TTIP: the corporate trump card

The TTIP trade agreement could make it impossible for governments to legally ban fracking, writes Thomas McDonagh

December 1, 2014
3 min read

If passed, the Transatlantic Trade and Investment Partnership (TTIP) trade deal will give corporations a new weapon to undermine future fracking bans and regulation in Europe. The deals’ investment chapters will grant corporations access to a system of private international tribunals to enforce a range of new rights.

This system, known as the investor-state dispute settlement (ISDS) mechanism – a veritable corporate trump card – is already being used by one US corporation to undermine fracking bans elsewhere. In the Canadian province of Quebec, the government has introduced a moratorium on fracking pending further tests and research. One of the corporations involved, Lone Pine Resources, is using the investment chapter of the North American Free Trade Agreement (NAFTA) to bring an ISDS case for $250million.

The ISDS system allows corporations to sue not just for what they have invested in a country when a government changes a policy or regulation but for what they expected to earn into the future. Hearings take place in private tribunals overseen by arbitrators working on a for-profit basis who move seamlessly between their roles as supposedly ‘independent’ arbitrators to their other work as corporate lawyers. Cases can only be brought by foreign corporations and there is no corresponding right for domestic companies – or indeed for governments or citizens when corporations cause human rights abuses.

If there was any doubt as to the intention of corporations to use this system in conflicts in Europe, the contribution to the consultation on the TTIP in the US by the Chevron corporation, which has fracking interests in several EU countries, is illuminating. It dedicated its entire response to the area of ‘investment protection’ – what it called ‘one of our most important issues globally’.

Europeans don’t have to go far to see this system at work. In Germany the government changed its policy on nuclear energy following the Fukushima disaster, cancelling some planned nuclear plants. It is now being sued by energy corporation Vattenfall for over €1 billion.

Nor was this the first such case. When Hamburg‘s environmental authority imposed quality controls for the waste waters released into the river from a planned coal-fired power plant, Vattenfall used ISDS provisions to seek compensation of €1.4 billion. The case was eventually settled when the City of Hamburg agreed to lower the environmental requirements – a telling indication of the ‘chilling effect’ the threat of such actions can have on policy.

Use of the ISDS system in cases against governments has only really taken off in recent years. Indeed, 2012 and 2013 have set records for the numbers of new ISDS cases – 57 and 58 respectively.

The ISDS mechanism has gone from being a legal tool of last resort in cases of government expropriation of assets to a weapon of choice in struggles over a growing range of important social and environmental issues. The explosion of cases in recent years has led many governments, economists and legal experts around the world to openly criticise the system and attempt to withdraw from it once they’ve seen in practice the threat it represents to democracy and public interest policy making.

The inclusion of ISDS in TTIP would greatly expand this system and likely lead to a further proliferation of cases. Given the very high level of existing trans Atlantic trade and investment, the deal would result in 75,000 firms being newly empowered to use these private tribunals.

The extractive industries, under increasing scrutiny for their role in environmental degradation, are using the ISDS weapon more and more in order to prevent any challenges to their dirty operations. They must be stopped.

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.
Share this article  
  share on facebook     share on twitter  

The government played the public for fools, and lost
The High Court has ruled that the government cannot veto local council investment decisions. This is a victory for local democracy and the BDS movement, and shows what can happen when we stand together, writes War on Want’s Ross Hemingway.

An ‘obscure’ party? I’m amazed at how little people in Britain know about the DUP
After the Tories' deal with the Democratic Unionists, Denis Burke asks why people in Britain weren't a bit more curious about Northern Ireland before now

The Tories’ deal with the DUP is outright bribery – but this government won’t last
Theresa May’s £1.5 billion bung to the DUP is the last nail in the coffin of the austerity myth, writes Louis Mendee

Brexit, Corbyn and beyond
Clarity of analysis can help the left avoid practical traps, argues Paul O'Connell

Paul Mason vs Progress: ‘Decide whether you want to be part of this party’ – full report
Broadcaster and Corbyn supporter Paul Mason tells the Blairites' annual conference some home truths

