Trade agreements can allow international corporations to trample on the rights of governments in the global south. This is the message from the Colombian government, which describes the effect of such deals as “Bloodbath” for their national sovereignty. And now Colombia president Gustavo Petro has said he wants to renegotiate his country’s agreements with the United States, the European Union and the United Kingdom.
His argument is compelling because in recent years the U.S. and European countries have also renegotiated similar trade and investment deals to avoid being sued in the secretive “corporate courts” that these deals entail.
Just this year, the British government withdrew from a toxic investment agreement called the Energy Charter Treaty after a series of cases in which European governments were sued by fossil fuel companies over climate policies that allegedly harmed those companies’ profits .
The question now is whether European countries will accept that southern countries need the same policy space to deal with climate change and numerous other problems they face. Or whether they will require these countries to continue abiding by these terrible, one-sided agreements.
The core of the problem lies in the so-called investor-state dispute settlement (ISDS). Essentially, ISDS creates a “corporate court” that allows multinational corporations from a trading partner country to sue governments in an international tribunal.
These “corporate courts” have been inserted into trade and investment agreements since the 1950s, originally intended as a means of protecting Western interests in developing countries. They created a legal system that would have made it more difficult for governments, for example, to nationalize oil fields belonging to Western multinational corporations. So these deals were implicitly neo-colonialist from the start.
But over time, the scope of these corporate courts was expanded to include corporate lawyers. Today, companies can challenge virtually any law or regulation they don’t like. Worse, these cases are often heard in secret and overseen by corporate lawyers who don’t have to worry about the impact of their decisions on society, human rights or the environment – only about investment law. And these “courts” generally have no right of appeal and can only be used by foreign investors.
Therefore, ISDS has been used by tobacco companies to counter governments who want to ensure that cigarettes are only sold in plain packaging. They have been used to challenge minimum wage increases and unexpected taxes. But increasingly they are being used to challenge all kinds of environmental regulations needed to curb climate change. In fact, they are becoming a major obstacle to the climate action that governments must take to keep our planet habitable.
As a result, Western countries have to pocket hundreds of millions of dollars from companies simply for fulfilling their democratic duties. Unsurprisingly, they are terminating the contracts that got them into this situation. However, they are significantly less interested in allowing other governments to take the same measures. One rule for us, a completely different one for the global south.
The Colombian government has decided to expose this hypocrisy and take matters into its own hands. President Petro said companies should never have settled disputes outside national courts, saying instead Colombia was forced to “put itself into the jaws of the wolf.”
He’s right. In the last decade, 23 known cases have been brought against Colombia under the ISDS, many of which were brought by foreign mining companies in direct response to Colombia’s actions to protect the natural environment and the rights of indigenous peoples.
Mining giant Glencore, for example, sued Colombia after the country’s Constitutional Court decided to suspend a planned expansion of what is already Latin America’s largest open-cast coal mine.
The Cerrejon mine has always faced fierce local opposition and led to toxic contamination of the air, soil and water supplies, as well as the displacement of 35 indigenous communities from their ancestral territories. The Constitutional Court ruled that the expansion of the mine would have serious impacts on the local community’s ecosystem.
Glencore said the court’s decision was discriminatory, unreasonable and arbitrary and used ISDS to launch four separate cases against Colombia. It won the first case and was awarded $19 million, while the other three are still being litigated for undisclosed sums of money.
In another case, Canadian mining company Eco Oro is seeking $696 million in compensation as the Constitutional Court ruled to protect the paramos – rare, high-altitude wetland ecosystems that serve as vital sources of fresh water. Although the ISDS system in question is expressly intended to guarantee governments policy space to protect the environment, the tribunal ruled that this environmental exception does not exclude the obligation to pay compensation.
Colombia is not alone. In recent years, countries such as Kenya, South Africa and Ecuador have begun to exit this deeply undemocratic system. One of the first treaties that Colombia wants to renegotiate is the United Kingdom-Colombia Agreement. The Colombian ambassador to the UK has clearly condemned the agreement, saying that these contracts have “become a burden for Colombia and many other countries”, noting in particular the power they give the fossil fuel industry to oppose to fight climate protection and sue countries “because they didn’t earn what they actually wanted to earn from environmental pollution.”
But they will face serious resistance. This means they need the support of citizens and movements here in the UK. Fortunately, the union of civil servants who work in the UK government to negotiate trade deals has already backed the Colombian position, saying: “We need real climate action.”
We must join them. ISDS is a secretive system, but in recent years activists have brought it out of the shadows and begun dismantling it in numerous trade deals. Seventy years after the creation of this neo-colonial system, we can finally defeat it. And if we want to stop climate change and build democracy, we have to do it quickly. Colombia is now on the front lines and needs our support.
The views expressed in this article are the author’s own and do not necessarily reflect the editorial stance of Al Jazeera.
