Fear of being sued not good enough reason to reject TPPA, says ministry sec-gen

International Trade and Industry Ministry secretary-general Tan Sri Dr Rebecca Fatima Sta Maria says Malaysian firms also invest overseas and need protection, which exists in trade pacts. – The Malaysian Insider pic by Najjua Zulkefli, January 23, 2016.

Various protections exist for Malaysian companies under the Trans-Pacific Partnership Agreement (TPPA), making fears of being sued by foreign investors an invalid excuse to reject the trade deal, the International Trade and Industry Ministry (MITI) says.

MITI secretary-general Tan Sri Dr Rebecca Fatima Sta Maria said there were many foreign companies in the country which have not sued Malaysia despite the existence of protectionist policies, such as Insurance Guarantee America (IGA) since the 1960s.

“With governance and rule of law, there is very little to fear over this (being sued).

“There is no need for fear-mongering. We have American companies here with the first IGA in the 1960s and also host companies from Japan, Australia and Mexico. 

“Over the years, all these companies have found no reason to sue us,” she told The Malaysian Insider in a recent interview.

Her remarks come in the run-up to a demonstration against the trade deal by non-governmental groups today at Padang Merbok in Kuala Lumpur.

Among the reasons for holding the anti-TPPA rally include concerns over the loss of Malaysia’s sovereignty and inability to defend local companies from legal action by investors, as well as fears over higher price of medicines.

The secrecy surrounding negotiations over the 12-nation deal and Putrajaya’s inability to explain its terms clearly and simply have also fuelled fears of its impact on Malaysia.

Rebecca, however, said Malaysia was prepared to face any suit under the investor-state dispute settlement (ISDS), including forming a monitoring mechanism.

“For ISDS, we have some concerns although there are safeguards in place. A minister has also announced that the prime minister has agreed to set up a mechanism to monitor and if necessary provide advice,” she said, adding that discussions on the issue were conducted in the presence of lawyers and consultants.

She said the worries regarding the ISDS should not be a stumbling block to signing the deal, since local companies, such as Petronas and Khazanah, also invested overseas.

“We always underestimate our own capability. We also invest in other countries and don’t we also need protection in the countries we do business in?”

She said the government should give due commitment to the clauses agreed in the trade deal to avoid being sued.

“It may be true that although there is protection in place, it does not stop any investor from staking a claim with the government. Each case is unique and cannot be too specific.

“This is the same as in the domestic legal system which does not prevent the government from being sued.

“In addition, the investment chapter under TPPA specifically provides that a party shall not be prevented from adopting, maintaining or enforcing any measure for purposes of environmental, health or other regulatory objectives, which acts as a defence for the government.

“Therefore, it is important for the government to be aware of its commitments in the TPPA and ensure measures undertaken are consistent with the obligations of the investment chapter.”

Recently, Universiti Malaya law professor Prof Gurdial S. Nijar said although protection under the ISDS could prevent petty suits against the government, it did not stop investors from suing governments over policies which they claimed interfered with their ability to turn a profit.

In 2014, 608 governments were sued under the ISDS primarily by American corporations, with 60% of those suits being against governments in developing countries, said Gurdial.

“We are now suspending bauxite mining operations because of public health and environmental hazards. Imagine with ISDS, if a foreign company was involved in mining and we stopped them, we could get sued,” Gurdial said as an example.

He also questioned the impartiality of ISDS, saying it was an open secret that the judges who sat on these international arbitration tribunals were also lawyers representing corporations suing governments.

- TMI