Could Ireland be sued for raising wages?

TTIP includes a mechanism that allows foreign companies to sue a country’s government for loss of profit.

In this week’s blog LUGHAN DEANE looks at what’s really at stake when we talk about TTIP, and what it means if this transatlantic trade deal between the US and the EU goes ahead.

Start to talk about the Transatlantic Trade and Investment Partnership (TTIP) and watch as people’s eyes glaze over.

This reaction is understandable. TTIP feels remote and distant. People (particularly those on the left) are against it, but it seems as though nobody is quite sure why.

Isn’t free trade a good thing? Doesn’t it stop wars? Yes, sometimes.

There’s a big problem with this proposed trade deal though, and it’s this: it’s not about trade. Instead, it’s about clearing obstacles for investors.

Let’s just look at one aspect of TTIP – the Investor-State Dispute Settlement mechanism (ISDS). The ISDS is an arbitration facility that allows foreign companies to sue a country’s government for loss of profit.

The idea behind it is to keep rogue governments in corrupt states from interfering with a firm’s ability to operate freely.

But TTIP is a proposed agreement between the EU and the US. It seems unlikely that some asset-grabbing dictator would come to power anywhere where TTIP would apply. So what will the arbitration aspect of TTIP be used for?

This is where the alarmist headlines about “secret corporate courts” and the hysteria about the Bilderberg Group and even the “Illuminati” are unhelpful.

In order to understand what TTIP’s ISDS function will be used for, all you need to do is to look at what ISDS facilities are currently used for in other, similar agreements. When the reality is as alarming as it is, there is no need for the hyperbole.

There have, so far, been 696 known treaty-based investor-state arbitrations across the globe. Of those that are concluded, more than a quarter have ruled in favour of the corporate investor and against the state.

The UN provides a user-friendly database of ISDS cases here.

ISDS Cases – The Greatest Hits

Minimum Wage:

Veolia v. Egypt: Veolia accused Egyptian authorities of breaching a contract in relation to waste disposal for the city of Alexandria. The accusation was based on the fact that Veolia’s operating costs had increased due to the introduction of a minimum wage for employees. Veolia sued the city for €82 million or a reversal of the minimum wage policy.

Public Health:

Philip Morris v. Uruguay: Philip Morris, a giant of the tobacco industry, has been suing Uruguay since 2010 through Uruguay’s bilateral trade deal with Switzerland. Philip Morris is suing for loss of revenue arising from the imposition of health warnings on cigarette boxes. The company is seeking $25 million in compensation or a reversal of the health measures.

Environmental Protection:

Vattenfall v. Germany: The Swedish energy multinational, Vattenfall, sued the German government after Germany imposed environmental restrictions on one of its coal-fired power plants. The company sought €1.4 billion in compensation. The case was only settled when Germany agreed to loosen its regulatory control.

Lone Pine v. Canada: In 2013, Lone Pine, a Calgary-based company registered in the United States sued Canada under chapter 11 of NAFTA, over the Canadian moratorium on fracking. Fracking produces carcinogens and hazardous air pollutants.

Social Progress:

Piero Forsti v. South Africa: Several investors from Italy and Luxembourg sued South Africa based on its Black Economic Empowerment Act. The purpose of the Act was to help redress the injustices of the apartheid regime by ensuring that black investors held stakes in major national projects. Piero Forsti and others argued that the law directly interfered with the manner in which they chose to conduct their business dealings.

Water Charges:

United Utilities v. Estonia: United Utilities, a company running Estonia’s water utilities, sued the Estonian government when their application to increase water rates was rejected. They are currently seeking compensation of more than €90 million.

In a recent publication entitled No Deal: Why Unions Oppose TTIP & CETA, ICTU stated that Congress “strongly believes” that the ISDS proposals are “unnecessary and undemocratic”. Congress also pointed out that the ISDS mechanism “could prove to be unconstitutional under Irish law” as it grants an external court powers beyond those granted to Ireland’s own supreme court.

TTIP & CETA: Trade Deals Pose ‘Insidious Threat to Democratic Institutions’

The Irish Congress of Trade Unions has said that the proposed TTIP and CETA trade deals “pose an insidious threat to democratic institutions and were less about creating a trade deal than clearing obstacles for investors.”

The CETA and TTIP trade deals are currently being negotiated between the European Union and Canada and the EU and the United States, respectively.

Speaking at a seminar last week to launch a new Congress briefing paper on the proposed deals – No Deal: Why Unions Oppose TTIP & CETACongress President Brian Campfield said: “These propositions are being sold to the public as simple trade deals with exaggerated claims about boosting job creation and economic growth.”

Addressing the likely impact of the proposed deals on public services, Congress vice-president and deputy General Secretary of IMPACT, Kevin Callinan said: “These deals will lock in privatisation and liberalisation of public services, preventing elected governments from changing or reversing policies pursued by previous administrations. That is fundamentally undemocratic.

“Overall, we will see a major shrinking of the public space and an increase in paid for, privately-provided services.”