OSAKA – While a great deal of political and media attention is focusing on what the Trans-Pacific Partnership might mean for Japan’s agricultural sector, less is being devoted to how it could impact investor-state disputes and copyright laws, two controversial areas that present a growing challenge to forging the trade accord.
The United States and some other TPP members are pushing to include an Investor-State Dispute Settlement clause in the multinational trade liberalization treaty. This would make it easier for corporations registered in TPP member nations to sue another member if its legislature enacts laws the company claims are negatively impacting its business.
For example, if the Japanese government were to enact stricter environmental regulations and the Osaka-based factory of a firm registered in a TPP country found it could not meet the new rules and was forced to shut down because of the additional costs, an ISDS clause would, critics argue, allow the company to sue Japan to reclaim its losses.
Little is known about the details of the current negotiating text because it has not been made public, although more than 600 corporate advisers have access to it. The United States says the TPP investment agreement will include provisions for an expeditious, fair and transparent ISDS provision, subject to appropriate safeguards, and that any TPP treaty will protect the rights of member countries to regulate in the public interest.
But so controversial is the issue that a growing chorus of politicians and legal experts are calling for it to be dropped entirely. Last year, nearly 130 U.S. state legislators and dozens of eminent legal scholars from the United States, Canada, Australia, New Zealand and Chile called for the clause to be removed altogether.
“ISDS clauses allow foreign investors the right to sue governments directly in offshore private investment tribunals, bypassing the courts and also allowing a ‘second bite’ if the investors do not like the results of domestic court decisions,” the state legislators said in a letter to U.S. negotiators.
“Although the ISDS tribunal has no power to nullify U.S. federal, state and local laws, in practice, when a country loses an investor, it will change the offending law, or pay damages, or both,” they said.
In a separate letter, the jurists warned that including an ISDS provision would lead to a massive increase in corporate claims against attempts by governments to create environmental and natural resource policies, which they point out is already occurring under existing bilateral free trade agreements.
“Over $675 million (¥68 billion) has been paid out under U.S. FTAs and bilateral investment treaties alone, 70 percent of which pertained to challenges to governments’ natural resource and environmental policies, not to traditional expropriations,” the letter said.
Public Citizen, a Washington-based nonprofit organization that opposes the TPP in general, said that Japan’s entry this week to the ongoing negotiations multiplies the threat posed to the public interest in both countries by including an ISDS clause.
“Expanding the investor-state dispute resolution mechanism to Japan through the TPP would expose the U.S. to an even greater surge of investor-state attacks,” Public Citizen said. “Similarly, Japan’s government would be exposed to a potential wave of investor-state cases from any of the more than 1,800 U.S.-based corporations that own more than 7,100 subsidiaries in Japan.”
The other area causing controversy is intellectual property. The TPP countries, who will number 12 with Japan’s entry to the talks, have already agreed to build upon the 1994 Trade-Related Aspects of Intellectual Property Rights negotiated by the World Trade Organization.
“Proposals are under discussion on many forms of intellectual property,” the Office of the U.S. Trade Representative said, “including trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge.”
A leaked chapter of the U.S. negotiating text on intellectual property calls for expanding the duration of copyrights. If the holder is an individual, the copyright under the TPP would extend to the lifetime of the creator, plus 70 years. If the published work is owned by a corporation, the term of protection would rise to 95 years from the first publication.
That’s good news for major entertainment businesses who want to protect their trademark rights, as well as individuals who create work and seek royalty payments.
But the Washington-based Electronic Frontier Foundation, an NPO involved in privacy and digital rights issues, says that if the agreement the United States is pushing were to be approved, citizens in TPP signatory countries would pay a heavy price in continued royalties, and that the only winners would be entertainment industry lobbyists and copyright lawyers.
Some countries engaged in the TPP negotiation process would also face having to change their domestic copyright laws. New Zealand, for instance, currently has a copyright term of the author’s life plus 50 years for literary works. Malaysia has a copyright term of the person’s life plus 50 years for literary, musical or artistic work.
Recent media reports in Japan indicate the government is preparing to hike domestic copyright protection to 70 years from 50 after an author’s death. Steve McClure of online magazine McCluremusic.com, which covers the Japanese and Asian music industries, says this would bring Japan in line with the U.S. and the European Union, where “life plus 70” is the norm.
“The Japanese Society for the Rights of Authors, Composers and Publishers, which is a copyright fee collection agency, has long lobbied for an extension,” McClure said. “From a market point of view, this change really helps foreign firms in Japan.”