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Our stance against this trade pact is a positive step forward

Date: September 17 2012


Thomas Faunce

Don't give firms special rights to take governments to court against the locals' best interests.

About this time of year in 1861 a US senator was killed in action in the Battle of Leesburg in the US Civil War. Oliver Wendell Holmes jr, an eminent US jurist was also severely wounded there, but survived to champion the principle that societies should govern themselves transparently by law rather than covertly by the power of interest groups. The Union defeat at Leesburg led to the Congressional Joint Committee on the Conduct of the War. This ancient battle has many resonances with one last week in the same location.

Last week representatives from Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the US met in Leesburg in the 14th round of negotiations of the Trans Pacific Partnership Trade and Investment Agreement. They were confronted by a large and well-orchestrated opposition of environmental, labour rights and information access groups concerned, for example, about mooted (the text is unreleased) provisions that may inhibit internet use and invade privacy.

Also of concern are TPPA investor-state dispute settlement provisions that undermine national sovereignty and the rule of law.

They give foreign firms unique rights to skirt even well-regulated domestic courts and directly sue governments for public policy initiatives, including those supporting public health and environmental sustainability, allegedly infringing their profits. Such cases are decided by investment arbitrators with vested financial interests in verdicts for corporations (governments cannot initiate these suits). Their rulings are ad hoc, with no requirement to consider the constitutional, legislative, international human rights or environment protection context.

Australia is the only TPPA nation holding out against ISDS provisions, a stand that will become harder as the negotiations are soon joined by Mexico and Canada who've long been subjected to such claims under chapter 11 of the North American Free Trade Agreement (resulting for instance in US companies claiming damages after Canadian bans on using toxic chemicals).

Last week also saw a series of national and local public energy and environmental policy initiatives that could be challenged by TPPA investor state provisions. These include linking our carbon price to that of the European Union, withdrawing the phase out of coal-fired power stations and the announcement of a new solar power plant in the ACT. Likewise, an agreement was signed by a Maori Trust and the New Zealand government according the Whanganui River capacity to sue (via joint guardians) to protect its interests, much as can notional people such as corporations.

As an example of how ISDS could facilitate corporate influence over such policy developments, in July 2011 Texas-based Mesa Power Group served Canada with an ISDS claim under NAFTA Chapter 11 in connection with Ontario's solar feed-in tariff. A claim against Spain under the Energy Charter Treaty has been brought by a group of 14 investors over retrospective cuts to solar energy tariffs. Canadian mining company Pacific Rim recently commenced an action before the International Center for Settlement of Investment Disputes against the government of El Salvador demanding more than $77 million in compensation over the government's denial of a permit for a gold mining project because of strong public concerns the project could contaminate the drinking water source for half the nation.

Such disputes are characteristic of the ''Anthropocene'' epoch ( a term coined by Crutzen in 2002) epoch where public policy is challenged by excesses in population, poverty, preparation for war, profits and pollution. Yet, if Australia's leadership stance against ISDS can be maintained and spread, advanced renewable energy technologies may soon assist environmental sustainability emerge alongside justice and equality in a new global social contract.

Amongst the most potentially transformative of such renewable energy technologies is nanotechnology-based artificial photosynthesis making solar fuels. Nanotechnology and molecular approaches by many large nationally-funded research groups are now producing practical devices that not only improve the efficiency of the photosynthetic process, but allow it to be engineered into every human structure to generate cheap and abundant hydrogen (which when burnt makes fresh water) and reduce industrially concentrated or dilute atmospheric carbon dioxide to create fuels such as methanol.

Solar fuel (or artificial photosynthesis) thus is an ''off-grid'' energy, food and climate change solution rolled into one. For it to blossom and promote ''small is beautiful'' governance structures supporting a billion-year Sustaincoene epoch, its place in the national and global policy space must be protected from the contrary interest of the ''archived photosynthesis'' industries. Australia's stance against ISDS in the TPPA negotiations marks a pivotal historical point in our emerging identity in the community of nations and is a positive step for a better future globally.

Professor Thomas Faunce is an ARC Future Fellow at the Australian National University.

A public lecture on these issues he delivered last week will soon be available on Youtube.

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