US Says 'No' To Corporate Sovereignty Reform; Hungary Says 'No' To Corporate Sovereignty

from the clash-of-civilizations dept

Wed, May 13th 2015 1:00am — Glyn Moody

Last week we wrote about an attempt by the EU's Trade Commissioner, Cecilia Malmström, to "save" the corporate sovereignty chapter in TAFTA/TTIP as more people wake up to its dangers, and resist its inclusion. Along with tinkering at the edges, her proposal for reform did have one more substantive idea: to create "a permanent multilateral investment court."

The intention was presumably to address the key objections to investment-state dispute settlement (ISDS) tribunals -- that they are secret, unpredictable and have no conflict of interest rules or appeals process -- by importing some of the key strengths of traditional courts, which are open and impartial, follow precedent and allow appeals. Of course, that approach begs the question why new courts are needed at all, when national courts already exist. But it seems that we won't be having a debate on that particular issue, since the US has lost no time pouring cold water on the whole idea, as AFP reports:

A senior US official rejected Monday an EU proposal to create an international investment court that was aimed at resolving one of the disputes holding up their free trade deal.

The comments by US Undersecretary for International Trade at the Commerce Department, Stefan Selig, include the following claim: "The criticisms that they undermine governments' right to regulate, I think are just misguided," Selig said during a visit to Paris when asked about Malmstroem's proposals.
As I wrote last year, far from being "misguided," the past experience with corporate sovereignty shows that those criticisms are entirely justified. Selig then goes on to say: The United States believes the ISDS mechanism "increases the security of companies willing to make investments and arguably makes that country, whether it's the United States or any country in Europe, a more attractive investment destination."
But again, that assertion is belied by the facts. According to the European Commission's recently-updated figures, in 2013, the total US investment in the EU was €1.65 trillion; the EU investment in the US was even higher -- €1.69 trillion. The size of these numbers is the best indication that companies are more than happy to send money across the Atlantic, even without ISDS.

The US refusal even to consider a major reform of corporate sovereignty poses big problems for the EU negotiators. It's clear that the strategy was to try to win over critics of ISDS by promising that its flaws -- admitted even by the European Commission -- would be fixed through the creation of a new court. With that option no longer on the table, it looks increasingly like TTIP's ISDS will simply involve some minor tweaks.

However, last week another country was making its position on corporate sovereignty clear, reported here by the Budapest Business Journal:

Hungary is against the inclusion of the investor-state dispute settlement (ISDS) clause in the Transatlantic Trade and Investment Partnership (TTIP) free trade agreement between the United States and the European Union, [Hungary's] Foreign Ministry state secretary István Mikola said yesterday following a convention of foreign trade ministers in Brussels.

Since TAFTA/TTIP is what is known as a "mixed agreement," both the EU and all the member states must ratify it before it comes into force. If Hungary refuses to do that on the grounds that it contains ISDS, it's possible the whole deal would simply collapse (it's not clear what would happen in practice, because this is largely uncharted territory). Moreover, Hungary is not the only country that is likely to vote down TTIP if it includes ISDS: Mikola said that Hungary's views on the ISDS clause are shared by 6-7 other EU member states, but he did not name those states.
That's further evidence that the central stumbling block for TTIP is corporate sovereignty. Indeed, it seems that ISDS is fast becoming as toxic as ACTA three years ago, when politicians rushed to dissociate themselves from the idea before rejecting it completely.

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Filed Under: corporate sovereignty, hungary, isds, tafta, ttip, us

40 Comments

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Mark, 13 May 2015 @ 1:33am

EU
What'll happen is the EU will keep going until it gets the answer it wants from Hungary. Much like all its treaties that had no referendums but still got implemented when they should have failed eg Maastricht.
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Anonymous Coward, 13 May 2015 @ 1:50am

This abortion should die on the vine.
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Anonymous Coward, 13 May 2015 @ 2:15am

well here's what I'd try
Send a claim to that ISDS describing how the current fascist and undemocratic climate has made me decide not to implement my business in 'murkaa, the loss of potential profits are estimated at 2billion, please deposit on following account :D
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Anonymous Coward, 13 May 2015 @ 2:42am

Re: EU
That is going to be much more difficult in this situation. The irish referendums and the Maastricht treaty in Denmark were referendums where the governments agreed with EU and forced the (ignorant) people to agree to small changes. In this case, upwards of 7 national governments are against ISDS in an international trade agreement, several more are very concerned and to boot, the european parliament (the place killing ACTA) is more than a little skeptical about ISDS among other things. The parliament and the national governments are there to keep the commission on a leash and if they are concerned it matters a lot more than if peasants complain.
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David, 13 May 2015 @ 2:43am

Here is the U.S. position in a nutshell:
"Down yours!"

