Unpacking the ISDS: Why the ISDS actually is a threat to us here

[cali]

I initially posted this in May, 2015

The first in a series I'll post: I try not to make these posts too long as I suspect that long posts are too often not read in detail.

First let me stipulate that the US has never lost an ISDS case. 17 have been brought. The US has prevailed in 13. 4 are pending. The TPP will significantly increase the volume of cases because many more corporations will have the right to bring ISDS cases.


Let's begin with a brief history:

The first ISDS was included in a trade agreement between Pakistan and Germany in 1959 to protect investors from unfair government actions and a court system that couldn't be trusted to rule equitably. The U.S. has about 50 trade agreements with ISDS provisions.

The most common claim echoed here at DU is about how the ISDS is nothing to get upset about because the U.S. has never lost an ISDS case- as mentioned above

A nation's laws cannot be changed by ISDS: True. An ISDS tribunal cannot alter the laws of a nation. But they can order restitution- and these can be large. That in turn can and does place pressure on countries, states and municipalities to not pass laws that they fear will result in being challenged by an investor. Such rewards also place pressure on a government to repeal laws. The former has already happened. One example is that several countries have put off plain packaging for cigarettes due to the WTO ISDS cases Philip Morris brought against Australia and Uruguay:



In 2011, Australia passed a tobacco-control law to discourage smoking. It required cigarettes to be sold in plain packages with prominent warnings, with brand information relegated to the bottom of the box. Touted as “one of the most momentous public health measures in Australia’s history” by the country’s health minister, the law was meant to deter a habit that will ultimately kill 1.8 million current Australian smokers, according to a recent study. After the country’s highest court upheld the constitutionality of the anti-smoking law, tobacco giant Philip Morris claimed that it violated the company’s corporate rights and launched a suit using a little-known provision called investor-state dispute settlement (ISDS). The case is pending, as is a similar case against Uruguay. A similar tobacco-control measure in New Zealand is on hold pending the outcome of these cases.

How can this happen? In each case, Philip Morris is empowered to sue because of investment treaties. Many treaties and trade agreements enshrine the rights of corporations to claim that a country’s right to regulate public health interferes with profits and to sue states to protect them. And the cases, heard in special tribunals, often protect corporate profits at the expense of the health and welfare of citizens.

What’s happening in these cases should serve as a cautionary tale for Americans, as President Barack Obama’s administration pushes through the final stages of negotiating the Trans-Pacific Partnership (TPP). The signature trade deal would open the United States to more suits just like these. Although the deal is being sold as a trade equalizer that would benefit U.S. citizens and companies, it could instead make it more difficult and more costly for the United States to protect its own people.

<snip>
http://foreignpolicy.com/2015/05/04/in-pro-corporate-tribunals-we-trust/

[jehop61]

1. Please enlighten us

as to what an ISDS is.

[cali]

3. Sorry. Investor State Dispute Settlement

https://en.wikipedia.org/wiki/Investor-state_dispute_settlement

[DanTex]

2. The problem is, trade agreements can't exist without something like ISDS.

It doesn't have to be called "ISDS", but there needs to be some form of dispute resolution, and it has to be international and independent, it can't take place in the legal systems of one of the countries. Without ISDS, countries can pass laws directly targeting competing international businesses, rendering trade agreements ineffective.

I don't know anyone who thinks its good that Phillip Morris is able to successfully challenge public health measures, to me public health measures are obviously just that, and not a form of protectionism, particularly given how harmful smoking is and how effective anti-smoking measures have proven to be in improving public health. So it seems to me in this case that the problem isn't ISDS, but rather the rules that ISDS enforces are poorly written if anti-smoking measures can be construed as protectionism.

In any case, tobacco is exempt from ISDS in TPP, so that particular example is a non-issue here.

[cali]

4. Yes, but the ones in FTAs to date, are seriously tilted toward corporations

Here's a chart of all cases as of June of 2015

http://www.citizen.org/documents/investor-state-chart.pdf

[DanTex]

5. I agree with that assessment. But I think that those making that case, including people like

Elizabeth Warren who I think very highly of, rather than simply saying that ISDS is bad, should talk about ways that ISDS could be made more just. Just saying "ISDS is bad" isn't very productive. Moreover, the fact that the US has never lost such a case indicates at the very least that ISDS is not, at least not at present, the nightmare that some make it out to be (though I get what you are saying in the OP: that the US has never lost a case is not conclusive evidence, just suggestive). And since we are going to be trading with other nations, there is going to be something like ISDS, so I think efforts towards improving it are more productive than efforts just opposing it.

Also, a lot of opposition to ISDS seems to be based on the principle that private corporations should not be able to sue governments in extra-judicial courts. And that makes for a good talking point, but it's not correct. There needs to be a mechanism by which investors can defend themselves against targeted protectionist laws, and it has to be in an extra-judicial court because neither party would, nor should, trust the courts in one of the two countries involved. I suppose it could be set up in such a way that investors can't directly challenge governments, only governments can, but that would add another layer of bureaucracy and potential corruption because an investor would then have to lobby his/her own government to raise the issue in an "SSDS" tribunal rather then doing it themselves.


