Corporate Sovereignty Finally Enters The Political Mainstream

Techdirt has been writing about investor-state-dispute settlement (ISDS), aka corporate sovereignty, for more than three years now. During that time, we've published well over a hundred articles on the topic. Increasing numbers of people have become aware of the threat that ISDS represents to democracy because of the privileged access it grants companies to a parallel legal system. Now, it seems, it's beginning to enter the political mainstream around the world.

A couple of weeks ago, the leader of the UK's Labour Party, Jeremy Corbyn, promised to reject TAFTA/TTIP if he were in power, and to vote against it if he were in opposition. One reason for that, he said, was his concerns over:

the facility for corporations to sue national governments if regulations impinged on their profits.

The Labor Party in Australia has also started to make pronouncements about corporate sovereignty:

The opposition's trade spokeswoman, Penny Wong, said Labor would try to remove so-called investor state dispute settlement (ISDS) clauses from every trade agreement, and every bilateral investment treaty, that Australia has signed.

It means Labor plans to review three major trade agreements concluded by the Abbott-Turnbull governments -- with China, Korea, and the Trans-Pacific Partnership -- that have ISDS provisions.

That comes at a time when the current Australian government is thinking about doing exactly the opposite:

The Turnbull government is considering adding a controversial provision to the Japan-Australia free-trade agreement that would allow foreign corporations to sue the Australian government.

Here's why it's taking that odd course of action:

The negotiations have been triggered by a relatively unknown clause in the Japan-Australia agreement, which was signed by the Abbott government in 2014.

The clause states that if Australia's government signs any future trade deal with another country that includes an ISDS provision then the Japan-Australia deal would be subject to an automatic review "with a view to establishing" an ISDS provision in it.

The trigger for such a review was the China-Australia free-trade agreement, which came into force on 20 December 2015, because it included an ISDS provision.

In other words, this is yet another "ratchet" clause that ensures changes only ever move in one direction -- to the benefit of companies, and against the interests of the public. It's yet another reason never to include corporate sovereignty chapters in these so-called trade deals.

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