France Says Corporate Sovereignty Must Come Out Of CETA, Or Be Replaced By Something Completely Different

from the that's-awkward dept

There are so many massive trade deals on the go at the moment that it is easy to lose track. In the US, TPP is at the forefront of many people's thoughts; in Europe, it is TAFTA/TTIP. TISA is just starting to appear on the radar, while CETA, the trade agreement between the EU and Canada, is dropping off it. That's because there is a general belief that CETA is "done" -- even if the text needs "legal scrubbing", the assumption is that no more changes can be made. Evidently, somebody forgot to tell the French government, which is calling for the corporate sovereignty chapter to be dropped according to this article in Le Devoir (original in French, found via @StuJT):

Although he is generally in favor of this agreement [CETA], the [French] Secretary of State [for External Commerce] considers that before ratifying the treaty it will be necessary either to withdraw current sections on ISDS or rewrite them entirely. Moreover, the opinion of [the French Secretary of State] Matthias Fekl represents not only the official position of France, but also a consensus shared by Germany and the European social democrats. In the daily Le Monde, he said on Wednesday that the only options remaining on the table were "the withdrawal, pure and simple, of ISDS or coming up with something new." There is therefore no question of the Secretary of State signing the Canada-EU treaty without "inventing something new, that is no longer [investor-state] arbitration, but a new way to settle disputes, by integrating public courts in the procedure."

That position will be a massive spoke in the wheel for the ratification of CETA, since there is no indication Canada would be willing to remove or renegotiate the corporate sovereignty provisions there. It's also interesting that Germany is mentioned in this context: its position on ISDS has been rather inconstant -- as has France's, for that matter -- and the latest news would seem to indicate that things are still up in the air for that country too.

The declaration of the French Secretary of State undermines a speech made very recently by the European Commissioner responsible for trade and TTIP, Cecila Malmström, at a meeting with the International Trade Committee of the European Parliament. Here's the context she gave:

the vast majority of the individual responses [to the Commission's consultation on corporate sovereignty last year] rejected either TTIP in its entirety or ISDS more specifically. But the responses from interest groups representing groups of people were more mixed.

Let me be clear on how we interpret those results. The consultation was not a referendum even if the responses showed huge scepticism and concerns about the system.

What the consultation did do is allow us to understand the main concerns about the system and give us ideas for how to address them.

In other words, we are going to ignore what 145,000 people said, and retain the anti-democratic corporate sovereignty structure intact. Malmström then goes on to give some specious reasons why ISDS must be kept in TAFTA/TTIP, albeit in a modified form -- and yet strangely omits to mention a far simpler solution, which is for companies that are worried about their foreign investments to take out insurance -- for example, from the World Bank's Multilateral Investment Guarantee Agency.

She then tries to suggest that CETA's ISDS chapter can act as a template for TTIP -- even though a detailed analysis from the Canadian Centre for Policy Alternatives indicates that the new corporate sovereignty provisions it contains are still deeply flawed (pdf). But if France really does stick to its view that ISDS must be removed from CETA, or replaced by a completely different mechanism, the argument that CETA's corporate sovereignty approach shows the way forward for including ISDS in TAFTA/TTIP collapses. Expect the European Commission to ignore this inconvenient fact, and to press on regardless.

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Filed Under: canada, ceta, corporate sovereignty, france, isds

How Corporate Sovereignty In Trade Agreements Can Force National Laws To Be Changed

from the they-said-it-couldn't-be-done dept

As we noted recently, one of the most worrying aspects of corporate sovereignty chapters in trade agreements is the chilling effect that they can have on future legislation. That's something that the supporters of this investor-state dispute settlement (ISDS) mechanism never talk about. What they do say, though, is that corporate sovereignty cannot force governments to change existing laws. A recent defeat for Canada before an ISDS tribunal proves that's not the case:

An international trade tribunal has ordered Ottawa to pay ExxonMobil and another oil company $17.3 million, following a complaint that the companies were required to spend money in Newfoundland and Labrador on research and development.

The case was brought by ExxonMobil using the corporate sovereignty provisions in the North American Free Trade Agreement (NAFTA), and concerned another agreement, called the Atlantic Accord. As CBC News explains:

Under the terms of the Atlantic Accord, a federal-provincial agreement on oil development first negotiated in 1985, oil companies are required to support petroleum-focused research and development in Newfoundland and Labrador, as part of its local benefits package.

