Investor State Dispute Settlements (ISDS) are one of the most dangerous yet least talked about parts in recent trade agreements. It essentially trumps any federal, state, and local U.S. regulation that is deemed a "trade barrier" and strips us from the right to handle our own affairs. ISDS enables foreign corporations to sue a host country for laws, policies, even court decisions that they find inconvenient and trade impeding. Any corporation could sue governments at any level including the local government level for loss of its future profits.
ISDS was included in the North American Free Trade Agreement (NAFTA) that was signed in 1993 and implemented in 1994 through the Clinton administration. Chapter 11 in NAFTA is clear when defining ISDS. The U.S. Department of State writes, "Chapter Eleven permits an investor of one NAFTA Party to seek money damages for measures of one of the other NAFTA Parties that allegedly violate those and other provisions of Chapter Eleven." In other words, if the bottom line of a company outside of the U.S. is hurt by any regulations, they can sue our government, our towns and our cities. Under NAFTA, we have been sued 18 times with damages between $90 million and $650 million.
Regardless of the outcomes of the 18 lawsuits, there is no need to waste time and money on such things and should not be included on any trade agreements. We were sued by Canada for $235 million in 2003 for temporarily blocking Canadian beef due to the discovery of mad cow disease in their cattle. We were simply protecting our citizens yet couldn't do so successfully because Canada deemed it "trade impeding."
We were sued in 2012 by Canadian pharmaceutical companies for $520 million because the Food and Drug Administration in the U.S. were issuing import alerts to consumers regarding certain imported drugs. The government has had to shell out millions of dollars in taxpayer-funded attorney fees and arbitration costs to defend these claims.
As we speak, there are five NAFTA foreign investor claims against our government working their way through the arbitration process. CAFTA and KORUS include the same provisions and have given us the same headaches.
NAFTA only deals with two other countries and the lawsuits have been, thus far, somewhat manageable. However if Fast Track is passed and the President pushes through the Trans Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TISA), we essentially have the whole world to deal with. The TPP alone encompass 40 percent of world GDP and 25 percent of world trade.
We have witnessed disasters occurring all across the world due to ISDS. Phillip Morris Intentional and British American, two multinational tobacco companies, sued Australia in its highest court to stop their anti-tobacco campaign and laws, deeming them "trade impeding." The judges called that case "delusive, unreal, and synthetic". That conclusion is fatal to the case.
We have seen the same tobacco companies sue other smaller countries such as Uruguay. They actually needed donations in order to obtain the large amounts of money needed to fight these court cases. Even countries that are amongst the 10 poorest countries in the world couldn't escape! The country of Togo in West Africa is currently receiving lawsuit threats from Phillip Morris International for their new warning labels on tobacco packets. Togo is a country whose entire GDP is $4.3 billion. Compare that to Phillip Morris International's net revenue of $80 billion!
This could easily happen in the U.S. What if powerful multinational companies came to sue one of our states with a low GDP or even a poor, small city who can't afford attorneys and legal fees?
TPP, TTIP, and TISA are putting our nation in grave danger. Within sections of the TPP are provisions for ISDS that would allow foreign companies to sue governments for harming their profits. Since Australia has felt the burn of ISDS with Phillip Morris International, they are very hesitant about this clause in the TPP and have asked if the U.S. could exempt Australia from the clause. Both TTIP and TISA have similar clauses. The dispute panel will only take account of "free trade" values, disregarding values of public health, human rights, environmental protection or other social rights. It all boils down to the bottom line of corporations.
By entering into an agreement that contains ISDS clauses, we are losing our voices, our safety, and America's best interest.