Secretive Corporate Deal in the Works Could Establish Special Closed Door Courts for Big Business


November 27, 2013 
A recent leak uncovered what may be the most dangerous aspect of the Trans Pacific Partnership.
This story first appeared on Getting Action, the Democracy Center’s activism blog.

Last week the proposed Trans-Pacific Partnership (TPP) trade agreement leapt from behind the closed doors of negotiations to the front pages of major newspapers, thanks to information from Wikileaks revealing previously unpublished details of the proposed intellectual property chapter of the deal.

If you hadn’t yet heard about the TPP, there is a reason for that. Not even members of the US Congress have been allowed to see the negotiating text. Thanks to a set of leaks however, we´re beginning to get glimpses of exactly how dangerous the agreement is. The Wikileaks revelations have shone an urgent public light on the agreement’s onerous implications regarding intellectual property.

In 2012, however, another leak uncovered what may be an even more dangerous aspect of the TPP. The proposed investment chapter of the deal revealed plans to expand the system of international investment tribunals that deal with what is called ‘investor-state dispute settlement’. These are closed-door courts that take direct aim at the ability of governments across the world to enact environmental, public health and other protections for their citizens.

We don’t need much help to imagine what a world under these provisions of the TPP would look like. We need look no further than some of the current investor-state dispute cases in which powerful international corporations are demanding millions – sometimes billions – of dollars in claims, against countries both poor and wealthy, for the sin of protecting their citizens.

This is the very same system that the Bechtel Corporation used to attempt to drain $50 million from the Bolivian public treasury after the corporation had been thrown out during the Cochabamba Water War.

This is the same system that Canadian mining firm Pacific Rim, recently taken over by Oceana Gold, is using to try to extract over $300 million from the people of El Salvador for having rejected mining operations that threaten to contaminate their drinking water.

And it’s the same system that Philip Morris, the tobacco giant, is using against Uruguay and Australia to try to eliminate important public health regulations designed to reduce tobacco consumption.

The number of these investment cases has exploded in recent years, with 2012 breaking all records. Cases such as these, with serious implications for government ability to regulate for public health, environmental protection and access to water, are now being heard far away from domestic legal systems in international investor-state arbitration courts. Decisions in these closed door tribunals are made by three investment lawyers working on a for-profit basis with no obligation to balance the public interest with the profit-making interest of corporations. Governments, meanwhile, have no corresponding right to bring legal action against corporations in these arbitration tribunals when they breach national environmental regulations or human rights laws. It’s all one-way traffic.

The evidence is there to show how the investment rules system is poisoning our democracies; its huge expansion under the guise of the TPP threatens to serve up this toxic dish to millions more citizens. The proposed investment rules chapter will grant more rights to corporations, expand their access to this system of international investment tribunals and open the door for many more of these cases.

The conflict of interest between corporations hard wired to maximize profit – even if it comes at the cost of our fresh water sources, our public health laws and our basic services – and policy making designed to serve the public interest is nowhere more apparent than in these arbitration cases. The means of mediating this conflict of interest and blocking unbridled profit-making is the democratic process.

The TPP leaks make it ever clearer, however, that these trade agreements are the mechanisms that corporations are now using to thwart democracy and to undermine the ability for us to pressure our governments to take action on a range of urgent public issues.

The recent Wikileaks disclosures have served as a wake-up call regarding the potential impact of the TPP on issues related to intellectual property. However, the investment chapter leaked in 2012 – and with potentially even more pernicious implications for our democracies – didn’t get anything like as much attention. This is largely due to a complete lack of awareness of the international investment rules regime beyond a small collection of lawyers and advocates.

Published in May 2013 the Democracy Center’s latest report Unfair, Unsustainable and Under the Radar:  How Corporations Use Global Investment Rules to Undermine a Sustainable Future explains for a non-technical audience what seems to many like a highly technical issue, and in so doing aims to help put a much wider public spotlight on this corporate power grab while there is still time to fight it.

George Monbiot, writing in the UK Guardian recently, described the expansion of the current international investment rules regime in the negotiations of the EU-US trade agreement as a “full-frontal assault on democracy.”  It’s time for the investment rules regime to be put much more clearly on to the public radar.