As you surely know, the Economist is a true right-wing pro-globalism pro-free trade liberal newspaper/magazine. And yet, they are sceptical about the EU-US trade deal under negotiations known as TTIP.
In an article published on 11 October 2014, the Economist looks at a very specific aspect of TTIP as well as most international trade deals: ISDS. ISDS stands for Investor-State Dispute Settlement. It is an arbitration mechanism that is integrated into trade agreements in order to protect investors from profit losses. In other words, it is a scheme through which investors – read companies – can claim compensations by suing Governments when the former deems that they have lost profit because of actions taken by the latter.
Here are a few recent noteworthy cases:
– Gas and petroleum firm Lone Pine Resources seeks out USD 250 million from Canada after Quebec voted a moratorium on fracking
– Swedish energy company Vattenfall is suing Germany for USD 4.7 billion after the German Government voted the phase-out its nuclear program after the Fukushima incidents
– Cigarette giant Philip Morris is requesting billions from countries such as Uruguay and Australia because of the states’ cigarette package reforms
Using a chart from UNCTAD (United Nations Conference on Trade and Development), the newspaper reminds its readers that ISDS peaked in 2012 when it reached 59 cases. Can you imagine? What’s unbelievable is that those claims are made in one direction only: by international corporations against States. Governments can only defend themselves since ISDS schemes are made to protect investors. Even more unbelievable, but most of all scary, is the fact that an investor can sue a Government because it may suffer losses as a result of a new reform. The 3 cases listed above are clear examples of that. There is definitely something wrong when a company has the possibility to sue a Government after the latter has chosen to defend the environment, consumers’ or workers’ rights. Should the Government be found “guilty” and decide to pay, they would naturally use public budget money, our taxpayers’ money!
The article starts in perfect sarcastic fashion and says “If you wanted to convince the public that international trade agreements are a way to let multinational companies get rich at the expense of ordinary people, this is what you would do: give foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever a government passes a law to, say, discourage smoking, protect the environment or prevent a nuclear catastrophe. Yet that is precisely what thousands of trade and investment treaties over the past half century have done”.
Perfect summary of what ISDS schemes are for and why we should fight them or any trade deal that integrates those mechanisms such as TTIP!
The Economist, ISDS The Arbitration Game – http://www.economist.com/news/finance-and-economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration
CBC News, Ottawa sued over Quebec fracking ban – http://www.cbc.ca/news/business/ottawa-sued-over-quebec-fracking-ban-1.1140918
TNI, The German Nuclear Phase-Out Put to the Test in International Investment Arbitration? – http://www.tni.org/files/download/vattenfall-icsid-case_oct2013.pdf
UNCTAD, Recent Developments in Investor-State Dispute Settlement (ISDS) – http://unctad.org/en/publicationslibrary/webdiaepcb2014d3_en.pdf