And George gets it wrong on trade again

They have good reason to ask. The commission insists that its Transatlantic Trade and Investment Partnership should include a toxic mechanism called investor-state dispute settlement. Where this has been forced into other trade agreements, it has allowed big corporations to sue governments before secretive arbitration panels composed of corporate lawyers, which bypass domestic courts and override the will of parliaments.

This mechanism could threaten almost any means by which governments might seek to defend their citizens or protect the natural world. Already it is being used by mining companies to sue governments trying to keep them out of protected areas; by banks fighting financial regulation; by a nuclear company contesting Germany’s decision to switch off atomic power. After a big political fight we’ve now been promised plain packaging for cigarettes. But it could be nixed by an offshore arbitration panel. The tobacco company Philip Morris is currently suing Australia through the same mechanism in another treaty.

Sigh.

All it is about is making sure that governments also obey the law. If you nationalise something you’ve got to pay compensation, that sort of thing. And yes, that really is all it is.

42 comments on “And George gets it wrong on trade again

  1. “We’ve now been offered plain packaging of cigarettes”?

    “We”? “Offered”? Isn’t it just another review; or is George admitting that the whole thing is a charade with a foregone conclusion?

  2. Is it really that simple though? When a dirty factory finds itself out of pocket because of a new clean air act, we’ve always left it to the factory owner to foot the bill for reducing emissions (or moving to China). Why change the game now? It certainly hasn’t been discussed much.

    Consider the converse situation. Government strikes the smoking ban; pubs and tobacco companies’ profits boom. Should they be forced to give up all those increased profits to the government?

  3. Do we know if George has fulminated against the ECHR and its decisions to restrict the rights of parliaments? The ECHR is far more egregious in its actions against the will of parliaments. The ECHR has grossly expanded its remit. Unlike the trade disputes which are usually over governments stealing people’s stuff without adequate compensation.

  4. Do we know if George has fulminated against the ECHR and its decisions to restrict the rights of parliaments? The ECHR is far more egregious in its actions against the will of parliaments.

    Nonsense.

  5. Andrew M,

    Why change the game now? It certainly hasn’t been discussed much.

    What do you mean “change the game now”? Such agreements have been in place for at least 50 years iirc. People are slowly becoming more aware of them, is all.

  6. Last month, while trying to defend the treaty, the British minister Kenneth Clarke said something revealing: “Investor protection is a standard part of free-trade agreements – it was designed to support businesses investing in countries where the rule of law is unpredictable, to say the least.” So what is it doing in an EU-US deal?

    I wonder what Monbiot thinks of Vattenfall v Germany (ongoing), where one month Germany legislated for extra investment in nuclear power, which Vattenfall duly invests, then a few months later, post-Fuskushima, Germany decided it didn’t like nuclear power after all.

    (incidentally, Vattenfall is wholly owned by Sweden, i.e. not an evil private sector entity.)

  7. ukliberty

    The extension of ECHR with bad law is far more egregious than investor state dispute resolution. Whether one believes it is egregious enough to demand withdrawal from the ECHR, you cannot claim that international binding arbitration over treaty terms – the scope of which were known far in advance – can be compared to the ECHR extending its remit. That you would term this nonsense shows that you are blinkered.

    Your own example of Vattenfall shows how absurd Monbiot is being – so it is quite right to ask if Monbiot has fulminated against the ECHR.

