Just Because Australia Won Its Plain Packaging Case Against Philip Morris Doesn't Mean Corporate Sovereignty Isn't A Threat

from the extrapolating-from-a-single-data-point dept

The challenge by Philip Morris to Australia's plain packaging law for tobacco products is perhaps the best-known example of how companies try to use corporate sovereignty provisions in trade agreements to force nations to change their policies -- in this case, one designed to save lives. That case was also notable for the way that it had been brought: since Philip Morris was very unlikely to win by invoking the trade agreement between Australia and the US, it used one between Australia and Hong Kong -- a classic case of treaty shopping. Last week, we heard that the case had been dismissed. An article by Kyla Tienhaara in The Sydney Morning Herald explains:

it appears that Australia was able to convince the tribunal that Philip Morris should not be permitted to plead the merits of its case because it engaged in "treaty shopping". In other words, it was an American investor when plain packaging was introduced and only adopted a "flag of convenience" in order to access arbitration.

It's great news that Australia won't be forced to pay huge punitive fines for proceeding with its health policy. But, predictably, people are already pointing to this result as "proof" that corporate sovereignty isn't really a problem, as in this column published by The Conversation:

A tobacco company sued a government for enacting laws designed to improve public health. They used a little understood mechanism -- ISDS -- to sue, despite having lost in Australian courts. International trade law disputes rarely have such a clear-cut villain. It is natural to distrust the mechanisms they relied on. However, this victory -- in the first ISDS claim brought against Australia -- should allay those concerns.

The author concludes:

Australia's victory over Philip Morris should take much heat out of this debate.

The bogeyman has been slain.

Leaving aside the rather important fact that it is not possible to extrapolate from a single data point -- and that there are dozens of other ISDS cases where governments have lost and been hit with massive fines -- there are couple of aspects to note here. First, as Tienhaara writes in her article:

the dismissal of the case on procedural grounds means that we will never get a ruling on the substance of Philip Morris' claims. As such, the award contributes nothing to the bigger debate about the conflict between investment protection and public policy.

That's the key issue -- whether companies can use corporate sovereignty provisions to trump laws enacted democratically. The defeat on a procedural issue leaves open the possibility that other ISDS cases will succeed where Philip Morris failed, and cause governments to repeal laws rather than pay massive fines. In particular, both TPP and TAFTA/TTIP are likely to give far stronger rights to tens of thousands of companies to sue governments directly, without needing to invoke obscure treaties with third parties. Tienhaara points out a further reason why the defeat of Philip Morris does not signal that corporate sovereignty is no longer a threat:

poor countries are in the worst position because they can't afford even a preliminary defence in an ISDS case. It has been reported that Australia has spent [AU]$50 million [about US$35 million] defending plain packaging in arbitration. Uruguay has been mired in its own dispute with Philip Morris for even longer than Australia and has to rely on funding from a foundation set up by former New York mayor Michael Bloomberg because it can't afford to pay its legal fees.

The high cost of ISDS makes the threat of arbitration a potent tool for the tobacco companies.

In other words, it is not necessary for companies to win all or even most corporate sovereignty cases: the mere threat of them winning is likely to be enough to dissuade many governments from proceeding with policies that could result in them paying huge awards. The ISDS bogeyman may have taken a hit with Australia's win, but it is most certainly not slain.

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Filed Under: australia, corporate sovereignty, isds, plain packs, trade agreeements
Companies: philip morris

White House So Desperate To Get TPP Approved, It Agrees To Whitewash Mass Graves & Human Trafficking In Malaysia

from the disgusting dept

At the end of last month, Trade Promotion Authority (TPA), better known as "fast track" for various trade agreements, was approved after a series of back and forth procedural moves by Congress. This means that Congress no longer has the (Constitutionally-provided) power to have a say in the trade deals the administration is creating, other than a single up-or-down vote when everything is set in stone. There was, however, one tiny poison pill that Senator Bob Menendez supposedly hid in the TPA concerning the Trans Pacific Partnership (TPP) agreement. And that was that it could not be used if the trade agreement included countries that were listed as a "tier 3 nation" by the State Department when it comes to human rights violations. Malaysia, one of the countries that is a part of the TPP, has been designated a "tier 3 nation" by the State Department for a while now, due to serious human trafficking problems.

Some trade deal supporters in Congress tried to quietly remove this provision, but failed. And that left a big Malaysia-shaped problem in front of the TPP. But, the Obama administration is nothing if not resourceful in trying to make sure the TPP gets approved and big corporations get their expanded power over national governments around the globe.

It just decided to upgrade Malaysia from a tier 3 country to a tier 2 country. Because it could. Not because of anything done by Malaysia to improve its record on human trafficking. But because it was politically necessary. The details are simply nauseating:

There is essentially zero evidence Malaysia has done anything to earn this reclassification. Just two months ago, police found 139 mass graves along the Malaysian border that contained migrant workers that had been trafficked or held for ransom.

Since the 2014 TIP report, Malaysia has actually convicted fewer smugglers. As recently as mid-April, the US ambassador to Malaysia publicly criticized the government there for not doing more to combat trafficking.

Also sketchy: the State Department's report was actually due out last month, but was mysteriously delayed until after the whole mess with fast track was concluded. It's almost like the State Department chose to wait until it saw whether or not this provision was included to determine what Malaysia's status would be.

And if you want further evidence that this late decision to magically upgrade Malaysia to tier 2 wasn't in the cards originally, how about this:

Menendez’s office said Friday that an interim report was delivered to the Senate Foreign Relations Committee in March on Tier 2 countries only, and Malaysia was not included.

In short, the State Department does not really think that Malaysia has improved its terrible record on human trafficking. It did not think so in March when it released an interim report. And then it made the political decision to hold off on releasing its June report until the middle of July to see how the fast track path proceeded.

Finally, rather than take this tool and use it force Malaysia to actually improve things, it gave the country a total free pass, just for the sake of finalizing TPP. I don't care where you stand on the various other provisions of the TPP, but this sort of cynical move -- where real lives are at stake -- is horrifying. And it shows the "who gives a fuck, get it done" attitude of our government right now. This isn't a theoretical issue. This is one where it's clear that people right now are being harmed, and rather than do anything about it, the government has deliberately chosen to turn a blind eye to the problem just so it can get this questionable trade deal passed.

This, of course, also is likely to confirm the fears of many who were opposed to the TPP all along. The Obama administration and US Trade Rep Michael Froman keep insisting that the TPP has a number of features to help raise labor standards in various countries. Yet, if they're happily willing to not just look the other way over Malaysia's human trafficking, but to actively whitewash it, what does that say for the seriousness with which it will enforce any labor practice rules?

Filed Under: bob menendez, fast track, human rights, human trafficking, malaysia, state department, tpp, trade agreeements, ustr