Corporate Sovereignty On The Wane, As Governments Realize It's More Trouble Than It's Worth
from the but-not-dead-yet dept
A few years ago, corporate sovereignty — officially known as “investor-state dispute settlement” (ISDS) — was an indispensable and important element of trade deals. As a result, it would crop up on Techdirt quite often. But the world is finally moving on, and old-style corporate sovereignty is losing its appeal. As we reported last year, the US Trade Representative, Robert Lighthizer, hinted that the US might not support ISDS in future trade deals, but it was not clear what that might mean in practice. The Canadian Broadcasting Corporation (CBC) site has an interesting article that explores the new contours of corporate sovereignty:
The preliminary trade agreement the U.S. recently reached with Mexico may offer a glimpse of what could happen with NAFTA’s Chapter 11 [governing ISDS].
A U.S. official said the two countries wanted ISDS to be “limited” to cases of expropriation, bias against foreign companies or failure to treat all trading partners equally.
The new US thinking places Canada in a tricky position because the latter is involved in several trade deals, which take different approaches to corporate sovereignty. As well as the US-dominated NAFTA, there is CETA, the trade deal with Europe. For that, Canada is acquiescing to the EU’s request to replace ISDS with the new Investment Court System (ICS). In TPP, however — still lumbering on, despite the US withdrawal — Canada seems to be going along with the traditional corporate sovereignty approach.
Despite treading diametrically opposite paths on tariffs and market access, India and China, along with other nations, have hit it off on talks regarding investment norms in the proposed Regional Comprehensive Economic Partnership (RCEP) pact.
In a bid to fast-track the deal, most nations have agreed to ease the investor-state-dispute settlement (ISDS) clauses.
As with NAFTA and CETA, it seems that the nations involved in RCEP no longer regard corporate sovereignty as a priority, and are willing to weaken its powers in order to reach agreement on other areas. Once the principle has been established that ISDS can be watered down, there’s nothing to stop nations proposing that it should be dropped altogether. Given the astonishing awards and abuses that corporate sovereignty has led to in the past, that’s a welcome development.