10 reasons why trade ‘agreements’ & ISDS tribunals undermine public interest regulation

Trade agreements like the TPPA, TTIP & TISA can lead to a regulatory chill - threatening our health and the environment.

1. ISDS tribunals have rejected requests to defer to government regulations when these have been enacted in good faith with no intent to harm corporate profits. 

2. ISDS tribunals' decisions have historically required scientific “proof”. However regulatory bodies/ governments have a duty of care. Acting in the public interest often requires them to employ the precautionary principle (aka prudent avoidance), a valuable tool in public policy-making.  Establishing the toxicity or safety of chemicals is a slow and difficult process and often takes much time and resources. (Many are eventually proven, with scientific certainty, to be carcinogens, endocrine disruptors, mutagens, environmental toxins etc.)     

3. Investor rights can trump public interest rights. A trade agreement may contain provisions that appear to ensure a government’s ability to protect the environment and public health, may be trumped by other agreement provisions that protect investor rights.  

4. ISDS Tribunals undermine democracy, public discussion and dissent:

a. Early settlement avoids big payouts but may result in undemocratic regulation. Settlement prior to ISDS arbitration may still result in environmental or health based settlement decisions or ‘agreed principles’ that, with due consultation in the public sphere, may have not been taken.

b.  The tribunals choose if public can participate or contribute. Public participation in ISDS disputes are decided by a panel of 3 lawyers (only 1 of whom is independent). 

c. Trade agreements may create environments hostile to journalists and whistleblowers and may compromise internet freedom. Online action targeting corporate wrongdoing may be prohibited. 

5. ISDS claims frequently target environmental and health policy measures. Analysts noted that “the provisions designed to ensure security and predictability for the investors have now created uncertainty and unpredictability for environmental (and other) regulators.”

 6. It’s simply not democratic. Frankly, our judicial system looks after us better. ISDS arbitration mechanisms can undermine domestic public interest regulation - providing the public with greatly limited ability to engage in these disputes. It’s cloaked in secrecy and public participation, when allowed, lacks key aspects of basic procedural fairness. This compares to the sophisticated procedural tools available to the public within the modern judicial system. Here, specific regulatory by-laws can be developed and become the subject of legal challenges - due process is provided under more transparent legislative and judicial systems.

 7. It’s based on estimated future profits – and only multinational corporations can engage. ISDS arbitration is only for multinational, and not domestic corporations.

8. Corporate lawyers lack public policy experience. Tribunal members appointed to adjudicate disputes frequently have a commercial law background. Arbitrators may lack the necessary expertise to consider broader public policy implications.

9. Local government regulations and by-laws are vulnerable. Local regulations may regulate to benefit local health & local economies. However they can be overridden by a government anxious to reach a less costly settlement.

10. Tribunals are not bound by rules of precedent. This creates even more uncertainty over ISDS outcomes and a “chilling effect” on government regulation.

Further reading. (Much of the information used to identify the above 10 reasons has been extracted from): Kathleen Cooper, Kyra Bell-Pasht, Ramani Nadarajah, and Theresa McClenaghan, Seeking a Regulatory Chill in Canada: The Dow Agrosciences NAFTA Chapter 11 Challenge to the Quebec Pesticides Management Code, 7 Golden Gate U. Envtl. L.J. 5 (2014).

 

10 environmental sectors ISDS arbitration could affect as a result of free trade agreements:

Water quality management – marine & freshwater

Air quality regulation

Regulation of extraction industries – mining, oil drilling, fracking etc.

Regulation to address climate change

Agricultural water use regulation

Animal welfare regulation

Health regulation

Hazardous substances regulation

Regulation requiring compulsory labelling of genetically modified food

Restrictions on imported agricultural product that carry unwanted pests and diseases

 

UNESCO defines the Precautionary Principle as follows:

When human activities may lead to morally unacceptable harm that is scientifically plausible but uncertain, actions shall be taken to avoid or diminish that harm. Morally unacceptable harm refers to harm to humans or the environment that is

·         threatening to human life or health, or

·         serious and effectively irreversible, or

·         inequitable to present or future generations, or

·         imposed without adequate consideration of the human rights of those affected.

 

The logic of precautionary avoidance is that, in the face of scientific uncertainty, before and until “proof” is established, action should be taken to avoid or diminish possible major harm until “proof” is established