Trans Pacific Partnership Agreement favours foreign investors over citizens' rights

Trans Pacific Partnership Agreement favours foreign investors over citizens' rights

Without debate, increased rights for foreign investors will undermine our way of life, writes Thomas A. Faunce.

All the indications from the recent Singapore meeting on the Trans Pacific Partnership Agreement (TPPA) are that Australian society is about to undergo a momentous shift in its governance arrangements. The recent Korea-Australia Free Trade Agreement (KAFTA) gives a pointer.

It includes an investor-state dispute settlement mechanism. This provides rights of foreign investors (additional to those of local businesses) to challenge our legislation where it impedes their profits overseas before panels of trade arbitrators. Our government claimed it had ''ensured the inclusion of appropriate carve-outs and safeguards in important areas such as public welfare, health and the environment.''

Farmers hold a banner as they take part in a rally against Japan's participation for negotiations in the U.S.-led Trans-Pacific Partnership.

Farmers hold a banner as they take part in a rally against Japan's participation for negotiations in the U.S.-led Trans-Pacific Partnership.Credit:Junko Kimura

The Australian government has no mandate to introduce such a significant change in our sovereignty and governance. Though the present author and others raised the issue of such greater rights of foreign investors over local businesses during the preceding electoral campaign it was never the subject of major policy debate or positioning.

The insertion of such foreign investor rights into our governance system is a momentous event in the history of our democracy. According to the central document in our social contract, fundamental alterations in Australia's governance arrangements require not just legislation but a referendum. Thus, a majority of Australian citizens in a majority of states were needed to support the creation of the Pharmaceutical Benefits Scheme or the citizenship of Aboriginal Australians.


Yet, as a result of the TPPA, this country risks displacing the authority of citizens who live and support families, friends, local communities and ecosystems in this land, in favour of a system privileging artificial people called corporations.

The multinational corporations to which the KAFTA and the TPPA will be ceding rights to challenge our democratic laws are regarded by the law as ''people''. They can sue in courts to protect their rights. But they lack conscience, empathy, the capacity to develop virtues though consistent application of generally applicable principle, that constitute the richness of our character. Corporations can never marry or have children. They seek to fulfil a monomanical basic craving - to maximise shareholder profit.

Perhaps the big issue in our nation should not be gay marriage, but corporate marriage - using the corporations law to link a broader public purpose.

It is ironic and sad that the privileging of corporate elites over the rights and interests of our citizens implicit in such foreign investor rights was rejected by conservative former prime minister John Howard at the time of the Australia-United States Free Trade Agreement in 2004. It also has been deprecated by Pope Francis as part of his recent apostolic exhortation.

Pope Francis decried the exponentially increasing gap between the salaries of rich and poor which results from ''ideologies which defend … financial speculation … widespread corruption and self-serving tax evasion'' so that ''whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.''

So we are in the middle of one of the biggest governance debates our country will ever have. And how much time how our leaders allowed for this debate to take place?

US negotiators created an artificial deadline at Singapore Ministerial conference between December 7 and 10 last year. When this failed, they moved the finalisation of the deal to the sidelines of the World Economic Forum at Davos.

We had indications before that ''carve outs'' would be the order of the day for Australia on TPPA investor rights. At the November 21 Senate foreign affairs, defence and trade legislation committee last year, a high-ranking official stated: ''The government has made it very clear that they would not agree to anything in the TPPA, or indeed any other FTAs, that would undermine the Pharmaceutical Benefits Scheme or indeed Australia's healthcare … the investor-state dispute settlement provisions, as they have evolved, do preserve the ability of governments to regulate in the interests of the public; for example, for public health objectives or the environment.''

This admits that our national sovereignty is not preserved outside such explicit exclusions. Another consequence is that foreign corporations are disrespecting our commitment to establish the rule of law in this country.

At the same time as foreign investors are gaining these extra rights, our government is preparing to turn more of our social infrastructure over to them. The new era for infrastructure financing involves projects financed by taxpayers and superannuants, that then are sold to private corporations who manage them.

The Coalition and Greens have now agreed to remove legislative limits on federal government debt. This is in the context of the Treasurer establishing the National Commission of Audit and reviewing ''the extent, condition and adequacy'' of Commonwealth sector infrastructure according to principles such as respect for taxpayers, living within means and doing for people ''what they cannot do, or cannot do efficiently for themselves, but no more.''

This debt will be used to fund infrastructure projects (for example airports, fast train, road, tunnel and national broadband projects) with foreign investors then buying that debt in the form of fully redeemable and guaranteed government converting infrastructure bonds.

These can then be traded on the markets such as the cover bond market and convert to private equity (shares) held in the main by private corporations and superannuation funds that then manage and gain profits from the ongoing utilisation of the infrastructure. When investors want to cash in their bonds, the government will have to pay them out with more asset sales.

One day, all our government assets will be sold off. They'll be owned by foreign corporations that have rights to challenge overseas our attempts to regulate them in the national interest. What will be left of our national pride at this time? When our corporate-led government has so thoroughly disengaged itself from its citizens, will they fight to support it?

The deliberate disengagement of Australian citizens from the governance changes being wrought on Australia through the TPPA may mark a turning point in a wider disengagement of citizens from the political process in this country.

♦ Thomas A. Faunce is professor, jointly in the college of law and college of medicine, biology and the environment at the Australian National University.