Why investor protection matters so much in trade deals
The European Parliament will vote at last on Wednesday (unless the vote is postponed again, until the autumn) on the most toxic element of modern trade deals: investor-state dispute settlement (ISDS). Like the rest of the European trade union movement, we’re calling on MEPs to exclude ISDS, and ISDS-lite from trade deals. Some people say that trade unions and others are making a fuss about nothing, but there are several reasons why it really does matter, and here are two.
The first is the obvious one, that ISDS opens the way for rapacious multinational companies to prevent governments doing what their electorates have voted for, by suing for eye-watering damages if they think they can prove to a biased international tribunal that their interests have been infringed. No one is saying that governments should be free to seize assets or break contracts without compensation (although a radical democrat might argue that this is precisely what democratically-elected governments should be able to do if there is a need, eg if the actions of the corporate in question would add to global warming, or cause homelessness, joblessness and poverty.) ISDS hasn’t just been used for that, but even for the expectation of future profits, on contracts not even yet awarded!
That’s what people worried about the future of the NHS, or about renationalisation of the railways are concerned about. ISDS can’t prevent governments taking services back into the public sector, but it can make it ruinously expensive.
But second, and in the long run more important, ISDS tells you everything you need to know about what has gone wrong with our politics, economy and society. It provides a unique route for private investors to seek redress for decisions that go against them, where no such route exists for anyone else. Workers who lose their jobs and livelihoods because of globalisation; consumers who face dangerous products, or mis-sold goods entering their markets because of trade agreements; or environmentalists seeing the planet despoiled and raw materials squandered – they can only rely on domestic courts, rather than the special route provided for foreign investors. Many of the governments who insist on supporting ISDS are hypocritically blocking attempts to make corporate responsibility enforceable globally.
The European Court of Justice is a transnational body designed to enforce – as a last resort – the international agreements peoples of Europe enter into as part of their membership of the EU. But the ECJ is open to everyone, whether you are an investor, a worker, a consumer or an environmentalist. It enforces ALL the elements of EU law, rather than just those that apply to investors.
In the Canada-EU trade deal known as CETA (the comprehensive economic and trade agreement), workers who feel their rights have been abused can ask their government to seek an expert ruling. And that’s all they get – a stiffly worded report from an eminent group of people. We’d swap that for a secret court awarding workers billions of pounds any day, but that compensation is only open to foreign investors.
That’s why we’re calling on MEPs to vote against ISDS, and ISDS-lite, on Wednesday. You can do the same by taking our Going to Work e-action.