[The following is an un-footnoted longer draft of one of two Policy Digests prepared for a Sydney Southeast Asia Centre joint research project and an ASEAN Secretariat conference on consumer protection law in Hanoi over 8-9 December 2014. The footnoted final version is available at: http://www.asean.org/resources/publications/item/consumer-protection-digests-and-case-studies-a-policy-guide-volume-1?category_id=382]
1. Overview
Consumer product safety is a major contemporary concern for developing, middle-income and developed economies. ASEAN, through its Committee on Consumer Protection (ACCP), has recognised this as a priority topic for international collaboration, as trade in goods accelerates through the region with its major trading partners world-wide. Part 2 of this Digest highlights the policy challenge. Part 3 shows how market and even private law incentives are unlikely to provide sufficient incentives for manufacturers to produce safe products; some minimum regulatory standards are needed. Part 4 focuses on regulatory powers to force recalls of unsafe goods, but also requirements for suppliers to notify national regulators about ‘voluntary’ recalls. It also outlines recall information disclosure efforts underway nationally, regionally (notably within the European Union, EU, but also through ACCP since early 2011), and now internationally (especially through the Organization for Economic Cooperation and Development, OECD, since late 2012). This Digest suggests there is scope already for greater engagement by ACCP and individual ASEAN member states particularly with the OECD initiative in this field. Part 5 also urges broader information-sharing as the OECD clearing-house expands over the next few years, as well as with product safety incident reporting systems already developed particularly in the EU and the United States (US).
Category: Asia-Pacific regional architecture
Consumer Protection and Free Trade [and Investment] Agreements
My public lecture on this topic, bringing together two research fields of contemporary public interest, was presented on 24 September 2014 as part of Sydney Law School’s Distinguished Speakers Program.
The session was kindly introduced by my colleague Prof Chester Brown, and ended with a commentary by NUS Asst Prof Jean Ho who kindly arrived straight from Sydney airport after her flight from Singapore.
The audio file of my presentation and Chester’s introduction are available via Sydney Law School’s podcast channel (specifically here), my Powerpoint slides are here (as a PDF), and a related short paper is here. Below is the abstract (with further hyperlinked references available here) and speaker/commentator bios.
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The “Anti-ISDS Bill” before the Australian Parliament
This posting is based mainly on a Note that critically reviews The Trade and Foreign Investment (Protecting the Public Interest) Bill 2014, drawing on my written Submission and subsequent Senate Hearings. The fully footnoted version will appear in the next issue of the CIArb’s “Australian ADR Reporter” or successor Journal. Readers may also be interested in my subsequent posting to the Kluwer Arbitration Blog, followed by the Senate Committee Report (27 August 2014) which agreed that the anti-ISDS Bill should not be enacted. Significant extracts from that Report will also be added and analysed in my draft paper at http://ssrn.com/abstract=2483610, with an introduction incorporating a version of the Note below.
This work is part of an Australian Research Council Discovery Project (DP140102526) funded over 2014-2016 jointly with Dr Shiro Armstrong and Professors Jurgen Kurtz and Leon Trakman, which was acknowledged in the Senate Bill hearings and final Report. The topic of ISDS will also be discussed at the Law Council of Australia’s 2014 International Trade Law Symposium, 18-19 September, Canberra, and will be the focus of an ABC National Radio broadcast on 14 and 16 September (with transcripts here).
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Do Many of Australia’s (and Some of Japan’s) Treaties Not Give Full Consent to Investor-State Arbitration?
Indonesia recently announced that it would review its 67 bilateral investment treaties (BITs). Shortly beforehand, it had unsuccessfully challenged the jurisdiction of an ICSID arbitral tribunal in a claim for expropriation and other violations brought by the Australian subsidiary of a UK coal mining company (Planet Mining v Indonesia).
The tribunal’s decision found that consent to jurisdiction existed under the coal mining licences given by Indonesian authorities, but not under the wording of the 1992 Australia-Indonesia BIT. It found that the countries had only given a “promise to consent” rather than full advance consent to ICSID jurisdiction, meaning that Indonesia could still refuse consent subject to potential review through an inter-state arbitration procedure separately provided under the treaty. Further, as both countries remained party to the framework 1965 ICSID Convention facilitating enforcement of arbitral awards, another BIT provision for ad hoc investor-state arbitration (ISA) was also unavailable to investors.