In other words, three decades ago, Canadian politicians had passed a research and development package, one of whose measures was designed to boost local employment -- exactly the kind of thing that voters want their politicians to do. But the ISDS tribunal ruled that under NAFTA, this was not permitted, and awarded substantial damages to ExxonMobil for being required to comply with the Atlantic Accord. But it gets worse:

Unless the governments of Canada and Newfoundland and Labrador agree to change the R&D legislation, Ottawa could be on the hook for continued damages. The federal government is responsible because NAFTA is an agreement between sovereign nations.

That is, the corporate sovereignty provisions in NAFTA are being used to force the Canadian government to change existing and long-standing legislation -- something that ISDS fans assure us never happens.

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Filed Under: corporate sovereignty, isds, laws, regulations, tafta, tpp, trade agreements, ttip

EU's Socialist Politicians Come Out Strongly Against Corporate Sovereignty -- To A Certain Extent...

from the definite-maybe dept

Techdirt has been writing about corporate sovereignty for nearly two years now. The public is beginning to wake up to the dangers it poses, which means that politicians, too, are suddenly discovering that they need to have an opinion on the subject. Over in the European Union, attention is focused on the S&D (Socialists and Democrats) Group in the European Parliament. Because of the way seats were won in the recent EU elections, it is the S&D group that will make or break TTIP/TAFTA; that makes its position on investor-state dispute settlement (ISDS) crucial. This week, the S&D Group published a position paper that gives some insight into its thinking on this issue (pdf). Here's the opening statement:

The S&D Group opposes the inclusion of ISDS in Trade Agreements in which other options to enforce investment protection are available, whether domestic or international. In agreements with countries that have fully functioning legal systems and in which no risks of political interference in the judiciary or denial of justice have been identified, ISDS is not necessary.

That seems clear enough: "opposes the inclusion," "ISDS is not necessary." But of course, statements from political groups are never that simple. Later on, the paper says:

The S&D Group has already on numerous occasions expressed its serious reservations concerning ISDS. In particular in the case of TTIP, we have made it clear that we do not see a need for its inclusion and have called for it to be excluded when negotiations for the investment chapter start.

Here, the S&D Group does not "see a need for its inclusion" of ISDS in TTIP, which is a rather weaker statement. The paper concludes:

We have an interest in a good TTIP that becomes a gold standard agreement. We do not want to see this opportunity jeopardized by the inclusion of provisions on ISDS which are not acceptable to the S&D Group, a majority in the European Parliament, and the general public.

Now, that could mean two different things. Either:

We do not want to see this opportunity jeopardized by the inclusion of provisions on ISDS, since these will be unacceptable.

Or:

We do not want to see this opportunity jeopardized by the inclusion of provisions on ISDS if they take a form that is unacceptable.

The first is a categorical rejection of corporate sovereignty in TTIP, the second is a rejection of certain kinds of ISDS, but not the idea itself. Clearly, then, the difference is significant: in the first case, S&D would vote against TAFTA/TTIP if it contains ISDS, while in the second, it might tolerate corporate sovereignty if certain conditions are met, and vote in favor of TTIP. That second position could well become that of the European Parliament itself. That's because the "draft report on Parliament's recommendations to the Commission on the negotiations for the Transatlantic Trade and Investment Partnership" (pdf), put together by the European Parliament's Committee on International Trade, includes the following paragraph on corporate sovereignty:

Given the EU's and the US developed legal systems, a state-to-state dispute settlement system and the use of national courts are the most appropriate tools to address investment disputes. Should ISDS provisions be included in the TTIP, it seems to be clear, that further reforms to the current model, are critical to avoid the problems that have arisen under the provisions in existing FTAs and BITs. Now that the results of the public consultation are available, a reflection processes is needed within and between the three European institutions on the needed reforms. Investors abroad have to be treated in a non-discriminatory fashion and should have a fair opportunity to seek and achieve redress of grievances. This can be attained in TTIP without the inclusion of ISDS provisions.

This notes that ISDS is not needed in TTIP, but does not go so far as to reject it outright, and even speaks of what needs to be done "should ISDS provisions be included."

Clearly, then, the politicians are hedging here. They have noted -- how could they not? -- the huge rejection of ISDS by the public in the consultation carried out last year, and the 1.5 million signatures on the European petition against TTIP. But they are obviously unwilling to reject ISDS outright, not least because some MEPs, notably those from the conservative parties in the European Parliament, are largely behind TTIP, and do not want it jeopardized because of a statement that any form of ISDS is unacceptable.

