Getting Action: Strangling Democracy

How the TPP Extends the Tentacles of Corporate Power

by Thomas Mc Donagh

Last week the proposed Trans-Pacific Partnership (TPP) trade agreement leapt from behind the closed doors of negotiations to the front pages of major newspapers, thanks to information from Wikileaks revealing previously unpublished details of the proposed intellectual property chapter of the deal.

TPPIf you hadn´t yet heard about the TPP, there is a reason for that. Not even members of the US Congress have been allowed to see the negotiating text. Thanks to a set of leaks however, we´re beginning to get glimpses of exactly how dangerous the agreement is. The Wikileaks revelations have shone an urgent public light on the agreement’s onerous implications regarding intellectual property.

In 2012, however, another leak uncovered what may be an even more dangerous aspect of the TPP. The proposed investment chapter of the deal revealed plans to expand the system of international investment tribunals that deal with what is called ‘investor-state dispute settlement’. These are closed-door courts that take direct aim at the ability of governments across the world to enact environmental, public health and other protections for their citizens.

We don’t need much help to imagine what a world under these provisions of the TPP would look like. We need look no further than some of the current investor-state dispute cases in which powerful international corporations are demanding millions – sometimes billions – of dollars in claims, against countries both poor and wealthy, for the sin of protecting their citizens.

This is the very same system that the Bechtel Corporation used to attempt to drain $50 million from the Bolivian public treasury after the corporation had been thrown out during the Cochabamba Water War.

This is the same system that Canadian mining firm Pacific Rim, recently taken over by Oceana Gold, is using to try to extract over $300 million from the people of El Salvador for having rejected mining operations that threaten to contaminate their drinking water.

And it’s the same system that Philip Morris, the tobacco giant, is using against Uruguay and Australia to try to eliminate important public health regulations designed to reduce tobacco consumption.

The number of these investment cases has exploded in recent years, with 2012 breaking all records. Cases such as these, with serious implications for government ability to regulate for public health, environmental protection and access to water, are now being heard far away from domestic legal systems in international investor-state arbitration courts. Decisions in these closed door tribunals are made by three investment lawyers working on a for-profit basis with no obligation to balance the public interest with the profit-making interest of corporations. Governments, meanwhile, have no corresponding right to bring legal action against corporations in these arbitration tribunals when they breach national environmental regulations or human rights laws. It’s all one-way traffic.

The evidence is there to show how the investment rules system is poisoning our democracies; its huge expansion under the guise of the TPP threatens to serve up this toxic dish to millions more citizens. The proposed investment rules chapter will grant more rights to corporations, expand their access to this system of international investment tribunals and open the door for many more of these cases.

The conflict of interest between corporations hard wired to maximize profit – even if it comes at the cost of our fresh water sources, our public health laws and our basic services – and policy making designed to serve the public interest is nowhere more apparent than in these arbitration cases. The means of mediating this conflict of interest and blocking unbridled profit-making is the democratic process.

The TPP leaks make it ever clearer, however, that these trade agreements are the mechanisms that corporations are now using to thwart democracy and to undermine the ability for us to pressure our governments to take action on a range of urgent public issues.

The recent Wikileaks disclosures have served as a wake-up call regarding the potential impact of the TPP on issues related to intellectual property. However, the investment chapter leaked in 2012 – and with potentially even more pernicious implications for our democracies – didn’t get anything like as much attention. This is largely due to a complete lack of awareness of the international investment rules regime beyond a small collection of lawyers and advocates.

Published in May 2013 the Democracy Center’s latest report Unfair, Unsustainable and Under the Radar:  How Corporations Use Global Investment Rules to Undermine a Sustainable Future explains for a non-technical audience what seems to many like a highly technical issue, and in so doing aims to help put a much wider public spotlight on this corporate power grab while there is still time to fight it.

George Monbiot, writing in the UK Guardian recently, described the expansion of the current international investment rules regime in the negotiations of the EU-US trade agreement as a “full-frontal assault on democracy”.  It’s time for the investment rules regime to be put much more clearly on to the public radar.


