Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
What would Teddy Roosevelt have thought of "investor-state dispute" tribunals?
Well, maybe we can find an answer in his 1912 Progressive Party platform:
Political parties exist to secure responsible government and to execute the will of the people.
From these great tasks both of the old parties have turned aside. Instead of instruments to promote the general welfare, they have become the tools of corrupt interests which use them impartially to serve their selfish purposes. Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people.
To destroy this invisible government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.
http://teachingamericanhistory.org/library/document/progressive-platform-of-1912/
And how would Teddy Roosevelt have responded if emissaries from J. P. Morgan had approached him with an idea to create "investor-state dispute resolution" tribunals in which Morgan could sue any federal, state, or local governmental agency which negatively impacted J. P. Morgan's profits, and have the tribunal approved by Morgan and exempt from judicial appeal?
Well, perhaps we can find an answer in Roosevelt's response to Morgan, when Morgan thought he could make a private deal with Roosevelt to save his railroad trust:
...Roosevelt told J. P. Morgan, when he thought he could make a deal to save his Great Northern Railroad Trust, he was "not interested" (and proceeded to have his Attorney General file suit under the Sherman Act.)
http://www.ushistory.org/us/43b.asp
54 replies
= new reply since forum marked as read
= new reply since forum marked as read
GONG it and shut that whole thing down.
(Seems the intellectual father of capitalism would agree with your statement that "Free market capitalism is not compatible with monopolies."
:
"The interest of the dealers [referring to stock owners, manufacturers, and merchants], however, in any particular branch of trade or manufacture, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, and absurd tax upon the rest of their fellow-citizens."
(Adam Smith, Wealth of Nations (Amherst, New York: Prometheus Books, 1991), pages 219-220)
"This monopoly has so much increased the number of some particular tribes of [manufacturers], that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature. The member of parliament who supports every proposal for strengthening this monopoly, is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest public services, can protect him from the most infamous abuse and destruction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists."
(Adam Smith, Wealth of Nations, page 368)
"The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."
(Adam Smith, Wealth of Nations, page 220)
"But though the interest of the labourer is strictly connected with that of the society, he is incapable either of comprehending that interest, or of understanding its connexion with his own. His condition leaves him no time to receive the necessary information, and his education and habits are commonly such as to render him unfit to judge even though he was fully informed. In the public deliberations, therefore, his voice is little heard and less regarded, except upon some particular occasions, when his clamour is animated, set on, and supported by his employers, not for his, but for their own particular purposes."
(Adam Smith, Wealth of Nations, page 218)
''When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.''
- Adam Smith, The Wealth of Nations
''No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.''
Adam Smith
http://www.nytimes.com/2001/08/16/business/economic-scene-the-many-faces-of-adam-smith-rediscovering-the-wealth-of-nations.html?sec=&spon=&pagewanted=print
What is being mislabeled by today's corporate media as "far left" is actually mainstream by historical standards.
Citing Adam Smith is the best reference for this argument and you were kind enough to give us the right notes.
...of the TPP would significantly expand the issues subject to such tribunals.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1740085
http://tcf.org/blog/detail/why-the-trans-pacific-partnership-could-leave-us-at-the-mercy-of-corporatio
(but your point is valid.)
(and, as you say,they certainly have changed.)
Here's a discussion of the $1.8 billion award from Equadorian taxpayers to Oxidental Petroleum.
http://citizen.typepad.com/eyesontrade/2012/10/tribunal-slams-ecuador-with-largest-investor-state-penalty-ever.html
The ballooning of Investor lawsuits in recent years, especially since NAFTA, underscore the problems associated with the inclusion of expansive non-trade issues in these agreements, including extension of copyright and patent monopolies, issues which would generate intense Congressional opposition if presented as a bill not hidden within a "Free Trade Agreement" designed to be Fast=Tracked through Congress without opportunity for amendment.
These are the issues that have turned a free trade advocate like Krugman into a TPP skeptic.
underscoring the exempt-from-appeal pro-corporate bias of the investor-state tribunals.
What events could have prompted such a massive judgment? In May 1999, Oxy signed a 20-year contract with Ecuador and the state oil company to explore for oil in Block 15, a segment of Ecuador’s Amazon, and extract from any discovered reserves (paras. 112, 115). In exchange for taking on all expenses, Oxy was contractually entitled to 70% of the oil produced, with Ecuador maintaining a right to the rest (para. 117). The contract also stipulated that while Oxy could sell the oil, it could not sell off any portion of its rights to produce and profit from the oil without government authorization. The contract stated that transferring the rights to the oil production without authorization “shall terminate” the contract, meaning legal annulment and forfeiture of investments (para. 119). This provision explicitly enforced Ecuador’s hydrocarbons law, which protected the government’s ability to vet companies seeking to gain control over oil production in its territory, a particular concern in the Chevron-ravaged Amazon region (para. 121).