Contagion: how the crisis spread
Following on from his essay, How Empire Struck Back, Walden Bello speaks to TNI's Nick Buxton about how the financial crisis spread from the USA to Europe

How empire struck back
Walden Bello dissects the failure of Barack Obama's 'technocratic Keynesianism' and explains why this led to Donald Trump winning the US presidency

Empire en vogue
Nadine El-Enany examines the imperial pretensions of Britain's post-Brexit foreign affairs and trade strategy

Grenfell Tower residents evicted from hotel with just hours’ notice
An urgent call for support from the Radical Housing Network

Jeremy Corbyn is no longer the leader of the opposition – he has become the People’s Prime Minister
While Theresa May hides away, Corbyn stands with the people in our hours of need, writes Tom Walker

In the aftermath of this disaster, we must fight to restore respect and democracy for council tenants
Glyn Robbins says it's time to put residents, not private firms, back at the centre of decision-making over their housing

After Grenfell: ending the murderous war on our protections
Under cover of 'cutting red tape', the government has been slashing safety standards. It's time for it to stop, writes Christine Berry

Why the Grenfell Tower fire means everything must change
The fire was a man-made atrocity, says Faiza Shaheen – we must redesign our economic system so it can never happen again

Forcing MPs to take an oath of allegiance to the monarchy undermines democracy
As long as being an MP means pledging loyalty to an unelected head of state, our parliamentary system will remain undemocratic, writes Kate Flood

7 reasons why Labour can win the next election
From the rise of Grime for Corbyn to the reduced power of the tabloids, Will Murray looks at the reasons to be optimistic for Labour's chances next time

Red Pepper’s race section: open editorial meeting 25 June
On June 25th, the fourth of Red Pepper Race Section's Open Editorial Meetings will celebrate the launch of our new black writers' issue - Empire Will Eat Itself.

After two years of attacks on Corbyn supporters, where are the apologies?
In the aftermath of this spectacular election result, some issues in the Labour Party need addressing, argues Seema Chandwani

If Corbyn’s Labour wins, it will be Attlee v Churchill all over again
Jack Witek argues that a Labour victory is no longer unthinkable – and it would mean the biggest shake-up since 1945

On the life of Robin Murray, visionary economist
Hilary Wainwright pays tribute to the life and legacy of Robin Murray, one of the key figures of the New Left whose vision of a modern socialism lies at the heart of the Labour manifesto.

Letter from the US: Dear rest of the world, I’m just as confused as you are
Kate Harveston apologises for the rise of Trump, but promises to make it up to us somehow

The myth of ‘stability’ with Theresa May
Settit Beyene looks at the truth behind the prime minister's favourite soundbite

Civic strike paralyses Colombia’s principle pacific port
An alliance of community organisations are fighting ’to live with dignity’ in the face of military repression. Patrick Kane and Seb Ordoñez report.

Greece’s heavy load
While the UK left is divided over how to respond to Brexit, the people of Greece continue to groan under the burden of EU-backed austerity. Jane Shallice reports

On the narcissism of small differences
In an interview with the TNI's Nick Buxton, social scientist and activist Susan George reflects on the French Presidential Elections.

Why Corbyn’s ‘unpopularity’ is exaggerated: Polls show he’s more popular than most other parties’ leaders – and on the up
Headlines about Jeremy Corbyn’s poor approval ratings in polls don’t tell the whole story, writes Alex Nunns

Job vacancy: Red Pepper is looking for a political organiser
Closing date for applications: postponed, see below

The media wants to demoralise Corbyn’s supporters – don’t let them succeed
Michael Calderbank looks at the results of yesterday's local elections

In light of Dunkirk: What have we learned from the (lack of) response in Calais?
Amy Corcoran and Sam Walton ask who helps refugees when it matters – and who stands on the sidelines

Osborne’s first day at work – activists to pulp Evening Standards for renewable energy
This isn’t just a stunt. A new worker’s cooperative is set to employ people on a real living wage in a recycling scheme that is heavily trolling George Osborne. Jenny Nelson writes

Red Pepper’s race section: open editorial meeting 24 May
On May 24th, we’ll be holding the third of Red Pepper’s Race Section Open Editorial Meetings.


48