Full text: Trading away democracy

Trading Away Democracy
successful and sophisticated in the world, capable of 
evaluating risk and the expected returns on that risk. 
Should the risk be too great, options such as private 
insurance, public investment guarantee schemes or, 
indeed, recourse to regular domestic courts are all 
readily available. 
We therefore call on the European Commission, 
the Canadian government, EU member states and 
parliamentarians on both sides of the Atlantic to reject 
the current CETA text which includes investor-state 
arbitration. It should also be ruled out of all existing 
and future trade agreements of both Canada and the 
EU – including the controversial EU-US Transatlantic 
Trade and Investment Partnership (TTIP) and the 
Trans-Pacific Partnership (TPP).
Our societies won’t be able to confront the challenges 
we are facing – from combating climate change and 
social inequality to preventing another financial crisis 
– when they are stuck in a legal straight-jacket, with 
the constant threat of multi-billion corporate disputes 
against policy changes. What we need instead are 
strong regulatory mechanisms to stop abuse by 
multinational corporations – not a carte blanche for 
them to trample over democracy, people’s rights and 
our planet.
Currently, 21 out of 28 EU member states – represent-
ing well over 95 percent of the EU economy – do not 
have investor-state arbitration provisions with Canada. 
More generally, most existing investment agreements 
of EU member states are with capital importers. CETA 
and other agreements with capital exporting countries 
(including the US, Japan and China) will massively 
expand the scope of investment arbitration, exposing 
EU member states to unpredictable and unprecedented 
liability risks.
Canada is likewise increasing the number of trade 
and investment agreements with capital exporting 
countries, including most recently the Canada-Korea 
Free Trade Agreement (CKFTA)59 and the controversial 
Canada-China Foreign Investment Promotion and 
Protection Agreement (FIPA), which entered into force 
on October, 1st 2014.60 
Opposition to the previously unknown investor-state 
dispute settlement has ballooned in the last years. In 
CETA, the European Commission and the Canadian 
government have claimed to reform provisions on 
investor-state arbitration in a bid to win over public 
support. However, the minor tweaks and adjustment 
provide little assurance that the system will not be 
abused as it has been in the past: as a weapon to 
limit the powers of elected governments and to fight 
regulation – particularly in sectors where stricter rules 
are needed such as finance and mining (see Annexes 
1 and 2).
Foreign investment can be risky, but there is no need 
for the creation of a special legal regime to protect for-
eign investors, who, like everyone else in society, have 
access to domestic legal systems to address griev-
ances. Today’s multinationals are amongst the most 
Academics have begun to question 
whether ISDS delivers the benefits it is 
supposed to, in the form of increased 
investment. Foreign investors can 
protect themselves against egregious 
governmental abuse by purchasing 
political-risk insurance [...].
The Economist61

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