And now Stefan Selig essentially added "we don't need to sugarcoat it. It goes down anyway".

The problem with that approach is not that the EU officials, particularly the EU Commission, aren't entirely willing to lap it up.

The problem is that they'll look bad and ridiculous doing so, and the EU has nowhere near the absolute stranglehold over its constituting states and populaces that the corrupt Washingtonacracy has.

So this U.S. "jump!" command comes at a cost.
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Violynne (profile), 13 May 2015 @ 3:06am

...investment-state dispute settlement (ISDS) tribunals...

Interesting. I'm curious to how long the word "dispute" was changed from "issue".
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Anonymous Howard (profile), 13 May 2015 @ 3:19am

Re: well here's what I'd try
You're under the impression that ISDS is for anyone but large multinational corporations.
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Anonymous Howard (profile), 13 May 2015 @ 3:24am

Doing good for the wrong reason
I'm pleasantly surprised that this piece of shit government scum stood up to something.
My bet is they do it because of their anti-corporation standing and russian affiliation rather than the danger for the citizens it pose, but at least we have some good out of it.
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David, 13 May 2015 @ 3:38am

Wrong reason?
What's wrong with rejecting ISDS because of "anti-corporation standing" and "Russian affiliation"?

In the U.S., everything is done to make it easier for money to buy power and screw people. That's capitalism. And it's what buys stuff like ISDS in the first place.

So why are those kinds of reason "right"? "anti-corporation standing" and "Russian affiliation" are essentially leanings that have ultimately a base in the interests of people, filtered through some ideological/national framework.

Capitalism have a bas in the interests of money and rich people and existing power, filtered through some ideological/national framework. Why is the latter a "right reason", and the former a "wrong reason"?

Because there is something inherently better with the U.S.A. rather than Russia?
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Anonymous Coward, 13 May 2015 @ 3:45am

Re: Wrong reason?
The main difference between left leaning and right leaning governments is that with tight leaning governments, corporation own the government, and with left leaning governments, the governments own the corporations. In both cases, the governments act to make the rich richer.
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Anonymous Coward, 13 May 2015 @ 4:13am

Oh great, now we can listen to US politicians and the WashingtoPost to be "concerned about Democracy in Hungary" again...
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Anonymous Coward, 13 May 2015 @ 4:36am

Re: Re: Wrong reason?
How silly, it's one or the other eh?
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Ninja (profile), 13 May 2015 @ 4:42am

Re:
Expect these naughty Hungarians to be in the next special 301 report alright. Dangerous fellas.
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David, 13 May 2015 @ 4:52am

Re: Re: Wrong reason?
It's more like the capitalistic governments act to make the rich more powerful, and the "communist" ones act to make the powerful more rich. But it's easier to rid oneself of people rather than money.
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Anonymous Coward, 13 May 2015 @ 4:58am

Re: Re: Re: Wrong reason?
So long as people treat left and right as the means of selecting politicians, governments will enact more and more laws until they become totalitarian dictatorships. It is time to start electing people who will role back, but not eliminate, the role of the state in everyday life.
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Just Another Anonymous Troll, 13 May 2015 @ 5:12am

Question: What if having a law damages the profits of a large corporation, but not having it damages the profits of another equally large corporation? Does the government just step down and install the chairmen of the board of the corporations as joint dictators?
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David, 13 May 2015 @ 5:29am

Re:
The chairmen of the board of the corporations have more important things to do than dicking around in Washington. It's much cheaper to buy a controlling interest in the government.
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Anonymous Howard (profile), 13 May 2015 @ 5:44am

Re: Wrong reason?
What's wrong with rejecting ISDS because of "anti-corporation standing" and "Russian affiliation"?

What's wrong? As I told you: the reason.

The right reason is "because we won't let corporations fuck the people."

The main difference can be illustrated by another action of the govt, done again for advantages and in spite of corporations: all big stores must close on sunday. We did not want it. we do not profit from it. But then, no one asked "the people" of what they think of it.

