Free Trade is anti-democratic

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The New World Order is shaping up to look very much like the Old World Colonial Era. Free trade agreements are proliferating like rabbits around the globe. They are anything but free. They're about repealing democracy.

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Opinion

Hey there, time traveller!
This article was published 17/11/2010 (4285 days ago), so information in it may no longer be current.

The New World Order is shaping up to look very much like the Old World Colonial Era. Free trade agreements are proliferating like rabbits around the globe. They are anything but free. They’re about repealing democracy.

Pioneered by the North American Free Trade Agreement between the U.S., Canada and Mexico in 1994, the only “freedom” they bestow is to investors through investor rights clauses that empower corporations to trump the democratic rights of citizens and their governments to enact laws and policies for the public good.

Investor rights clauses are reminiscent of colonialism, says Osgoode Hall Law School associate professor Gus Van Harten. “They are the most powerful legal mechanisms to regulate countries since the colonial period, established mainly to protect the interests of large corporations,” he continued in an interview. “The fines and penalties they impose are similar to the legal measures imperial powers once used to discipline new or semi-independent countries. Big corporations now use similar mechanisms to threaten governments.”

Van Harten and David Schneiderman, who teaches law and political science at the University of Toronto, have spearheaded a Public Statement on The International Investment Regime. It is signed by 48 academics from Canada, the U.S., Britain, Australia, China, Finland, Austria, Germany, Singapore and Thailand.

Current investment treaty arbitration is neither fair, independent nor balanced, the statement says. Its signatories warn against entrenching it in the proposed Canada-European Comprehensive Economic and Trade Agreement, saying it raises concerns for “democratic choice, policy-making flexibility and judicial independence.”

Many of NAFTA’s Chapter 11 arbitrations are held in secret. They are presided over, not by judges, but by arbitrators appointed by investors (corporations), governments or the World Bank’s International Centre for Settlement of Investment Disputes. The arbitrators are often corporate lawyers. They lack judicial independence, training and experience. And they tend to favour corporations over governments. There’s a further bias in the process. Investors can sue governments but governments cannot sue investors.

A new study by international trade specialist Scott Sinclair for the Canadian Centre for Policy Alternatives finds that all levels of government, particularly in Canada, are being targeted under NAFTA’s Chapter 11.

It imposes not one, but two, layers of colonialism — one on democratic government itself and the second on the two smaller partners, Canada and Mexico.

Since NAFTA’s inception in 1994, there have been 66 investor state claims launched under Chapter 11 — 28 against Canada, 19 against the U.S. and 19 against Mexico. Canada has paid out $157 million in damages and Mexico, $187 million. By contrast, the U.S. has yet to lose a NAFTA Chapter 11 case or to pay out one cent in an out-of-court settlement.

All three governments have incurred tens of millions of dollars in legal costs. “The situation has become a legal and economic minefield, with governments often finding that the best interests of their citizens are trumped by the ability of multinationals to make profits,” the study says. “All levels of government are being pressured to fall into step with the will of foreign investors.”

When governments “fall into step” democracy withers. Since many public policy issues affect property rights, these investment treaties restrict the ability of government to regulate finance, the economy, employment, taxation, natural resources, health, social policy and environmental protection.

“The threat of incurring large financial penalties to compensate foreign investors for losses stemming from regulatory measures casts a significant chill over policy-making,” the study continues.

The number of investor rights cases has risen sharply over the last five years. Fully 75 per cent of all new claims target Canadian governments. Investors do not have to seek consent from their own governments and do not have to try to resolve the issue before the country’s domestic court system. Under Chapter 11, all three governments have given their “unconditional prior consent” to submit investor claims to binding arbitration.

“In effect, NAFTA establishes a private justice system exclusively for foreign investors, including the world’s largest and most powerful multinational corporations,” the study says.

In plain language, Chapter 11 repeals huge tracts of the democratic commons — the right of citizens through their governments to determine the management of their society. It constitutes a fundamental abridgment of government of the people, by the people and for the people.

Canada has signed eight free-trade agreements and has another 11 under negotiation. The nations involved include Panama, Jordan, Colombia, Peru, Costa Rica, Chile, Turkey, Morocco and Singapore. Canada also has a further 35 “foreign investment promotion and protection” agreements pending with, among others, Tanzania, Tunisia, Indonesia, Vietnam, Panama, Ecuador, Lebanon, Romania, Latvia and Hungary.

Frances Russell is a Winnipeg author and political commentator.

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