Labor Senator Penny Wong said she was concerned about the impact of "any" proposed ISDS mechanism. Photo: Alex Ellinghausen
South Korean corporations will be able to sue the Australian government under a new historic free trade agreement.
Under the deal, announced by the Abbott government on Thursday, tariffs will be eliminated on local exports of agricultural products such as beef, sugar, wheat, wine and dairy, as well as energy, resources and manufactured goods.
But the agreement also includes a controversial provision for a mechanism called an investor-state dispute settlement (ISDS).
This allows foreign corporations to take legal action against another country's government if they believe that government has infringed on their rights. That means if the Australian government does something that negatively affects the profit stream of a South Korean company, the company may sue it.
In details released on Thursday, the government said the ISDS in the new agreement with South Korea had retained appropriate "carve outs and safeguards" in areas such as public welfare, health and the environment.
"This will provide new protections for Australian investors in Korea as well as Korean investors in Australia, promoting investor confidence and certainty in both countries," the document says.
But Labor Senator Penny Wong said she was concerned about the impact of "any" proposed ISDS mechanism. "In the interests of transparency Labor has urged the government to release the text of the proposed agreement with the Republic of Korea at the earliest opportunity," Senator Wong said.
Supporters of ISDS mechanisms say they provide certainty for those investing in foreign countries, but opponents say they lead to the loss of sovereignty and the ability of governments to regulate in the national interest.
The former Labor government had a blanket ban on ISDS provisions in free trade agreements.
While the Australian Chamber of Commerce and Industry, the Business Council of Australia and the Minerals Council all welcomed the deal, consumer groups were critical of the ISDS inclusion.
"Granting big business the right to initiate dispute settlement proceedings against the Australian government might expose the public to real risks," a spokesman for the consumer group Choice said.