July 8, 2015
One of the most famous—or infamous—Supreme Court rulings this century has been Citizens United v. Federal Election Commission in 2010. This “corporations are people” ruling granted U.S. corporations the same right to free speech as individuals, effectively removing previous restrictions on corporate campaign donations, a form of political speech.
Now we may see Citizens United’s beefy stepbrother gain an even stronger foothold in international law. The Trans Pacific Partnership (TPP), a twelve-nation trade agreement currently under negotiation, contains a key provision that would grant corporations rights traditionally reserved for countries. This provision, investor-state dispute settlement (ISDS), permits corporations to directly sue national governments. For an example of how this works, we can look to Asia, where ISDS was established between Australia and Hong Kong in 1993: Philip Morris Asia is using ISDS to sue the government of Australia over a law that requires plain packaging for cigarettes.
In contrast, under the World Trade Organization (WTO), only governments can raise disputes against one another; if a corporation wants to sue an entire nation, as Philip Morris is suing Australia, it must be represented by its government. ISDS has been previously incorporated into other trade agreements, including the North American Free Trade Agreement (NAFTA) between the U.S., Canada, and Mexico. If the TPP includes the ISDS mechanism, all twelve signatory countries will be able to use it.
With ISDS in the TPP, transnational food corporations based in any of the twelve countries will be empowered to sue TPP country governments over nutrition policies that threaten their sales. One likely victim is Peru’s 2013 policy mandating the use of front-of-package warning labels on unhealthy packaged food items, intended to help consumers make healthier choices. Corporations that produce these items may argue such labels discriminate against their products – the labels are a positive step from the standpoint of public health and nutrition, but they may detract from corporate profits.
Many other existing or potential health policies could come under attack with ISDS in place. And the implications of ISDS are most concerning for the less developed countries involved in the TPP negotiations. For example, with ISDS in the TPP, Malaysia will become vulnerable to litigation by U.S.-based corporations. And of course, some of these U.S. corporations have annual revenues that exceed the entire gross domestic product of Malaysia, which will not be able afford expensive legal battles with well-financed corporate legal teams.
The continued success of U.S. corporations is important; they are critical to the U.S. and world economies, provide hundreds of millions of jobs, and deliver goods and services. But granting them privileges previously reserved for individuals (through Citizens United) and simultaneously, rights previously reserved for countries, takes our protection of corporations too far.