This week, Oliver Wright and Nigel Morris writing in The Independent reported that Britain’s freedom to tackle climate change, protect consumers or guarantee a publicly-run NHS could be jeopardised by a trade deal being negotiated between Europe and the US, MPs and pressure groups have warned. Under a draft plan supported by the European Commission, multinational firms would be given wide-ranging powers to sue EU governments that adopt public policies deemed to “discriminate” against free trade.
Why should we be worried about this? It’s mostly because campaigners warn that similar trade deals elsewhere in the world have resulted in countries being sued for adopting policies in the public good – such as anti-smoking measures – because they were deemed to penalise foreign investors. These include Australia which is currently being sued by Philip Morris for introducing plain cigarette packaging, Canada, which is being sued by US drugs firm Eli Lilly for revoking patents on drugs on the grounds that their benefits may have been overstated and Germany is being sued for ending its nuclear power programme.
The article says that Zac Goldsmith, the Tory MP, told The Independent: “It is hard to see how this won’t seriously jeopardise the sovereignty of the UK Government and its legal system. Disputes between companies and legislators should always be dealt with by British courts.”
We’re told that more than 200 organisations across the EU, including the TUC, Greenpeace and War on Want, have written a joint letter to European and American trade negotiators demanding the removal of the investor-state dispute settlement (ISDS) process from the final treaty.
If you haven’t come across ISDS before, here’s what Wikipedia says about it: Investor-state dispute settlement (ISDS) is a provision in international trade treaties and international investment agreements that grants an investor the right to initiate dispute settlement proceedings against a foreign government in their own right under international law. For example, if an investor invests in country “A”, which is a member of a trade treaty, but then country A breaches that treaty, then that investor may sue country A’s government for the breach.
In response to the campaigners, the European Commission and the British Government insist the deal under the draft plan would include safeguards to prevent misuse by corporations, thus guaranteeing the right of EU governments to “pursue legitimate public policy objectives such as social, environmental, security, public health and safety” without the risk of being sued.
The article goes on to say that ISDS has been a long-established principle of multilateral trade deals between countries and is a process designed to ensure investors are not discriminated against by governments or biased judicial systems. It allows companies who believe they have been unfairly treated to take states to a neutral arbitration panel that can award compensation for loss of earnings.
But in recent years, campaigners claim, it has been used by large multinational companies to sue governments acting in the public interest. The Slovak Republic was forced to pay $22m (£13.4m) damages after the government reversed the liberalisation of its health-insurance market.
Green Party MP Caroline Lucas, who tabled the parliamentary motion, said the move would “overturn decades of laws and regulations formed through democratic processes on both sides of the Atlantic”.
A Department for Business spokesperson said the UK already has more than 90 ISDS agreements with other countries and added: “Investment protection provisions do not limit the ability of states to make or repeal any law or regulation.”
There doesn’t seem to be much written about these issues in the popular press. A few articles, some left-leaning, some Green, are now emerging, including WikiLeaks here and NewMatilda.com here. There’s an interesting piece described as a “Brief chronicle of an obscure, scarcely informative “civil society” meeting on the Transatlantic Trade and Investment Partnership in Brussels on January 14th, 2014” here.
Are we in Britain at risk? It’s not clear yet. It’s a case of “watch this space” as I think there’s more to unfold.
He has written over 700 business publications (see Glossaries at http://onesmartplace.com/resources/glossaries/) and is editor of Better Business Focus (see http://onesmartplace.com/resources/better-business-focus-magazine). His Blog, on a wide range of subjects can be found at: http://onesmartplace.com/blog/
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