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Global Struggles

Trump’s Trade Agenda: A Wake-Up Call

Shifting power from countries to corporations in trade negotiations hurts both people and the planet. Will the president’s trade agenda put workers’ rights ahead of profit and plunder?

Research & Commentary
February 22, 2017

by Robin Broad John Cavanagh

Originally published by The Hill.

This week, labor, environmental, religious and other groups representing over 180 million people from around the world sent a letter to a corporate mining CEO — a letter that is also a wake-up call for President Trump’s trade agenda.

The letter highlights the problems with the so-called “investor-state” provision in trade deals, first created through the North American Free Trade Agreement (NAFTA) 23 years ago. This provision unfairly prioritizes corporations, encouraging them to file lawsuits against governments that implement public health and other measures that impede future corporate profits.

Back to the letter in a moment, but first the dilemma that it highlights for Trump: In one of Trump’s first public statements as president, on January 22, he called for the renegotiation of NAFTA to (as he puts it) help U.S. workers.

So far, the media focus has been on Trump’s suggestion that he wants to increase tariffs on U.S. imports from Mexico. But NAFTA and other trade agreements are only in small part about trade tariffs. They are much more about giveaways to fleet-footed corporations, giveaways that further encourage corporations to offshore their production and jobs.

The No. 1 NAFTA provision that does this is the investor-state clause. By making it easy for corporations to sue governments in other countries, this provision gives firms a big incentive to relocate across borders and then to launch frivolous lawsuits.

Back to the letter: What sparked this week’s letter and its wide-ranging signatories was one such frivolous lawsuit filed in 2009 by a Canadian-Australian mining firm that wanted to mine gold in El Salvador.

As the firm explored for gold in northern El Salvador, it set off large-scale community opposition. Farmers and other community members learned about the huge threat the cyanide used in mining posed to their main source of water, and they convinced their government to stop issuing new mining licenses in the entire country.

The existence of these investment rules in the Central America version of NAFTA (called CAFTA) and in the Salvadoran investment law allowed the mining company to retaliate with an investor-state lawsuit, claiming that the Salvadoran government deprived it of $250 million of future profits. [pullquote] Corporations bully governments into undoing measures to protect workers, the environment and public health.[/pullquote]

This was an outrageous claim and lawsuit because the company did not have a mining license, since it had not completed the basic requirements for seeking a license. But the investment court, which is part of the World Bank Group in Washington, accepted the case anyway.

The tribunal and the lawyers profit from more cases, the decisions on which are ruled by three highly paid (often corporate) lawyers who are not allowed to consider environmental, indigenous or other basic rights in their decisions. Not surprisingly, critics have called it a “kangaroo court” and a corporate-biased venue.

This corporate lawsuit against El Salvador dragged on for seven years, costing the Salvadoran government a whopping $13 million in fees, and giving the mining firm an extended period to try to convince the government to allow it to mine.

Fortunately, civil society groups in and out of El Salvador joined with key members of the Salvadoran government to fight back. Finally, in October 2016, the tribunal ruled that the mining firm, owned by OceanaGold, didn’t have a case and that it was to pay El Salvador $8 million.

However, the corporate bias continues. Now, four months later, OceanaGold still hasn’t paid a cent, and it is still lobbying the Salvadoran government to allow it to mine while offering “fake news” about its ability to mine without disastrous environmental consequences.

These biased investment rules don’t result just in frivolous lawsuits. They also exert what experts call a “regulatory chill,”scaring governments to refrain from passing measures to protect the environment or public health for fear of investor-state lawsuits.

Now back to the Trump-related trade issue of the moment, NAFTA: The investor-state provisions in NAFTA don’t help U.S. workers vis-a-vis Mexican workers. Instead, they hand enormous power to corporations to bully governments into undoing (or not implementing) measures to protect workers, the environment and public health.

In a nutshell: This corporate power shift hurts workers in all three countries.

On the campaign trail, when candidate Trump criticized trade agreements as undermining U.S. independence, he insinuated that he was opposed to investor-state rules. But, as president, he has said nothing about them.

As President Trump launches discussions on NAFTA, let us see if he stands up against this blatant giveaway to corporations or if he allows this lining of corporate pockets to continue.

Originally published by The Hill.

Robin Broad is a professor at the School of International Service at American University and is on the board of Earthworks. John Cavanagh is the executive director of the Institute for Policy Studies.

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