The Philip Morris lawsuits against Australia and Uruguay in the early 2010s highlighted the need to reform international investment agreement (IIA) practices to ensure that governments do not give up their regulatory autonomy for foreign investment. We undertook a policy analysis to reveal how interests, ideas and institutions shaped reform in IIA treaty practice to protect health policy autonomy in Australia and Uruguay after the Philip Morris investor-state dispute settlement cases. Arbitration appears to have had different effects on how the two governments approach IIAs. Interest-based, ideational and institutional conditions at play in Australia and Uruguay help explain this phenomenon: differently perceived risks and benefits arising from the different economic contexts and consequently negotiating powers, varying policy paradigms that shaped domestic negotiations and distinct international institutional networks the two countries are members of and facilitated policy diffusion. These conditions shaped whether there was enough political will to overcome path dependency and adopt stronger health safeguards. We found that a power imbalance between negotiating countries may trump efforts to adopt health safeguards. It is vital that more powerful governments adopt a paradigm shift that frames investment policies as tools to drive progress in social and environmental dimensions in addition to economic domains.
Policy implications
- Policymakers are encouraged to not to wait for investor-state dispute settlement cases to drive reform. Arbitration cases are important to question the legitimacy of dominant international investment policy paradigms and practices, but the review and renegotiation of current IIAs are recommended before arbitration. International organisations may help with providing the necessary technical expertise needed for these reforms.
- Assessing economic context, negotiating powers and dominant policy paradigms can help policymakers to develop strategies to adopt stronger health safeguards in IIAs.
- Governments need to invest in building technical capacity among treaty negotiators and public health policymakers to understand the nuances of treaty text drafting. Cross-sectoral collaborations can help maintain political momentum, and policymakers, civil society organisations and academics should coordinate advocacy efforts to ensure that the adoption of strong health safeguards remains a political priority.
- Countries with greater economic size and negotiating power should exercise leadership by championing the adoption of stronger health safeguards in international investment agreements. These countries have more responsibility for advancing strong health safeguards because their treaty practices set precedents and influence global norms.
Photo by 🇻🇳🇻🇳Nguyễn Tiến Thịnh 🇻🇳🇻🇳