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What is TPP/TPPA?

International Law

& Treaty Making

Process

Dispute Settlement:

ISDS

Pro & Cons of TPPA

OVERVIEW

1) SYARIFAH NUR AISYAH (MSC 152021)Graduate StudentMSc (Mathematics)Faculty of Science, UTM Skudai

2) IZZAH ZAHIN (MBE 151045)Graduate StudentMSc (Construction Contract Management)Faculty of Built Environment, UTM Skudai

3) NOR SHAM (MBE 151046)Graduate StudentMSc (Construction Contract Management)Faculty of Built Environment, UTM Skudai

4) SR. MOHD AFIZ (MBE 151024)Graduate StudentMSc (Construction Contract Management)Faculty of Built Environment, UTM Skudai

12 Pacific countries seal huge free trade deal, Yahoo News – by Paul Handley (October 5, 2015)

2006• Original TPPA – Joined by Brunei, Chile, New Zealand &

Singapore

2008• US joins negotiations for new TPPA• Intent to negotiate with current TPPA members and later with

Australia, Peru & Vietnam

2009

• November – President Obama announces intent to engage on TPPA

• Dec-USTR officially notifies Congress of intent to enter negotiation

TIMELINE OF TPPA

2010• 1st , 2nd, 3rd & 4th round of negotiations held• Dec- Leaks of documents

2011• 5th to 10th negotiations held & more leaks• Propose new texts

2012 • 11th to 15th Negotiations• Canada & Mexico expected to join

2015• October 5th – Concluded negotiations on TPPA - the deal

still has to be ratified by lawmakers in each country.

ORIGINS OF TPPA• Not initiated by US – not a party• P-3 P-4 TPPA• Previously known as Trans-Pacific Strategic

Economic Partnership• February 2008- US decided to join• Then, changed to TPPA

CONTENTS OF TPPA • Summary from USTR• Intellectual property

provisions• Investor-state arbitration

(ISDS)

“This is the least transparent trade negotiation I have ever seen.” Former U.S. trade official Gary Horlick, a TPPA supporter

CHAPTERS IN TPPA

INTERNATIONAL LAW & TREATY MAKING PROCESS

International Law

Sources of International Law

Treaty Making Process

Application of Treaty in Malaysia

Examples of Malaysian Statutes

transforming Treaties into National Law

INTERNATIONAL LAW• Body of rules which are legally binding on

States in their relations with each other. • International Court of Justice (ICJ)-the

principal legal organ of the United Nations• Article 93 of the UN Charter:

All UN member states are ipso facto parties to the ICJ Statute, but they are not required to submit any case to it except in cases where they have consented or promised to do so.

SOURCES OF INTERNATIONAL LAWArticle 38 (1) of the Statute of the ICJ is generally recognised as a definitive statement of the sources of international law:

a) international conventions, whether general or particular, establishing rules expressly recognized by the contesting states;

b) international custom, as evidence of a general practice accepted as law;

c) the general principles of law recognized by civilized nations; d) subject to the provisions of Article 59, judicial decisions and

the teachings of the most highly qualified publicists

TREATY MAKING PROCESS• Article 2(1) Vienna Convention on the Law of Treaties

For the purposes of the present Convention: (a) 'treaty' means an international agreement concluded between States in written

form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation

• Generic termTreaty, pact, protocol, charter, covenant, accord, statute, exchange of notes, etc.

• Deliberate act of States

• Article 26 Vienna Convention on the Law of Treaties Pacta sunt servanda ‘agreements must be kept’ Every treaty in force is binding upon the parties to it and must be performed by them in

good faith

Q: Does our national legal system provides the mechanism for the application of treaties in our country?

The Federal Constitution of Malaysia contains no express provision which says that treaties shall be the laws of Malaysia.

Parliamentary Authority and Privileges Articles 44 - 68

The Malaysian Constitution The Legislature

15

Legislative Authority to Make Federal LawsArt 74(1): Parliament may make federal laws in respect of matters falling under the Federal List or the Concurrent List.

