BY KARINA YONG
OPINION, Dec 11 — Imagine this: There is a cure for cancer but it’s out of reach because it’s made unaffordable.
You celebrate because the company running that rare earth processing plant in your neighbourhood was ordered by the government (FINALLY!) to stop its operations which were making residents ill. Now you hear that it is resuming operations despite the stop work order, and the government has to pay the company damages out of taxpayers’ pockets for issuing the stop work order!
These are but two of the many human rights concerns that await Malaysia if we sign the TPPA.
UN experts have voiced concerns over adverse impacts of the TPPA on:
- the right to health and the right to life, especially through a lack of access to essential medicines;
- the right to work and rights in the workplace;
- the right to an adequate standard of living, including access to housing, food and water;
- rights to intellectual property;
- the rights of minority groups, and states’ duties to protect them: examples include children, especially those in poverty, and indigenous people.
Only about 5 or 6 out of 30 chapters in the TPPA actually deal with issues traditionally perceived as trade issues such as the lowering of tariffs. The devil is in the details as they say, and a close look at Chapter 9 on investment and its enforcement mechanism, Investor State Dispute Settlement (ISDS), reveals this: it gives foreign investors in Malaysia a whole new mode of legal redress with extraordinary protection to their investments and profits to the detriment of our development policies.
Claims brought under similar worded ISDS clauses in other free trade agreements include:
- American company Renco’s suit against Peru for US$800 million (RM3.4 billion) because its contract was not extended after Renco’s operations caused massive environmental and health damage;
- A French company, Veolia, sued Egypt for the disadvantage it suffered from the rise of the minimum wage from 400 to 700 Egyptian pounds (US$56 to US$99). Minimum wage was one of the few concessions won by salaried workers in the 2011 Arab Spring.
- Eli Lilly, the fifth-largest pharmaceutical group in the US, is demanding roughly US$490 million in compensation because the Canadian courts upheld Canada’s patent laws and had found in favour of a generics manufacturer, making medicines cheaper and more accessible to Canadians.
Just a few weeks ago, after months of denial by Tok Pa (Minister of International Trade and Industry Datuk Seri Mustapa Mohamed) and various other government authorities, President of the United States, Barack Obama admitted that the price of medicines will go up under the TPPA.
What will happen to Malaysia’s current public healthcare system, which for all its faults, has succeeded in making medical services widely accessible to Malaysians? Will we go down the road Jordan and other countries with similar IP laws have gone, with the financial stability of our country’s health programmes being threatened?
Investment chapter and ISDS
There are many problems with the investment chapter in the TPPA: the combination of an expansive definition of investment and the clauses on expropriation and minimum standard of treatment (MST) mean that foreign investors will be able to sue our government even when there has been no takeover or seizure of an asset. They can demand for compensation if new policies that apply to both domestic and foreign firms undermine their “expectations” of how they should be treated.
And where might they bring this claim? Usually bypassing our own courts (the TPPA allows them to do that), to an international arbitration tribunal, most notably ICSID at the World Bank.
The fact that the foreign investor can tap into a completely different legal system outside of Malaysia to which we are bound, undermines judicial and national sovereignty to say the least.
Our laws and policies will be subjected to the dictates of these international tribunals notorious for being pro-investor, for awarding exorbitant awards and cost (exorbitant legal and arbitration costs averaging over US$8 million per dispute) and for being biased in composition. The awards obtained by the investor are then enforced through the seizure of assets owned by the government and located abroad (read: taxpayer funds). ISDS is thus, a very powerful tool.
A few lawyers (mainly American and European) monopolise the investment arbitration business, and they act as lawyers in one case and arbitrators in other cases. Many of their firms are also known to seek and encourage investors to take up cases. In one known case, one of the arbitrators was a member of the board of directors of the parent company of the investor that took up the case. Yet the review panel ruled that the decision would remain and there was no need for the case to be heard again by another panel.
