Despite improved dispute settlement mechanism, trade deals remain suspect


Essentially a vanity project by Donald Trump and a slightly modified version of the North American Free Trade Agreement (NAFTA), the Canada-United States-Mexico Agreement (CUSMA) contained a victory for the people.

As Scott Sinclair of the Center for Policy Alternative notes in a new report, the removal of investor-state dispute settlement (ISDS) from the renegotiated NAFTA was a crucial victory for democratic sovereignty over investor power. Within three years, CUSMA will eliminate the SDSI between Canada and the United States and significantly reduce it between the United States and Mexico.

This is a good change, he notes, given the number of problems Canada has suffered under NAFTA’s Chapter 11 investment provisions. Not only did environmental risks impose, but were forced to pay for this privilege, the result of ISDS provisions that had not been widely discussed prior to the entry into force of NAFTA in 1994.

“The obscurity of the NAFTA ISDS system was short-lived. In 1996, Ethyl Corporation, the US company responsible for leaded gasoline, launched the first NAFTA claim against Canada. Ethyl opposed a Canadian ban on the importation and interprovincial trade of MMT, the manganese-based gasoline additive which is a suspected neurotoxin. Automakers have also claimed that MMT interferes with on-board diagnostic systems in automobiles.

“In 1998, after the court’s preliminary rulings against him, the Canadian government settled with the company. He paid Ethyl $ 13 million, repealed the MMT ban, and ridiculously apologized to the company. Suddenly Chapter 11 of NAFTA captured the attention of policymakers and the public, ”he writes in The Rise and Demise of NAFTA Chapter 11.

“Then in 1998, a US waste disposal company challenged a temporary Canadian export ban on polychlorinated biphenyl (PCBs) toxic waste. Canada argued that the ban was taken for environmental protection reasons in accordance with its obligations under the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal. The NAFTA tribunal dismissed this argument, ruling that the Canadian actions violated Chapter 11 rules on discrimination and minimum standards of treatment. He awarded SD Myers $ 6.05 million and ordered the government to pay investors’ legal fees of $ 850,000. “

These questions are a clear example of how free trade talks have little to do with trade – let alone freedom. In fact, NAFTA and the types of agreements that followed – CETA, TPP, CUSMA and their ilk – are all about the control of corporations, subverting the public good in the name of profits.

The problem is that agreements like the Trans-Pacific Partnership are not about trade. It is about consecrating corporatism and eliminating national government control over unfettered capitalism in all its abusive glory.

Going further in the continuum of “trade” agreements, new agreements such as the TPP enshrine corporate profit rights over good public policy, the environment and even people’s lives. Corporations can and will sue governments for hampering profits, able to demand massive compensation from governments if they are unable, for example, to provide private health care services in Canada.

PTP-type agreements are no longer primarily aimed at reducing traditional trade barriers. Instead, they are policies that have nothing to do with comparative advantage, policies that are often designed to result in higher consumption costs and a concentration of corporate power.

So the TPP has little to do with trade – and remember that free trade deals have done a lot of harm to most Canadians and their working and middle class counterparts in the world. United States – but everything to do with increasing the wealth of a few while killing. jobs and jack up prices here. On this point, many critics – including Nobel Prize winners – agree.

Many see it as an end to sovereign nations and their ability to protect the public good – already a dubious undertaking, given the corrupt and co-opted governments we elect. There will be a loss of governance, higher prices – changes in intellectual property and patent rules will drive up the cost of products, from pharmaceuticals to music – and downward pressure on wages.

We know, of course, that sweeping trade deals have been largely damaging to our economy, fostering the kind of globalization that has ravaged the manufacturing sector in Ontario, as it has even done in the heart of the United States.

The language used in early agreements such as NAFTA becomes even more pronounced in CETA and the TPP allows national governments to be bypassed, essentially limiting their powers. In many ways, its deregulation continues through stealth, as governments would be handcuffed. As parties to the negotiations, they do so willingly, trying to hide from the public the desire to cede more power to the companies. Once the agreements are in place, national governments can simply wash their hands of all the issues raised by their citizens.

It is a pro-business program, to the detriment of other priorities that citizens may have, by transferring the levers of control from public to private hands.

It can be argued that liberalized monetary policies and trade agreements favor corporate interests over the well-being of citizens – policies that have eroded our standard of living for three decades. The cure, we are told, is even more deregulation and globalization, essentially offering a drowning man more water instead of a life jacket.

It is the angst over sweeping changes in our economies that has helped fuel the rise of populist movements, from the author of Make America Great Again to pro-citizen groups such as Syriza and Podemos.

The realities of trade wars as we saw from the previous US administration, for example, don’t make sense, but sentiment does, especially at the ever-growing grassroots. In principle, Western countries under pressure from the influx of goods from overseas and the insidious trend of outsourcing to offshore locations, which have been more pressing concerns than trade with our American neighbors, with which we have much more in common on all fronts … until recently, that is.

Buying locally, especially from small producers and retailers, is the perfect tonic for globalization that has destabilized the financial system, weakened the national economy, and lowered the standards and safety of the products we consume. It might not be that simple, but simplicity and slogans are hallmarks of the types of populism we see in the United States.

Trade agreements generally reflect the imbalance of power between corporate investors and the vast majority of the public. But there is reason to be optimistic, Sinclair notes in his report.

“Just as the early NAFTA Chapter 11 cases turbocharged the ISDS regime in North America and around the world, its cancellation at USMCA could spur the reverse process of dismantling the system. In Europe, there is anger over lawsuits by investors demanding massive compensation for phasing out fossil fuels32. In the South, dozens of countries, large and small, have chosen to opt out of damaging investment treaties.

“Although it is not an easy task, the prospects for dismantling ISDS are better than ever.”



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