Despite what some politicians say, corporations aren’t people. But, even worse, when it comes to the world’s biggest trade deals, corporations are actually treated like nation states. Thankfully, a major storm is brewing that could put a crack in this fundamental pillar of the existing free trade regime.
Today’s free trade deals commonly include a set of rules that empower corporations to challenge laws and policies passed by democratically-elected governments in secret trade courts. Increasingly, corporations use these so-called ‘investor-state’ provisions to challenge energy and climate policies, public health and anti-smoking laws, and minimum wage requirements – among many others. That authority effectively gives corporations the same legal standing as other nations when it comes to international trade. While civil society has long opposed this anti-democratic and anti-public interest process, new leadership in the European Union may help bury this system of corporate rights once and for all.
This process of “investor-state” dispute settlement has been a major and controversial issue in the Transatlantic Trade and Investment Partnership (TTIP), a free trade deal being negotiated between the United States and the European Union. Back in December 2013, less than six months after negotiations for the trade pact began, more than 200 civil society organizations from both sides of the Atlantic urged investor-state provisions to be excluded from TTIP because:
- Investor-state dispute settlement forces governments to use taxpayer funds to pay corporations for public health, environmental, labor and other public interest policies and government actions;
- Investor-state dispute settlement explicitly undermines democratic decision-making; and
- European and U.S. legal systems are already very capable of handling disputes.
The United States Trade Representative (USTR), the part of the U.S. government that negotiates free trade pacts like TTIP, has been absolutely clear in its desire to keep investor-state provisions in the pact, despite strong opposition from U.S. civil society organizations, state legislators, and some Members of Congress. The sentiment in Europe is more skeptical.
In January 2014, for example, growing public concern over these reckless provisions prompted the European Commission to halt negotiations on this part of the agreement and conduct a public consultation on the issue. About 150,000 people responded to the consultation--one of the highest response rates ever for a Commission consultation. The Commission is now compiling the results.