3Concurrent

List(Parliament

and State e.g. housing, national park, social

welfare)

1Federal

List(Parliament only

e.g. defence, finance, security,

citizenship )

2State

List(State

Legislature only, e.g. local

government, Syariah courts,

mining)

1. Federal Legislative List 9th Schedule, List I

The Malaysian Constitution Legislative Provisions NJB

16

Parliament may make laws on matters in the Federal List, such as:• External affairs, defence,

internal security• Civil and criminal laws • Federal citizenship• Finance (incl. currency)• Trade, commerce and industry• Shipping, communication and

transport, education • Medicine • National holidays• Newspapers and publications• For the full list see List I of the

9th Schedule of the Constitution

Defence

Citizenship

Currency

Criminal Law

Finance

Communications

The ‘Federal List’ in the 9th includes:

1. External Affairs, including –(a) Treaties, agreements and conventions with other countries and all matters which bring the Federation into relations with other countries;(b) Implementation of treaties,

agreements and conventions with other countries;…

The Three Branches of Government

Legislature(Badan

Perundangan)Makes laws

Executive(Eksekutif)

Administers the law

Judiciary(Badan Kehakiman)

Interprets the law

The Malaysian Constitution Main Features

18

ExecutiveJudiciaryLegislature

http://www.kehakiman.gov.myhttp://www.parlimen.gov.my http://www.malaysia.gov.my

Parliament Article 44

The Malaysian Constitution The Legislature

19

YDPA Dewan Rakyat

Dewan Negara

Parliament is abi-cameral legislature comprising of a lower house called the: House of Representatives(Dewan Rakyat) and an upper house known as theSenate (Dewan Negara).

The Yang di Pertuan Agong is also a part of Parliament.

The Legislature

The Executive Articles 39 – 43

The Malaysian Constitution The Executive

20

The executive authority of the Federation is vested in the Yang di-Pertuan Agong but, as a constitutional

monarch, he must act in accordance with the advice of the Cabinet, except in limited matters such as the

giving of consent to dissolve Parliament.

Exercise of Executive Power Articles 39 - 43

The Malaysian Constitution The Executive

21

The Cabinet YDPA

A Minister authorised by

Cabinet

Any person authorised by

law

Subject to federal law, the executive authority vested in the YDPA may be exercised by:

Article 80(1): “The executive authority of theFederation extends to all matters with respect towhich Parliament may make laws.”

APPLICATION OF TREATY IN MALAYSIA

Doctrine of Incorporation

-automatically incorporated

Doctrine of Transformation

-transform by means of statute/Act of Parliament

Negotiation

• Governments’ representatives work with those from other countries• To produce a commonly acceptable set of standards-influence over a treaty outcome• The negotiating team-experts from ministries and agencies, legal officials from AGC,

feedback received from various stakeholders.

Signature

• Preliminary endorsement• Effect of signature? Subject to ratification/acceptance/approval/reservation• Demonstrate State’s intent to examine it domestically, commits to seeking ratification• Doesn't create binding legal obligation-means no more than authentication of its

text/content

Ratification

• Procedure-international act whereby a State indicates its consent to be bound to a treaty

• Grants State the necessary time frame:- to seek the required approval on domestic level- to enact necessary legislation to give domestic effect to the treaty

RATIFICATION OF TREATY• Legislature needs to transform the content of treaty

into domestic law by:

1) Legislating terms of treaty2) Expressly adopting the treaty through relevant

statutes

Executive

• Enter treaty

Legislative

• Pass legislation

• The Executive possesses the ‘treaty-making capacity’ while the power to give legal effect domestically to treaties rests in the Legislative.