Thomas Mc Donagh is project coordinator and researcher with the Democracy Center in Cochabamba, Bolivia. Thomas works on the Network for Justice in Global Investment project, which has been raising awareness of the investor state arbitration issue for many years.

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13 Responses to Getting Action: Strangling Democracy

  1. We will vigorously oppose any transatlantic agreement that compromises our democracies, human and Indigenous rights, and our right to protect our health and the planet. We urge the EU and Canadian governments to follow the lead of the Australian government by stopping the practice of including ISDS in their trade and investment agreements, and to open the door to a broad re-writing of trade and investment policy to balance out corporate interests against the greater public interest.

  2. So what we’re talking about with this leaked chapter is literally a parallel system of justice. People have domestic laws and courts, trying to defend our rights and get our needs met. Corporations would have a parallel system of private attorneys, three of them, no conflict-of-interest laws. The U.S. and the other countries would submit themselves to the jurisdiction of this corporate kangaroo court, and these three random attorneys would have the right to order the U.S. government to pay unlimited amounts of our tax dollars to corporations and investors who, A, claim regulatory costs need to be refunded, or, B, are saying they’re not being treated well enough, regardless if the policies they dislike are the exact same ones that apply to all of us. Even under NAFTA’s system, which has some of this, $350 million have already been paid out to corporations by governments, over toxics bans, zoning laws, timber rules. This is a sneaky outrage. And if people actually put a spotlight on it, we can stop it.

  3. Yes: Some say that progress on global climate change requires a joint strategy among the small number of actors responsible for the lion’s share of the world’s carbon dioxide emissions, including China (25.3 percent), the United States (17.8 percent), the European Union (14.2 percent), and a handful of other developed and emerging economies.

  4. The United States and other major economies have already begun to turn to smaller, less formal frameworks, including the Group of Twenty (G20), the Major Economies Forum (MEF), and the Climate Change Forum–which some analysts point to as alternatives to the United Nations.

  5. However, when energy policy and climate change are compared to other issues, they are rated extremely low in terms of importance. A Pew Research Center poll on public priorities for 2011 found that global warming ranked last of twenty-two possible policy priorities. The same survey in 2012 found similar results.

  6. Report 2012: Even with the current mitigation commitments and pledges fully implemented, there is roughly a 20 percent likelihood of exceeding 4°C by 2100. A series of recent extreme events worldwide highlight the vulnerability of all countries.

  7. No nation will be immune to the impacts of climate change. The global community has committed itself to holding warming below 2°C to prevent “dangerous” climate change.

  8. World Bank Group President Jim Yong Kim (2012): “Climate change is one of the single biggest challenges facing development, and we need to assume the moral responsibility to take action on behalf of future generations, especially the poorest.

  9. 4°C warmer world can, and must be, avoided – we need to hold warming below 2°C. Lack of action on climate change threatens to make the world our children inherit a completely different world than we are living in today”.

  10. These results suggest instead a rapidly rising risk of crop yield reductions as the world warms. Large negative effects have been observed at high and extreme temperatures in several regions including India, Africa, the United States, and Australia. For example, significant nonlinear effects have been observed in the United States for local daily temperatures increasing to 29°C for corn and 30°C for soybeans. These new results and observations indicate a significant risk of high-temperature thresholds being crossed that could substantially undermine food security globally in a 4°C world.

  11. China has engaged only very reluctantly in the global effort to bring down overall emissions. The US Congress’s deep reservations regarding the passage of a climate bill has been exacerbated by China’s positions, especially on issues such as international monitoring and accountability for its emissions, which China considers an affront to its sovereignty.

  12. If a corporation “wins”, the taxpayers of the “losing” country must foot the bill. Over $350 million in compensation has already been paid out to corporations in a series of investor-state cases under NAFTA-style deals alone. This includes attacks on toxics bans, natural resource policies, health and safety measures, and more. In fact, of the over $12.5 billion in the 17 claims now pending under NAFTA-style deals, all relate to public health, environmental, and transportation policy – not traditional trade issues. Even when governments win, they waste scarce budgetary resources defending national policies against these corporate attacks.

  13. China has engaged only very reluctantly in the global effort to bring down overall emissions.