What this means in practice, as in the US, is that the politicians will continue to try to gauge the public mood as they re-calibrate their responses. The latest statement by the S&D Group is part of that complex dance: an important rejection of corporate sovereignty, but by no means a definitive one.

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Filed Under: corporate sovereignty, eu, isds, s&d, tafta, trade, ttip

Is America About To Experience The Billion-Dollar Pain Of Corporate Sovereignty First Hand?

from the not-your-parents'-ISDS dept

Readers of Techdirt have been hearing about corporate sovereignty -- the ability of foreign investors to sue governments directly in special courts over alleged losses, also known as Investor-State Dispute Settlement (ISDS) -- for a while now. For others who have yet to discover this particular feature of so-called trade agreements, Senator Elizabeth Warren has a good, approachable summary of the key issues in a Washington Post opinion piece. In fact, it was clearly so good that the White House Blog felt obliged to try to rebut its main arguments (there's also a great point-by-point response to that response by the Cato Institute's Simon Lester.). The White House Blogt post, written by Jeff Zients, Director of the National Economic Council, pretty much concedes that the criticisms of ISDS are valid, but would have us believe that everything has been fixed now:

ISDS has come under criticism because of some legitimate complaints about poorly written agreements. The U.S. shares some of those concerns, and agrees with the need for new, higher standards, stronger safeguards and better transparency provisions. Through TPP and other agreements, that is exactly what we are putting in place.

There are two massive problems with that assurance. First, the extreme secrecy of the TPP negotiations means that we have no idea just how strong those "safeguards" are. And secondly, in some sense it doesn't even matter: companies can use the mere threat of an ISDS action to cast a chill over future regulatory action. That's why the following comment is true but misses the point:

The reality is that ISDS does not and cannot require countries to change any law or regulation.

The ability to use ISDS to discourage governments from introducing inconvenient laws or regulations is no mere theoretical fear. As this important 2001 article in The Nation explains:

Carla Hills, the US Trade Representative who oversaw the NAFTA negotiations for Bush I and now heads her own trade-consulting firm, was among the very first to play this game of bump-and-run intimidation. Her corporate clients include big tobacco -- R.J. Reynolds and Philip Morris. Sixteen months after leaving office, Hills dispatched Julius Katz, her former chief deputy at USTR, to warn Ottawa to back off its proposed law to require plain packaging for cigarettes. If it didn't, Katz said, Canada would have to compensate his clients under NAFTA and the new legal doctrine he and Hills had helped create [ISDS]. "No US multinational tobacco manufacturer or its lobbyists are going to dictate health policy in this country," the Canadian health minister vowed. Canada backed off, nevertheless.

Nor was that an isolated incident:

A former government official in Ottawa told me: "I've seen the letters from the New York and DC law firms coming up to the Canadian government on virtually every new environmental regulation and proposition in the last five years. They involved dry-cleaning chemicals, pharmaceuticals, pesticides, patent law.Virtually all of the new initiatives were targeted and most of them never saw the light of day."

Zients goes on to say that corporate sovereignty chapters are needed because foreign courts can't be trusted to provide justice:

U.S. investors often face a heightened risk of bias or discrimination when abroad.

But Warren already answered that with several extremely powerful points:

Countries in the TPP are hardly emerging economies with weak legal systems. Australia and Japan have well-developed, well-respected legal systems, and multinational corporations navigate those systems every day, but ISDS would preempt their courts too. And to the extent there are countries that are riskier politically, market competition can solve the problem. Countries that respect property rights and the rule of law — such as the United States — should be more competitive, and if a company wants to invest in a country with a weak legal system, then it should buy political-risk insurance.

Zients also tries to argue that since the US hasn't suffered as a result of ISDS cases in the past, it'll be fine in the future:

There have only been 13 cases brought to judgment against the United States in the three decades since we’ve been party to these agreements. By contrast, during the same period of time in our domestic system, individual and companies have brought hundreds of thousands of challenges against Federal, state, and local governments in U.S. courts under U.S. law.

We have never lost an ISDS case because of the strong safeguards in the U.S. approach. And because we have continued to raise standards through each agreement, in recent years we have seen a drop in ISDS claims, despite increased levels of investment.