One year after signing the contract, Oxy sought to sell off a portion of its investment in Block 15 oil production so as to gain capital and reduce expenditure risks. In October of 2000, it signed with the Alberta Energy Company (AEC, a Canadian firm) a contract in which Oxy kept “nominal legal title” to the oil production contract with the government, but AEC purchased 40% of Oxy’s oil rights and agreed to foot 40% of ongoing costs (paras. 128, 129). The two companies formed a “Management Committee” comprised of one AEC representative and one Oxy representative with the “power and duty to authorize and supervise Joint Operations” (para 136). Oxy mentioned the deal to the government, but neither presented the contract nor sought government authorization for AEC’s acquisition of a significant economic and operational stake in the Amazonian oil project (paras. 147-160).
After an audit of Oxy in 2004, Ecuador’s Attorney General determined that the confidential Oxy-AEC contract in 2000 had bypassed necessary government authorization and thus violated Oxy’s contract with the government, prompting him to initiate a process to annul it (para. 177). In May 2006, after a long delay filled with a presidential ouster and political tumult, the government terminated the contract with Oxy and repossessed the land and oil equipment of Block 15 (paras. 199, 200). . . . . How did the tribunal, reviewing this evidence, determine that Ecuador should pay Oxy the largest ICSID tribunal-decided sum in history? With 326 pages of logical gymnastics. The tribunal found that Ecuador had violated its BIT obligation to provide Oxy with “fair and equitable treatment,” the single most successful investor claim in the NAFTA-style investor-state system. To get there, the tribunal’s arguments took numerous turns, often defying Ecuador’s sovereignty, common sense, or both. I summarize below five of the most troubling arguments, presented in reduced arithmetic form to underscore the tribunal’s “logic.”
. . . . .
Five Affronts to Sovereignty / Reason
continued at link:
http://citizen.typepad.com/eyesontrade/2012/10/tribunal-slams-ecuador-with-largest-investor-state-penalty-ever.html
Do we benefit democracy by turning over an increasing slice of economic activity, including large areas of patent and copyright law, environmental law, labor law, safety law, and food labeling law, to the pro-corporate whims of exempt-from-appeal investor-state tribunals?
Your description of the political process involved in coming to an agreement ("Ecuador would have been involved in establishing this tribunal, so it would be reasonable to assume that they endeavored to make sure that it would be impartial, fair and just. Otherwise why would they agree to it in the first place?"
is very interesting in light of the current situation regarding the TPP, in which U.S. Representatives and Senators endeavoring to determine whether or not the terms are fair, just, and beneficial, and whether or not we should agree to such terms, are being denied the right to take notes, have staff accompany them, or have the access necessary to consult with independent experts.
Perhaps you feel that U. S. Representatives and Senators have no business providing input or provided access, that such matters of determining the terms of patent & copyright law, environmental, labor, safety, and food labeling should be determined by in secret by negotiations between the executive branch and corporate lobbyists, and that the role of Congress should be to approve in an up-or-down vote without input or amendment.
It is interesting to see arguments that assume that the fact that an agreement was made is used as proof that the terms were carefully examined and found to be beneficial, at the very same time we are witnessing a full court press to ram through a "Fast Track" through a Congress which has substantial restrictions on the access requisite to making an informed determination of national interest.
.... tribunals exempt from judicial appeal, and "restricted access" by members of Congress, as otherwise the alternative is a "hermit kingdom" surrounded by a "moat"?
Thanks for educating me!
...medications, higher pharmaceutical prices in general .... these are a pretty high price to pay for unsubstantiated "counterbalancing provisions", especially in an era in which overt trade restrictions have already been dramatically reduced.
Krugman, a free trade advocate, points out that the major issues in the current process is not about eliminating trade restrictions, but about increasing monopoly rents through changes in intellectual property law. Consequently, Krugman, despite being a supporter of free trade, states he would be relieved if the TPP were to "fade away".
Too bad Krugman (as well as Reich, Hightower, Warren, Sanders, and the progressive caucus) isn't converted by hints of "counter-balancing provisions".
Europeans don’t want investor state dispute settlement in trade agreements
The European Commission today released the results of a public consultation on the investor state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP). Between 27 March and 13 July 2014, the Commission had invited citizens to comment on various aspects of ISDS and received a record number of nearly 150,000 responses. It emerged today that 97 per cent of responses oppose ISDS.