  8. Ukliberty

    The prisoner votes thing.
    And then there was this -

    D. vs United Kingdom 1997. no.37

    Summary:
    This case concerns the proposed removal of an alien drug courier dying of Aids to his country of origin (St. Kitts) where he has no accommodation, family, moral or financial support and no access to adequate medical treatment. The applicant arrived at Gatwick Airport, London, on 21 January 1993 and sought leave to enter the United Kingdom for two weeks as a visitor. He was found at the airport terminal to be in possession of a substantial quantity of cocaine with a street value of about 120,000 pounds. The Immigration Officer refused him leave to enter on the ground that his exclusion was conducive to the public good and gave him notice that he would be removed to St. Kitts within a matter of days. However, after being arrested and charged, the applicant was remanded in custody and subsequently prosecuted for being knowingly involved in the fraudulent evasion of the prohibition on the importation of controlled drugs of Class A. He pleaded guilty and was sentenced to six years’ imprisonment. In August 1994, while serving his prison sentence, the applicant suffered an attack of pneumocystis carinii pneumonia (`PCP’) and was diagnosed as HIV- positive and as suffering from AIDS. The infection appears to have occurred some time before his arrival in the United Kingdom. On 3 March 1995, the applicant was granted a period of compassionate leave to be with his mother whose air fare to the United Kingdom to visit him had been covered by charitable donations. On 24 January 1996, the applicant was released on licence and placed in immigration detention pending his removal to St. Kitts. The applicant’s solicitors requested that the Secretary of State grant the applicant leave to remain on compassionate grounds since his removal to St. Kitts would entail the loss of the medical treatment which he was currently receiving thereby shortening his life expectancy. This request was refused by the Chief Immigration Officer. The applicant has no family home or close family in St. Kitts other than, according to information provided by the Government, a cousin. His mother, who currently lives in the United States, has declared that her age, bad health and lack of resources prevent her from returning to St. Kitts to look after her son if he were to be returned there. She has also stated that she knew of no relatives who would be able to care for him in St. Kitts. When granted bail by an adjucatior on 31 October 1996 the applicant was released to reside in special sheltered accommodation for AIDS patients provided by a charitable organisation working with homeless persons. Accommodation, food and services are provided free of charge to the applicant. The applicant was transferred to an AIDS hospice around the middle of January 1997 for a period of respite care. At the beginning of February there was a sudden deterioration in his condition and he had to be admitted to a hospital on 7 February for examination. At the hearing before the Court on 20 February 1997, it was stated that the applicant’s condition was causing concern and that the prognosis was uncertain. According to his counsel, it would appear that the applicant’s life was drawing to a close much as the experts had predicted. The Court observed that the expulsion of alien drug couriers is a justified response to the scourge of drug trafficking. The right of Contracting States to expel aliens is however subject to the need to respect the absolute nature of the prohibition contained in Article 3. It is a duty of the respondent State to secure to the applicant the guarantees contained in Article 3 irrespective of the gravity of the offence committed. The applicant has been within the jurisdiction of the respondent State since 21 January 1993 even if he never entered in the technical sense. It is true that the application of this principle is not confined to the contexts in which the individual to be expelled faces a real risk of being exposed to forms of treatment proscribed by Article 3 which are intentionally inflicted by public authorities in receiving State or by non-State bodies when the public authorities in that State are unable to afford him appropriate protection. The Court must be able to apply Article 3 in other contexts so as to avoid undermining the absolute character of the article’s protection. The conditions which await the applicant in St. Kitts do not in themselves breach the standards of Article 3. The respondent State has assumed its responsibility for treating the applicant since August 1994 because he is in the advanced stages of a terminal and incurable illness. The applicant is now reliant on medical and palliative care provided to him. His removal at this stage would hasten his death and expose him to a real risk of dying under most distressing circumstances and thus to inhuman treatment. There is no adequate medical treatment, no shelter, no family support in the receiving country. Aliens who have served their prison sentences and are subject to expulsion cannot in principle claim any entitlement to remain on the territory of a Contracting State in order to continue to benefit from medical, social or other forms of assistance provided by that Sate during their stay in prison. However, in view of the very exceptional circumstances of the case and the compelling humanitarian considerations at stake, removal of the applicant would violate Article 3. Therefore, there would be a violation if the applicant were to be removed. The applicant had also contended that the circumstances of his case engaged the responsibility of the respondent Government under Article 2. The Court concluded that having regard to its finding under Article 3 it was not necessary to examine the complaint under Article 2. The Court also held that the applicant’s complaint under Article 8, in particular his physical integrity did not rise a separate issue, having regard to its finding under Article 3. The Court confirmed the conclusion reached in its earlier judgments concerning the respondent State that judicial review proceedings constituted an effective remedy. The domestic court is required to submit the applicant’s plight to the most anxious scrutiny on account of the established risk and had the power to grant the relief sought. There was no violation of Article 13. The Court finally held that the respondent State had to pay under Article 50 the costs and expenses.