Also, I did not bring in capitalism vs communism (?? there is no communism beside small tribes). I don't think either works correctly.
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Anonymous Howard (profile), 13 May 2015 @ 5:48am

Re: Re:
What if I tell you, we can legally download music and movies as a compensation for blank copy levies? (of course there is no end of governmental stupidity, so in theory you can't use bittorrent, as uploading is still illegal -.-)

Also, I'd take the special 301 badge of honor any time instead of DemocracyTM USA style.
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Anonymous Coward, 13 May 2015 @ 6:17am

Re: Wrong reason?
you are a tool.

It's not capitalism you twit... its corruption. There are a lot of non-capitalistic economies that have done, did, and are doing just exactly what you are accusing capitalism of.

People like to blame objects and nouns for their problems. Like, guns kill people, and religion is the cause for humanities woes. Human will corrupt anything, and you are living proof of that corruption because you are corrupting public opinion of an idea.

Marxism, Socialism, Capitalism, whatever-ism. They all have their merits, it is the evil ignorant turds that get in charge and fail each and every time to recognized what the true problem is. Humans! If you were in power I bet you would be the very thing you espouse your hate for because you are just that ignorant!
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Teamchaos (profile), 13 May 2015 @ 6:47am

Re: Re: Re: Re: Wrong reason?
It is time to start electing people who will role back, but not eliminate, the role of the state in everyday life.

I agree. But very few folks will agree on the appropriate role of the state. I've argued for limited government in the context of net neutrality and gotten fairly well shouted down in this forum, so it seems most tech dirt posters believe that the government should regulate commerce as to protect us from corporate greed. I know just as many folks that would argue that government regulations are choking our economy. Everybody wants laws passed that protect their position.

Any suggestions as to how we find folks to vote for that support rolling back the role of government in our everyday life without bias one way or the other?
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David, 13 May 2015 @ 6:48am

Re: Re: Wrong reason?
Well, capitalism is the nuclear option of government with regard to its susceptibility to corruption. It is designed to blow up big scale. It's the "greed is controllable as long as it is our superior breed of men at the helm" option.

That does not mean that you can't let greed blow up other political/economical systems. But the fallout tends not to be global scale like that of the large human-driven catastrophes fed by monetary interests.
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Anonymous Coward, 13 May 2015 @ 7:06am

Re: Re: Re: Re: Re: Wrong reason?
Is it really considered to be "government regulation" when the government stops corporations from screwing everyone?

Or is it part of a system of law enforcement?

Supposedly, laws are put in place for the benefit of society - but as we all know this is a very cruel joke.
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Anonymous Coward, 13 May 2015 @ 7:10am

Re:
Answer: The dueling corporations will mobilize their merc armies and do battle, most likely in some BFE place where the media is not allowed.
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Anonymous Coward, 13 May 2015 @ 7:18am

Re: Re: Re: Re: Re: Wrong reason?
The one area the state does have a role in is protecting people from is monopoly corporations and cartels. Title ii is such an instance, in that it allows the prevention of corporations turning the Internet into cable TV V2 by selecting what sources of content they allow over their connections. If you have lots of small companies, and new players can enter the market easily, you will have a reasonably fir market. When however a few corporations can dominate a market, and it is it reasonable for people to go to several at the same time, that is utilities and the like, then some regulation is needed to ensure that the people get the service they want, rather than the service the corporations wish to offer.
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Anonymous Howard (profile), 13 May 2015 @ 7:44am

Re: Re:
hire shadowrunners to sabotage each others operations.
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Baron von Robber, 13 May 2015 @ 7:59am

Re: Re: Re:
Jack in, Chummers.
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Padpaw (profile), 13 May 2015 @ 8:28am

Easier to enslave your citizens if you allow for corporations(who bribe our supposedly non treasonus representitives) to have rights that supercede the average citizen.
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Teamchaos (profile), 13 May 2015 @ 11:22am

Re: Re: Re: Wrong reason?
Well, capitalism is the nuclear option of government with regard to its susceptibility to corruption. It is designed to blow up big scale. It's the "greed is controllable as long as it is our superior breed of men at the helm" option.