ISDS would give foreign investors the right to sue states in private arbitration courts for any actions that could damage their profit expectations. Investors have used similar agreements to sue states and demand millions, even billions of Euros in compensation. One example is the lawsuit of Swedish energy company Vattenfall against Germany for introducing environmental requirements for a coal fired power stations. Another example is Canadian gas and oil company Lone Pine suing against a fracking moratorium in the state of Quebec.
“Such cases show that ISDS can be used to undermine environmental standards, to prevent regulation or to pocket taxpayers’ money. It’s bad enough that some investment agreements already include ISDS. It should certainly not be included in any future trade and investment deals.“ demanded Karl Bär, a spokesperson of the Stop TTIP alliance......
https://stop-ttip.org/europeans-dont-want-investor-state-dispute-settlement-trade-agreements/
http://www.iatp.org/files/NAFTA_Chapter_11_Investor-to-State_Cases_Bankr.htm
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1740085
http://tcf.org/blog/detail/why-the-trans-pacific-partnership-could-leave-us-at-the-mercy-of-corporatio
http://www.hightowerlowdown.org/node/3402
as documented above.
The fact remains that the number of ISDS lawsuits have exploded in recent years, especially since NAFTA:
NAFTA’s investor protections are unprecedented in a multilateral trading agreement. Since the agreement’s enactment, corporate investors in all three NAFTA countries have used the these new rights to challenge a variety of national, state and local environmental and public health policies, domestic judicial decisions, a federal procurement law and even a government’s provision of parcel delivery services as NAFTA violations. While most cases are still pending, some corporations have already succeeded with these challenges. (Please see the chart listing these cases and their status at the end of the Executive Summary.) . . . . . . Remarkably, NAFTA also provides foreign investors the ability to privately enforce their new investor rights. Called "investor-to-state" dispute resolution, this extraordinary mechanism empowers private investors and corporations to sue NAFTA-signatory governments in special tribunals to obtain cash compensation for government policies or actions that investors believe violate their new rights under NAFTA. If a corporation wins its case, it can be awarded unlimited amounts of taxpayer dollars from the treasury of the offending nation even though it has gone around the country’s domestic court system and domestic laws to obtain such an award.
Supporters of NAFTA claimed that these extensive investors protections and their private enforcement mechanism were necessary to protect investors from the state seizure of private property (i.e., nationalization). Mexico, which nationalized its foreign oil refineries in 1938, was the prime target of these concerns. . . . . . . . . . . . . However, the majority of the investor-to-state cases filed to date have had little to do with the seizure of property NAFTA supporters feared.3 Instead, the cases challenge environmental laws, regulations and government decisions at the national, state and local level:
The California-based Metalclad company successfully challenged the denial of a construction permit by a Mexican municipality for the building of a toxic waste facility;
Environmental and health bans of suspected toxins have been challenged, with one case already resulting in reversal of a Canadian government ban on the gasoline additive MMT;
Canada’s implementation of two international environmental agreements has been successfully challenged, and Canada will soon be ordered to pay damages to U.S. investors in both cases;
Foreign corporations have taken two lawsuits they lost in U.S. domestic courts to be "reheard" in the NAFTA investor-to-state system, one challenging the concept of sovereign immunity regarding a contract dispute with the City of Boston and the other challenging the rules of civil procedure, the jury system and a damage award in a Mississippi state court contract case;
The American company, United Parcel Service (UPS), has filed a suit challenging the governmental provision of parcel and courier services by the Canadian postal service; and
A Canadian steel fabrication company challenged a federal "Buy America" law for highway construction projects in the U.S.
This extraordinary attack on normal government activity -- such as operating a civil justice system through courts, denying a construction permit or establishing health and other public interest regulations -- has drawn growing criticism to NAFTA’s Chapter 11 investment rules. For some Republican and Democratic members of Congress who voted for NAFTA, these cases have been an unexpected and unwelcome result of the agreement. The Republicans were promised NAFTA would not undermine U.S. local and state sovereignty and control. The Democrats were promised NAFTA would not undermine domestic environmental and health laws. Both were promised NAFTA would not give foreign investors better treatment than local businesses or open the U.S. Treasury to new demands from foreign investors. But the NAFTA Chapter 11 cases have made a mockery of these promises. . . . Of the 15 cases reviewed in this report, the damages claimed by the companies add up to more than U.S.$13 billion. Initially, not many cases were filed under these provisions. However, once the first investors obtained damages and/or reversal of the government policy they attacked, a flurry of additional cases were filed. . . .
http://www.iatp.org/files/NAFTA_Chapter_11_Investor-to-State_Cases_Bankr.htm
... the Pandora's box of corporate goodies into which ISDS's have evolved.