FEDERAL LAW

PUBLICATION

ROYAL ASSENT

OTHER HOUSE

THIRD READING

COMMITTEE STAGE

SECOND READING

FIRST READING

NoteIf the Yang di-Pertuan Agong does not assent to a Bill within 30 days after it has been presented to him, it shall automatically become law (Articles 66(4) and (4A))

Procedures for making Federal law Articles 66 - 68

The Malaysian Constitution Legislative Provisions

28

Passed by

Dewan Negara

Passed by

Dewan Rakyat

Assented to by the

Yang di-Pertuan Agong

Passed by

Dewan Negara

Passed by

Dewan RakyatFederal Law

1) The Geneva Conventions Act, 1962, as revised in 1993, to give legal effect to the Four Geneva Conventions for the Protection of the Victims of War of 1949;

2) The Diplomatic Privileges (Vienna Convention) Act 1966, as amended in 1999, to give legal effect to the Vienna Convention on Diplomatic Relations 1961;

3) The Carriage by Air Act, 1974, to give legal effect to the Warsaw Convention of 1929, as amended by the Hague Protocol of 1955 and the Guadalajara Convention of 1961

EXAMPLES OF MALAYSIAN STATUTES TRANSFORMING TREATIES INTO

NATIONAL LAW

4) Malaysia ratified the Convention on the Rights of Child (CRC) in 1995 to uphold its commitment to the protection and welfare of her children. - A key outcome of Malaysia’s ratification is the Child Act 2001 which forms part of the protective legal environment for children in the country.- Several initiatives have been introduced under this Act to safeguard children from violence, abuse, neglect and exploitation. - Eg, incest has been criminalised by the Penal Code, while the Domestic Violence Act protects the child against violence within the family.

International Law

Sources of International Law

Treaty Making Process

Application of Treaty in Malaysia

Examples of Malaysian Statutes

transforming Treaties into National Law

Dispute: Mode of Settlement???

DISPUTE SETTLEMENT:

ISDS?

Investment ChapterISDS (Investor-State Dispute Settlement

ISDS (Investor-State Dispute

Settlement)• The most controversial clause/provision

• A mechanism of dispute settlement between investor(s) and host-state.

• Giving right to the investor(s) to sue the host-state in breach of the terms in the Agreement (BITs, IIAs and alike).

• a common clause in any IIAs (International Investment Agreements) such as BITs (Bilateral Investment Treaties) and others.

OBJECTIVES• Developed countries do not believe in other less developed

countries’ legal system.

White people supremacy???

• to protect their investors base in foreign state from loss due to environment change i.e policy and regulatory changes.

• to find impartial system in dispute resolution (settlement).

FORUMS• The choice of forum: International Arbitration Centre e.g: - ICSID (International Centre for Settlement of Investment Dispute)- SCC (Stockholm Chamber of Commerce)- ICC (International Chamber of Commerce)- PCA( Permanent Court of Arbitration).

• ICSID is the most popular forum since 1987 (UNCTAD).

• Arbitrators?

ter

• There are 42 new cases registered in 2014.

• Since 1987 to 2014 more than 600 ISDS cases registered.

• Cases registered with ICSID are the highest (33)compared to non-ICSID.

• 6 UNCITRAL, 2 SCC, 1 ICC.

• 30 cases under BITs, 2 under CAFTA (Central America-Domician Republic- US FTA, 1 under NAFTA (North America FTA) and 1 under Canada-Peru FTA.

• Range of claim: USD 8 mil – USD 2.5 bil.

Of the 42 known new cases, 35 were brought by investors from developed countries and 5 were brought by investors from developing countries. In 2 cases, the nationality of the claimants is unknown. The most frequent home States in 2014 were the Netherlands (7 cases by Dutch investors), followed by the United Kingdom and the United States (5 each), France (4), Canada (3) and Belgium, Cyprus and Spain (2 each). This corresponds to the historical trend where developed-country investors – in particular, those from the United States, Canada and several European Union (EU) countries – have been the main users of the system responsible for over 80% of all ISDS claims.

The relative share of cases against developed countries is on the rise. In 2014, 60% of all cases were brought against developing and transition economies, and the remaining 40% against developed countries. In total, 32 countries faced new claims last year. The most frequent respondent in 2014 was Spain (5 cases), followed by Costa Rica, the Czech Republic, India, Romania, Ukraine and the Bolivarian Republic of Venezuela (2 cases each). 3 countries – Italy, Mozambique and Sudan – faced their first (known) ISDS claims in history.

