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Brendan Vickers, Director of Research and Policy for South Africa's Department of Trade and Industry, discusses alternatives to the investor-state system.
Global Trade Watch's Melinda St. Louis discusses the effects of maintaining the status quo in protecting investors.
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Investor-State Dispute Settlement (ISDS) Attacks: Empowering Multinational Corporations to Attack our Domestic Laws, Demand Taxpayer Compensation

 At the heart of today's "trade" agreements are provisions that grant multinational corporations extraordinary new rights and powers. This system – called Investor-State Dispute Settlement (ISDS) – empowers individual foreign corporations to skirt domestic courts and sue governments before a panel of three corporate lawyers.

 ISDS cases are decided by tribunals composed of three corporate lawyers that are authorized to order governments to pay unlimited sums of taxpayer money to corporations that claim our domestic laws or government decisions violate special new rights provided in ISDS agreements. Payments include what the three corporate lawyers deciding the case surmise are the "expected future profits" that the corporation would have earned in the absence of the public policy it is attacking. There is no outside appeal. Many of these attorneys rotate between acting as tribunal "judges" and as the lawyers launching cases against the government on behalf of the corporations. Under ISDS, multinational corporations are provided greater rights than residents of the countries signing these ISDS agreements or domestic firms.

This extreme ISDS system already has been included in a series of U.S. "trade" deals, forcing taxpayers to hand more than $440 million to corporations for toxics bans, land-use rules, regulatory permits, water and timber policies and more. Under one pact, a tribunal ordered payment of more than $1.4 billion to a multinational oil firm after it violated the terms of its contract with the Ecuadorian government to explore for oil in the Amazon. Just under U.S. deals, more than $70 billion remains pending in corporate claims against climate and energy laws, medicine patent policies, pollution cleanup requirements, and other public interest policies we rely on to protect the environment, our health, safety and financial stability.

In the past few years, the number of such investor-state attacks has surged. From the 1950s – when this system was first established – until 2000, only 50 cases were initiated. Today, more than 750 cases have been launched. A whole industry of third-party financing and specialized law firms has sprung up to help multinational corporations extract our taxpayer dollars and roll back key public interest policies using the ISDS system.

But some countries are now beginning to challenge this outrageous system: South Africa, Indonesia and India have started terminating or renegotiating their treaties that contain ISDS provisions, and Ecuador, Venezuela and Bolivia have already terminated many of their treaties.

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