Uruguay investment agreement endorsement underlines undemocratic process for trade deals

December 4, 2019: The government announced that a new Bilateral Investment Agreement between Uruguay and Australia was signed on April 5, 2019. As is the usual practice, the text was tabled in parliament only after signing, and the agreement was reviewed by the Joint Standing Committee on Treaties (JSCOT), which reported on December 3. Since the government has a majority on the committee, the report recommended that the government ratify the agreement. The previous 2002 Uruguay-Australia  bilateral agreement will be terminated when this agreement enters into  force.

The agreement contains Investor-State Dispute Settlement (ISDS) which enables foreign investors to sue governments for millions of dollars in unfair international tribunals if they can argue that a law or policy will harm the value of their investment.  The Philip Morris tobacco company used ISDS in a Hong Kong-Australia investment agreement to try to sue the Australian government over our plain packaging law. Australia won, but it took seven years and $24 million in legal costs, only half of which was recoverable.  

The government argued that the new agreement is more explicit about governments’ right to regulate than the old agreement, and has some improved procedural processes. AFTINET’s submission to the JSCOT inquiry argued that, although the new agreement did have some changes, it still gives additional legal rights to global corporations that already have enormous market power, and does not actually prevent ISDS cases from being launched against health, environment and other public interest laws.

There were additional comments from the Labor and Greens members of the committee that were critical of ISDS. The Labor comments noted the lack of public consultation about the agreement which is discussed below. They also raised the shortcomings of the ISDS tribunal process including that there are no independent judges, no precedents and no appeals, shortcomings which they said were “inconsistent with rule of law and with Australian judicial principles.”

The Greens also criticised the lack of public consultation and recommended against the inclusion of ISDS provisions in the agreement, arguing that they pose significant risks to health and environment regulation and national sovereignty.

New low in lack of consultation

The agreement was apparently negotiated over the last two years. DFAT claims that the negotiations were mentioned in the twice-yearly consultations with business and some community groups in which they give very brief reports about current trade negotiations. However it did not appear on the list of agenda items for those meetings.

Unlike the practice with other agreements, there was no information on the DFAT website about the negotiations and no public invitation for submissions during the negotiations. AFTINET was not aware that the agreement was being negotiated until the government announced that the agreement had been signed.

The DFAT National Interest Analysis documents presented to JSCOT for all other agreements include a list of submissions received. There is no such list in the DFAT National Interest Analysis for the Uruguay Agreement, which confirms the lack of public consultation.

This is a new low in lack of public consultation during negotiations.

But there is more. After the JSCOT report for other agreements, the parliament does not debate or vote on the whole agreement, only on any enabling legislation required, which is usually about tariff changes. This is the only opportunity for parliamentary debate outside the JSCOT.

Since the Uruguay agreement deals only with investment and requires no changes to legislation, there is no enabling legislation and no opportunity for parliament to debate or vote on it. The broader parliament therefore has no role at all in the decision about its implementation. This underlines once again the democratic deficiencies in the trade agreement process. AFTINET has long advocated for a more open and democratic process, and will be pursuing this in the upcoming review of the trade agreement process which is expected in 2020.


PDF icon 190821 Uruguay submission final.pdf443.32 KB