President of the ACTU

EARLIER this month, unions and church groups in Sydney and Melbourne held demonstrations as part of worldwide protests against an Australian mining company. OceanaGold is suing El Salvador for $301 million – just for saying no to a mine that would pollute its main water supply.

I spoke at the Melbourne protest because El Salvador is a tiny Latin American country which is trying to rebuild after a disastrous civil war, with most people still living in poverty. Much of El Salvador’s water is already polluted by previous mining projects. The government responded to community and church-based movements to save the Lempa River, its last remaining source of clean water. It refused a mining license to the Pacific Rim Mining company, which has since been taken over by Australian company OceanaGold. The company responded by using a clause in the Central American Free Trade Agreement which enables foreign investors to sue governments for damages in international tribunals if they can claim that a law or policy “harms” their investment. 

Known as Investor-State Dispute Settlement or ISDS, the disputes are heard in international tribunals without the protections of national legal systems. There is no independent judiciary because arbitrators can be practising advocates and there are no precedents or appeals, so decisions can be inconsistent. There is an international petition asking OceanaGold to withdraw its ISDS action.

The Howard government did not include ISDS in the US-Australia Free Trade agreement and the previous ALP government opposed it after advice against it from the Productivity Commission.  This is still ALP policy. Australian public resistance to ISDS has grown because the Philip Morris tobacco company is currently using ISDS in an obscure Hong Kong investment agreement to sue the Australian government over plain packaging legislation. The European Parliament is currently reviewing the inclusion of ISDS in its trade agreements.

ISDS is again being hotly debated in Australia because the Coalition Government has agreed to it in the Korea-Australia Free Trade agreement (KAFTA), claiming there are “safeguards” which will prevent cases against health and environmental legislation.  KAFTA is attracting more parliamentary scrutiny than most trade deals mainly because of ISDS. The Joint Standing Committee on Treaties, on which the Government has a majority, reported on it last week, and there is an ongoing Senate Inquiry.

The committee heard evidence that ISDS in the KAFTA could mean that the NSW government could be sued because it has responded to community concerns about the environmental impacts of mining by introducing some environmental regulation. Three of the most controversial mining projects in NSW, with continuing battles over environmental regulation, are owned by Korean investors. These are the Kores Wallarah 2 coal mine on the Central Coast, the POSCO mine in the Southern Highlands and the Kepco mine in the Bylong Valley. If the KAFTA is ratified with ISDS, and the NSW government subsequently refuses a license to any of them, that company could sue the NSW government for millions of dollars.

The committee also heard evidence that the claimed “safeguards” in other agreements like the Central American Free Trade Agreement have not prevented foreign investors from suing governments over environmental regulation: witness the El Salvador case. Nor would such safeguards prevent cases against industrial laws. French company Veolia is currently suing the Egyptian government over a waste disposal contract. Part of its claim for damages is a legislated rise in the minimum wage.

The ALP Deputy Chair of the Committee, Kelvin Thomson, and  ALP MP Melissa Park issued a dissenting report based on ALP policy opposing ISDS and recommended against KAFTA. But there is a debate in the ALP because other MPs on the Committee have acknowledged the policy against ISDS but have said they are willing to support KAFTA.

I applaud the courageous defense of ALP policy in the dissenting report. The ALP should implement its policy and should use the opportunity of the Senate Inquiry to refuse to agree to ISDS in the KAFTA or any trade agreement.