Two articles discuss the costs of free trade agreements
March 5, 2018: The inclusion of investor-state dispute settlement (ISDS) in the rebranded ‘Comprehensive Progressive’ Trans-Pacific Partnership (CPTPP), set for signing on March 8 in Chile, puts Australia’s democracy and sovereignty at risk. Sydney Morning Herald journalist Anna Patty has spoken to ACTU secretary Sally McManus, AFTINET spokesperson Dr Patricia Ranald and Dr Stuart Rosewarne from the Department of Political Economy at Sydney University, and summarised their concerns about ISDS in this article.
ISDS provisions in the CPTPP allow foreign-owned companies to challenge Australian laws. Dr Rosewarne gives this example: ‘if the Federal government decided to introduce a law that provided increased protection for temporary migrant workers, such as an administrative requirement for a company to report on how it is meeting an Australian labour law, the law could be challenged under the ISDS’.
While Trade Minister Steve Ciobo insists that the ISDS provisions in the CPTPP include ‘modern safeguards’ that will allow the government to regulate in the national interest, the only clear exclusion of public interest regulation in the CPTPP is for tobacco regulation.
Analysis by Ross Gittins on free trade agreements and the CPTPP was also published recently in the SMH. It discusses a recent paper by Harvard Professor Dani Rodrik titled What Do Trade Agreements Really Do?. Gittins notes that deals like the CPTPP are more about changing domestic regulation than reducing tariffs. He then considers four ‘worrying’ aspects of these deals - intellectual property provisions, restrictions on a country’s ability to manage cross-border financial flows, investor-state dispute settlement (ISDS), and the harmonisation of regulation - and argues that all of these must be critically analysed to see who benefits and who loses.
He quotes Roderick’s conclusion that "Trade agreements are the result of rent-seeking, self-interested behaviour on the part of politically well-connected firms – international banks, pharmaceutical companies, multinational firms”. Gittens concludes that “They may result in greater mutually beneficial trade, but they're just as likely to redistribute income from the poor to the rich under the guise of ‘freer trade’”.