New Momentum for Those Who Seek Fair and Enforceable Rules for Investment Overseas

By December 5, 2013Economy, Trade

In announcing the conclusion of the Korea-Australian Free Trade agreement today, Australia also indicated that both countries agreed to include investor-state dispute settlement provisions that would promote “investor confidence and certainty in both countries.”  While the text of the agreement is not yet available, this announcement is a major step forward for manufacturers and other businesses, policymakers and all that seek strong enforcement of international obligations and outcomes that promote basic rules of fairness and economic growth.

Today’s move is highly noteworthy because it is the first time in recent years that Australia has included investor-state dispute settlements in an agreement, although it is not really surprising given Australia’s long history in support of such rules and strong enforcement.  Since at least its investment treaty with Vietnam was concluded in 1991, Australia had long included broad investor-state coverage in its treaties and trade agreements.  Indeed, Australia has accorded investor-state rights not just to Vietnam, but to an additional six countries that are currently part of the Trans-Pacific Partnership (TPP) negotiations: Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.

Australia’s rejection of this basic enforcement provision in the U.S-Australia Free Trade Agreement and by the former Gillard government more broadly over the last several years was, we hope, a disappointing anomaly for a country that has long been respected for its leadership role in international trade and its strong embrace of binding and enforceable rules.

With today’s announcement, manufacturers see new momentum to achieve strong outcomes on investment and investor-state in the TPP negotiations.  As noted in NAM’s Trading Up TPP blog post series here, manufacturers are seeking strong and comprehensive outcomes across the board, based on the Obama Administration’s 2012 Model Bilateral Investment Treaty (BIT) text. The application of investor-state to all sectors and for breaches of concession and other investment contracts and authorizations, as well as for the core investment chapter provisions, is absolutely critical to ensure that manufacturers’ investments overseas promote new export opportunities and support substantial research and development and capital investment here in the United States.

Manufacturers seek major progress in the TPP talks next week and will be watching closely for pro-growth outcomes on investment, as well as the other core provisions such as concrete new market access that are priorities for growing manufacturing here in the United States.


Linda Dempsey

Linda Dempsey

Linda Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating intellectual property protection, increased export financing and the elimination of trade barriers as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
Linda Dempsey

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