But that line of reasoning ignores why there have been so few cases in the past: because corporate sovereignty provisions were mainly included to protect US investments in developing countries with weaker legal systems. By definition, such nations are unlikely to have the resources to make many or significant investments in the US, and therefore have few opportunities to use the ISDS system. That is what will change dramatically with TAFTA/TTIP, as this analysis by Public Citizen explains:

TAFTA would vastly expand the investor-state threat, given the thousands of corporations doing business in both the United States and EU that would be newly empowered to attack public interest policies. More than 3,400 EU parent corporations own more than 24,200 subsidiaries in the United States, any one of which could provide the basis for an investor-state claim. This exposure to investor-state attacks far exceeds that associated with all other U.S. "free trade" agreement partners.

In fact, the US may be about to find out about the modern reality of billion-dollar corporate sovereignty lawsuits, thanks to the 21-year-old NAFTA agreement, and the controversial Keystone XL project, which President Obama recently vetoed. Here's Politico's explanation of how corporate sovereignty could enter the equation:

President Barack Obama may decide to kill Keystone XL for good, but that could be no easy task -- thanks in part to the North American Free Trade Agreement.

The 21-year-old free-trade pact allows foreign companies or governments to haul the U.S. in front of an international tribunal to face accusations of putting their investments at risk through regulations or other decisions. The CEO of Keystone developer TransCanada has raised the prospect as a potential last resort if Obama rejects the $8 billion project, although for now the company is focused on getting him to say yes.

Administration officials involved in reviewing the proposed Canada-to-Texas pipeline are aware of the potential for a NAFTA challenge and the importance of minimizing that risk in the event the president rejects Keystone.

So even though the President retains full powers to reject Keystone, it’s easy to see how the threat of a billion-dollar ISDS lawsuit might encourage him to approve it anyway. That would offer the perfect demonstration of how corporate sovereignty chapters can interfere with democratic decision-making -- at even the highest levels.

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Filed Under: corporate sovereignty, elizabeth warren, isds, jeff zients, lawsuits, tafta, tpp, trade agreements, ttip, ustr

John Oliver Highlights The Ridiculousness Of Corporate Sovereignty Provisions

from the good-for-him dept

Okay, I know that it's become something of a cliche for blogs and news sites to repost John Oliver clips, but dammit, if the guy doesn't keep on covering the types of stories that we normally cover around here. I mean, Stephen Colbert and Jon Stewart used to touch on related topics maybe once every six months or so, whereas Oliver seems to hit on a Techdirt-worthy topic basically every other week (so often we don't get to all of them!). This past week, he did his big segment on the nasty games that Big Tobacco plays around the globe to market its products to just about everyone. Yes, in the US, most cigarette advertising is blocked, but Big Tobacco has just shifted to more vulnerable populations around the globe. That topic, by itself, isn't directly in Techdirt's wheelhouse -- but in the middle of the segment, there's a discussion about corporate sovereignty, and specifically the use by Big Tobacco of "investor state dispute settlement" (ISDS) provisions to allow the big tobacco companies to sue countries for daring to try to regulate cigarettes, advertising or packaging. The segment on corporate sovereignty starts at around 6 minutes, right after showing examples of ridiculous tobacco commercials that are shown around the globe:

Now countries can try to counteract the influence of that kind of marketing, but if tobacco companies feel threatened, they'll put them through legal hell. Let me take you on a world tour of how they attack laws intended to protect public health, because it's kind of amazing.

Let's start in Australia. In 2011, they passed a plain packaging law, and what that means is this. [Shows (fair use!) news clip describing required packaging of cigarettes with no branding, and scary health pictures]. Australia's plain packaging law bans tobacco company branding from packaging and replaced it with upsetting photos, such as the toe tag on a corpse, the cancerous mouth, the nightmarish eyeball, or the diseased lung. Now, yes, I'm pretty sure I'd find a healthy lung disgusting, but, that thing does look like you're trying to breathe through baked ziti, so [instructing staff] take it down! Just take it down!

Perhaps unsurprisingly, since this law was implemented, total consumption of tobacco cigarettes in Australia fell to record lows and... nightmares about eyeballs have risen to record highs. [Instructing staff] Take it down! Take down the demon eye!

To get these laws, though, Australia has had to run a gamut of lawsuits. First, two tobacco companies sued Australia in its highest court to stop them. The result, was a little surprising, as Australia's attorney general let everyone know. [Shows clip of AG announcing not just the victory, but Big Tobacco having to pay the government's legal fees.] Yes! Score one for the little guy! Even if that little guy is the sixth largest country in the world by landmass.

And the tobacco companies didn't just lose. The judges called their case "delusive," "unreal and synthetic" and said their case had "fatal defects." ....

