Australian Government Rejects Investor-State Dispute Settlement

In what is seen as a reversal of policy, the Australian government has stated that it now opposes the inclusion of investor-state dispute settlement in trade agreements. It also specifically said it will no longer seek the inclusion of investor-state dispute resolution procedures in trade agreements with developing countries at the behest of Australian businesses.

The insertion of  investor-state dispute resolution clauses into trade agreements is often sought by countries, especially by developed countries in their trade agreements. These clauses empower businesses from one country to take international legal action against the government of another country for alleged breaches of the agreement, such as for policies that allegedly resulted in losses or put these businesses at a disadvantage vis-a-vis domestic firms.

The statement by the Australian government is available at: http://www.dfat.gov.au/publications/trade/trading-our-way-to-more-jobs-and-prosperity.html#investor-state

We reproduce the relevant section below.


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http://www.dfat.gov.au/publications/trade/trading-our-way-to-more-jobs-and-prosperity.html#investor-state

Gillard Government Trade Policy Statement: Trading our way to more jobs and prosperity
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 Investor-state dispute resolution

 Some countries have sought to insert investor-state dispute resolution clauses into trade agreements. Typically these clauses empower businesses from one country to take international legal action against the government of another country for alleged breaches of the agreement, such as for policies that allegedly discriminate against those businesses and in favour of the country's domestic businesses.

 The Gillard Government supports the principle of national treatment – that foreign and domestic businesses are treated equally under the law. However, the Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses. Nor will the Government support provisions that would constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses. The Government has not and will not accept provisions that limit its capacity to put health warnings or plain packaging requirements on tobacco products or its ability to continue the Pharmaceutical Benefits Scheme.

In the past, Australian Governments have sought the inclusion of investor-state dispute resolution procedures in trade agreements with developing countries at the behest of Australian businesses. The Gillard Government will discontinue this practice. If Australian businesses are concerned about sovereign risk in Australian trading partner countries, they will need to make their own assessments about whether they want to commit to investing in those countries.