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Is The Devil In The Detail On The TPP?

09/10/2015 5:17 AM AEDT | Updated 15/07/2016 12:50 PM AEST
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Melissa Adams/Fairfax Media

Wednesday's ground breaking unanimous High Court decision that Myriad's breast cancer gene patent is invalid vindicates the long struggle by cancer patients and by health and community organisations against the patenting of human genes.

The Court found that Myriad did not invent the breast cancer gene and it is therefore not entitled to monopolise testing and research on the gene via a patent. The High Court's decision follows the U.S. Supreme Court's similarly unanimous decision against Myriad two years ago that natural phenomena are not patentable.

Yvonne D'Arcy's magnificent victory in the High Court could however be illusory if Myriad, a U.S. corporation, was able to sue Australia under investor state dispute settlement (ISDS) provisions in the TPP.

Such clauses allow foreign corporations to sue governments in private international tribunals for laws, policies and even court decisions that impact upon their profits.

This is how Philip Morris is suing Australia in relation to our plain packaging laws, pursuant to an ISDS clause in an obscure Australia-Hong Kong investment agreement, despite those anti-tobacco measures having been passed with bipartisan support through the national parliament and upheld by the High Court.

The Chief Justice of the High Court, Robert French, gave a speech in 2014 in which he raised concerns about ISDS and its implications for Australia's judicial system. He referred to the case of Eli Lilly, the U.S. pharmaceutical giant that sued Canada under ISDS after the Canadian Supreme Court ruled two of its medicine patents invalid.

The Chief Justice quoted Professor Brook Baker of North Eastern University law school's assessment of that case:

"After losing two cases before the appellate courts of a western democracy should a disgruntled foreign multinational pharmaceutical company be free to take that country to private arbitration claiming that its expectation of monopoly profits had been thwarted by the court's decision? Should governments continue to negotiate treaty agreements where expansive intellectual property-related investor rights and investor-state dispute settlement are enshrined into hard law?"

The Australian High Court decisions in Myriad and Philip Morris, like the Canadian Supreme Court decision in Eli Lilly, are precisely the kind of matters being litigated under ISDS -- primarily, but not exclusively, by U.S. corporations. Of course, the TPP has not yet come into force and we do not know the details of how ISDS will work because of the extreme secrecy surrounding the agreement.

The Trade Minister has assured us that there are 'carve-outs' from ISDS for public health and environmental regulation. We haven't seen the wording of these exemptions but we know from experience they may not be effective. There are numerous examples where so-called exemptions in trade agreements for public health or environmental regulation have not deterred investors from suing, and where tribunals have ignored the intended limitations.

The U.S. Renco lead mining company is using ISDS in the U.S.-Peru free trade agreement to sue the Peruvian government for damages over a court order to clean up its lead pollution, notwithstanding a supposed carve-out for health and environmental regulation. And Canada has recently lost an ISDS case under NAFTA on the basis that an environmental impact assessment was allegedly unfair. This occurred under a carve-out in NAFTA for environmental regulation that is similar to the one proposed in the TPP.

Australians might be surprised to know that ISDS cases are not heard by a respected independent international tribunal of judges but rather by panels of corporate lawyers who can be advocates for multinationals one day and panel members adjudicating cases the next. Their decisions, no matter how unreasonable, cannot be appealed.

AFTINET's submission to the treaties committee inquiry on the Korea-Australia FTA, which also contains an ISDS clause, quoted Juan Fernandez-Armesto, an arbitrator from Spain who made this observation:

"When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all. Three private individuals are entrusted with the power to review, without any restrictions or appeal procedure, all actions of the government, all decisions of the courts and all laws and regulations emanating from parliament."

Nobel Prize winner for Economics Prof Joseph Stiglitz has described ISDS as a "new private judicial system only available to foreign corporations". ISDS cannot be used by domestic corporations, by civil society, or by governments; it can only be used by foreign companies like Myriad, Philip Morris and Eli Lilly.

While Minister Robb and much of the Australian media are busy spruiking the so-called benefits of the TPP, the community must wait a month to discover its downsides.

Prime Minister Turnbull has promised a government that will proceed through open conversation and good process. On an issue as important as the TPP, this requires an independent assessment of the agreement by the Productivity Commission, as a prelude to its full and careful consideration by the Joint Standing Committee on Treaties, as well as public consultation, before ratification.

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