The straw man you continue to attack is the concept of absolute novelty, which you claim that some posters "seem to believe".
Yet the substantial, and growing, damage that ISDS's are doing to the public interest, and the threat posed to many diverse non-trade areas of law, lies not in an imaginary absolute novelty, but in the reality of the ISDS's that have evolved as a result of corporate influence, generally exerted out of public view.
This reality has resulted in dramatically increased ISDS lawsuits and pro-corporate awards under NAFTA, which have been extensively documented.
The wide scope of the TPP, extending far beyond the lowering of actual trade barriers such as tariffs and duties, and now primarily involving such issues as extension of copyrights and patents, expands the scope of the threads posed by this Pandora's Box of corporate goodies under the TPP.
But rather than addressing these issues, which have been clearly articulated by many, including Robert Reich, Jim Hightower, and even free trade advocates such as Paul Krugman (who, despite his advocacy of free trade, points out that the TPP does not primarily address trade issues, but rather extending monopoly rights through patent and copyright charges, such that he would be relieved if it is not adopted), you continue to attack the straw man of absolute novelty which you claim some posters "seem to believe".
.... investments, but about undermining environmental and other legitimate legislative processes, as documented above.
Your mis-characterization of critics of Fast Tract & the TPP (which includes Robert Reich, Paul Krugman, Jim Hightower, Elizabeth Warren, & Bernie Sanders) as being akin to believing the President is the anti-Christ, a Muslim, and/or Kenyan is a gratuitous smear, which only serves to distract from the central issues (one central issue being that corporate interests continue to abuse the specter of nationalization to create a system of sovereign tribunals, exempt from judicial appeal, that amount to a de facto corporate coup.)
Here's Robert Reich on the TPP and Nafta:
STOP THE TPP. Congress is poised to fast-track the Trans-Pacific Partnership trade deal (that is, move it through both houses without opportunity for amendment). This massive trade pact with 11 Asian and Latin American nations, whose total population is almost 800 million and comprise 40 percent of the world’s GDP, is a high priority for the U.S. Chamber of Commerce and its corporate patrons because it would strengthen patent and copyright protections abroad, and encourage American corporations to make even more stuff overseas and ship it here. Americans benefit from cheaper goods from abroad only if Americans have the money to buy them. But this massive deal would further erode the jobs and wages of working and middle-class Americans while delivering its biggest gains to corporate executives and shareholders. Moreover, the deal’s environmental and labor safeguards are woefully inadequate, and it would give global corporations further rights to challenge American health and safety laws.
I still regret not doing more to strengthen the North American Free Trade Act's labor and environmental side-agreements when I was labor secretary under Bill Clinton. The TPP is NAFTA on steroids. Make a ruckus.
https://www.facebook.com/RBReich/posts/736965702982695
Note Reich's statement, "... it would give global corporations further rights to challenge American health and safety laws.", a direct reference to the ISDS system.
More from Reich, specifically on the TPP and Fast Track:
(especially when combined with his regrets regarding NAFTA).
I support and respect him.
One of the reasons I support him is that he is one of the few Presidents to tell his supporters:
"Your job is to hold my feet to the fire. So, you need to be out there everyday raising these issues, telling us when we’re doing the right or wrong thing."
The problems most see with the TPP is not about trade. The TPP, even more than NAFTA, covers an extremely wide breadth of issues, extending intellectual property monopolies, and having impact on a wide range of environmental, labor, safety, food labeling, and internet communication issues.
What is known is that each of these are issues that would, and should, be subject to intense debate on their own merits. In many cases these involve corporate benefits that would not pass Congress on their own merits.
For these wide, non-trade, issues to be bundled into a "Free Trade Agreement" and "Fast-Tracked" through Congress without opportunity for amendment, totally relying on the executive branch, is not appropriate, no matter how much one trusts the executive.
Our President has instructed us to do our job: to "hold my feet to the fire"...to "tell us when we’re doing the right or wrong thing."
Congress has a duty be more than a rubber stamp, and this is magnified by the wide breadth of non-trade issues in the TPP.
To imply that those who support Congress doing its constitutional duties are "ignoring that government heads, like Obama, have a say in these agreements.", or that that support for constitutional process implies distrust of the executive, is a fallacy, and one that serves only to distract from the central issues.