But Australia's legal troubles were just beginning. Because then, Philip Morris Asia got involved. [Shows clips of a news report saying Philip Morris considering using ISDS provisions to take the Australian government to a tribunal claiming it lowered the value of the company's trademarks].

That's right. A company was able to sue a country over a public health measure, through an international court. How the fuck is that possible? Well, it's really a simple explanation. They did it by digging up a 1993 trade agreement between Australia and Hong Kong which had a provision that said Australia couldn't seize Hong Kong-based companies' property. So, nine months before the lawsuits started, PMI put its Australian business in the hands of its Hong Kong-based Philip Morris Asia division, and then they sued, claiming that the "seized property" in question, were the trademarks on their cigarette packages.

And you've got to give it to them: that's impressive. Someone should really give those lawyers a pat on the back... and a punch in the face. But, a pat on the back first. Pat, then punch. Pat, punch....

He then goes on to point out how Big Tobacco further got three other countries to file complaints with the World Trade Organization (WTO) against Australia, claiming the plain packaging law violates trade agreements: Honduras, Dominican Republic and Ukraine. Oliver then shows a clip noting that Ukraine does not have any tobacco trade at all with Australia, showing how ridiculous the WTO claim is.

Next, he shows how Big Tobacco is sending threatening letters to other countries, like Uruguay, Togo and Namibia for considering health regulations around tobacco products, even going so far as to totally misrepresent the total loss of its lawsuit in Australia, pretending that it was a victory. Oliver's researchers got letters that Big Tobacco sent these countries, threatening "an incalculable amount of international trade litigation."

There's even more in the video -- though it would be great if Oliver also took on the fact that these kinds of ISDS/corporate sovereignty agreements are at the heart of key trade agreements currently being negotiated today by the US and much of the rest of the world in both the TPP agreement and the TTIP agreement.

It's because of stories like this that we're so concerned about these corporate sovereignty provisions. Defenders insist they're necessary to stop countries from absconding with assets built by foreign companies and investors, but that risk tends to be fairly limited, compared to how these agreements are actually being used: to allow corporations to effectively step in and block regulations designed to protect the public.

Filed Under: australia, big tobacco, cigarettes, corporate sovereignty, isds, john oliver, tobacco, togo, uruguay
Companies: philip morris

Does Angela Merkel Want To Renegotiate The Corporate Sovereignty Chapter In EU-Canada Trade Agreement?

from the that-would-be-big dept

Techdirt hasn't written much recently about the trade agreement between the EU and Canada, generally known as CETA. That's because it is "finished" -- at least, in theory. It is now undergoing what is known as the "legal scrub" to prepare it for the final ratification on both sides. One story we did write concerned questions about the agreement's compatibility with EU law, largely because of the corporate sovereignty provisions in CETA. Things have been fairly quiet since then, which makes the following story in the Canadian edition of Huffington Post, on a related aspect, particularly intriguing:

German chancellor Angela Merkel will be in Ottawa for a visit on Monday, but she may not be bringing the news [Canadian Prime Minister] Stephen Harper wants to hear when it comes to the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

That's because the German government wants to reopen CETA and amend the investor-state dispute settlement [ISDS] mechanism.

No source is given for that claim, but the following explanation is offered:

Merkel likely does not have an ideological problem with bestowing corporations with the hammer of the investor-state provision, but the political reality is that her Christian Democrats have 311 seats in the Bundestag and need the support of the 193 Social Democrats in that legislature to maintain her 'grand coalition' government. Her minister of economy is a Social Democrat and that party is very clear in its opposition to investor-state. Last year, that party's convention passed a resolution against investor-state.

In other words, Merkel needs to keep her Social Democrat coalition partners happy if CETA and TTIP are to pass in the national vote that will be held at some point. That impacts CETA, because last month the same Social Democrat Minister of the Economy and Energy made a joint declaration with his French counterpart in which they said they wished to examine "all the options for changing" the ISDS chapter in CETA (original in French). The Huffington Post article also notes that what happens with CETA has big implications for TAFTA/TTIP:

Beyond the challenge of coalition politics for Merkel, she also needs to contend with an electorate that may not have paid too much attention to a 'free trade' agreement with Canada, but is very attentive -- and critical -- of the European Union's current negotiations with the United States on another 'free trade' deal called the Transatlantic Trade and Investment Partnership (TTIP). If Merkel agrees to a corporate rights provision in CETA, voters in Germany know that the same powers would be extended to U.S. corporations too.

