Separate Comments of TEPAC Members on the Investment Chapter of the U.S.- Australia Free Trade Agreement

This document consists of separate comments submitted by four members of the Trade and Environmental Policy Advisory Committee (TEPAC) regarding the investment chapter of the U.S.-Australia Free Trade Agreement (FTA). The authors express approval that the agreement lacks an investor-state dispute mechanism but argue that the substantive investment provisions remain problematic, fail to comply with the Trade Act of 2002's "no greater substantive rights" mandate, and pose threats to environmental regulation and public governance.

• The authors approve of the U.S.-Australia FTA investment chapter's lack of an investor-state dispute mechanism, arguing that relying on domestic courts and state-to-state dispute settlement better balances investor rights against the public interest and supports the development of national legal regimes.
• The authors contend that the agreement violates the Trade Act of 2002, which mandates that foreign investors not be granted "greater substantive rights" than domestic investors under U.S. law. They argue this is because the agreement uses international law concepts and subjective standards, such as "fair and equitable" treatment, which do not exist in U.S. law and are subject to interpretation by ad hoc panels not bound by U.S. Supreme Court precedent.
• The document identifies several flaws in the expropriation provisions, noting that while the removal of "tantamount to" language is an improvement, the agreement fails to incorporate critical U.S. legal principles. Specifically, it omits the requirement that a governmental action must permanently interfere with a property in its entirety to be a taking and fails to distinguish between land and personal property.
• The authors argue that the "fair and equitable treatment" standard is dangerous to good governance because it is inherently subjective and could allow arbitral tribunals to second-guess governmental actions—including legislation and court decisions—without the limits found in U.S. law, such as the Administrative Procedure Act's "arbitrary or capricious" standard.
• The authors criticize the agreement for lacking a general environmental exception in the investment chapter and for failing to clarify how environmental criteria can be used to distinguish between investors in "like circumstances" analysis, which they view as a threat to public interest policies.
• The authors state there is no evidence that investment rules are necessary for bilateral relations with Australia, noting a lack of public information suggesting Australia has mistreated U.S. investors or that its judicial system is incapable of resolving investor complaints.
• The document highlights an imbalance in international economic law where corporate investors are granted explicit rights and enforcement mechanisms, while citizens are provided no equivalent enforcement mechanism, nor are there required minimum standards of corporate conduct for investors acting abroad.

APA

Butler, W., Karpatkin, R. H., Magraw, D., & Zaelke, D. (2004). Separate Comments of TEPAC Members on the Investment Chapter of the U.S.- Australia Free Trade Agreement. Center for International Environmental Law. https://www.ciel.org/wp-content/uploads/2015/05/Tepac_Comment_9Mar04.pdf

Chicago

Butler, William, Rhoda H. Karpatkin, Daniel Magraw, and Durwood Zaelke. Separate Comments of TEPAC Members on the Investment Chapter of the U.S.- Australia Free Trade Agreement. Center for International Environmental Law, 2004. https://www.ciel.org/wp-content/uploads/2015/05/Tepac_Comment_9Mar04.pdf.

Wikipedia

{{cite press release |last1=Butler |first1=William |last2=Karpatkin |first2=Rhoda H. |last3=Magraw |first3=Daniel |last4=Zaelke |first4=Durwood |title=Separate Comments of TEPAC Members on the Investment Chapter of the U.S.- Australia Free Trade Agreement |publisher=Center for International Environmental Law |date=9 March 2004 |url=https://www.ciel.org/wp-content/uploads/2015/05/Tepac_Comment_9Mar04.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{butler2004separate, author = {Butler, William and Karpatkin, Rhoda H. and Magraw, Daniel and Zaelke, Durwood}, title = {{Separate Comments of TEPAC Members on the Investment Chapter of the U.S.- Australia Free Trade Agreement}}, publisher = {Center for International Environmental Law}, year = {2004}, month = mar, url = {https://www.ciel.org/wp-content/uploads/2015/05/Tepac_Comment_9Mar04.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }