy distinction between the parties.
Thomas Faunce is an ARC Future Fellow at the Australian National University.