No ISDS in proposed UK – Japan Free Trade Agreement

July 29, 2020: It appears that the Japanese and British governments will not be sued by UK and Japanese corporations under the terms of a proposed free trade agreement which they want to conclude by January 1, 2021. That is when the United Kingdom is expected to finally break with the European Union, with or without a trade agreement.

According to a report in the Japan Times, the two governments “are studying a plan of not including an investor-state dispute settlement (ISDS) system in the bilateral trade deal they are currently negotiating”.

There are now over 1,000 ISDS cases under a range of trade agreements and investment treaties, which allow a foreign investor to seek compensation in an international tribunal for a change in government law or policy which they argue harms their investment. By the end of 2018, governments worldwide had been ordered or agreed to pay investors in disclosed ISDS cases a staggering US$88 billion. Millions of dollars of taxpayers’ money have been diverted away from funding for public health, food security, education and other essential services.

The Japan Times sources indicated that Japan wanted to have ISDS in the agreement but was ready to set it aside to make sure an agreement was achieved in the short time available. British opposition to ISDS may reflect public opposition in both Britain and Europe to cases in which corporations have sued governments over policies to reduce coal-powered energy and to end privatisation of health services.

The Court of Justice of the European Union has declared that ISDS provisions are not covered by the European Commission’s trade negotiating mandate and must be approved by a separate vote of parliament in each EU country. This has led the EU to exclude ISDS from some agreements, including the Australia-EU Free Trade Agreement now being negotiated. AFTINET opposes ISDS in any trade agreement.  It  remains to be seen whether  ISDS is being considered in the Australia -UK agreement negotiations which have recently begun.