Investor-state dispute settlements (ISDS) have been around for over fifty years. Originally meant to protect investors from losses due to government actions – what may have seemed a good idea at the time has spiralled out of control with international trade deals like NAFTA, CETA, TPP and TTIP. They have now become a means of transferring even more wealth and power from ordinary taxpayers to the corporate sector. There are now, unbelievably, over 3200 trade treaties worldwide containing ISDS provisions.
ISDS means that corporations can sue governments of other countries if they can show that their actions have reduced returns for their shareholders. In the 21st century, it seems that nothing will be allowed to get in the way of corporate profits – not environmental protection, not the NHS, not health and safety legislation, not communities, not protecting small businesses, not democracy – nothing. Australia introduces plain packaging for cigarettes, they get sued by Philip Morris. That’s the way the world is going unless we oppose treaties like TTIP. You won’t read about this in the corporate media, because the corporate media is part of the corporate sector – why would they alert the public to the dangers of TTIP, in terms of democracy and sustainability, when they are set to gain from it?
Recently, President Obama has disallowed the Keystone XL pipeline that was due to bring Canadian tar sands (an environmental nightmare that we’ll go into another time) down into the US. The Canadian company involved, TransCanada, is suing the US government (and so ultimately, US taxpayers) for $15 billion to cover lost profits from the pipeline. TransCanada is able to do this via the NAFTA trade treaty, and it’s interesting to note that a TransCanada director is an ex-NAFTA negotiator. The people who make our policies and laws drift between government office and the boards of corporations in a weird, undemocratic, corrupt Neverland that few understand – but when corporate directors negotiate treaties that affect them directly (which happens all the time), I think we can safely say that Western ‘democracy’ is a fantasy.
Ironically, Canadian taxpayers are themselves facing almost £3 billion of corporate claims against their democratic decisions to restrict or ban carcinogens in fuel, pesticides and fracking.
Often, merely the threat of a lawsuit will mean that governments will steer away from legislation that would protect the environment or the public. This is a case of getting our priorities very wrong, I think. Here are Claire Provost and Matt Kennard in the Guardian.
Investors have used this system not only to sue for compensation for alleged expropriation of land and factories, but also over a huge range of government measures, including environmental and social regulations, which they say infringe on their rights. Multinationals have sued to recover money they have already invested, but also for alleged lost profits and “expected future profits”. The number of suits filed against countries at the ICSID is now around 500 – and that figure is growing at an average rate of one case a week. The sums awarded in damages are so vast that investment funds have taken notice: corporations’ claims against states are now seen as assets that can be invested in or used as leverage to secure multimillion-dollar loans. Increasingly, companies are using the threat of a lawsuit at the ICSID to exert pressure on governments not to challenge investors’ actions.
Although corporations can’t force governments to change their laws (but who knows what the future will bring – see the Global Redesign Initiative), the threat of huge claims and the fact that their assets can be seized abroad are enough to make governments think very carefully before introducing legislation in the first place. So we already have a process (apart from the usual political donations, lobby industry and the ‘revolving door’) in which powerful financial interests can directly influence the decisions of elected governments. We are headed more and more towards a corporate rather than a democratic world.
You’ll hear the argument that treaties including ISDS provisions attract investment into a country – but Brazil has never signed up to one of these treaties, and yet has no problem attracting investment
ISDS is very lucrative for corporate lawyers (legal fees average around £8 million per case, and arbitrators charge around £3000 per day plus expenses), but very bad for you, if you’re a taxpayer.
TTIP negotiations are taking place in secret, so I suppose it’s no surprise that, from personal conversations with politicians and from their outpourings in the media, it’s pretty clear that many, if not most of them, have no real idea about the implications of TTIP. Make sure you do.
Get involved in the fight against TTIP here.
If you are a member of a community group and would like an expert on TTIP to come and give a talk to your group, let me know – [email protected]
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1screenbeetle January 18th, 2016
I heard a very good Radio 4 documentary on this early last year. At the time of writing it is still available here: