The Jakarta Post
The government must take into account certain risks before joining the Trans Pacific Partnership (TPP), as the final investment chapter of the agreement contains many dangers for member countries, according to Indonesia for Global Justice (IGJ).
IGJ manager of research and monitoring Rachmi Hertanti said on Friday that the partnership would elevate individual foreign corporations to equal status with the TPP's member countries. It would also empower foreign firms to sue signatory governments in extrajudicial investor-state dispute settlement (ISDS) tribunals over the state's domestic policies.
Rachmi said joining the TPP would eliminate state controls over the public sector and prove counterproductive to what the government is doing right now to provide various protections in the national interest.
"We consider the TPP unfair because it brings heavier obligations to member countries. The TPP actually only benefits foreign corporations," said Rachmi in a discussion held in Jakarta.
The TPP, he continued, included an overreaching definition of 'investment' that would extend the coverage of TPP investors far beyond real property, permitting ISDS attacks over government actions and policies related to financial instruments, intellectual property and regulatory permits.
The TPP's chapter of investment defines 'investment' as every asset that an investor owns or control, directly or indirectly, that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectations of gain and profit, or the assumptions of risk. Forms that an investment may take include: an enterprise, shares, stock and other forms of equity, bonds, futures and other derivatives.
"This definition is very broad and could have serious legal consequences as it could be used to challenge the government," she added.
Third World Network researcher Lutfiyah Hanim added that the TPP would also empower foreign firms to demand compensation from governments for performance requirements imposed on domestic and foreign firms alike. Article 9.9 of the agreement, Hanim said, allowed foreign firms to challenge policies used by governments to support local job creation and business growth.
"This investment clause seeks to remove 'performance requirements' usually required of foreign investors. For example local content and construction of a production facility obligations," she said, adding that if Indonesia insisted on joining the TPP, the government would have to deregulate drastically to conform to its rules.
Furthermore, the agreement states that each party should accord to investors of other parties no less favorable treatment than it accords to its own investors. "Foreign companies are even more privileged than local companies, because if they were treated unequally by local investors, they could file a dispute with arbitration," she added.
Considering these disadvantages of joining the TPP, Hanim urged the government to make sure it read all TPP clauses before joining the trade pact with the other 12 countries already signed up. "Because the TPP is not merely a free-trade agreement, but an agreement on investments, services and intellectual property rights," Hanim said.
During his first visit to the US last month, President Joko 'Jokowi' Widodo expressed his intention to join the trade pact along with the US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The 12 countries of the TPP represent 40 percent of world trade.
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