If Merkel is indeed beginning to worry about the huge backlash in Germany against TTIP thanks to the corporate sovereignty provision it contains -- the main bone of contention for many people -- she knows that she must also deal with it in CETA, too. That would make a request to open up the ISDS section at least plausible, even if it would be pretty dramatic at this late stage, especially given statements by the Canadian Prime Minister that CETA's ISDS is non-negotiable. However, Harper has a general election coming up in October this year, and might prefer to accept CETA without corporate sovereignty rather than risk losing the political prize of a trade agreement with Europe altogether by refusing to renegotiate on this critical point.

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Filed Under: angel merkel, canada, ceta, corporate sovereignty, eu, germany, isds, tafta, tpp, ttip

European Commission's Clever Ruse To Introduce Corporate Sovereignty Regardless Of Ratification Votes In EU

from the whatever-happened-to-democracy? dept

Because of the complicated nature of power-sharing in the European Union, some international agreements require the approval of both the European Parliament and of every Member State -- so-called "mixed agreements." It is generally accepted that both the Canada-EU trade agreement (CETA) and TAFTA/TTIP are mixed agreements, and will therefore require a double ratification: by the full European Parliament, and all the EU governments. Indeed, the European Commission has frequently cited this fact to bolster its assertion that both CETA and TAFTA/TTIP are being negotiated democratically, since the European public -- through their representatives -- will have their say in these final votes.

But a disturbing analysis published by Greenpeace on its Austrian pages (original in German), suggests that built into the CETA agreement, which is currently going through a "legal scrub" before being presented for ratification (pdf), are a couple of sections that will allow the European Commission to introduce the corporate sovereignty provisions anyway. According to Article X.06 3(a):

This Agreement shall be provisionally applied from the first day of the month following the date on which the parties have notified each other that their respective relevant procedures have been completed.

This means that CETA would enter into force provisionally as soon as the European Commission and the Canadian government have notified each other that "relevant procedures have been completed." There's no explicit requirement there for those "relevant procedures" to include ratification by the European Parliament or the EU Member States: the European Commission might claim that the "relevant procedures" simply meant things like the legal scrub. One of the provisions of CETA is a deeply-problematic corporate sovereignty chapter, so this too would enter into force at this point, regardless of what national governments might want.

Now suppose that the European Parliament, or one of those Member States, does not ratify CETA, perhaps because of the investor-state dispute settlement (ISDS) mechanism, in which case the entire agreement would fail. But here's what Article X.07 4 says happens in this case:

If the provisional application of this Agreement is terminated and it does not enter into force, a claim may be submitted pursuant to the provisions of this Agreement, regarding any matter arising during the period of the provisional application of this Agreement, pursuant to the rules and procedures established in this Agreement, and provided no more than three (3) years have elapsed since the date of termination of the provisional application.

In other words, even if CETA is rejected in Europe, thus causing the provisional application to be terminated, claims under the ISDS chapter would still be possible up to three years afterwards for investments made during the provisional period. This is no mere theoretical possibility: it is exactly what happened to Russia with the Energy Charter Treaty, which it never ratified, but where an ISDS tribunal made an award of $50 billion against the country because of the treaty's provisional application. What's even more troubling is that the European Commission proposes to add similar clauses to TAFTA/TTIP, as the Greenpeace article notes:

A representative of the European Commission at a press briefing session in Vienna on Tuesday confirmed to Greenpeace that the Commission intends to propose a "provisional application" for TTIP too.

This would be even worse than putting such sections in CETA, because ISDS in TAFTA/TTIP will apply retrospectively to all existing investments, as the negotiating mandate specifies (pdf):

The investment protection chapter of the Agreement should cover a broad range of investors and their investments, intellectual property rights included, whether the investment is made before or after the entry into force of the Agreement.

This would allow corporate sovereignty provisions applying to huge numbers of existing investments to enter into force and remain there for some years even if TTIP were rejected by the European Parliament or one of the national governments. So much for the European Commission's much-vaunted "democracy" -- and another compelling reason to take the ISDS chapter out of both CETA and TAFTA/TTIP.

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Filed Under: ceta, corporate sovereignty, eu commission, eu parliament, isds, ratification, tafta, trade agreements, ttip

EU Consultation On Corporate Sovereignty In TAFTA/TTIP Shows 145,000 Against It; European Commission Carries On Anyway

from the not-listening dept

As Techdirt has been reporting for a while, corporate sovereignty chapters have emerged as one of the most worrying aspects of trade agreements. Concerns about the inclusion of the investor-state dispute settlement (ISDS) mechanism in TAFTA/TTIP became so acute in the EU that the European Commission was forced to hold a consultation on the subject last year in an attempt to assuage growing fears. We pointed out at the time that this was a sham, since all it offered was the option to comment on a few minor revisions to the ISDS mechanism: it was not designed to allow the public to express their views on the idea itself.