    This is a hard case, and hard cases make bad law. In general, the court has not followed this terrible precedent – see

    N. vs UK 2008.

    But several ECHR justices have recently attempted to extend Art 3. building on the 1997 judgement.

  9. Perhaps if the government puts income tax up it should compensate me for having “changed the game”. I wouldn’t mind that.

    It is astonishing that this mockery of sovereignty (which is clearly what it is, whatever your position on government sovereignty in the first place) is defended by those who are so bitterly opposed to the EU on supposed sovereignty grounds. Better to work out how to encourage governments to exercise their sovereignty wisely, don’t you think?

  10. I’m broadly with James on this. For good or ill, it’s a dilution of Parliament’s (already diluted) sovereignty. If it’s just a matter of governments not breaking existing law, we have courts and judicial review already.

    But there are some other quirks. A foreign investor can go straight to the arbitration tribunal, bypassing local courts. A native cannot. And foreign investors have gone to the arbitration tribunal after losing in the local court, on the grounds the local court was wrong. That gives them a right of appeal the local does not have.

    My guess is that you’d get loads of US firms trying to enforce iffy patents through the tribunal when they thought they’d lose (or had lost) in the English or other EU courts.

  11. I wonder what Monbiot thinks of Vattenfall v Germany (ongoing), where one month Germany legislated for extra investment in nuclear power, which Vattenfall duly invests, then a few months later, post-Fuskushima, Germany decided it didn’t like nuclear power after all.

    It’s worse than that in the US. There have been occasions where oil companies have been indicted by the Department of Justice for colluding with other oil companies in precisely the manner the Department of Energy ordered them to in the interests of energy security. Sometimes the indictment was made whilst the orders were still being given. Madness.

  12. “It is astonishing that this mockery of sovereignty (which is clearly what it is, whatever your position on government sovereignty in the first place) is defended by those who are so bitterly opposed to the EU on supposed sovereignty grounds. Better to work out how to encourage governments to exercise their sovereignty wisely, don’t you think?”

    Yeah that’ll work. Until those “encouraging governments” want to do something like regulate the shape of fruit and veg…

    Perhaps you’d like to rethink your faith in supranational and intergovernmental organisations?

  13. ” … bypass domestic courts and override the will of parliaments. … it could be nixed by an offshore arbitration panel”: so he’s a mad bastard eurosceptic, I assume?

  14. ken, it’s arguable about how much of the “The prisoner votes thing” is actually against the will of Parliament. In Hirst the court found “there is no evidence that Parliament has ever sought to weigh the competing interests or to assess the proportionality of a blanket ban on the right of a convicted prisoner to vote”. And this row could have been sorted out years ago (it is now over eight years since Hirst) if Parliament had legislated appropriately. There has been far more fuss about this than necessary – istm because it’s politically expedient to make a big deal of it instead of just sorting it out.

    D. vs United Kingdom 1997. no.37 is against the will of the Government, not Parliament.

  15. @Led125, I don’t trust any of them. And as much as I am against governments regulating business out of existence as much as they already do, I am also opposed to further expansion of the already considerable legislative capture by big business which works in the interests of big business and against everyone else.

  16. Parliamentary sovereignty is overrated. Broadly speaking, any mechanism that can veto a parliament, from whatever source, is a Good Thing since parliament invariably does Bad Things.

