Trade agreement with China - the right to change our mind
Scoop’s Election 08 site has just posted a detailed analysis of the Annex 13 investment rules in
“The language of clause 3(b) - indicating that measures which are ‘disproportionate to the public interest’ can constitute acts of indirect expropriation - is also problematic, given that the balancing of the relative benefits and burdens of regulatory measures is highly subjective, and is a function traditionally assigned (in democracies) to the legislative branch of government.�
This is a delicate way of saying that democracies usually retain for themselves the right to decide whether on balance, a social, economic or environmental need requires it to change the investment rules within its own territory. Governments do not normally and happily sign away their freedom to make decisions on whether such actions are’ disproportionate to the public interest.’ Yet in the FTA, we have surrendered the power to make final rulings on such matters, and outsourced the ultimate call to an un-elected arbitration panel sitting somewhere overseas, in the likes of
Geneva .
The tricky thing about foreign investor rights is that they come at the expense of other rights. As Porterfield notes one of those important rights is the democratic right of future governments to change their mind. Â
“You didn’t ask about it, but I’d urge you to take a look at Article 143 – ‘Fair and Equitable Treatment’ - which has been the basis for more successful claims by foreign investors against government sunder investment agreements than provisions regarding ‘indirect expropriation.’ Fair and equitable treatment has been interpreted by international tribunals to include a right to a ‘stable and predictable regulatory environment,’ which has been used to successfully challenge changes in regulatory and tax standards.�
