The United States is in the final stages of secret, closed-door negotiations on the Trans-Pacific Partnership, a massive trade agreement with 11 other countries.
Who will benefit from it? One provision hidden in the fine print – “Investor-State Dispute Settlement” – may sound harmless, but don’t let that fool you: ISDS could let foreign companies challenge US laws without ever stepping in an American court.
That would undermine US sovereignty and tilt the playing field even further in favor of multinational corporations.
Here’s how ISDS would work: Imagine that the United States bans a toxic chemical that is often added to gasoline because of its health and environmental consequences. If a foreign company that makes the toxic chemical opposes the law, it would normally have to challenge that regulation in a US court.
But with ISDS, the company could skip the US courts and go before an international panel of arbitrators. If the multinational company won, the ruling couldn’t be challenged in US courts, and the arbitration panel could require American taxpayers to cough up millions – and even billions – of dollars in damages.
If that seems shocking, buckle your seat belt. ISDS could lead to gigantic fines, but it wouldn’t employ independent judges. Instead, highly paid corporate lawyers would go back and forth between representing corporations one day and sitting in judgment the next. Really.
And if the tilt toward giant corporations wasn’t clear enough, consider who would get to use this special court: only international investors, which are, by and large, giant corporations. So if a Vietnamese company with US operations wanted to challenge our refusal to import a dangerous chemical, it could use ISDS. But if an American labor union or human rights group believed Vietnam was allowing Vietnamese companies to pay slave wages in violation of trade commitments, the American labor group would have to make its case in the Vietnamese courts – and if an environmental group thought the Vietnamese company was dumping waste in their rivers in violation of the new trade agreement, they would have to go to a Vietnamese court as well. In other words, the great deal for corporations is only for corporations – everyone else is left out.
Opposing ISDS isn’t a partisan issue – even your Tea Party relatives should be worried about this dangerous provision:
- Conservatives who believe in US sovereignty should be outraged that ISDS would shift power from American courts, whose authority is derived from our Constitution, to unaccountable international tribunals.
- Libertarians should be offended that ISDS effectively would offer a free taxpayer subsidy to countries with weak legal systems.
- And progressives should oppose ISDS because it would allow big multinational corporations to weaken labor and environmental rules.