Trade deal branded 'rule for the corporation by the corporation'

05 September 2013
In the media

Susan George chairs the Transnational Institute in Amsterdam. She says the Trans Pacific Partnership Agreement could give powerful companies the right to challenge domestic laws which restrict their future profits.

On a visit to Australia, Susan George spoke to our economics correspondent Stephen Long.

SUSAN GEORGE: I agree that certain selective free trade is a very good idea. I disagree that what is being put into "free trade", so-called, agreements today is beneficial to people.

Because the agreements we are negotiating now - you in Australia, in the Trans Pacific Partnership, and in Europe it's the Trans Atlantic Partnership - are far less about trade than they are about investment. These are treaties to free the transnational corporations from regulation and from any restrictions on investment.

These are treaties to give those corporations the power to sue a sovereign government if that government passes any legislation which limits their present or even future expected profits.

And you've had experience with that in Australia with the Philip Morris lawsuit. There's litigation against you from Philip Morris, and it's using the fact that it's got some sort of headquarters in Hong Kong, so it can use the Australian-Hong Kong free trade treaty that's got an investor/state dispute resolution mechanism, as these things are called, and they are saying you are going to hurt our future profits if you use a blank cigarette packet.

STEPHEN LONG: They're trying to overturn our plain packaging laws, which were upheld by the Australian High Court.

SUSAN GEORGE: Yes, yes. Well too bad for the Australian High Court, because the arbitration tribunals have nothing to do with the local judiciary system. That's a very good example of these corporations taking over not only the legislative function but also the judicial function because all of these investor/state disputes are ruled on by arbitrators.

And look at the arbitrators! There are 15 of them, mostly Europeans and Americans, and this is a real litigation boom. It's an explosion. Ten years ago, there were maybe 30 cases a year. Now there's an accumulation of over 500 of these things and as a I last saw it, it was about 150 of those that were asking for settlements of more than $100 million from governments.

STEPHEN LONG: The corporations would say that they are basically fighting back against the imposition of sclerotic regulations that hamstring capitalism and hamstring the creation of the wealth that really benefits everybody.

SUSAN GEORGE: Well if it were just legislation that they already knew about when they signed the treaty, you could say "but you knew about this", but what they're doing and what they have achieved, and what I think is particularly dangerous, is that they are talking about the future.

So what they have effectively done is to put a ceiling on regulation. The kind of deregulation that you get in these treaties is not just deregulation of what has already happened, but it is a ceiling on what you can do in the future.

So if you want more stringent climate change measures, less CO2 for instance, a petroleum company can say "well, you've hurt my future profits".

STEPHEN LONG: So you think this could actually prevent action against climate change?

SUSAN GEORGE: Definitely. It scares, it scares the government that they're going to get lumbered with a suit which could ask them for a billion dollars.


Listen to the interview here.