Tobacco Firm Sues Australia over Plain Packaging, Confirms Risks of TransPacific Partnership Deal

Media Release: Professor Jane Kelsey. Monday 27 June 2011

Tobacco giant Philip Morris announced today that it will use a foreign investment treaty to sue the Australian government for introducing plain packaging tobacco laws.

‘This is exactly what we have been warning could happen if US firms are given powers to sue the government under the Trans-Pacific Partnership Agreement,’ said Professor Jane Kelsey of the University of Auckland Law School.

‘Indeed, this case shows the risks already exist. The Howard Government rejected the inclusion of investor-enforcement powers in the Australia US Free Trade Agreement in 2005. The Australian Labor Government is committed to rejecting similar powers in theTPPA. But Philip Morris has found a back door route to protect its profits.’

Philip Morris is a US company. In a classic exercise of treaty shopping, it is using an obscure Bilateral investment Treaty that Australia signed with Hong Kong in 1991 tobring the case in an offshore international tribunal and seek billions of dollars in compensation for lost revenues.

New Zealand has a similar bilateral investment treaty with Hong Kong that was signed in 1995.  Ironically, submissions on updating that as part of the New Zealand Hong Kong free trade agreement close on 30 June.

‘The champions of these agreements dismiss concerns that they could be used to challenge public policies that are in the national interest, such as tobacco controls, offshore mining regulation or stricter telecommunications laws.’

‘They have claimed that there isn’t a problem because similar powers exist in some of our other agreements, and have never been used against us – like our 1995 agreement with Hong Kong.’

‘This development should send shock waves through the Parliament, local government and ordinary citizens’, warned Professor Kelsey.

‘It’s clearly not enough to stop these powers being included in a TPPA. All New Zealand’s trade and investment agreements that have investor-state enforcement powers need to be revisited as well.’



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