    If we had a parliament heading in a liberal direction, we might be worried about a veto mechanism. But we don’t, and will not have one in the foreseeable future. So, Good Thing overall. One has to bear in mind that George is upset entirely because this mechanism prevents more laws, regulations and interferences with the citizen. Effectively, it is a mechanism for the subjects of parliaments (in this case, corporations etc) to reclaim their sovereignty and prevent the parliament exercising it.

    So like I said, good-oh!

  17. @Ian B, yes, it would be great if all had the same right to veto parliaments. Giving such a right specifically and exclusively to foreign legal persons is perverse.

  18. JamesV – Good.The problem is that the only thing worse than an ever expanding legislature is an ever expanding executive. And you’re in for a shock if you think that always delegating everything to intergovernmental bodies is always going to increase liberty to the individual. It won’t. And as it won’t there is no necessary contradiction in defending certain intergovernmental agreements while opposing the European Union on the grounds of sovereignty QED.

    IanB – I wouldn’t be so sure about that “invariably” bad remark. It was parliament that passed the Human Rights Act, set up Parliamentary Committees, repealed the Corn Laws, abolished the slave trade, got rid of sodomy laws et cetera. If I have to choose between the tyranny of the mob and the tyranny of well meaning technocrats my preference leans towards the mob.

  19. ukliberty

    “Apparently in some cases foreign investors have been prevented from accessing the local courts, so some of this seems like swings and roundabouts.”

    Fair point in abstract. But are you seriously saying that a US company would be prevented from bringing an action in the UK courts? It might not win, but that’s not the point.

    I’m not particularly arguing against them, just saying they are only necessary if (a) at least party doesn’t trust the other’s courts, and/or (b) you intend to force the other party to abide by the letter/spirit of the treaty even if its legislature doesn’t want to/changes its mind (and are prepared for the other party to do that to you).

    So we’re giving up sovereignty. Might be worth it, might not. What’s UKIP policy, anyone?

  20. The mechanism doesn’t give up any more sovereignty than any trade treaty does. It simply means that entities subject to the treaty can challenge the governments, so the lost sovereignty is effectively partly in the hands of the subject entities, not just the governments of the subject entities.

    It’s worth remembering here that, as Bastiat (or Ron Paul indeed) would remind us; governments never enable trade. They can only restrict it. When governments sign a trade treaty, they are making a list of restrictions upon economic agents within their collective power, so talk of “foreigners” is nonsense here. All foreign treaties are about foreigners, duh. The question is whether you’re just going to pool your sovereignty over trade with a foreign government, or also directly with its citizens and corporations. But the amount of sovereignty lost is the same.

  21. ken – “This is a hard case, and hard cases make bad law.”

    What is hard about it? There was precisely nothing about that man that would even suggest we, the taxpayers of Britain, should have been compassionate towards him. Even assuming that everything he said was true. Given his very strong determination to break our laws and poison the stupider members of the British community, why should we be paying hundreds of thousands of pounds to keep him alive a little bit longer?

  22. But are you seriously saying that a US company would be prevented from bringing an action in the UK courts?

    No, I’m not, I just responded to the point that “A foreign investor can go straight to the arbitration tribunal, bypassing local courts,” I didn’t suggest anything about specific countries. I imagine US investors would think the UK is relatively low risk in this context and vice versa. But what about other countries in the EU?

    I don’t understand the loss of sovereignty argument. If Vattenfall wins it doesn’t mean Germany is obliged to have nuclear power. All it means is that Germany owes some money to Vattenfall. (And then who is going to make Germany pay Vattenfall that money? Germany could ignore the decision.)

  23. Parliament can make or unmake any law. The Government is apparently free to ignore adverse decisions made in non-domestic courts, political considerations aside – we haven’t been kicked out of the Council of Europe (the ultimate sanction for disobeying the ECtHR) for not abiding by Hirst for eight years. I think the loss of sovereignty argument is overwrought.

  24. ukliberty – “(And then who is going to make Germany pay Vattenfall that money? Germany could ignore the decision.)”

