Why companies should not be allowed to sue our governments
No civilised society should allow a commercial enterprise to dictate any aspect of health policy. Yet in Australia, there is the danger that that is happening, with the news that cigarette manufacturer Philip Morris is suing Australia over a new law banning company logos from cigarette packets.
Philip Morris taking legal action against Australia’s proposed brandless cigarette packaging legislation once again demonstrates the power of transnational companies over health-related regulation. The fact that the tobacco giant can sue the country for damage compensation defies the common sense of anyone trying to bring down smoking-related deaths and disability. A similar case is being brought by the same company against the Government of Uruguay. But it is no use just blaming the tobacco companies. Change must start from within our governments. As the Director General of the World Health Organisation recently stated in London: “The world must get tougher in resisting the increasingly aggressive tactics of Big Tobacco.”
Australia is falling victim to an 18-year-old bilateral investment treaty with Hong Kong. Like governments all around the world it willingly gave up its sovereign right to regulate health matters in the public interest. Bilateral Investment Treaties (BITs) protect the private investments of nationals or companies of one country in another, including investments in intellectual property such as brands or patents. Most of these treaties will guarantee investors the right to the same treatment as national companies, to pursue compensation for any losses and will grant protection against expropriation. Importantly, however, many BITs also provide for a dispute settlement mechanism outside a country’s judicial system. So when a company sees its enjoyment of an investment threatened by regulation it can file a claim with arbitration bodies, typically the International Center for the Settlement of Investment Disputes (ICSID) under the auspices of the World Bank. This completely circumvents national laws and constitutions; yet it is a common feature of world economic relations. Worldwide there are more than 2500 investment treaties in force. The UK is currently party to 92 such treaties.
Luckily, Australia has learned from its mistakes: In its recent Trade Policy Statement “Trading our way to more jobs and prosperity” the Gillard government has vowed to discontinue the inclusion of investor-state dispute resolution clauses in bilateral trade agreements. In the UK and EU we should move in the same direction. Yet, a free trade agreement currently under negotiation between the EU and India proposes investor-to-state arbitration for damages perceived by companies investing in the other contracting party. This not only concerns factories or monies but intangible property such as a brand and its reputation – it could be anything from fake Nike shoes and copied EMI-CDs to cigarette packets or cancer medicines.
Because India provides a large proportion of the generic medicines consumed in developing countries it has been called the pharmacy of the world. For example, more than 80% of antiretroviral generic medicines used worldwide originate in India. If India signs the agreement with the EU it could be held hostage by companies claiming that the generics industry is indirectly stealing EU-based companies’ intellectual property. Together with our partners in other NGOs and campaign organisations, Health Poverty Action calls on the EU and India to learn from the Philip Morris debacle in Australia, to remove intellectual property from the investment chapter and to not sign up to an investor-to-state arbitration mechanism. Save us and India from being philip-morrised.