Bill proposing to preclude Australia from ISDS in future investment treaties
I am pleased to provide this Submission on The Trade and Foreign Investment (Protecting the Public Interest) Bill 2014. I specialise in international and comparative commercial and consumer law, and have produced extensive academic publications and media commentary on treaty-based investor-state dispute settlement (ISDS). My interest is in the policy and legal issues associated with this system; I have never provided consultancy or other services in ISDS proceedings.
The Bill simply provides, in clause 3, that:
“The Commonwealth must not, on or after the commencement of this Act, enter into an agreement (however described) with one or more foreign countries that includes an investor-state dispute settlement provision.”
The Explanatory Memorandum provides no guidance as to the background to this proposal, or its pros and cons. However it seems to be aimed at reinstating the policy shift announced by the April 2011 “Gillard Government Trade Policy Statement”. That is no longer found on Australian government websites and is inconsistent with the present Government’s policy on ISDS, which allows for such provisions on a case-by-case basis (as evidenced by the recent Korea-Australia FTA).
The Bill, like the previous Trade Policy Statement in this respect, may be well-intentioned, but it is premature and misguided. Treaty-based ISDS is not a perfect system, but it can be improved in other ways – mainly by carefully negotiating and drafting bilateral investment treaties (BITs) and free trade agreements (FTAs). This may also have the long-term benefit of generating a well-balanced new investment treaty at the multilateral level, which is presently missing and unlikely otherwise to eventuate.
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12th ANJeL Japanese Law conference: Cairns, 16 May
The Australian Network for Japanese Law (ANJeL) will host the Cairns Symposium on Japanese Law on Friday 16 May, with special thanks to ANJeL member and James Cook University Associate Professor Justin Dabner. Registration should be completed by emailing your name and institution to [email protected]; registration costs $60 for non-speakers (to cover lunch and teas) and can be paid on the day of the conference (please inform in advance if a receipt is required).
[Updated 26 April] The Symposium’s theme is ‘Japanese Law and Business Amidst Bilateral and Regional Free Trade Agreements’ – by happy coincidence, in light of the conclusion of negotiations for the Japan Australia Economic Partnership Agreement on 7 April 2014 (see media commentary here). However, presentation proposals dealing with other Japanese Law topics were also welcomed, as in previous ANJeL conferences held since 2002. As indicated by Abstracts below, speakers will cover fields including agricultural land law and policy, corporate law reforms, insolvency law and practice, long-term contracting, cross-border investment dispute resolution, tax treaties, emissions trading schemes and political participation rights.
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Consumer Protection Law and Practice in South-East Asia: Implications for Regional FTAs and Australia
The Sydney Southeast Asia Centre, with in-kind support from the global law firm Baker & McKenzie, will fund over 2014 this project involving also my colleague specialising in Chinese law, Prof Bing Ling.
[Background] Regional economic integration is proceeding apace. ASEAN aims to completely eliminate tariffs among 6 original (out of 10) member states by 2015, as part of developing an economic, political (security) and socio-cultural “community”. Yet it has also established an ASEAN Committee on Consumer Protection, to avoid a regulatory “race to the bottom” along with this expansion of free trade. Since late 2012, ASEAN has also begun negotiating a “Regional Comprehensive Economic Partnership” (RCEP) with Australia-NZ, Japan, China, Korea and India – leveraging off existing Free Trade Agreements (FTAs) with each of those states. Consumer protection is likely to arise also in the context of RCEP, and even the Trans-Pacific Partnership FTA (with negotiations already well advanced and involving many of the same states).
Investor-State Dispute Settlement Back for Australia’s Free Trade Agreements
Australia’s Coalition Government, dominated by the Liberal Party and led by Prime Minister Tony Abbott, recently completed a rocky first 100 days in power. Diplomatic rows with China and Indonesia are only part of the story. The Government stands accused, for example, of sending ‘conflicting messages’ to the business sector. At the Business Council of Australia’s 30th anniversary dinner on 4 December, Abbott reiterated his election-night declaration that Australia was ‘once more open for business’. Yet five days earlier, his Treasurer had taken the rare step of blocking a major foreign direct investment (FDI) – a $3.4 billion bid by US firm ADM for GrainCorp.
