No to “Pay Polluter” in TPPA

The latest round of Trans-Pacific Partnership Agreement (TPPA) negotiations involving Malaysia and 11 other countries including the United States began on 3 July and will continue until 12 July 2014 in Ottawa, Canada.

According to news reports, the chapters that will be negotiated there include: investment, services, intellectual property, tariffs on goods and exceptions such as for health including tobacco control and the environment.

The Consumers’ Association of Penang (CAP) is deeply concerned by the provisions that have been agreed to in the leaked TPPA investment chapter.  Foreign investors have successfully challenged laws on health, environment and other crucial public interest areas in other countries that have signed similar treaty provisions.  Those cases have even shown that when the foreign investor breaks the law of the country it is operating in and it is punished as allowed by the host country’s law, the foreign investor can still sue the host government under these treaties and win.

This is what happened to Ecuador when an American oil company broke the law in Ecuador so Ecuador cancelled the contract, as it is allowed to do under Ecuadorian law.  The oil company sued Ecuador at an international tribunal under an investment treaty with provisions similar to those that have been agreed to by all countries, including Malaysia, in the leaked TPPA investment chapter.  The oil company won and Ecuador was required to pay it US$2.4 billion, even though the tribunal agreed that the oil company broke Ecuador’s law.

To avoid this happening to Malaysia under the TPPA (for example if a foreign investor in Malaysia pollutes the environment and the government takes action against the investor), the government needs to at least be able to bring a counterclaim to reduce the amount of damages the foreign investor can win by the amount of its wrongdoing (for example the cost of cleaning up its pollution).

Unfortunately, our new research shows that with the wording in the leaked TPPA investment chapter as of 2012, it is unlikely that counterclaims would be allowed.  Unless this is changed, this means that Malaysia is likely to end up paying the polluter, not making the polluter pay.

In addition to all the other problematic provisions in the TPPA that harm Malaysian consumers, patients, students, workers and the environment, this new research shows that the supposed “safeguards” in the leaked TPPA investment chapter are still grossly insufficient.  Even if better safeguards can be obtained, experiences of other countries show that more often than not, foreign investors are effectively able to violate national laws with impunity and get paid for it as well.

Therefore we once again call on the Malaysian government to immediately withdraw from the TPPA negotiations and not sign the TPPA.

Press release, 4 July 2014