Japan Press Weekly

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2016 March 30 - April 5 [ECONOMY]

ISDS provisions in TPP will cause damage to Japanese local economies

The Trans-Pacific Partnership free trade pact (TPP) will become a main focus of the Diet halfway through the 150-day ordinary session. The TPP investor-state dispute settlement (ISDS) provisions which enable corporations to sue governments will possibly bring about an unreasonable loss to not only national governments but also local governments in regard to their administration and maintenance of public services.

Tokyo University Professor Suzuki Nobuhiro said, “Protection of U.S. corporate interest from ‘discriminatory and disadvantageous treatments’ in overseas markets is the main principle of the TPP. This means that regulations on food labeling, such as a mandatory labeling of genetically modified foods, would be targeted for a lawsuit under the ISDS provisions.”

For example, Japanese municipalities’ rule of using locally or domestically grown food for their school lunch programs will be sued as discrimination against U.S. firms.

What actually happened in South Korea is that the Seoul City government had revised its ordinance requiring schools to use non-GMO products in school lunch programs before the Korea-U.S. free trade agreement came into effect in 2012. The city government found that if a U.S. company takes legal action, the city will have no chance to win. In addition to Seoul, many local governments “voluntarily” revised or abolished their ordinances in order to avoid having to engage in legal battles over what U.S. corporations call “discrimination”.

In the United States, the TPP will have an impact only on federal laws, meaning that state laws calling for the use of domestic products in public services will be exempted from targets of the ISDS mechanism. Meanwhile, in Japan, under the TPP, both the central and local governments will be obliged to invite international bids for their public works projects. If they give any preferential treatments to local businesses in the bidding process, they will face a lawsuit for unfair treatment. This will deliver a heavy blow to local economies.

Past related articles:
> Lawyers say ‘TPP conflicts with Constitution [July 30, 2013]
> US corporate interests in TPP overshadow Japan’s economy [February 22, 2012]
> ISDS enables multinationals to sue governments [December 8&9, 2011]