    The Argentinians are discovering that the Courts haff vays of making them pay.

  25. ukliberty – “In Hirst the court found “there is no evidence that Parliament has ever sought to weigh the competing interests or to assess the proportionality of a blanket ban on the right of a convicted prisoner to vote”.”

    In other words the Courts are punishing Britain because they think the UK has not created enough useless make work for lawyers in recent times. There is no rational reasons for this decision to be respected at all. Just because we have not had an expensive inquiry with lots of QCs on the public teat doesn’t mean the policy is not good or was not arrived at properly or that it should not exist.

    But of course we did not tick all the boxes properly.

    If ever there was a case for the abolition of this Court, this is it.

  26. The Argentinians are discovering that the Courts haff vays of making them pay.

    How much money has Argentina paid to holdouts in the pari passu saga?

  27. In George’s topsy-turvy world, companies who follow the law to oppose government policy is wrong, whereas NGOs who deliberately break the law doing the same are ok.

  28. This is a case of bolted horses and shut gates. The UK has been signing bi-lateral investment protection and promotion agreements (IPPAs) since the middle of the 1970s. There are well over 50 such agreements with all sorts of countries (have a look on the DTI web site for a full list).

    Each of those contains an arbitration clause allowing investors to sue (OK refer to arbitration) the government parties if they breach the terms of those agreements.

    I am with Tim on this it seems perfectly reasonable that if the Peoples Republic of Absurdistan wants to encourage me to invest in their country that if they then appropriate my investment without compensation I should have some remedy. Pretty straightforward really. Of course once you have an arbitral award enforcing that claim might be more problematic.

    Of course there is no IPPA between the UK and the USA and of course US businesses are a bit more litigious than most so it is far more likely that this mechanism will be used, but probably against countries that unfairly protect domestic industry or treat foreign investors as second class citizens (I am looking at you France).

    All seems pretty straightforward rule of law stuff to me, why should governments be above the laws they create.

  29. UKliberty – “political considerations aside”

    Well, yeah, therein lies the rub. We have a political constitution in this country rather than a legal one. Parliament could legislate to close the port of Boston if it wanted to but the politics would make it difficult for Cameron & co to set aside the Treaty of Paris 1783.

    Until our politicians grow some balls, the complaint that we surrender sovereignty is a valid one.

  30. Ukliberty

    You’re going to claim that D. vs UK 1997 would not fail if put before parliament? Obviously bollox. Just admit that the ECHR has engaged in overreach – leaving aside whether that justifies leaving or ignoring the ECHR. The case clearly ignored the law of the land for no legal reason – and worryingly we find attempts to extend this bad decision today.

    SMFS

    D. vs UK is clearly a case where the law should have held – quite rightly – that he should have been deported. But, the ECHR was horrified by the possibility that this was a de facto death sentence (an earlier death). As such it is a hard case. This isn’t unknown in English law, much of the development of equity by Lord Denning MR was associated with hard cases. (“A little old lady is going to lose her house, that would never do, so even though equity is shield, I shall use it to bludgeon the bank”).

  31. ken,

    You’re going to claim that D. vs UK 1997 would not fail if put before parliament? Obviously bollox.

    I don’t understand your question – Parliament doesn’t try cases.
    (And please don’t put questions in my mouth and then answer them yourself.)

    The case clearly ignored the law of the land for no legal reason – and worryingly we find attempts to extend this bad decision today.

    Are you saying Article 3 isn’t law?

  32. There was precisely nothing about that man that would even suggest we, the taxpayers of Britain, should have been compassionate towards him.

    Precisely, he was a dying human being, in Britain.

  33. the ECHR was horrified by the possibility that this was a de facto death sentence (an earlier death).

    No, not an earlier death or a de facto death sentence but that removal would lead to “acute mental and physical suffering … a real risk of dying under most distressing circumstances” which would constitute inhuman treatment in violation of Article 3.