GENERAL RESPONDS ON ISDS CLAUSE IN TPPA

Australia:

• Strongly oppose the proposal of inclusion of ISDS mechanism in the TPPA. One of the strongest party opposing to the inclusion.

• In 2014, Australian Senate’s Foreign Affairs, Defence and Trade Legislation Committee held a public hearings on the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014 that being introduced by the Senator for Tasmania, Peter Whish-Wilson.

• United States of America

“There have only been 13 cases brought to judgment against the United States in the 3 decades since we’ve been party to these agreements. By contrast, during the same period of time in our domestic system, individual and companies have brought hundreds of thousands of challenges against Federal, state, and local governments in U.S. courts under U.S. law…”

“We have never lost an ISDS case because of the strong safeguards in the U.S. approach.”

https://ustr.gov/aboutus/policyoffices/pressoffice/blog/2015/february/cross-post-investor-state-dispute-settlemen

• There are also who protest against it e.g Democrat Senator, Elizabeth Warren who released a letter signed by 90 Law Professors concerned about proposed ISDS in TPP and said:

“ISDS allows foreign companies to challenge American laws and potentially to pick up huge payouts from taxpayers without even setting foot in an American Court.”

• Other countries like Mexico, Peru, Vietnam and Brunei Darussalam not signatories or never ratified Convention of the International Investment Dispute Settlement.

Malaysia:

• Prof. Joseph Stiglitz, Uni. Of Columbia, Chief Economist at Roosevelt Institute & Adam Hersh a Senior Economist at Roosevelt Institute and Visiting Scholar at Uni. Of Columbia:

“International corporate interests tout ISDS mechanisms as investment-protecting, but that is sheer nonsense: they are demanding similar provisions of European countries whose legal system provides every bit as good protection for property rights as the US.

In reality they are backhanded way of undermining countries’ ability to protect the health and safety of their citizens, the environment, or even the economy…”

• Shaun Kang, a former counsel at an International Organization handling ISDS cases, as published by The Malaysian Insider Oct. 5, 2015:.

“To eliminate ISDS provisions would be detrimental to Malaysian investors, as they would be left with little or no legal recourse. ISDS provides certainty to foreign investors (and Malaysian Investors in foreign countries) that there is an avenue for legal recourse available to them in the event that their rights under the trade agreement are breached….. Reform the substance of TPP, not remove ISDS”

Issues with ISDS

Sovereignty

Impartiality/Transparency

Costs

Power

Loose/Vague rules

Inconsistency

EXAMPLES OF CONTROVERSIAL DECISION OF ICSID

Metalclad Corp v United Mexican (Award of 30 August 2000), ICSID Case No.

ARB(AF)/97/1

• American waste management co. challenged Mexican municipal, state and federal preventing it from operating a hazardous waste landfill.

• Tribunal found there is an expropriation:

• “expropriation under NAFTA includes not only open, deliberate and acknowledged takings of property, such as outright seizure of formal obligatory transfer of title in favour of the host state, but also covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use of reasonably-to-be expected economic benefit of property even if not necessarily to the obvious benefit of the host state”

• The Tribunal also found that Mexican Federal Govt had given assurance to the operation of waste management as such the investor continue to invest.

S.D MEYER V CANADA

• Claimant alleged host-state violated NAFTA

• Clause National Treatment was being violated. Banned on the PCB (Polychlorinated biphenyl) export

• Claimant alleged this is a clear discrimination against them (a US based waste management company) in Canada

• Tribunal found there is a clear breach

PROS AND CONS OF TPPA

COMPREHENSIVE MARKET ACCESS• Eliminates of reduces tariff and non tariff barriers• Create new opportunities and benefits for business, workers and consumers

REGIONAL APPROACH TO COMMITMENTS• Facilities the development of production and supply chains and standards,

facilitates cross-border integration and opens domestic markets

ADDRESSING NEW TRADE CHALLENGES• Promotes innovation, productivity and competitiveness• Addresses issues such as development of the digital economy and the role of

state-owned enterprises in the global economy

PLATFORM FOR REGIONAL INTEGRATIONA platform for regional integrationDesigned to include additional economies across the Asia Pacific region