To add salt to the wound, there is no appellate mechanism against the tribunals’ decision, the decision of the tribunal is final. There is also no system of precedent or accountability to a higher court rendering tribunal decisions arbitrary, with one tribunal decision contradicting another tribunal’s in similar cases.
And the ISDS mechanism is only for the investor. The government who is a party to the TPPA is not allowed to bring a claim against the investor under the ISDS provision.
UN expert on the promotion of a democratic and equitable international order, Alfred de Zayas has said that “the apparent lack of independence, transparency and accountability of ISDS tribunals entails a violation (prima facie) of the fundamental principle of legality laid down in international human rights law, including article 14 of the ICCPR, which requires that suits at law be adjudicated by independent tribunals.”
Together with several other UN Special Rapporteurs and referring to the TPPA and the TTIP, de Zayas concluded that “these treaties and agreements are likely to have a number of retrogressive effects on the protection and promotion of human rights, including by lowering the threshold of health protection, food safety, and labour standards, by catering to the business interests of pharmaceutical monopolies and extending intellectual property protection” and invited states “to revisit the treaties under negotiation and ensure that they foster and do not hinder human rights.”
Some of their recommendations were that “ex ante and ex post human rights impact assessments [HRIA] should be conducted with regard to existing and proposed BITs and FTAs “ and that “Parties should detail how they will uphold their human rights obligations if they ratify the BITs and FTA’s under negotiation”.
Where are the safeguards?
The government has not done a HRIA despite calls by various activists and civil society groups including Muhammad Sha’ani Abdullah, former Commissioner of SUHAKAM, to do the same. Further, the Cost Benefit analysis promised by the government has been delayed for months.
MITI tries to allay our fears by saying that the TPPA is only one of the numerous bilateral and free trade agreements that Malaysia has already signed. But they leave out the fact that the scope of protected investments which are enforceable is far wider than in any of Malaysia’s previous trade agreements and that the US, the most litigious nation in the world, is a party for the first time.
Further, despite what MITI would have us believe, the “safeguards” within the TPPA on health, environment and labour are unenforceable. Meaning, should the investor be guilty of offences in these areas, our government cannot file claims against them under the TPPA. What we will have though, is a Renco situation, as described above.
Then there is the issue of the Most Favoured Nation Clause. Known as the wipe out clause, it allows foreign investors from TPP states to make a claim against Malaysia based on the ISDS provisions in any other trade deal Malaysia has signed, no matter which country it was signed with. So no matter how cleverly and carefully drafted the TPPA is, we are only as protected as the most retrogressive trade agreement that we’ve entered into.
A special word on food security
Malaysia has bucked the international regime on patents on plant varieties. We have a progressive legislation called the Plant Varieties Protection Act 2004 (PVPA) which protects the traditional practice of farmers freely saving, exchanging and selling their farm-saved seeds, seeds which they rely on for their livelihood, and ensuring that the rights of our farmers and indigenous peoples are not taken over by big agri-businesses. Under the TPPA, PVPA will have to be repealed, giving precedence to the UPOV 1991 Convention. UPOV has the stated objective of protecting new varieties of plants by an intellectual property right and the terrible consequence of disempowering our farmers and creating a food security crisis in the long run as multinational seed companies take over control of the seed market and agriculture as a whole.
This is a move of the kind denounced by the UN Special Rapporteur on the Right to Food, Olivier De Schutter, who has criticised free trade agreements that require the introduction of patent protection for plants or legislation implementing the 1991 UPOV.
In light of the above and given that it is not determinate that trade agreements, especially ones with ISDS clauses, do indeed increase economic growth in a country, Malaysia should not sign the TPPA.
* Karina Yong, is a member of National Human Rights Society (HAKAM) and a legal consultant for Third World Network, Malaysia
Since 1950, the world marks December 10 as Human Rights Day. It is a day to create awareness to fundamental human rights set out in the Universal Declaration of Human Rights (UDHR) as the common standard of achievement for all peoples and all nations.
This year, the National Human Rights Society, in collaboration with Malay Mail Online, is publishing seven articles over seven days to bring attention to seven specific interest areas concerning human rights in Malaysia.