Business | Asian regional trade deal may see more lawsuits: report
Container boxes at the Yangshan Deep Water Port in Shanghai. Photo: Reuters
Container boxes at the Yangshan Deep Water Port in Shanghai. Photo: Reuters

Asian regional trade deal may see more lawsuits: report

Around 50 lawsuits seeking US$31 billion have been filed against governments in talks on the Regional Comprehensive Economic Partnership agreement

December 8, 2016 6:21 PM (UTC+8)

Investors have launched 50 lawsuits at secret international arbitration tribunals, seeking at least US$31 billion, against governments that are negotiating the new Regional Comprehensive Economic Partnership (RCEP) agreement, Friends of the Earth International said based on new research.

The lawsuits were revealed in new research published in a report by the Transnational Institute (TNI), Friends of the Earth International, Indonesia for Global Justice, Focus on the Global South and Paung Ku.

The bloc of 16 countries started negotiations on RCEP on Thursday in Jakarta, Indonesia, and talks are expected to end on December 10. If the agreement is signed, it would grant corporations the exclusive right to bypass domestic legal systems and sue governments at international tribunals whenever they feel state rules can limit their profits.

RCEP comprises 10 Association of Southeast Asian Nations members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six free-trade agreement partners – India, China, Japan, South Korea, Australia and New Zealand.

The report exposes an increase in corporate lawsuits against Asian countries that could lead to a drain of millions of US dollars from public budgets.

The research shows the largest known amount paid to a foreign investor by an RCEP country is US$337 million as part of the settlement in the Cemex versus Indonesia case, which is equivalent to 38,593 Indonesian teachers’ salaries for one year. Environment-related laws and sectors account for 36% of cases recorded.

Friends of the Earth International trade campaigner Sam Cossar-Gilbert said the secrecy of the investor-state arbitration means these figures “could be just the tip of the iceberg.”

“The huge sums of money involved leave no doubt about the unacceptable burden that this dangerous mechanism puts on countries across Asia,” Cossar-Gilbert said.

“If the RCEP trade deal goes ahead as planned, we expect to see an increase in multibillion-dollar claims – and citizens being forced to foot the bill.”

The report said the lawsuits are a warning of the potential high costs of the proposed RCEP trade deal. RCEP will deepen the rights of investors and lock in place this system of privatized justice, it said.

“Investors are already using investment agreements to raid cash-strapped public budgets in Asia. Granting corporations the same excessive rights in the even more far-reaching RCEP trade deal would be political madness,” said Cecilia Olivet, researcher at the Transnational Institute. “It is time to reject a privatized justice system that can undermine crucial regulation in the public interest.”

This week, 316 civil society organizations presented a joint letter to RCEP governments urging them to exclude investor-to-state dispute settlement provisions from the deal and demanding instead a new trade model that helps to develop sustainable societies, by supporting local economies, workers’ rights and food sovereignty.

The stated goal of the negotiations is to “boost economic growth and equitable economic development, advance economic cooperation and broaden and deepen integration in the region through the RCEP,” according to the ASEAN website. The proposed deal would cover intellectual property rights, investment, economic and technical cooperation, goods, services, rules of origin and competition and dispute settlement.

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