PROS OF TPPA

Cons of

TPPA

Copyrights extension from 50

years to 120 years Jeopardize

consumer & public

interest policies

Increase price of

medicine

Investor-State

Dispute Settlement

(ISDS)

Lack of transparency

and accountability

Impact on future public procument

Restricting internet freedom

CONS OF TPPA

EFFECTS OF TPPA ON SOUTHEAST ASIA

U.S. GOODS TRADE WITH TPPA COUNTRIES, 2014

EFFECTS OF TPPA ON MALAYSIA

How will the TPPA Benefit Malaysia

• 5.6% higher GDP by 2025• 11.9% higher exports by 2025• Sectors that will benefit are textiles, apparel,

commodities and the electronic industries

Potential Negative Impact on Malaysia

• It could wreck the environment• Boosts corporate power• Limited access to information• Threatens health matters• Limits access to medicine• Local SMEs may lose out to competition

EFFECTS OF TPPA ON VIETNAM

How will the TPPA Benefit Vietnam

• Gain the most under TPP framework• Allow Vietnam to export at 0% tariff rate and

become more competitive (currently supply 34% of U.S. of apparel imports)

• Potential Negative Impact on Vietnam

• Fundamental political & economics reforms• Unroll of State-Owned Enterprise (SOE)(SOE

make-up 1/3 of Vietnam’s economy)• Promote labour rights and freedom (freedom of

association and labour union)• Illegalized use of child labour (currently 1.75

million child labour)

EFFECTS OF TPPA ON SINGAPORE

How will the TPPA Benefit Singapore

• Most trade-dependent economy• Existing FTA with most participating countries (except Canada and Mexico)• Major hub for international export Potential Negative Impact on Singapore

• Depends on maritime trade and security (cross-border labour, goods and services exchange with Malaysia)

EFFECTS OF TPPA ON BRUNEI

How will the TPPA Benefit Brunei

• Hard to measure positive effect (smallest economy of 12 nations; GDP $16 billions)• Current trade of non-oil trade very low (5%)

Potential Negative Impact on Brunei

• Issues about human rights violation due to implementation of Islamic laws

• Leverage on the side of negotiating partners

CONCLUSION• Largest deal between countries• Affects the country and also the citizen• Public-access to the negotiating text

REFERENCES• http://tppinfo.org/resources/tpp-timeline/• http://www.globalresearch.ca/the-origins-and-evoluti

on-of-the-trans-pacific-partnership-tpp/5357495• https://en.wikipedia.org/wiki/Trans-Pacific_Partnershi

p• http://leg.wa.gov/JointCommittees/LOCTP/Documents

/2012Nov14/TPP%20Presentation.pdf• http://malaysiafactbook.com/Chronology:Trans-Pacific

_Partnership_Agreement• http://malaysiafactbook.com/Trans-Pacific_Partnershi

p_Agreement• http://news.yahoo.com/12-pacific-countries-seal-huge

-free-trade-deal-130306553.html• http://www.bbc.com/news/business-34444799• http://www.mfat.govt.nz/Trade-and-Economic-Relatio

ns/2-Trade-Relationships-and-Agreements/Trans-Pacific/2-P4.php

• http://www.themalaymailonline.com/print/malaysia/tok-pa-no-penalties-if-we-pull-out-from-tppa-later

• http://www.theguardian.com/australia-news/video/2015/jul/02/the-undercurrent-tpp-icsid-tisa-ttip-video

• www.icj-cij.org• www.slideshare.net/mbl2020/the-malaysian-

constitution-2873614• http://

www.themalaysianinsider.com/sideviews/article/setting-the-record-straight-on-tpps-investor-state-dispute-settlement-shaun

• https://hacked.com/tpp-ttip-tisa-secret-trade-negotiations-threaten-government-sovereignty-individual-rights/

• https://wikileaks.org/tpp-ip3/• http://www.eurasiareview.com/09032015-wh

y-is-malaysia-so-interested-in-joining-the-tpp-analysis/