Out of the Woods

Do you think that global corporations are evil? 

Wait till you hear this.

It used to be that if an American company invested in Canada and some disagreement arose between the US and the Canadian businesses, their disagreement would be adjudicated under Canadian law. In recent years transnational trade agreements provide for what is called “Investor-state arbitration.” Under such treaties, an arbitration panel staffed by lawyers, who also may be involved in international trade and in court cases concerning international trade, is empowered to resolve disagreements regardless of the laws in the country where the investment is made. These arbitration panel decisions override court decisions of the country where an, often North American, corporation has made investments. Arbitration panels of this kind can override national sovereignty and governments duly elected by the people of another country.

There are a number of cases where North American drug companies have appealed to these somewhat shadowy tribunals in order to prevent Canadian manufacturers of generic drugs from selling those in the US or even in Canada. In other cases North American chemical companies complained about the Canadian limitations on poisonous agricultural chemicals. They appealed to the arbitration panels for permission to sell their highly toxic agricultural chemicals even where Canadian law prohibited that.

The upshot is that before US investors will invest in a foreign country, the country first must sign a treaty with the US which limits the application of their legislation and their courts and their government sovereignty in the interest of allowing US companies to override local law and court decisions.

A particularly startling example of this kind of naked imperialism is the experience of Ecuador. Between 1964 and 1992 Texaco explored for and drilled for oil in the Amazonian jungle of Ecuador. During that time the company is accused of dumping more than 16 billion gallons of toxic water into streams and rivers used by the local, indigenous inhabitants.

The indigenous peoples sued in Ecuadorian and in US courts. After losing repeatedly over an 18 year period, the plaintiff's finally won in an Ecuadorian court and then in the appellate court. Chevron, who had bought the operation from Texaco, was ordered to pay $18 billion for cleanup and punitive damages to the indigenous Ecuadorian people.

But that did not settle anything at all. In February of this year one of the shadowy “investor – state” tribunals ordered the Ecuadorian government to stop enforcing the decree of their own courts. Chevron has still not done any cleanup. It has not paid any reparations. It has sought refuge under the greater power of the US government and the US economy to invade the decisions of a legitimate Ecuadorian government.

The investor-state tribunal can give orders to the government of another nation, a government that the citizens of that country elected. US corporations arrogate to themselves power over foreign government. They enforce those outrageous claims by threatening to withdraw investments from those other countries. Imperialism is alive and well.

Is it any wonder that foreign countries and their populations call us “bullies”?