People went ahead and used the opportunity to convey their rejection of the imposition of corporate sovereignty provisions anyway. The publication of the European Commission's analysis of the ISDS consultation (pdf) confirms just how complete that refusal is. Here's a summary from the accompanying press release:

The vast majority of replies, around 145,000 (or 97%), were submitted through various on-line platforms of interest groups, containing pre-defined, negative answers. In addition, the Commission received individual replies from more than 3,000 individuals and some 450 organisations representing a wide spectrum of EU civil society, including NGOs, business organisations, trade unions, consumer groups, law firms and academics. These replies generally go into more detail on the proposed approach.

As well as the unanimity of the rejection, what is striking is the fact that 145,000 citizens replied to a consultation on an obscure aspect of trade agreements that most people had never heard of a year ago. That alone bespeaks an unprecedented engagement by the public -- something rare enough at a time when people are generally disenchanted with politicians and their grand projects. And yet instead of celebrating this incredible interest from the public, here's how the European Commission's report chose to frame things:

It was possible to ascertain that a very large number of replies (around 145.000) were submitted collectively through various non-governmental organisations (NGOs). These organisations provided pre-defined answers which respondents adhered to. These NGOs made available dedicated on-line platforms or software, often with pre-prepared answers, permitting the loading of replies directly into the database of the public consultation, thus making it possible to submit very significant numbers of replies in a short amount of time.

In other words, the Commission clearly implies, those 145,000 replies were more or less cheating, because they used "pre-defined answers" to make things easier, and thus shouldn't really be treated as seriously as individual and unique contributions that required many days work by highly-paid lobbyists. That attitude betrays once more the inherent bias in these consultations, which are aimed at companies and their PR machines, not at the general public, whose views are rarely sought, and even more rarely listened to.

And that's the case with this corporate sovereignty consultation. Declaring that it was not meant to be a "referendum" on ISDS, the European Commission is responding by organizing yet more consultations:

In the first quarter of 2015, the Commission will organise a number of consultation meetings with EU governments, the European Parliament, and different stakeholders, including NGOs, business, trade unions, consumer and environment organisations, to discuss investment protection and ISDS in TTIP on the basis of this report.

This is the old technique of repeatedly asking a question until you get the answer you want. It confirms that the consultation was never seriously intended to solicit people's views, but was mere window-dressing, and undertaken in the hope that the general public would be too bored or confused by the technical questions posed to take part.

But this reckoned without two factors. The first is the Internet, which has allowed NGOs and other campaigners to provide tools that make it much easier for the public to understand and participate in complex discussions. That's why the European Commission singles out this aspect for scorn: it represents a very serious threat to the cosy old way of doing things, as the Net-driven rejection of the Anti-Counterfeiting Trade Agreement (ACTA) in 2012 showed most dramatically.

The other factor that the Commission overlooked was that people now understand that TAFTA/TTIP is not a typical trade agreement about tweaking tariffs. Instead, it represents an ambitious attempt to re-mold society on both sides of the Atlantic by changing regulatory norms and processes. Unlike tariffs, regulations are largely cultural, and so "harmonizing" them is about imposing cultural change from without. ISDS is part of that: it is a way for companies to challenge and shape national law-making through the use of supranational courts.

The massive rejection of corporate sovereignty by huge numbers of Europeans in the ISDS consultation is a warning to the European Commission that such anti-democratic actions are unacceptable, and that if it wants to avoid another ACTA fiasco, it had better drop ISDS from TAFTA/TTIP sooner rather than later.

