Study Shows Risks Of Including Corporate Sovereignty In The 'Other' Huge Asian Trade Deal, RCEP

from the watch-out-US dept

Mon, Dec 12th 2016 5:17pm — Glyn Moody

As we've noted, TPP is unlikely to come back from the dead, despite what some seem to think or hope. For example, the Japanese government has decided to go ahead and ratify TPP anyway. That seems foolish, since it has just thrown away most of its bargaining counters for other trade negotiations, in what amounts to an act of political seppuku. As Sean Flynn points out, Japan has form here, since it also ratified the infamous Anti-Counterfeiting Trade Agreement (ACTA), just as pointlessly.

One of the most important trade deals still under active discussion is the Regional Comprehensive Economic Partnership (RCEP). Techdirt first wrote about this 18 months ago, while recently we noted that many of its provisions are even worse than those in TPP. One aspect of RCEP that has received little attention so far is the corporate sovereignty chapter. The Transnational Institute (TNI) has put together a useful document looking at what it calls the "hidden costs" of including investor-state dispute settlement (ISDS) in RCEP. It provides an excellent summary of corporate sovereignty activity in Asia that complements a 2014 study from Friends of the Earth Europe, which looked at the same "hidden costs" of ISDS in Europe. Here are a few of the main findings for RCEP nations (pdf):

50 investment arbitration cases already filed against 11 RCEP (Regional Comprehensive Economic Partnership) countries since 1994, over 50% of which have been filed after 2010.

India alone has been the target of 40% of the cases filed against RCEP countries.

Foreign investors have claimed at least 31 billion USD from RCEP countries. Given the secrecy surrounding investor-state dispute settlement (ISDS) proceedings, this could be much more. This amount is 7 billion USD less than India's entire health budget for 2015.

Of the 31 billion USD claimed by investors, 81% has been claimed from just four countries, India, South Korea, Australia and Vietnam.

The largest known amount paid to a foreign Investor by an RCEP country is 337 million USD as part of the settlement in the Cemex versus Indonesia case.

36% of cases against RCEP countries concern environmentally relevant sectors.

RCEP countries have been sued for measures taken to protect public health, adjust corporate taxes, promote industrialisation, and review contracts acquired through allegations of corruption, among others.

The study brings together much-needed data on corporate sovereignty cases in Asia. It also points outs why RCEP countries would be very unwise to sign up to an ISDS chapter in the deal: Including the harmful ISDS clause in the RCEP trade agreement under negotiation contributes to cementing investors' rights and expanding the scope of private arbitrators' power. RCEP will lock in place this system of privatised justice. Governments will find it much more difficult to withdraw their commitments to the rights accorded to foreign investors in RCEP than in Bilateral Investment Treaties, because they would need to put an end to the whole agreement and not just the sections on investors' rights.
It's a general problem with ISDS provisions in trade deals: they are almost impossible to cancel, however much harm they end up causing. The bigger the deal, the greater the lock-in. This aspect underlines once more how corporate sovereignty comes at the expense of national sovereignty.

Finally, there's one other interesting nugget that Techdirt readers may find of note. According to the RCEP report, over two-thirds of all ISDS cases against RCEP nations have come from Europe. At the moment, there are only a few minor trade deals that allow European companies to sue the US in ISDS tribunals, in theory at least. But if some kind of post-Trump TTIP 2.0 were agreed -- always a possibility despite the anti-trade deal rhetoric -- and it included a corporate sovereignty chapter, the US might find itself on the receiving end of a similar barrage of costly lawsuits that will reduce its sovereignty at both a national and local level.

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Filed Under: asia, china, corporate sovereignty, isds, rcep, trade deals

13 Comments

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techie1 (profile), 12 Dec 2016 @ 5:29pm

ISDS question
Glyn,
When an ISDS tribunal renders a decision in favor of a plaintiff/litigant against a nation-state government, what is the recourse or method of payment collection? Does the WTO or other transnational entity obtain money from the sovereign nation's treasury?
Sincerely,
"techie1"
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Anonymous Coward, 12 Dec 2016 @ 6:25pm

Re: ISDS question
The nation whose corporation won the settlement that isn't getting paid send in men with guns. That is how all laws are enforced.
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Glyn Moody, 13 Dec 2016 @ 1:19am

Re: ISDS question
My understanding is that if a nation refuses to pay, the plaintiff is able to apply to courts in other countries that recognise the ISDS court's decision to seize assets of the government that loses. Here's an interesting story on this issue involving Russia:

https://www.euractiv.com/section/europe-s-east/news/russia-prepares-to-seize-western-assets/
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Anonymous Coward, 13 Dec 2016 @ 2:46am

India and China do not have the fundamental situation of their rent-seeking vampire-class using foreign labor to engage in for-profit, domestic wage arbitrage. These "trade deals" and ISDS courts are really about allowing Asian cannibal-class to feel good about extending credit to the US Vampire-class. Meanwhile, the US vampire-class gets its fangs into all sorts of long-term rent seeking enterprises via Patent, IP and copyright ownership.

Really what's going on here is a bunch of cannibals and vampires arguing over who gets the tastiest mortals, all while engaging in psychological warfare to convince both public's their sacrifice is virtuous.
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Ninja (profile), 13 Dec 2016 @ 2:54am

These clauses are not supposed to benefit the countries and their citizenry much like the whole trade agreements out there. They are made to benefit a select group of companies and individuals at the expense of everyone else.
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Anonymous Coward, 13 Dec 2016 @ 6:23am

Re: Re: ISDS question

My understanding is that if a nation refuses to pay, the plaintiff is able to apply to courts in other countries that recognise the ISDS court's decision to seize assets of the government that loses.

Of course, if the USA loses nothing happens but talk.
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Anonymous Coward, 13 Dec 2016 @ 6:39am

Re: Re: ISDS question
Would that be the corporate private army of mercs or the government army of volunteers?
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Anonymous Coward, 13 Dec 2016 @ 6:42am

Re:
"convince both public's their sacrifice is virtuous"

Thank you for your service - btw, the local VA hospital has been shut down, you need to travel 200 miles for your office visit.
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CharlieBrown, 13 Dec 2016 @ 9:03am

*rolleyes*
Oh for fuck's sake, don't these people ever stop with the back room deals or do they just all like backdooring us too much?
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Craig Welch (profile), 13 Dec 2016 @ 10:35pm

Re: Re: Re: ISDS question
The dispute in the article to which you linked is not an ISDS dispute.

The US has not yet lost an ISDS dispute, although it surely will (Keystone XL comes to mind). It nearly lost one, but the Government 'leaned on' one of the arbitrators beforehand.
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Frozen Njal (profile), 14 Dec 2016 @ 5:57am

Re: *rolleyes*
^^^ This.
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Wendy Cockcroft, 14 Dec 2016 @ 7:27am

Re: Re:
Because government ruins everything it touches, we privatised the hospital. How much VA care can you afford?
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Wendy Cockcroft, 14 Dec 2016 @ 7:28am

Re: Re: *rolleyes*
One presumes you can put the words "over" and "barrel" into a sentence...
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