Investor State Dispute Settlement By The Numbers

ISDS is not the only problem with the TPP and the TTIP, but it certainly is a big one. What’s particularly interesting in this piece by Glenn Moody is it puts some numbers on how much the winners and losers, well…, win and lose and who they are.

It’s not pretty.

My emphasis throughout.

TPP’s Corporate Sovereignty Chapter A ‘Threat To Democracy And Regulation’
by Glyn Moody, Tech Dirt
June 15th 2016

The same organization (the Canadian Centre for Policy Alternatives) has now published a set of analyses looking at key aspects of TPP, entitled “What’s the big deal? Understanding the Trans-Pacific Partnership“.

They are all worth looking at, but Techdirt readers will probably be particularly interested in one called “Foreign investor protections in the Trans-Pacific Partnership.” It’s by Gus Van Harten, a professor at Osgoode Hall Law School of York University in Toronto, Canada, and a well-known commentator on trade law and policy. The first part of his analysis provides a good summary of the world of corporate sovereignty, or investor-state dispute settlement (ISDS) as it is more formally known. The later section looks at some new research that provides additional insight into just how bad corporate sovereignty is for those of us who are not insanely rich.

For example, Van Harten quotes some recent work showing that 90% of ISDS fines against countries went to corporations with over $1 billion in annual revenue or to individuals with over $100 million in net wealth. Similarly, the success rate among the largest multinationals — those with turnovers of at least $10 billion — was 71% in the 48 cases they initiated, compared with a success rate for everyone else of 42%. So any claim that ISDS is equally useful to all companies, including small and medium-sized businesses, is not borne out by the facts.

Van Harten also mentions some interesting figures for the financial winners and losers across all known corporate sovereignty cases. The largest corporations ended up with gains of around $6 billion; the thriving ISDS legal industry took home $2 billion; very wealthy individuals received around $1 billion; and large companies picked up another $500 million. As for the countries that were sued by these groups, their losses totaled some $10 billion. That’s an important reminder that nations cannot win ISDS cases: the best they can ever hope for is not to lose. And they often do lose, as the high cumulative fines indicate.

Another fascinating insight comes from looking at the percentage of foreign-owned assets (that is, inward foreign direct investment) in the US economy that are covered by ISDS in trade and investment agreements. Currently, it is only around 10%, which is probably why corporate sovereignty is not a big deal for the US public today. If TPP is ratified, another 10% of foreign investments will be covered. But if the TAFTA/TTIP deal with the EU goes through, it would add another 60% to the total — a huge jump. That would mean that TPP and TTIP together would make nearly all foreign investments in the US subject to corporate sovereignty.

Van Harten highlights another key aspect of TPP that has not received much attention. He points out that TPP goes beyond the older North American Free Trade Agreement (NAFTA), which is between the US, Canada and Mexico, but does not solve its serious problems, despite claims to the contrary.
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In other words, TPP has been written in such a way that the public always gets the worst of both worlds.
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Anyone who has any lingering illusions that it might be worth signing up to TPP should read this new analysis, which will dispel them rapidly.