South Africa Plans To Terminate And Renegotiate Treaties That Include Corporate Sovereignty
from the fair's-fair dept
Despite the growing evidence that corporate sovereignty clauses in international treaties pose considerable risks to nations that sign them, such "investor-state dispute settlement" (ISDS) mechanisms are present in both TPP and TAFTA/TTIP -- at least as far as we know: it's hard to be sure given the obsessive secrecy surrounding them.
South Africa has experienced first hand the reality of those bland-sounding systems and the behind-closed-doors tribunals that implement them. Here's what happened when it set about transforming the country after apartheid, as this column on the South African Independent Online site explains:
One would assume that no nation state would have the audacity to file such a [ISDS] claim against a post-apartheid country that has been widely held up as a model for the world. That, however, didn't stop European firms from filing claims under their bilateral investment treaties. Worse, they went right at the core of South Africa's post-apartheid transformation plan.
Allowing external investors to dictate its social policies was unacceptable, and South Africa decided to review its other investment agreements to see if there were dangers there too. The problem turned out to be systemic:
The reason the country was taken to these private tribunals was an attempt to shoot down South Africa's policy to seek greater equality in its lucrative mining sector. South Africa had required that these companies be partly owned by "historically disadvantaged persons".Bilateral investment treaties, the review found, "pose risks and limitations on the ability of the government to pursue its constitutional-based transformation agenda".
The dogma is that without such bilateral treaties and their guarantees of corporate sovereignty, external investors would be reluctant to invest in a country. But that turns out not to be true:
Since this review South Africa has further concluded that "bilateral investment treaties were now outdated and posed growing risks to policymaking in the public interest". On that basis, the government has recently moved to terminate many of its bilateral investment treaties.South Africa actually receives far more capital inflows from nations with which it does not have bilateral investment treaties than from nations with which it has a treaty.
Therefore, renegotiating them should not cause capital flight.
Freed from the necessity to accept whatever terms other countries might seek to impose on it, South Africa is now able to renegotiate bilateral agreements that are fair and that preserve its right to pass laws as it sees fit, unconstrained by legal threats from foreign investors. The Independent Online article points out:
South Africa's efforts should not be seen in isolation. India is also undergoing a national review of its bilateral investment treaties. A group of 12 Latin American nations has recently convened to rethink the benefits of bilateral investment treaties, and the subject is under discussion at the [African Union].
If that proves to be the case, it could be that those countries signing up for one-sided and inequitable ISDS clauses in TPP and TAFTA/TTIP will come to regret not choosing to preserve their sovereignty as South Africa has done.
Brazil, a country that did its homework ahead of time and does not negotiate bilateral investment treaties, is putting forth an alternative model for negotiating treaties that may serve as a template for others.
Over the next several years, we will thus see an increasing number of nation states withdrawing from their investment treaties and offering more balanced alternatives.
Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: corporate sovereignty, investor state dispute settlement, isds, south africa, tafta, tpp, treaties, ttip
Reader Comments
Subscribe: RSS
View by: Time | Thread
Canada
[ link to this | view in chronology ]
NSA Files
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
That should be considered an honor. An indication that you're doing fine.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Kittens pretending they are lions are not threatening.
[ link to this | view in chronology ]
Brazil refusal of bilateral investment treaties
If we could streamline our tax code, there would be way more investors in Brazil.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
btw - is this illegal yet?
[ link to this | view in chronology ]
/rhetoric
[ link to this | view in chronology ]
Terminate And Renegotiate
just say'in.
[ link to this | view in chronology ]
Do you honestly believe that end result will be any different because some parts of the process are slightly different ?
A treaty is a AGREEMENT between the sides involved, how you reach that agreement is probably not going to change the substance of that agreement.
But if it fill this blog up all the better I say,, more page hits, more $$$$$
[ link to this | view in chronology ]
Re:
How's living under the rock? Do you get obamacare?
[ link to this | view in chronology ]
Re:
In this case those countries/companies who thought that they had the upper hand are likely to find out the hard way that that is no longer true, due to the fact that other countries not bound by such restrictive treaty/agreement wording are not only equally profitable for South Africa, but actually more profitable, so like it or not the treaty/trade agreement negotiations this time around are likely to be noticeably different than they were the first time, and not in the foreign company/county's favor.
[ link to this | view in chronology ]
Wish we did this, too
[ link to this | view in chronology ]
Who's America?
I would chance this to say "businesses that have great influence with the U.S. Executive and Congress". The vast majority of America, meaning it's citizens, see no gain and considerable harm from these deals. It is very much a corporate/10%er thing.
[ link to this | view in chronology ]