Fighting corporate privilege in trade and investment

Investor State Dispute Settlement (ISDS) clauses allow MNCs to sue the government using a secretive private tribunal system. The tribunals can require governments who use their democratic legislative powers to protect the public interest to pay billions of dollars of damages to corporations. In the most alarming recent case, the giant tobacco company Phillip Morris is suing the Australian government for damages after the government introduced legislation requiring cigarettes to be packaged in plain packets in an attempt to reduce the harm from smoking.

Referring to this case, Dr Margaret Chan, General Secretary of the World Health Organization (WHO) has stated that: “Something is fundamentally wrong in this world when a corporation can challenge government policies introduced to protect the public from a product that kills... If these agreements open trade – yet close access to affordable medicines, we have to ask: Is this really progress at all, especially with the costs of care soaring everywhere?”

ISDS is also used by MNCs to sue governments for future profits when they re-municipalise privatised services – even when the privatised company has broken the law or the privatisation has failed. These rights are not extended to private citizens nor to local business, implying that MNCs have more rights than people and have a competitive advantage over local business. Shockingly, MNCs can sue governments for future expected profits, even if the company has not yet started in that line of business.

The meeting in Istanbul identified the latest threats, shared examples of the abuse of ISDS clauses and planned action to raise awareness and oppose the use of ISDS.

PSI’s Daniel Bertossa, who attended the meeting as a member of the global co-ordinating committee representing the labour movement said, “The meeting was a great success and has identified concrete areas for action. Raising awareness of this issue is essential as most people are not only unaware, but are shocked when they understand the new rights our governments are giving to corporations”.

The meeting identified the need for the technical issues surrounding the new clauses to be made more understandable for people and the importance of publishing examples of the abuse of these clauses. More information about the action planned from the meeting will be available soon.

Shortly after the meeting in Istanbul, the AFL-CIO convened a meeting of concerned unions at the ITUC congress in Berlin and also pledged to fight a global campaign against ISDS.

To find out more about PSI’s work on Trade agreements click here.