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Filed Under: corporate sovereignty, eu, eu commission, isds, tafta, ttip

Latest Trade Agreements Are About The Opposite Of Free Trade: Protectionism For Big Business

from the this-is-not-free-trade dept

We've been talking a lot about the various big "trade agreements" that are being worked on around the globe -- with a major focus on the TPP (Trans Pacific Partnership) and the TTIP (Trans-Atlantic Trade and Investment Pact). These are frequently referred to as "free trade agreements." But an important point that gets lost in the various debates is that, generally speaking these are not free trade agreements at all. In many ways, they're the opposite. Free trade is about removing barriers to trade -- which are, generally speaking, a good thing. But the simple fact is that for the most part we already have pretty low trade barriers with most of the countries involved in these negotiations. Instead, this is almost entirely about a combination of regulatory arbitrage, and the ability to better move money around by giant multinational companies. The economics comic artist Michael Goodwin did a nice job demonstrating all this in a comic about the TPP a while back. Here's just two panels, though I highly recommend the whole thing: Economist Dean Baker has a good article describing this in more detail as well, showing that these agreements aren't about "free trade" at all. As he notes, basic free trade generally makes sense. But, that's not what's really being discussed in these agreements:

In TPP and TTIP we are not talking about the textbook trade story. The actual trade barriers between the United States and the countries in these deals, with few exceptions, are already quite low. This means that there is little to be gained by lowering them still further.

Instead, he notes -- as we have in the past -- that these "trade agreements" are really just the opposite. They're about gifts for certain big businesses that they couldn't get through legislation:

TPP and TTIP are about getting special deals for businesses that they would have difficulty getting through the normal political process.

He lists out a bunch of examples, but here are a couple we've been focused on:

The pharmaceutical industry and entertainment industries will get longer and stronger patent and copyright protection.

Note how this is the opposite of true free trade. Longer and stronger copyrights and patents are actually barriers to trade. They're putting up regulatory barriers to the free flow of information, protecting certain legacy businesses at the expense of innovative firms. And, it's all done in secret, with basically only input from businesses. The only time voters actually get to see what's in it is when it's a done deal, and fully negotiated. At that point, the parties are too committed to actually allow any fixes that protect consumers or innovation.

So, when you hear people talking about these agreements as if they're "free trade" agreements, just recognize that calling them free trade agreements is a lie -- and it's a lie that's used to convince the gullible that these agreements must be good for the economy. And it appears to work on some people:

As Thomas Friedman once famously said in reference to his support of CAFTA, "I didn't even know what was in it. I just knew two words: free trade." Others in the media may be too sophisticated to express themselves so bluntly, but undoubtedly most share Friedman's view. Under such circumstances, there will be few politicians prepared to stand up for principle or their constituents and vote against the pacts regardless of what it is in them.

In short: people (correctly) believe that free trade is generally a good thing. Businesses recognize this -- and even though we generally have an awful lot of free trade around the globe these days, with fewer and fewer tariffs and trade barriers, governments are working on "free trade deals" because they know by calling them that, people will often support them, believing blindly that they're good things. Instead, there's very little that's actually about free trade, and an awful lot that's about propping up and protecting legacy business models, while stifling the important free flow of information.

Filed Under: corporate sovereignty, dean baker, economix, free trade, investment, isds, michael goodwin, tafta, tpp, trade agreements, ttip

Canada's Strict New Anti-Corruption Rules Might Lead To Yet More Corporate Sovereignty Lawsuits Against It

from the no-good-deed-goes-unpunished dept

Recently, we wrote about the extraordinary free trade agreement between Canada and China that places itself above the Canadian constitution. Here's another development where Canada can serve as a warning to the rest of the world about the dangers of giving too much power to corporations in free trade agreements, as reported by the The Globe and Mail:

Canada risks being hit with a World Trade Organization challenge and NAFTA investor lawsuits over its threat to bar some companies from selling to the government for up to 10 years, warns a report commissioned by the Canadian Council of Chief Executives (CCCE) and delivered to federal officials.

And a number of foreign multinationals are already exploring possible trade action, according to an industry source, who declined to be named.

The problem is that Canada has introduced new anti-corruption rules:

Under the newly revised federal regime, companies seeking to bid on federal contracts must certify that neither they nor their affiliates have been charged with a long list of criminal offences anywhere in the world, including bribery and fraud, dating back 10 years.

Apparently, the inclusion of affiliates is much stricter than anti-corruption laws elsewhere, and that might open up Canada to claims that it is unreasonable for Canadian subsidiaries of foreign companies to be held responsible for the actions of other affiliates over which they have no control. No lawsuits have yet been filed, so it's too early to say how serious this threat is. But it certainly emphasizes how signing up to corporate sovereignty chapters in free trade agreements -- in this case, the 1994 North American Free Trade Agreement -- increases the risk that companies will use them in unexpected ways to attack governments when they introduce new policies, however praiseworthy those may be.

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Filed Under: anti-corruption, canada, china, corporate sovereignty, free trade, isds, trade agreements