The Peru FTA Morning After
Trade on the Trail, XI

Your civil rights are a barrier to trade

As we've written about for a long time, "trade" rules are increasingly limiting how our own taxpayer dollars can be spent, namely by banning or rolling back Buy America, green procurement, and human rights conditionality in competing for state, local and federal government contracts - the use of which is one of the very few ways that our elected officials can directly create jobs, and shape the morality of the marketplace.

In a rare sign of morality (or at least political savvy) from the corporate class that drafts these agreements, they've generally excluded minority preferences and set-asides from coverage from trade pact rules.

But this may be ending. According to Luke Peterson's Investment Treaty News, the best source of information on investor-state proceedings anywhere, a group of European mining companies is suing South Africa under a bilateral investment treaty between their respective countries. Their gripe? Having to hire black South Africans.

The investors posit ... that a series of obligations imposed upon mining companies, including hiring "historically disadvantaged South Africans", violates treaty undertakings by South Africa to provide fair and equitable treatment to foreign investors...

According to Mr. Leon [the corporations' lawyers], the key tenets of the new mining regime, including the Black Economic Empowerment requirements, "potentially conflict with South Africa's international law obligations".

Mr. Leon opined that bilateral investment treaties should afford foreign investors higher levels of financial compensation than would be available under South Africa's Constitution. He added that by signing and ratifying a series of bilateral investment treaties, South Africa "has, in effect, outsourced the adjudication of key elements of its public policy to foreign arbitral tribunals".

The "fair and equitable treatment" standard referred to by Luke, also known as the "minimum standard of treatment", is why corporations are pushing hard not only for bilateral investment treaties like the one between South Africa and the European countries, but also "innovating" on this practice by inserting them directly into "free trade agreements", as we do only here in America through NAFTA-style trade policy.

What does the standard mean? As Matthew Porterfield explains in this law journal article,it basically says that foreign investors (and any corporation that can claim "foreigness" by playing games with their corporate structure... think Halliburton's relocation to Dubai, folks) can be required to be treated more favorably than that allowed for under domestic law.

This obviously wreaks havoc on any progressive reform or legislative efforts here or anywhere in the world. If corporations can bypass the domestic political / democratic process and use foreign trade tribunals to define how they have to be treated anywhere in the world (regardless of domestic civil rights, environmental, or labor law), then the end is very nigh.

Corporations have already demonstrated over the last 30 years that they can weaken the state and any countervailing force that calls into question their hegemony. For them, this is the final coup d'etat - ensuring that their temporary gains become permanent, and enforceable anywhere on the planet.

The corporate class is thinking VERY far ahead; it seems like progressives and Democrats are often not even thinking about the present, largely caving on Bush's NAFTA expansion to Peru this year (except for a slight majority of House Democrats, a shamefully small minority of Senate Democrats, Change to Win and a few others who we've celebrated in this blog).

The justifications for doing so widely varied, but they seemed to be because they couldn't identify any U.S. worker that would lose their job TOMORROW because of the Peru deal, or alternately that they wanted to make tiny, incremental progress on an international labor rights agenda which not only pales in comparison to the rights given to corporations detailed above, but also will have no tangible effect for anyone anywhere on the planet (for perhaps hundreds of years while the labor movements of Peru and elsewhere slowly gain power).

Put simply, this kind of thinking is just not very smart: it gets us nowhere closer to figuring out how to reign in a corporate class that is out of control, or a political class that is largely indifferent to building policies that benefit the majority of Americans. Sure, they can always be counted on to make empty gestures of support for folks that are truly marginalized, but not to pursue policies that bring the marginalized and the middle together. In short, the "strategies" being pursued are not worthy of that designation, especially when you see how clever these corporations are getting, expanding whole notions of international law that enable them to challenge even such non-controversial public policy instruments as domestic civil rights policy.

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