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ISDS Courts



One of the biggest concerns about the Trans-Pacific Partnership and other trade agreements are the Investor State Dispute Settlement courts that have no accountability to anyone, can overturn national laws that improve labor and environmental conditions, and are utterly opaque. Here is a very useful run-down of the ISDS and the TPP:

In short, ISDS gives corporations the power to sue national governments for lost future profits related to public interest legislation, most commonly focused on the protection of the environment. This provision is known as Chapter 11 in the North American Free Trade Agreement (NAFTA) and it’s present in the yet to be ratified Canada-European Union Comprehensive Economic Trade Agreement (CETA) and is the subject of debate and proposals to reform in the United States-European Union Transatlantic Trade and Investment Partnership (TTIP).

As for the TPP agreement reached on October 5, Foreign Policy notes, “The final deal reportedly includes substantial changes to the investor-state process. A key change: Companies would have to prove all elements of their damages’ claims, which could effectively make it easier for tribunals to side with the states being sued. In addition, the new agreement would also ease the process of dismissing frivolous claims and enact rules preventing conflicts of interest among attorneys who hear cases.”

Toronto Star columnist Thomas Walkom writes, “The Canadian government says only that the new pact will establish ‘strong rules’ to treat foreign investors ‘in a fair, equitable and non-discriminatory manner’. The U.S. government goes farther. It says the entire NAFTA dispute settlement process will be ‘upgraded’ to make it more difficult for corporations to make frivolous claims. In particular, according to the office of the U.S. trade representative, the TPP will not allow dispute settlement panels to overturn laws. Instead they will be limited to issuing what are, in effect, stiff fines.”

That said, Walkom cautions, “Ottawa says the TPP does not remove the right of governments to ‘legislate and regulate in the public interest’. That’s what was said about NAFTA originally. But those claims proved to be false. With the TPP, as with NAFTA, all will depend on how the final text is worded and how the dispute settlement panels interpret this wording. In the end, the new Trans-Pacific deal is essentially a renegotiated NAFTA with Japan and a couple of cheap-labour countries (Vietnam, Malaysia) thrown in.”

Since we still don’t have the final text, we don’t know, but while there do seem to be some cosmetic changes that maybe could change these courts a bit to fight against dubious corporate suits, the reality is that these trade courts still give unaccountable judges authority to reject a nation’s climate change legislation if it hurts an energy company’s profit or repeal a minimum wage law if a corporation disagrees. Certainly creating courts that citizens have no ability to access is tremendously undemocratic and is a major problem with the modern trade framework. If these courts gave workers the ability to sue corporations or nations that undermined their rights or if citizens could seek redress for pollution and disease they experienced because some company parked a factory in their backyard, that might be a different story. But as constituted, the ISDS courts a prime reason to fight against trade deals like the TPP.

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