Monday, June 27, 2011

A warning on investment clauses

For the past year, people have been warning against the inclusion of investment clauses in the free-trade agreements (such as the TPP and ACTA) that National is currently negotiating with the US. We've now received a definite warning of the dangers of such clauses, with tobacco company Philip Morris suing the Australian government for theoretical future profits "expropriated" by the shift to plain packaging:

International tobacco giant Philip Morris will take legal action to try and force the Gillard government to back down on its plain-packaging legislation.

"We don't take legal action lightly, but we have no other option. We believe we have a very strong legal case," spokeswoman for the company, Anne Edwards, told the Australian newspaper on Monday. The legal action by the company, which manufactures brands such as Marlboro and Peter Jackson, will occur under a bilateral investment treaty between Australia and Hong Kong.

The company will argue that because its Australian operation is owned by Philip Morris Asia (PMA), which is based in Hong Kong, the plain-packaging legislation will adversely impact upon an investment protected by the treaty.

That "investment" is the addiction of millions of Australians, which Philip Morris and other tobacco companies have spent billions cultivating. Plain packaging will certainly undermine this investment and cost them money - but that is the point: to remove the last avenue by which tobacco companies can market cancer as being sophisticated and fashionable, rather than simply an olive-drab health hazard. This is a straight-out health measure, something governments should be able to do in the public interest. And if the Australian government have signed away the right to protect the health of their citizens through regulation and legislation, then they need to repudiate that deal immediately, or else be de-elected in favour of a government that will.

Meanwhile, this is a warning to us: what is happening in Australia today will happen in New Zealand tomorrow if we permit these sorts of clauses in our FTAs. Worryingly, the New Zealand government is currently negotiating just such a clause as an additional protocol to the New Zealand-Hong Kong, China Closer Economic Partnership. If those negotiations are successful, then we can no doubt expect our own lawsuit from Philip Morris on our anti-powerwall legislation and other health measures. If you want to speak up about this threat, then submissions close on Thursday; you can use the online form here.