How Corporate Sovereignty Threatens The Power Of Governments To Collect And Set Taxes
from the undermining-the-rule-of-law dept
The dangers of corporate sovereignty chapters in so-called "free trade" agreements are increasingly well-known. That's especially the case for Techdirt readers, since we've been warning about this parallel legal system, which puts corporations above national laws, for well over three years. Now that the general issues of these investor-state dispute settlement (ISDS) mechanisms are widely understood, people are starting to explore more specific problems. Here, for example, is a new report from the Transnational Institute (TNI) looking at how ISDS cases limit the ability of governments to collect and even set taxes in their own lands:
Analysis of data and documents on hundreds of ISDS cases filed so far reveals that foreign investors have already sued at least 24 countries from India to Romania over tax-related disputes -- including several cases where companies have used this system to successfully challenge -- and lower -- their tax bills.
There's a particular issue faced by developing nations:
Eager to attract foreign investment, many developing countries have offered huge tax breaks to multinational companies. Governments must be able to review and reconsider their tax laws and any tax incentives they may have granted to foreign investors in the past. Tax breaks cost developing countries as much as $138bn a year, and repealing these could release much needed funding for healthcare and other critical public services.
Corporate sovereignty means that national sovereignty suffers: governments that want to remove tax breaks run the risk of punitive ISDS cases being brought against them, so often daren't try. Many nations are fully aware of this risk, and try to mitigate it with "carve-outs":
Though some of these carve-out clauses are stronger and clearer than others, they have not prevented lawyers from filing tax-related ISDS cases, and they have not prevented arbitrators from agreeing to consider them. The language in these treaties is often convoluted and sometimes contradictory, with exceptions within exceptions -- giving lawyers a lot to argue about but making it difficult for policymakers to know what actions could risk a treaty claim.
This exposes one of the fundamental flaws of corporate sovereignty. No matter how much new treaties may claim to "solve" the problems of traditional ISDS through the use of carve-out clauses, or by tweaking some of its features, arbitrators always have the last say, and can override or just ignore whatever changes have been made.
That's why there is only one solution to the many problems of ISDS: to drop it altogether, and let national courts resolve disputes. If domestic courts aren't fair or reliable enough, investors should refuse to put money into the country until they are. That will give governments a powerful incentive to fix any weaknesses in their legal systems. Corporate sovereignty clauses actually remove that pressure to improve traditional court systems, since investors won't use them and local people don't have any choice. In other words, despite frequent claims that ISDS is simply about strengthening the rule of law in countries that sign up to it, in reality, it does the opposite.
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Filed Under: corporate sovereignty, isds, taxes, tpp, ttip
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So?
It's much more elegant to create frameworks where the governments of the developed countries are responsible for breaking a few kneecaps rather than every corporation having to do it on their own. Even better if the governments of the developing countries are responsible for breaking a few kneecaps because of having a few officials sign a few dumb things in the interest of personal gains.
I think you are confusing "problems of ISDS" with "missive of the ISDS". Your proposals are tantamount to improving the effectiveness of a gun silencer by removing the hole in the middle.
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Re: So?
There is an old name for this - it is called imperialism.
You are an unreconstructed imperialist.
Is your name really David?
Or is it Clive?
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Re: So?
Megalomania is awesome isn't it?
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Re: Re: So?
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Re: Re: Re: So?
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Re:
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Assume the worst or deal with the core problem
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Re: Assume the worst or deal with the core problem
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... obviously at the expense of the local tax paying citizenry. I'm sure the locals will be thrilled.
And what do the butthurt corporations do when the locals revolt? Hasn't this has been tried before? Didn't it fail?
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Re:
They tell fibs, control the media and bribe politicians.
It works just like Orwell predicted it would.
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i hazard a guess that it was a US company/industry that invented it, so what was going to be lost and what was being taken as more important than the profits of what? health and safety of miners, perhaps? what about the local environment surrounding a chemical factory? whatever it was, it was putting people before profits and in the planet we have, just over the horizon, run by a multitude of Conservative (leaning) governments nothing is more important than 'THE FEW, MAKING THE MOST, REGARDLESS OF THE EFFECT ON THE MANY!!'
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I'm just sayin'.
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Re:
TPP will vote 'NO' on Bernie. The question is only whether he'll run out of campaign funding in the primaries or the main race. If the latter, welcome to the next Republican president, whoever wins this season's clown show.
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Shadowrun
That's all *REALLY* need to say, we just need magic, elves/trolls/orcs and dragons, and spirits.
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