Sorry, but no. Capitalism (which is not a form of government) leads to far less corruption than communist/fascist governments. As for "large human-driven catastrophes" how many people did Mao, Stalin, Hitler, and the Khmer Rouge kill?
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John Fenderson (profile), 13 May 2015 @ 11:41am

Re: Re: Re: Re: Wrong reason?
"Capitalism (which is not a form of government) leads to far less corruption than communist/fascist governments."

I have never seen even the tiniest hint that this is a true statement.
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Zonker, 13 May 2015 @ 11:54am

The United States believes the ISDS mechanism "increases the security of companies willing to make investments and arguably makes that country, whether it's the United States or any country in Europe, a more attractive investment destination."
This is precisely the problem with ISDS: unelected company executives and investors do not and should not have a right to risk free investment over the peoples right to an elected government enforcing the laws they or their representatives put in place.

If I were to gamble on starting a small business in the US and I fail, nobody should bail me out or repeal any law that prevented me from making a profit. Why then should a multinational corporation be protected if they take a risk on opening a branch in Europe or China?

Under ISDS, what would stop China from deciding to open sweatshops here in America and suing our government over minimum wage, child and fair labor laws, and minimum safety standards? These all interfere with Chinese factories ability to make a profit above all else. Our health, safety, and quality of life would suffer and we would be powerless to stop it as our votes would mean nothing. Want the China smog clouds to spread over the continental US? ISDS would likely eliminate all the environmental controls that prevent it.

Libertarianism is a fine ideal, but a working government is meant to be a tool of the people to regulate the bad behaviors of the few for the benefit of all society. A balance between regulation and freedom is what is needed, not a shift to either extreme.
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John Fenderson (profile), 13 May 2015 @ 11:59am

Re:
Precisely.

Such protection is also unnecessary. If a nation behaves in a way that displeases (or even cheats!) outside investors, then there will be fewer outside investors. If the nation wants to encourage outside investment, then it will alter its policies to do that.

Either way, the choice remains exactly where it should be: with the nations themselves. ISDS inverts that situation and deprives nations of their right to self-rule.
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Teamchaos (profile), 13 May 2015 @ 12:17pm

Re: Re: Re: Re: Re: Wrong reason?
I'd suggest looking at a list of the least and most corrupt governments. It's more than a tiny hint.
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John Fenderson (profile), 13 May 2015 @ 1:16pm

Re: Re: Re: Re: Re: Re: Wrong reason?
I'm still not seeing it. Are you perhaps confusing "capitalism" with types of governments?
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Teamchaos (profile), 13 May 2015 @ 1:31pm

Re: Re: Re: Re: Re: Re: Re: Wrong reason?
Capitalism is not a form of government (as stated that in my original post).

Just look at the index of the most corrupt countries, North Korea tops the list, or the countries most likely to win business abroad by paying bribes (Russia and China top that list).

The US isn't actually that corrupt as compared to the rest of the world.
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John Fenderson (profile), 13 May 2015 @ 2:03pm

Re: Re: Re: Re: Re: Re: Re: Re: Wrong reason?
What I see in that list is a difference in forms of government. The list itself does not indicate that it is the presence or lack of capitalism.

Yes, there are many nations that are more corrupt than the US in some ways, but it's not true to say the US isn't very corrupt. The primary difference is one of style: in the US, we've institutionalized and legalized the corruption. In a sense, that's an even greater level corruption than nations that do it with less finesse.
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Anonymous Coward, 13 May 2015 @ 5:58pm

Re:
What if having a law damages the profits of a large corporation, but not having it damages the profits of another equally large corporation?
The government just uses taxpayer money to compensate each company for a projected decade-worth of profits in the presence/absence of the law... and then passes the law with a well-crafted loophole that allows both corporations to operate as desired. Everybody wins!
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Anonymous Howard (profile), 14 May 2015 @ 5:20am

Re: Re: Re: Re: Re: Re: Re: Re: Re: Wrong reason?
That's gold.

"We are not corrupt, because the first thing we did is we made our corrupted officials legalize further corruption"
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Pragmatic, 14 May 2015 @ 7:44am

Re: Re: Re: Wrong reason?
^THIS. They are two sides of the same coin, so reject them both! This does NOT mean that there is only one coin, or that there are no other options.

We need to sit down and discuss what those options actually are instead of riding the left-right see-saw and wondering why nothing seems to change.
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Pragmatic, 14 May 2015 @ 7:46am

Re: Re:
Thank you both. :)
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