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The US-Australia Free Trade Agreement

The investment chapter of the United States/Australia Free Trade Agreement is unique among recently completed U.S. agreements.It makes no immediate provision for investor-to-state dispute resolution.The most effective opponents of investor/state were the state governments in Australia and state and local governments in the United States, which both opposed this method of dispute resolution on federalism grounds.Australian negotiators worked closely with U.S. associations of state and local officials until the United States agreed to drop its demand that individual investors should be able to bring investment complaints before international tribunals.

Nonetheless, the Australia agreement does contain an investment chapter. And, it contains the same kind of broad definition of investment and the same kind of open-ended investor rights related to expropriation and minimum standard of treatment as are contained in investment chapters of other recently completed U.S. FTAs.This is a cause for concern.State-to-state dispute resolution is still available to prosecute claims.

Another concern is that the Australia agreement includes an article on “consultations on investor-state dispute settlement.”Article 11.16 of the agreement provides that either the U.S. or Australia may request consultations to consider allowing an investor to bring a claim on its own behalf.If both parties agree to allow the investor claim and agree on procedures for prosecuting it, then investor-to-state dispute resolution proceeds.While this has the appearance of an allowance for a few exceptions to the general bar on investor/state claims, nothing would prevent every claim being made an exception if both parties agree.Fortunately, there is no immediate prospect of the U.S. and Australia making such an agreement.

Article 11.16 also contains a caveat that nothing in its language prevents "an investor of a Party from submitting to arbitration a claim against the other Party to the extent permitted under that Party's law."  This caveat appears to be either totally unnecessary or suspicious.   

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