US-EU trade deal stalls over corporations suing governments

Until recently investor-State dispute settlement (ISDS) cases were rare.   This is the provision that allows companies to take governments to international arbitration panels to seek compensation if they feel their investment has been harmed by government action.   There has now been a surge in filings by companies taking an ever broader view of what constitutes a legitimate cause for action.   According to the OECD, 57 ISDS cases were filed against government in 2013, almost half of them in developed economies.   What is disturbing is that ISDS has increasingly been stretched to cover regulatory actions rather than simple expropriation.   Several recent cases illustrate this point.

Vattenfall, a Swedish energy company, is suing the German government for €3.7bn over the latter’s decision to phase out nuclear power in the wake of the Fukushima nuclear disaster.   Canada was forced to revoke its ban on the toxic fuel additive MMT under challenge from the US company Ethyl.   The US tobacco giant Philip Morris is suing the Australian government for billions of dollars over its public health policy that all cigarettes must now be sold in plain packaging.   Argentina has been hit hard by several ISDS cases, msny of them related to the country’s decision to unpeg its currency from the US dollar in 2002, and has been forced to pay over $500m  to settle 5 companies’ claims in October 2013.   Ecuador has been ordered to pay Occidental Petroleum $1.77bn in damages for terminating the oil giant’s contract when the company broke Ecuadorian law.   A separate tribunal threw out the claim by Ecuador for $19bn in damages against Chevronfor its contamination of the Amazonian rainforest over a period of two decades.

The use of ISDS by transnational corporations is now reaching epidemic proportions.   Over 500 known cases have now been filed against at least 95 countries, of which over 400 have come in the last decade alone.    A study by the LSE found that if Britain joined up to the ISDS in the current secret Transatlantic Trade and Investment Partnership (TTIP) negotiations, the UK would be exposed to an even greater number of disputes and costs than Canada suffered under the NAFTA, while being “highly unlikely” to bring in any additional investment .   It is worth noting that no bilateral agreement with any industrialised nation has ever resulted in increased US investment.

TTIP is widely seen as an attempt to sideline emerging economies such as China, Brazil and India that are now challenging the hegemony of the core capitalist powers.   Ultimately TTIP is an agreement designed to benefit US and EU transnationals seeking to expand their market access and to engineer the removal of regulations that restrict their profits.   But public resistance is growing, particularly in Germany, while the Cameron government  as usual is the stooge that follows the US lead.   The increasingly strident call from civil society is to stop TTIP altogether and replace it with an alternative trade mandate that puts people and the planet before corporate profit.

3 thoughts on “US-EU trade deal stalls over corporations suing governments

  1. A good sound article and I agree that new EU free trade agreement will benefit the US and extend their pernicious economic hegemony even further to determent of us all.

    But how many people will make the connection between free trade; on the US’s terms and it’s consequences, among which are the continuing abolition of universal healthcare and complete privatization of the NHS, (henceforth to be now treated as commercial business not as a public service?)

    Anyone wanting a taste of things to come should recall Blackstone capital’s asset striping of Southern Cross Care Homes:

    “Taxpayers face having to rescue more than 31,000 vulnerable people amid financial meltdown at the UK’s biggest care-home company.”

    “The bill could run into hundreds of millions of pounds after ruthless City speculators left Southern Cross Healthcare in dire straits.”

    “There is anger and outrage that so many lives have been thrown into turmoil through the actions of City venture capitalists.”

    “The U.S. private equity firm Blackstone, led by Stephen Schwarzman, bought Southern Cross in 2004 for £162million and sold it three years later. It is believed to have quadrupled its investment.”

    “But to achieve this it sold off the company’s homes, robbing Southern Cross of its capital and forcing it to lease the properties back from another company.”

    Thank you; The Daily Mail.

    Downing Street announced yesterday that the Government will use public money to ensure those in the 750 affected homes can stay – amid warnings that moving them would lead to the deaths of the most vulnerable.

    The crisis is the worst ever to hit the care-home sector.

    So far?

  2. The increasingly strident call from civil society is to stop TTIP altogether and replace it with an alternative trade mandate that puts people and the planet before corporate profit. sense at last why does one need trade agreements this ttip isn’t in the populations interest and firms taking governments to court is a no no but then the tories have sold us out time and time again just hope eu sees that this could cause heartache for member states jeff3

  3. Great article. Are there more MP’s like you who oppose the TTIP. Zac Goldsmith strangely enough is the only MP I am aware of who opposes TTIP which was most unexpected.

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