Posts Tagged ‘Investor-State Appeals’

Pushing back against pro-corporate treaties

May 6, 2013


Last month representative of 12 Latin American governments met in Guayaquil, Ecuador, to talk about what to do about trade treaties that give private business the right to appeal to international tribunals to overturn laws and court decisions for the protection of workers, consumers and the public interest.

Such provisions are part of the North American Free Trade Agreement and of numerous bilateral agreements between the United States and foreign governments.   These treaties not only give them the right to appeal to a tribunal of foreigners to overturn a nation’s laws, but to collect damages for loss of “expected profits.”   Only investors have the right of appeal under these treaties.  Labor unions and citizens groups do not.  As Public Citizen reported:

Many of the other countries present have also faced a taxing litany of investor-state cases in recent years:  Mexico (e.g. losing $170 million in a NAFTA-created tribunal to the same U.S. agribusinesses that, under the same NAFTA, displaced over two million farmers), Argentina (e.g. losing a slew of cases to foreign financial firms for using financial regulations to mitigate the country’s 2001 financial crisis), Guatemala (e.g. losing $13 million to a railroad company that failed to build a railroad because the tribunal thought that the government had failed to fulfill the company’s expectations), etc.

via Eyes on Trade.

These “investor-state” provisions are being used more and more.   Recently a company appealed Quebec’s moratorium on hydraulic fracturing for natural gas to a NAFTA court.   Lone Pine Resources, a company incorporated in Delaware and headquartered in Calgary, Alberta, has asked for $250 million to compensate for its time and expense in obtaining necessary permits and approvals for hydrofracking.  Under the treaty, the appeal must go to binding arbitration to a three-person panel of professional arbitrators in a hearing closed to the public.   If Lone Pine wins, this would have grave implications for the ability of New York state or any other North American government to regulate hydrofracking.

Red bar is cases before International Center for Settlement of Investment Disputes.  Grey bar is other cases.  Source; UNCTAD

ICSID is the International Center for Settlement of Investment Disputes.

Barack Obama in his 2008 Presidential campaign promised to renegotiate NAFTA so as to give better protections for labor and the public interest, but as President, he did not make even a token effort to do so.   Instead his administration is embarked on negotiations for a new Trans-Pacific Partnership agreement and a new agreement with the European Union which would lock in investor rights to appeal national laws.

I don’t think global corporations need the benefit of special protection under international law.   If corporate executives feel their company is treated unfairly by a government, they have the power to simply cease doing business there.  Public Citizen’s Global Trade Watch organization quoted reports that there is no evidence that investor-state treaties increase the amount of foreign investment in a country.

As a result of the Guayaquil meeting:

At the end of the day, seven of the governments present signed a declaration to coordinate efforts in seeking to replace the investor-state regime with an alternative investment framework that respects sovereignty, democracy, and public well-being.  They announced the launch of an International Observatory, a intergovernmental commission based in Latin America to audit investor-state tribunals, draft alternative investment agreements, and collaborate in strategies for reform. … …  Representatives from the remaining five governments participated as observers and are now taking the declaration back to their capitals to discuss joining the emerging Latin American coalition.

via Eyes on Trade.

I hope something comes of this.   It is U.S.-based corporations and the corporate-influenced U.S. government that are pushing for unequal trade treaties.  They do not benefit the American people.