The Transatlantic Trade and Investment Partnership: Putting the neo back into neoliberalism

Don't screw with Chevron
Don’t screw with Chevron

“We can’t let little countries screw around with big companies like this – companies that have made big investments around the world.”

These were words recently spoken by an unnamed lobbyist for the US oil multinational Chevron concerning its dispute with the Ecuadorian government writes Patrick Scott. In the 1960s Texaco (since taken over by Chevron) drilled for oil in the rainforest of eastern Ecuador into which it subsequently dumped billions of gallons of toxic waste. Once the waste got into the ecosystem it caused substantial environmental destruction including a massive increase in cancers, miscarriages and birth defects to babies in the local population. Eventually Chevron was successfully sued in the Ecuadorian courts for the damage it had caused and ordered to pay $19 billion damages. But it did not end there. Chevron appealed this decision to an international arbitration tribunal (it could to do under the terms of an investment treaty between Ecuador and the United States), overruling the Ecuadorian legal system the tribunal then suspended the judgement pending the hearing of the appeal which is ongoing.

More recently the Costa Rican government refused to grant a permit to a Canadian mining company Infinito Gold to develop an opencast gold mine in the country due to the environmental damage it would cause. Infinito Gold responded by taking court action for damages against Costa Rica in the International Centre for the Settlement of Investment Disputes, part of the World Bank. If Infinito Gold succeeds in its action Costa Rica would be forced to pay damages to the company for financial loss caused by the denial of its mining permit. As in the case of Chevron against Ecuador, Infinito Gold was able to do so under the terms of a bilateral investment agreement between Canada and Costa Rica.

There are many such bilateral agreements in the world today allowing multinational corporations of one country to sue the government of another country for damages in an international court or tribunal. Generally speaking such agreements have been between countries in the developing world and a much more economically powerful imperialist country. Nevertheless the principle of allowing multinational corporations to sue countries for damages in international courts (overriding any judgements of national courts, and sometimes national legislation as well) may well be extended even further with two proposed multinational free trade agreements. There is the proposed Trans-Pacific Partnership (TPP) focused on countries bordering the Pacific including the United States. There are also negotiations underway between the United States and the European Union to form the so called Transatlantic Trade and Investment Partnership (TTIP), if formed this would see a free trade area between the United States and the European Union that would account for almost half of all global GDP. It is significant that the United States is a key player in the creation of both proposed free trade areas. The negotiations underway for both these agreements have largely taken place in secret and with good reason. As what is being proposed will give even greater power to capital with no regard to labour or the environment. There have though been leaks, WikiLeaks recently published online the proposed intellectual property chapter of the TPP.[1]

In terms of what is being proposed what is exactly meant by a free trade area? For both the TPP and TTIP there is a lot more than free trade that is up for discussion, there is talk for example of extending the terms of patents, including medical patents. One of the proposed aims is of TTIP is to create a so called level playing field regarding regulations concerning what can be produced and sold. For example in the United States genetically modified food can be legally sold for human consumption, and not only that, it can also be sold without it having to be labelled as genetically modified. In the European Union though regulations on the sale of genetically modified food are much stricter and more prohibitive. But which side is likely to prevail in order to create a level playing field? The reality is that with genetically modified food as with everything else a level playing field will in all probability mean a levelling down of standards; so that in the domain where regulations are laxer allowing for greater capitalist profit it is these laxer regulations that will prevail over the more prohibitive ones.

What is of even greater significance though is the proposed introduction of an investment chapter for the TTIP, a result of lobbying by many multinational corporations including not surprisingly Chevron. A Vice President of Chevron Edward Scott sent a letter in May to the US representatives in the TTIP negotiations emphasising the need for a strong chapter to defend corporate investments,[2] he would have not been the only corporate lobbyist to do so. If adopted the investment chapter could allow corporations to sue member states in an international tribunal for any activities including national legislation that had caused financial loss. This could and would be likely to include environmental, health and labour legislation. If a gas or oil company was denied permission for fracking for example because the proposed plant was in a highly populated area it might be able to sue the country for financial loss. It might for example also allow tobacco companies to sue a country for financial loss caused by legislation restricting the advertisement and or/sales of tobacco products. This may sound extremely far-fetched but even now the US tobacco manufacturer Philip Morris is suing Australia and Uruguay in the international courts under bilateral trade investment agreements both countries have signed for precisely that reason.

Whilst multinationals have had access to the negotiations behind the TPP and TTIP and have played a key lobbying role other bodies such as NGOs, environmentalist organisations, trade unions etc have been kept out. The Chevron lobbyist said “We can’t let little countries screw around with big companies” but now the message from multinationals lobbying hard in the TPP and TTIP agreements is that they don’t want the big countries, that is the imperialist countries screwing around with big companies either. So some of the onerous terms suffered by many countries in the developing world under bilateral trade and investment agreements could soon be coming to both the United States and Western Europe if the TTIP agreement is signed. This is the ultimate logic of unrestricted free market capitalism, namely that no legislation threatening capitalist profit including laws designed to protect the environment or public health should be allowed in any way. Patrick Scott 1086 words

  1. Good to publicise this. Ginden and Panitch go into great detail in their book on Global Capitalism – the new American empire. They show how important all these seemingly boring international trade and legal agreements are.

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