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Hi.
I'm Dr. Ashley Schram, deputy director of the Menzies Center
for Health Governance located within RegNet here
at the College of Asia and the Pacific.
COVID-19 has been a stark reminder
of just how globally integrated our societies and economies
have become.
We've all witnessed the chaos and anxiety associated
with uncertainties about whether those invisible supply
chains will continue to keep our shelves stocked.
And while the impact of COVID-19 on access to goods,
like toilet paper, personal protective equipment,
and our food supply has been front and center,
increased global integration has put something much less obvious
at risk--
the very measures that governments have been taking
to address this pandemic.
In time, governments could face lawsuits
from private companies for these emergency measures
to the tune of billions of dollars
as a result of our international trade and investment systems.
Here in the Menzies Center, we research the impact
of international trade and investment
on human health in terms of the types of consumer goods
that it delivers as well as the way
it regulates business actors, consumer environments,
and shapes policymaking at a national level.
So how does the trade and investment system
allow private companies to seek compensation from states
for their COVID responses?
Well, many agreements provide for something
called investor-state dispute settlement, which, at its core,
protects the rights of foreign investors
to earn profits on the investments they
make in other countries.
In the event that a government action is perceived
to violate one of those rights, then the investor
can use a system of private international arbitration
to directly sue the government.
Australia is no stranger to investor-state dispute
settlement, as this was one of the forums
that transnational tobacco companies used
to challenge the country's tobacco plain packaging
legislation in recent years.
But this system has been used by investors around the world
to challenge a wide array of public policy measures.
And when investors are successful,
it can be very costly to taxpayers.
To date, as many as 46 awards have each
exceeded $100 million US dollars in compensation
to private investors.
When national emergencies like COVID-19 arise,
governments need the autonomy to introduce policies
that increase the capacity of health care infrastructure
as well as safeguard a range of social determinants of health,
like employment, housing, finance,
as well as any actions that may limit commercial activity.
Yet we've seen legal experts across the globe
warning us we could see hundreds of foreign investors
challenging COVID-related emergency
measures using the investor-state dispute system.
For example, actions nationalizing private hospitals
may be as open to challenge as measures
to halt the spread of the virus across borders, which
have resulted in revenue losses to airlines, stopping
fee collection on private toll roads
in order to promote the movement of goods and workers,
or suspending bonuses among banking executives
to help stabilize the financial sector.
While we might like to believe that times of crisis
would be exempt from such legal challenges,
the aftermath of events like the global financial crisis
or the Arab Spring in fact shows that these events often
trigger disputes.
Argentina, for example, in 2001.
After experiencing a near total economic collapse
and profound political instability,
including a 50% fall in GDP and a succession of five presidents
in 10 days, ultimately had to respond to as many as 50
investor-state cases regarding the range of emergency measures
it took to respond to the crisis, which ended up mounting
to over 2 billion US dollars in compensation
to private investors.
At the same time, international organizations
have estimated that we'll see a drastic decline
in global foreign investment over the next year, as much
as a 40% drop.
The flow of finance across borders
is critical to economic development in many countries
and has been flagged as vital to funding the UN's sustainable
development goals.
So the challenge is to learn how to build
a balanced and fair trade and investment system,
one that encourages sustainable and ethical development
while retaining government capacity to adapt and respond
to national health and development priorities.
COVID-19 is a time to reflect on our global governance
infrastructure and ask, how do we
want to emerge from this global crisis?
Here at the Menzies Center for Health Governance,
we're studying how to reform the trade and investment
system to retain interconnectedness
and global cooperation while better supporting
human and planetary health equity.
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