Who’s really in favour of #ISDS?
The investor-state dispute settlement (ISDS) provisions in the proposed trade deal between the EU and the USA (TTIP) are the most controversial part of the deal. And they appear in all new trade negotiations, like the one between the EU and Canada (CETA), the Trans-Pacific Partnership (TPP) and the EU-Singapore Trade Agreement (EUSTA). Whenever we argue we should get rid of ISDS, we’re told that the other party to the agreement is insisting on it. Recent developments suggest this is far from the truth: so who actually does support ISDS?
In the case of EUSTA, the Singapore Government has confirmed that it would prefer to see investment provisions excluded, so the deal only covers traditional trade barriers. But the European Commission is standing firm on keeping ISDS in that agreement regardless.
When it comes to TTIP, the Government’s own research makes it clear that ISDS would have little to no economic advantages, and significant political risks. Employers in the Institute of Directors have indicated they’re not that bothered either, with only a quarter thinking investment protection is important in TTIP. But we’re told the USA is insisting on ISDS.
Now, though, influential groups in the US Congress are also coming out against ISDS in TTIP and TPP. A number of senior Democrats are urging President Obama to exclude the ISDS provisions in TTIP and TPP, which they say could lead to changes in US financial regulations that would make it more difficult to prevent yet another financial crisis.
Led by Bill Pascrell Jr, a New Jersey member of the House of Representatives’ Ways and Means Committee, which covers trade negotiations, they wrote to Obama urging him to exclude ISDS provisions from TTIP, saying:
“We share your goals of ensuring that U.S. interests that invest abroad are not treated in a discriminatory fashion or denied fair opportunity to seek and achieve redress of grievances and believe they can be attained in TTIP without the inclusion of ISDS provisions.
“Should investor-to-state provisions be included in the TTIP, we believe that reforms to the current model are critical to avoiding the problems that have arisen under the provisions in existing FTAs and BITs.”
[FTAs are free or bilateral trade agreements, and BITs are bilateral investment treaties: alphabetti spaghetti has got nothing on international trade!]
They argue that ISDS provisions in previous trade deals have allowed foreign firms to use the process to challenge government regulation of the financial sector.
And in a separate letter, Senators Elizabeth Warren, Tammy Baldwin and Edward Markey raised concerns about ISDS provisions being included in TPP, saying:
“Including such provisions in the TPP could expose American taxpayers to billions of dollars in losses and dissuade the government from establishing or enforcing financial rules that impact foreign banks. The consequence would be to strip our regulators of the tools they need to prevent the next crisis.”
Richard Trumka President of the AFL-CIO, the TUC’s equivalent in the USA, has backed the politicians’ objections. He says:
“The TTIP can help our economy grow, but only if it excludes the ISDS. ISDS gives foreign investors extraordinary legal rights to challenge generally applicable public policies, including decisions about where to place toxic waste dumps, whether to increase minimum wages, and how to protect children from smoking and water pollution in privatized ‘corporate courts’.”
The Pascrell letter also notes that ISDS provisions were dropped from past US trade deals with Australia, Canada and Israel. So to return to my earlier question, who really is behind the drive for ISDS in trade deals? No doubt there are US supporters, but on this side of the Atlantic, the protestations that it is the USA demanding ISDS seems a little less than the whole truth.
Instead, it’s the four C’s behind this massive attack on democracy: Cameron, the coalition, the Commission and the CBI. They should drop the facade, and drop ISDS, too!