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“The fundamental importance of foreign direct investment to Australia in the 21st century: Reforming treaty and dispute resolution practice”
The (federal government’s) Australian Research Council has provided $260,000 to support this project over 2014-6 (DP140102526), in collaboration with Prof Leon Trakman (lead-CI, former Dean of Law at UNSW), A/Prof Jurgen Kurtz (Melbourne Law School) and Dr Shiro Armstrong (ANU Crawford School of Public Policy, co-editor of the East Asia Forum blog). Below are parts of our original project application to the ARC; an updated and edited version is available at http://ssrn.com/abstract=2362122.
[Abstract] “This project will evaluate the economic and legal risks associated with the Australian Government’s current policy on investor-state dispute settlement through multidisciplinary research, namely econometric modeling, empirical research through stakeholder surveys and interviews, as well as critical analysis of case law, treaties and regulatory approaches. The aim of this project is to identify optimal methods of investor-state dispute prevention, avoidance and resolution that efficiently cater to inbound and outbound investors as well as Australia as a whole. The goal is to promote a positive climate for investment inflows and outflows, while maintaining Australia’s ability to take sovereign decisions on matters of public policy.”
[Aims] Foreign direct investment (FDI) has become essential to global economic development, with FDI flows exceeding US$1.5 trillion in 2012 (UNCTAD 2012). Australia’s treaty making practice, especially its current policy with respect to investor state dispute settlement (ISDS), may be sub-optimal, in that it is not entirely based on sound economic cost-benefit data and supporting econo-legal research. Australia can potentially increase its share of the global FDI pool by adopting a more efficient approach to formulating policy with respect to ISDS.
This project aims to develop a key policy framework and devise salient institutional structures and processes that take account of two competing pursuits: the cost-benefit advantages of promoting Australia as an FDI destination; and the need to ensure that these advantages are considered in light of competing policy objectives that are not explicated exclusively on economic grounds (as explained in the Background section). This project is valuable and innovative because it identifies significant gaps in the current Australian policy framework and uses interdisciplinary research to address them.
The overall purpose is to ensure that Australia attains its optimal share of the global FDI market in the context of competing policy objectives. As such, the project will evaluate the economic and legal risks associated with the Australian Government’s current policy on ISDS through multidisciplinary research, namely econometric modeling, empirical research through stakeholder surveys and interviews, as well as critical analysis of case law, treaties and regulatory approaches. The general aim is to identify optimal methods of investor-state dispute prevention, avoidance and resolution that efficiently cater to inbound and outbound investors as well as Australia as a whole. The specific purposes therefore are: (1) to investigate policies that underpin Australia’s approach to negotiating international investment treaties, with particular emphasis on its policies on avoiding, managing and resolving investment disputes; (2) to identify and analyse links between these policies and the investment practices of both inbound and outbound investors; and (3) to propose recommendations on alternative approaches to investment policy, so that, through a carefully framed cost-benefit analysis, Australia can retain appropriate sovereignty over public policy issues (such as health and the environment) while promoting a positive economic climate for investment inflows and outflows.
Investor-State Arbitration: In the TPP and RCEP (‘ASEAN+6’ FTA)?
It remains to be seen whether the new Coalition Government will revert to Australia’s longstanding treaty practice prior to the 2011 ‘Gillard Government Trade Policy Statement’. That declared that Australia would not include investor-state arbitration (ISA) protections in future investment treaties – including investment chapters of Free Trade Agreements – even with developing countries.
The new Prime Minister, Tony Abbott, has declared that he is keen to conclude FTAs which Australia has long been negotiating with Japan, Korea and China respectively. The Gillard Government’s stance on ISA adding to delays experienced in finalising these treaties – see comments, including some of my own in The Australian on 21 September 2013. It also complicates negotiations for regional agreements like the Trans-Pacific Partnership (TPP) agreement and the Regional Comprehensive Economic Partnership (RCEP).
The ISA system is far from perfect, but there are many ways for Australia to draft provisions in investment treaties – old and new – to balance public and private interests effectively. Examples that attract varying degrees of support, from experts in international investment law, are provided in my paper co-authored with Chris Campbell and Sophie Nappert, forthcoming in a special issue of the Transnational Dispute Management journal. It and some of my other recent papers relevant to this topic, uploaded on SSRN.com, are listed with their Abstracts below.
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