In the spotlight

In the spotlight 1

Who is pushing FTAs?

Free trade and investment agreements (FTAs) are deals between two or more governments outside the World Trade Organisation (WTO). Many political and economic elites in countries like the US, members of the European Union (EU), Japan and Australia have looked outside the WTO since they claim it doesn’t go far enough in setting global rules for the benefit of their corporations and their geopolitical objectives, while multilateral talks have moved slowly. Since the beginning of this century, these elites seek more powerful deals on a bilateral or regional basis with tough enforcement teeth. The idea is that by getting countries to commit to deeper and more comprehensive levels of corporate freedom through these agreements, a uniform global market that is “wide open” to transnational business and finance capital flows can be built from the bottom up.

It’s not surprising that these deals are drawn up in secret: parliaments have no role other than setting broad objectives while the public is denied access to actual negotiating texts. Corporate lobbyists are actively consulted throughout the process on the outcomes they want: indeed, transnational corporations and industry coalitions are major players in shaping these deals in the first place. For example, in the early phase of talks between the US and EU on the Transatlantic Trade and Investment Partnership (TTIP), agribusiness corporations like Cargill and Coca-Cola were the top interest group telling negotiators exactly what they wanted written into the deal [1].

FTAs cover a very comprehensive range of issues — from intellectual property rights (IPR), telecommunications and energy to food safety — spelling out exactly what countries can and cannot do in a vast number of areas as they open their markets to foreign investors. As a result, the governments that sign on are forced to rewrite their laws, and make binding, enforceable commitments against going backwards. Through these deals, companies even get the right to scrutinise draft policies and regulations that they claim may affect them in the FTA partner country.

Right now, social movements are fighting powerful new FTAs such as:
– CETA between Canada and the European Union (The European Parliament has voted to approve the agreement on the 15th of February 2017);
– TTIP between the US and the EU;
– TPP between the US, Japan and 10 other countries (the US has pulled out but that does not necessarily mean the deal is dead);
– RCEP between ASEAN, China, India, Japan, Australia, Korea and New Zealand;
– TISA, on services alone, between the US, EU, Japan and 20 other countries;
– EPAs imposed by the EU in Africa;
– and bilateral deals being pushed by the EU with India, Vietnam, Mexico, Japan, Mercosur, Chile, etc.

In addition to political and regulatory power, all of these treaties would give corporations access to natural resources, labour and new markets.

While some of these deals seem to be on shaky ground now since new right-wing governments in countries like the UK and the US have promised to replace a host of old trade agreements with new ones, this does not necessarily mean that the old deals will simply disappear. They may change shape or membership or go more slowly. Moreover, it would be a mistake to believe the propaganda that new and “better” trade or investment agreements will save local jobs or create trickle down well-being for farmers, consumers, small companies or the environment. Nothing has changed in the agenda of seeking to prop up the super 1% of big business, including agribusiness, through these deals.

In the spotlight 2

Investor state dispute settlement, what is at stake?

One of the most damaging elements of free trade agreements and investment treaties is the “investor state dispute settlement” (ISDS). The mechanism stems from colonial times, when powerful empires wanted to protect their companies working overseas to extract minerals or produce cash crops. They created legal texts that evolved into today’s investment treaties, aiming to protect investors from “discrimination” and expropriation by foreign states.

To do this, the treaties grant transnational corporations (TNCs) a special right to take foreign governments to binding arbitration when they consider themselves treated unfairly. This means that TNCs can ‘sue’ governments when they adopt public policies like anti-smoking laws or regulations to cut air pollution that might restrict their investments and profits. Domestic companies don’t get this same right: the mere threat of such a lawsuit can drive policy-making (chilling effect).
International investment disputes are taken to special arbitration panels, usually at the World Bank in Washington DC or at arbitration courts like the one in The Hague. This allows them to bypass national courts altogether, on the grounds that they may be biased. Proceedings are conducted by private lawyers and usually in secret with no appeal possible.

In the last 15 years, ISDS disputes have skyrocketed. In most cases, the investor’s demands are fully or partially satisfied. As a result, governments have payed awards that typically amount to millions, if not billions, of dollars — taxpayer money that could be used for public benefit. This threat has some governments putting their investment treaties on hold as they rethink strategies.

ISDS affects food sovereignty in several ways. It gives companies powerful legal leverage to overturn domestic policies that support small farmers, local markets and the environment. Initiatives to fight climate change in the food sector — e.g. to promote short circuits by granting preferences or subsidies to local producers — can be challenged by TNCs if they expect to be negatively affected. Recently, Canada stopped a US company from proceeding with an open pit mining project in Nova Scotia because the damage it would bring to local fisherfolk was too great. The company took Canada to an ISDS tribunal and won, costing Canadian taxpayers US $100 million.

Mexico had to pay US $90 million to Cargill, because of a tax on beverages containing high fructose corn syrup — a sweetener linked to obesity, produced by this corporation. The tax helped safeguard the Mexican cane sugar industry, with hundreds of thousands of jobs, from the influx of the US-subsidized syrup.

ISDS gives foreign investors more rights than domestic investors, and they use this to their benefit in the agricultural and fisheries sectors. Trade deals generally assert that foreign investors should have equal access to farmland and fishing grounds as domestic ones (“national treatment”). ISDS gives these corporations an extra tool to assert that right that national companies — or farmers or fishers and their cooperatives — don’t enjoys. Sometimes national agribusiness investors set up companies abroad and then invest in their home country just to avail of these extra protections.

The linchpin of strengthening food sovereignty in the context of international and even regional trade relies on states’ power to give preference to local and national food producers through subsidies and procurement policies. These subsidies and preferences are generally banned under free trade commitments (even though they are widely used by big actors such as the US or the EU), and ISDS gives foreign corporations a tool to make sure that competition from domestic producers supported by such policies does not threaten their bottom line.