    It is one thing to claim that removal would not constitute a violation of Article 3 (as the UK argued), quite another to claim the court “it ignored the law of the land for no legal reason” – Article 3 is part of the law.

  34. ukliberty

    What constitutes defiance of parliament? It is clear that if D. vs UK was subject to a vote in Parliament, there is no way that it would not be found to be in contravention of the will of parliament. Your use of “defiance of the government” would mean that you require an actual vote to suggest that a court case defied the will of parliament. Article 3 is law, but in the context of my original point – if Monbiot fulminates against international mediation (law), he should fulminate against ECHR – where the “law” is clearly far more against the will of parliament as it originally intended when it signed up to a treaty.

    Article 3. was never meant to be used in the way it was used in D. vs UK. It was meant to be a prohibition on torture. Note the way the article is written. “Article 3. Prohibition on torture”. The extension to the idea that the UK has a legal duty to give medical treatment to a criminal who is due to be deported is absurd. Which is why the ECHR went through the absurd contortions it did when it stretched Article 3 to cover D. vs UK. Why not just accept that D. vs UK is bad law, just as all of Denning’s adventures in the creative use of equitable estoppel was bad law?

    The law of land is that article 3 is to prohibit torture including inhuman treatment. D’s early death was a hard case. Yes, the ECHR wittered on about “distressing circumstances”, but in practice, this is absurd – does every individual suffering from a terminal condition have the right to medical treatment if they make it into a ECHR member state? This is about as convincing as Denning’s use of equitable estoppel as a sword to prevent the bank seizing the little old lady’s house.

    Hard cases, bad law. What is truly depressing is that the ECHR has justices trying to extend D vs UK.

  35. ken, I think your case against Monbiot is better taken up with him. For what it’s worth I raised the point with him and he has yet to respond. As for our arguments:

    If Parliament made a law requiring all such foreign nationals to be expelled and the court found in favour of one of them, then I think you could reasonably say the court went against the will of Parliament (for whatever that’s worth). But Parliament did not make such a law here. It gave the state the power to expel foreign nationals and the discretion to allow them leave to enter and leave to remain. It is the result of the exercise of the power of removal in this specific case that the court found would constitute a violation of Article 3 because of the particular circumstances. ISTM then that the decision is against the state not Parliament.

    Article 3. was never meant to be used in the way it was used in D. vs UK. It was meant to be a prohibition on torture. Note the way the article is written. “Article 3. Prohibition on torture”.

    I think what you’re trying to say is that your interpretation of Article 3 is in terms of deliberate inhuman treatment. The court acknowledged that previous cases were in such contexts and discussed this from para 49 of the judgement.
    But to me there seems to be a distinction with little difference in this context between (A) the state deliberately causing inhuman treatment and (B) the state deliberately doing something that has the effect of inhuman treatment.

    The extension to the idea that the UK has a legal duty to give medical treatment to a criminal who is due to be deported is absurd.

    Then why have you invented it? The court didn’t mention a duty of care.

    does every individual suffering from a terminal condition have the right to medical treatment if they make it into a ECHR member state?

    No. It is made explicit that the UK lost because of “the very exceptional circumstances of this case and … the compelling humanitarian considerations at stake.” If expulsion of your hypothetical individual would constitute a violation of Article 3 then he would likely win. If it wouldn’t constitute a violation of Article 3 then he would lose. So no, not “every” individual.

  36. “Precisely, he was a dying human being, in Britain.”

    PaulB,

    There are millions of human beings dying right now all over the world. A lot of them could be spared with the application of British compassion. Most of those not spared could have their suffering eased.

    As you don’t appear to be arguing for Britain to take a role in these people’s lives, I assume it’s just proximity that makes this guy special. In other words, if you don’t have to see it, it’s not a problem to you.

  37. Acts and omissions are not the same in my philosophy. Putting D on a plane to St Kitts is different from not putting sick people in St Kitts on a plane to England.

    Our inability to help everyone is not a good reason to help no one.

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