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Under TPPA warning labels can attract billion-dollar suits

 | November 7, 2013

This is based on the experience faced by Uruguay and Australia which were sued billions of dollars by international tobacco company Philip Morris.

KUALA LUMPUR: Malaysia can be sued for billions if it displays “Smoking is bad for health” warning on its cigarette packs.

DAP’s Klang MP Charles Santiago told reporters that this would be the case if international investors decide to sue the country, as provisioned under the investor-state dispute settlement (ISDS) chapter of the Trans-Pacific Partnership Agreement (TPPA).

Santiago cited tobacco company Philip Morris which brought an investor-state claim against the Uruguayan and Australian governments for requiring the company to display graphic health warnings on its cigarette packs.

Philip Morris claimed that the warnings will affect its profits in the two countries.

However, Santiago said that it was the government’s responsibility to ensure the health of its citizens.

Nonetheless with the Agreement, international corporations will have the upper hand in determining what is deemed appropriate for their companies, as cited earlier.

Santiago then rationalised that this will burden the future generation if the government agreed to sign TPPA.

The ISDS chapter in the TPPA allowed disputes to be adjudicated by international courts, thus bypassing Malaysian courts. Various local groups have opposed it, claiming that it compromises Malaysia’s sovereignty.

An expert invited by the Pakatan Rakyat to further explain the matter, Uruguayan international investment regime specialist Cecilia Olivet, claimed that international courts are not neutral enough to settle disputes between investor and the state.

“There are evidences of bias of the investment arbitrary system. There are only 15 individual arbitrators and they come from strong commercial backgrounds instead of public-interest backgrounds,” she said.

Double standard

She added that these arbitrators were mostly board of directors of big, international corporations.

“And it is a lucrative industry. They earn US$3,000 daily and as we know, trials last for years. The earning act as incentives for them to arbitrate and keep the cases coming,” she said.

Former Bolivian trade negotiator Pablo Solon added that the ISDS chapter creates double standard as foreign companies will be of first class standing while Malaysian investors will be second class.

“Furthermore, Malaysian companies cannot access ISDS. Also, it is expensive for the state to go into ISDS compensation.

“You would have paid US$3 to 8 million even if you win the case to pay lawyers to defend you,” he said.

International investment law professor Gus Van Harten added if the government refused to pay the compensation, all assets owned abroad by the country would be at risk as the international companies can place the award before courts of other countries.

The TPPA is a multi-lateral trade agreement that the United States – the leading negotiator in the talks – hopes will serve its role in developing a broader platform for trade liberalisation particularly throughout the Asia-Pacific region.

Malaysia is currently negotiating with 11 other countries comprising Australia, Brunei, Canada, Chile, Mexico, New Zealand, Peru, Singapore, the US, Vietnam and Japan to conclude the TPPA.


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