Trojan Horse Deals Are Test for WTO Boss INVESTOR Power; Zz Developing Countries Get Wise to Dubious Trade Tribunals

Article excerpt

BYLINE: Lori Wallach and Ben Beachy

Roberto AzevA*do, the new World Trade Organisation (WTO) director-general, has earned praise for avoiding the implosion that has characterised many past WTO meetings.

The Bali deal indicates that, while attempts to expand the scope of the WTO do not enjoy support from most members, AzevA*do may find more support in heeding calls to alter existing WTO rules.

His home country has proven successful in challenging old globalisation agendas and crafting its own trade policy. Brazil was one of the few countries that refused to subject its financial services sector to the WTO's broad deregulation rules. Unlike those countries that did, Brazil weathered the 2007/8 global financial crisis with limited impact.

Another example of Brazil's savvy is its refusal to accept an obscure-sounding provision that is usually buried in the trade and investment agreements and pushed onto other countries by the US and the EU.

Known as "investor-state" dispute resolution (ISDR), this mechanism empowers foreign corporations to bypass the domestic legal systems of the countries in which they operate. Instead, it allows them to drag sovereign governments before extrajudicial tribunals with a stunning demand - compensate corporations for health or environmental policies (or other government actions) that investors find inconvenient.

These tribunals consist of three private sector attorneys, unaccountable to any electorate. And yet, they are empowered to decide whether an important public interest policy should be deemed a violation of expansive, but vague, foreign investor privileges.

For example, a Peruvian anti-toxics policy is being attacked by a US corporation, as is Canada's medicine patent policy. And US tobacco giant Philip Morris has launched cases against progressive anti-smoking laws in Uruguay and Australia, after failing to sink the laws in domestic courts.

To outsiders, this may sound like a conspiracy theory. If only. In the name of investment promotion, US trade negotiators over the past two decades have quietly inserted these far-reaching provisions into a panoply of "free trade" agreements (FTAs) signed with 17 mainly developing countries, from Mexico to Morocco. European countries have inked nearly 1 000 bilateral investment treaties (BITs) containing the same mechanism with developing countries in Latin America, Africa and Asia.

As a result, US and EU oil, pharmaceutical and other corporations are now launching an unprecedented wave of these investor-state cases. The UN reports that the cumulative number of investor-state cases has jumped tenfold since 2000.

Corporations are using this tool to go up against consumer safeguards, environmental laws, financial regulations and other polices that they claim inhibit their "expected future profits". …