Discussions of the value of trade agreements have been quite prominent in the current election campaign. Supporters of the neoliberal economic model are strong advocates of so-called ‘free trade’, extolling the benefits they claim it provides, while critics have said that the only ones who really benefit are the oligarchs who get greater freedom to move capital and production around the globe is pursuance of greater profits, leaving behind abandoned workers.
But there is another lesser-known aspect of these agreements and that is that they create an alternative legal system that is heavily tilted in favor of the oligarchs. Chris Hamby, in the first of a three-part series, describes how this new system known as ISDS (investor-state dispute settlement) enables crooks to get away either scot-free or with just a slap on the wrist.
Imagine a private, global super court that empowers corporations to bend countries to their will.
Say a nation tries to prosecute a corrupt CEO or ban dangerous pollution. Imagine that a company could turn to this super court and sue the whole country for daring to interfere with its profits, demanding hundreds of millions or even billions of dollars as retribution.
Imagine that this court is so powerful that nations often must heed its rulings as if they came from their own supreme courts, with no meaningful way to appeal. That it operates unconstrained by precedent or any significant public oversight, often keeping its proceedings and sometimes even its decisions secret. That the people who decide its cases are largely elite Western corporate attorneys who have a vested interest in expanding the court’s authority because they profit from it directly, arguing cases one day and then sitting in judgment another. That some of them half-jokingly refer to themselves as “The Club” or “The Mafia.”
And imagine that the penalties this court has imposed have been so crushing — and its decisions so unpredictable — that some nations dare not risk a trial, responding to the mere threat of a lawsuit by offering vast concessions, such as rolling back their own laws or even wiping away the punishments of convicted criminals.
This system is already in place, operating behind closed doors in office buildings and conference rooms in cities around the world. Known as investor-state dispute settlement, or ISDS, it is written into a vast network of treaties that govern international trade and investment, including NAFTA and the Trans-Pacific Partnership, which Congress must soon decide whether to ratify.
Hamby gives three examples of how corporate criminals exploit this court.
- A Dubai real estate mogul and former business partner of Donald Trump was sentenced to prison for collaborating on a deal that would swindle the Egyptian people out of millions of dollars — but then he turned to ISDS and got his prison sentence wiped away.
- In El Salvador, a court found that a factory had poisoned a village — including dozens of children — with lead, failing for years to take government-ordered steps to prevent the toxic metal from seeping out. But the factory owners’ lawyers used ISDS to help the company dodge a criminal conviction and the responsibility for cleaning up the area and providing needed medical care.
- Two financiers convicted of embezzling more than $300 million from an Indonesian bank used an ISDS finding to fend off Interpol, shield their assets, and effectively nullify their punishment.
Just as the neoconservatives seek to impose US hegemony on the rest of the world by using US military force, the neoliberals seek to impose corporate-capitalist hegemony on the rest of the world using these trade agreements. Both groups are entrenched in the US political system and have the power to overcome objections.
When the US Congress votes on whether to give final approval to the sprawling Trans-Pacific Partnership, which President Barack Obama staunchly supports, it will be deciding on a massive expansion of ISDS. Donald Trump and Hillary Clinton oppose the overall treaty, but they have focused mainly on what they say would be the loss of American jobs. Clinton’s running mate, Tim Kaine, has voiced concern about ISDS in particular, and Sen. Elizabeth Warren has lambasted it. Last year, members of both houses of Congress tried to keep it out of the Pacific trade deal. They failed.
It will be interesting to see if the ISDS gets mentioned in the upcoming presidential debates and becomes an issue. The idea of a supra-national entity that can override national legal systems is the kind of thing that should be repulsive to the nativist campaign of Donald Trump and I am not sure why he has not taken u the issue.