The Obama administration claims that TPP represents a marked improvement over previous trade deals with respect to ISDS. Is that actually true? Probably there's some improvement, but not enough.

https://www.whitehouse.gov/blog/2015/02/26/investor-state-dispute-settlement-isds-questions-and-answers

[cali]

6. That is absolutely fair. And suggestions for improvements have been made

I don't see much improvement in the Investment chapter in the the TPP as compared to other FTAs.

<snip>

More than the mere existence of the ISDS process itself is its structure within the TPP agreement that has critics the most alarmed. Unlike the U.S. and many member states’ judicial systems, which involve presumably impartial judges and attorneys who generally focus on one side of the bench, members of the ISDS panels are amorphous. Panel members rotate between being lawyers and judges depending on the dispute. The foreign investor and the state each choose one of the three ruling judges, and the foreign investor is the only entity that can initiate a case. Many opponents of the panel structure believe that it is too easy for investor-states to stack the deck in their favor, given the ambiguous structure of the panels. Even more alarming to legal scholars, however, is the fact that panel rulings are not required to follow legal precedent, nor are there avenues for appellate review. It is likely the structure of these panels that will be the most hotly contested component of TPP when it faces its “fast track” vote through Congress, presumably near the end of the month. It would be surprising to see the bill pass without some alterations regarding the ISDS structure, especially the latter two parts regarding precedent and appellate review.

<snip>
http://www.legalreader.com/tpps-isds-moving-from-state-to-state-to-company-to-world-dispute-resolution/

And no, no changes were made to improve the ISDS process prior to the TPA vote- which is certainly one reason dems voted so hugely against passing TPA.

https://www.eff.org/deeplinks/2015/04/fasttrack-bill-legitimize-white-house-secrecy-and-clear-way-anti-user

[DanTex]

7. I don't know enough about the issue to assess for myself whether the ISDS is actually improved

or not. It's a complicated issue. There are people I trust on both sides of it, and also in the middle. I've been meaning to educate myself more, but haven't done that. I haven't read the investment chapter of TPP, nor have I read the investment chapters in any of the other trade deals. So I'm relying on opinions of others I trust, and those vary widely. Though I will say that Stiglitz's firm opposition to TPP is persuasive, probably more than anyone else's.

Broadly speaking, my opinion of trade deals is that everyone makes too big a deal out of them. I'm basically neutral on TPP, I tend to agree with the view that it's more of a geo-political anti-China play than an economic move, but that doesn't mean it's a bad thing.

Thanks for the links.

[cali]

8. It's hard to do. It's being physically disabled that allowed me to delve into it

particularly in 2013 when I was totally immobile except for learning to walk again starting in a tank of water thingie.

It keeps my mind occupied and off the pain to get absorbed in learning something.

You are very welcome re the links

On I/P issues, infojustice, a project hosted by American University, is very good- and so is the EFF.

http://infojustice.org/

[DanTex]

9. Learning to walk again, wow, that is something.

PS. Thanks for coming back to DU, great having you here, even if I disagree with you a lot, yours is an informed opinion. Look, we just had a civil conversation!

Be well.

[cali]

10. Yes we did.

and it was informative.

(I smashed my leg up so badly that it required 3 surgeries, a rod inside the tibia from ankle to knee, plates on the fib and various other screws and bolts. Left me with RSD- Reflex Sympathetic Dystrophy also known as CRPS, Complex Regional Pain Syndrome)

https://en.wikipedia.org/wiki/Complex_regional_pain_syndrome

[ananda]

11. I understand.

I had CRPS for awhile. In my experience, it's something most
people just don't get. I was lucky to beat it, but it gave me a
whole new perspective on life.

I hope you beat yours, too.

[cali]

14. Thank you. So far no luck.

And I've been through a lot of treatments- from spinal nerve blocks to all kinds of medications. I don't know how you got it, or if it was type I or II, but mine was the result of severe trauma.

I have days that are better and days that just plain suck.

I'm so glad you beat it.

[DanTex]

12. Ouch. Car accident?

My cousin almost lost a leg after being shot in a stop-light mugging (he tried to drive away) couple years ago. It was iffy in the hospital whether they could get blood flow back or would have to amputate. But eventually he made an almost full recovery, he even plays sports again.

I hope you recover fully.

[cali]

15. No. Stupidity. I was running down slippery wooden stairs in socks

I made it 3 steps down a long flight and in trying to right myself, landed on a stone floor with all my weight on one twisted leg. I had to crawl on my stomach up my driveway and and down the dirt lane to the neighbor's to get help. I still shudder at the thought of that night. It was a compound spiral break. Ugh.

It's been 4 years, several surgeries. The bones eventually healed but I did a fair amount of soft tissue damage and was left with traumatic arthritis in the ankle and the damned CRPS.

Thanks for the wishes for a full recovery. I exercise as much as I can, but I really miss certain things. I used to be a runner and I've downhill skied since I was a little kid.

On the upside, I'll never run down the stairs again.

[randome]

13. Philip Morris is expected to lose their case.

It's not as simple as saying "corporate rights are at risk". It's when a country passes a law that favors their own companies over those of countries it has a trade treaty with.
[hr][font color="blue"][center]Stop looking for heroes. BE one.[/center][/font][hr]