Why Germany Is Backing Away From a Trade Deal That Lets Corporations Sue the Government
Wednesday, 13 August 2014 09:16
In a move that has many on the left cautiously celebrating, Reuters reported on July 28 that Germany might reject a new trade agreement between Canada and the European Union.
The deal is called the Comprehensive Economic and Trade Agreement, or CETA. It's part of a new wave of large, aggressive trade deals that also includes the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union, and the Trans Pacific Partnership (TPP) between 12 countries of the Pacific Rim.
If all the deals passed, they would affect more than half of the world's economy. But the red light from Germany could signal that these agreements are not as inevitable as their advocates suggest.
Germany's objections are centered specifically on the so-called "investor-state dispute settlement" provisions in CETA. These provisions—also known by the acronym ISDS—allow transnational corporations to take legal action against individual governments if they believe that the country's domestic laws violate a trade agreement. And the legal disputes happen through arbitration, which is a way to settle disputes completely outside of the involved countries' courts.
We've seen this movie before. Chapter 11 of the North American Free Trade Agreement (NAFTA) stipulates that three-person panels of private attorneys decide who wins in disputes between corporations and individual governments. These proceedings are closed to public observation.
The fallout has been dramatic: Corporations have used the NAFTA tribunals to win big-ticket monetary settlements from the taxpayers of nations whose domestic laws interfere with corporate profits. According to a report by the consumer-rights advocacy group Public Citizen, there are 17 pending claims in which corporations are seeking a total of $38 billion through NAFTA and other deals.
The compensation won through these claims hits particularly hard in Argentina—the most frequent target of these cases according to a 2014 report by the United Nations Conference on Trade and Development. In one example, Argentina was ordered to pay $185.3 million to the energy company BG Group, who sued for profits lost when the country froze gas prices in 2001.
Argentina is not alone: another report by the same U.N. group shows that 66 percent of investor-state cases initiated in 2012 were brought against "developing or transition economies":
SOURCE - here - credit UNCTAD
[...]
Some implications
Germany is no stranger to similar dispute settlements. After the country decided to phase out nuclear power following the disaster at the Fukushima Daiichi Nuclear Power Plant in 2011, the Swedish energy firm Vattenfall filed for arbitration to seek €3.5 billion ($4.6 billion) in damages, blaming the country for past and future loss of profits.
Considering how that worked out, Germany's change of heart is perhaps to be expected. But some commentators see the move as proof that global organizing against the new round of trade agreements is gaining ground. Arthur Stamoulis, director of the Citizens Trade Campaign, noted that "The German government and other governments are starting to feel the heat from public opposition to [investor-state dispute settlements]."
Yet not everyone is convinced by the messages coming out of Berlin. Peter Fuchs, executive director of PowerShift, a Berlin-based NGO focused on international trade and investment policy, expressed skepticism toward the idea that German opposition will sink CETA.
"Unfortunately, you cannot trust this government at all when corporate interests are at stake," Fuchs said, calling the German government "a staunch proponent of neoliberal trade and investment agreements."
According to Fuchs, this is a time for the public to ramp up pressure by calling on politicians to reject the trade deals.
[...]
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This sounds rather interesting.
Read somewhere that Japan and Australia concluded a deal without these provisions, so it's not like it's impossible to alter that clause when it looks like it could be an issue.
It looks like sovereignty issues might come into play as well.
....................................................
Check this out:
Corporate Sovereignty Tribunal Makes $50 Billion Award Against Russia
...
In an historic arbitral award rendered on July 18, 2014,
an Arbitral Tribunal sitting in The Hague under the auspices of the
Permanent Court of Arbitration (PCA) held unanimously that the Russian
Federation breached its international obligations under the Energy
Charter Treaty (ECT) by destroying Yukos Oil Company and appropriating
its assets. The Tribunal ordered the Russian Federation to pay damages
in excess of USD 50 billion to our clients who were the majority
shareholders of Yukos Oil Company.
That comes from a press release issued by the lawyers acting for the Yukos shareholders, who are also doing quite nicely:
The Tribunal also ordered the Russian Federation to
reimburse to our clients USD 60 million in legal fees, which represents
75% of the fees incurred in these proceedings, and EUR 4.2 million in
arbitration costs.
Even for an oil- and gas-rich country like Russia, this is obviously a massive amount of money. A detailed and insightful post by Kavaljit Singh puts it in context:
In relative terms, the compensation award is equivalent
to around 11 per cent of Russia's foreign exchange reserves, 10 per cent
of annual national budget and 2.5 per cent of country’s GDP. Given the
magnitude of compensation, the Award could be more damaging to the
Russian economy than all the economic sanctions imposed by the West
against Russia for its actions in Ukraine.
He goes on to point out one of the most worrying aspects of these awards by tribunals:
What is most astonishing is that the arbitral tribunal
has not provided any standard or credible rationale behind awarding $50
bn in compensation to claimants. The calculations of total damages put
forward by claimants are based on assumptions and hard evidence is
lacking.
EXTRACT ONLY - FULL @ SOURCE
https://www.techdirt.com/blog/?company=yukos+oil+company
EU-NATO IMPERIALISM ❌ 
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