australianvoice (australianvoice) wrote,

THE HIDDEN NASTY IN THE TPP: Investor-State Dispute Settlement (ISDS)

It is hard to understand why any country would choose freely to enter into any treaty or other agreement which involves the Investor-State Dispute Settlement (ISDS). In the ISDS system, a company can demand Australia pay compensation for law or regulation which they believe hinders their profits. This system of extreme corporate privilege is one of the central parts of the TPP. The ISDS provisions of the treaty authorize supra-national tribunals independent of any other judicial system to settle disputes between corporations and countries. These tribunals are in effect a private court system staffed by corporate lawyers paid by the muiltinational corporations who designed the TPP. Under the TPP, if a company believes an Australian law endangers its "expected future profits," it can take this dispute to an investor-state tribunal. This tribunal has the power to overrule Australian laws and levy fines against the Australian government. However this system cannot be used by Australia to sue any multinational company. The ISDS is a one-way street. There are so many problems with this system it is hard to know where to start.

1) Deregulation: The ISDS system is not about trade. Its sole purpose is to force deregulation on a country.

2) Sovereignty: Such forced deregulation is a surrender of a nation's sovereignty, its power to frame and enforce legislation and policies.

3) No Consideration of Public Interest:
Under the ISDS system, there is no possibility for consideration of what we all understand as public interest. The only reason relevant to remove a given law or regulation is that it will diminish the profitability of a foreign company.

4) Anti-democratic:
The ISDS system is totally beyond the usual democratic processes of elections, advocacy and public protest. How a robust democracy could even consider accepting such a system is incomprehensible.

5) One-Sided:
The ISDS system does not allow for States to sue corporations. As a legal document, it is a one way street. It is incomprehensible how any government, democratic or not, would agree to the ISDS system without a gun being held to its head. So who is holding the gun?


6) Consider This Analogy:
Perhaps the best way to illustrate the belligerent and aggressive approach embodied in the ISDS system is to consider an analogous situation in ordinary life. Suppose you invited one of your friends over for dinner. When they arrive, you explain politely to you that you do not like to have people smoking in your house. A normal response would be to accept your "house rules" and come in for dinner. However suppose instead they said that they were damn well going to smoke during dinner, and if you continue to protest they would smash down your door and break your windows. It is like the guest who won’t take off their dirty shoes at the door.

This aggressive behaviour resembles the actions of the corporations who are behind the ISDS system. Instead of realizing that it is a privilege to be allowed to invest in Australia, they think it is their right to invest here. Furthermore, it is their right to do whatever they want to in order to maximize their profits. How can the leaders of any self-respecting country tolerate such an arrogant approach by foreign corporations?

7) An ISDS Treaty is a Blank Cheque:
There is no limit to the laws or regulations which could be challenged and removed. People who believe such a system might be reasonable are either lying, kidding themselves, or seriously lacking in imagination.

One of the early advocates of the deregulation which is the core of the ISAS system was the philosopher John Stuart Mill. In his essay On Liberty Mill defends the British position in the Opium War. He insisted the Chinese government was restricting the freedom of the people in China to buy what they wanted. He believed "that the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." From this, he argued against limitations on free trade in alcohol and opium as unjustified infringements on the rights of the buyer. That is, one of the main advocates of "free trade" actually argued for complete deregulation of alcohol and drugs. His reasoning would apply equally to all the modern drugs such as ecstasy, ice, cocaine, heroin and amphetamines.

The point is that there is nothing in the ISDS system which could hinder a demand for the kind of deregulation advocated by Mill. The defenders of the ISDS system will say that this is extreme and nobody is going to suggest such changes be enforced by the ISDS system. This may seem extreme, however Mill was not speculating about possible laws. He was defending what was a real and very profitable policy of the British government and the East India Company, namely harvesting opium in India and selling it to China.

There is no place for what we call public interest in the ISDS system. In fact it is devised to avoid any such consideration. So, to repeat: it follows from the structure of the ISDS system that ANY law or regulation, however wise it might seem to the people of Australia, can in principle be overturned or used as a basis for a compensation payment. This system has absolutely no safeguards of any kind. It is a blank cheque which can be filled out in any way a foreign company sees fit. Only a fool or a fanatical supporter of deregulation could think the ISDS is good for anybody but the huge corporations that came up with the ISDS system.

Political life in today's democracies is made up of hundreds of decisions which balance what can be called the greater good with the legitimate interests of individuals and corporations. For example we have drawn the line between legal and illegal drugs and ignore the extreme position taken on this by J.S. Mill. But in the ISDS system, who is going to draw the line which restricts the interests of large foreign companies? Just the companies themselves and the handful of overpaid lawyers they have set up as their own private legal system? It certainly looks like the fox guarding the proverbial henhouse.

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Tags: australia, tpp

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