Treaty Shopping: How Companies Tilt The Legal Playing Field For Investor-State Arbitration

Alongside globe-spanning treaties like ACTA and TPP, there are more subtle efforts to limit the power of national governments, through the use of free trade agreements (FTAs) and bilateral investment treaties (BITs). There are now so many of these that it's hard to keep up, although the dedicated site bilaterals.org is a great help here. The confusing multiplicity only adds to their attractiveness for those negotiating them behind close doors, keen as they are to avoid transparency as much as possible. 

On Techdirt.

Big Tobacco: Saving Lives is "Expropriation"

Although I knew that there is yet another trade treaty being discussed between New Zealand, the US and others, I hadn't heard about this aspect before:

The Green Party is calling on the Government to reject attempts to introduce investor-state disputes mechanisms into the Trans-Pacific Partnership (TPP) trade negotiations in light of evidence that the Philip Morris tobacco company is planning to use the TPP to block anti-smoking laws.

The issue is this, apparently:

Philip Morris is currently taking action against Uruguay’s proposed anti-smoking laws under the investor-state disputes mechanism of the trade agreement between Uruguay and Switzerland. Uruguay is proposing to introduce new measures requiring 80 percent of cigarette packaging to carry graphic warnings against smoking. The company argues such measures effectively expropriate their investments. Under the investor-state disputes mechanism a World Bank panel will decide if Uruguay must pay Philip Morris for this ‘expropriation’.

So let me get this straight. Philip Morris - and all the other tobacco companies - make hefty profits by selling highly addictive substances to people that the company knows will probably give them cancer and/or a host of other life-threatening and painful diseases. Their deaths will cause huge losses not just personally, but economically - to their families, and to the state.

And yet, thanks to this wonderful "investor-state disputes mechanism", an unelected World Bank panel made up of people whose interests are probably aligned with big business rather than individuals in developing countries, "will decide if Uruguay must pay Philip Morris for this ‘expropriation’."

"Expropriation": that's what they want to rebrand the fight against these profits that result directly from the suffering of millions of people. Stopping these global, massively-powerful drug dealers is not common sense, or a wise health policy, but is now branded "expropriation". If you ever wanted a symbol of how sick and twisted capitalism and the structures that support it really are can be, you could do worse than choose this new "expropriation" of profits born of death.

Let's hope New Zealand tells the TPP negotiators pushing for this "investor-state disputes mechanism" that they can stick it in their carcinogenic pipes and smoke it. (Via @juhasaarinen.)

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Opening Our Eyes to the Tilted Playing-Field

One of the subtlest ways of gaming the system is to hack the system before you even play - for example, by building in a bias that means your particular approach is given a natural advantage. That this goes on, is nothing new; that it's happened at the heart of the European Union is profoundly disturbing. Here's the summary of what's now been discovered:

These findings suggest that BAT [British American Tobacco] and its corporate allies have fundamentally altered the way in which EU policy is made by ensuring that all significant EU policy decisions have to be assessed using a business-orientated IA [Impact assessment]. As the authors note, this situation increases the likelihood that the EU will produce policies that favor big business rather than the health of its citizens. Furthermore, these findings suggest that by establishing a network of other industries to help in lobbying for EU Treaty changes, BAT was able to distance itself from the push to establish a business-orientated IA to the extent that Commission officials were unaware of the involvement of the tobacco industry in campaigns for IA. Thus, in future, to safeguard public health, policymakers and public-health groups must pay more attention to corporate efforts to shape decision-making processes. In addition, public-health groups must take account of the ways in which IA can be used to undermine as well as support effective public-health policies and they must collaborate more closely in their efforts to ensure effective national and international policy.

A number of lessons need to be learned from this.

First, that if you want a system to produce fair results, you need to ensure that its framing is fair. Secondly, full transparency is imperative, especially about the relationships between those who are lobbying for changes to a system. Basically, you just can't have too much openness when it comes to setting key policy like Impact assessment.

This is an incredibly important - and impressive - paper, with huge implications for many areas. One that springs to mind is that of environmental protection. Given that the framing of Impact assessments is biased in favour of business and financial issues, it's not hard to see that other viewpoints - for example of examining the implications for animal and plant life, or of the various commons impacted - will receive pretty short shrift. It's also an argument for the economics of externalities to be developed more so that they can be brought into the equation when such one-side reviews are being conducted.

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Opencourseware Comes Under Attack

It was bound to happen: opencourseware is under attack:

While seeking to make college more accessible, the Obama administration has launched a largely unnoticed assault upon the nation’s vibrant market in online learning. As part of an ambitious bill designed to tighten federal control over student lending, the House of Representatives included a scant few sentences green-lighting a White House plan to spend $500 million on an “Online Skills Laboratory,” in which the federal government would provide free online college courses in a variety of unspecified areas. The feds would make the courses “freely available” and encourage institutions of higher education to offer credit for them. The measure is now before the Senate.

Ah yes, "freely available": that communistic cancer again.

It is not clear what problem the administration is seeking to solve. The kinds of online courses that the administration is calling for already exist, and are offered by an array of publishers and public and private institutions. Online enrollment grew from 1.6 million students in 2002 to 3.9 million in 2007. Nearly 1,000 institutions of higher education provide distance learning.

More than half a dozen major textbook publishers, and hundreds of smaller providers, develop and distribute online educational content. To take one example, Pearson’s MyMathLab is a self-paced, customizable online course, which the University of Alabama uses to teach more than 10,000 students a year. Janet Poley, president of the American Distance Education Consortium, doesn’t see the need for federal dollars to be spent “reinventing courses that have already been invented.”

Since it's "not clear what problem the administration is seeking to solve", allow me to offer a little help.

The article suggests that the kinds of online courses that will be created are already on offer: well, no, because those produced by "major textbook publishers, and hundreds of smaller providers" are neither "free of charge" nor "free" in the other, more interesting sense that you can take them, rework them, reshape them, and then share them. And why might that be a good idea? Well, most importantly, because it means that you don't have to "reinvent courses that have already been invented."

Oh, but wait: isn't that what the article says the current situation avoids? Indeed: and that, of course, is where the article goes wrong. The existing courses, which are proprietary, and may not be copied or built on, cause *precisely* the kind of re-inventing of the wheel that opencourseware is accused of. That's because every publisher must start again, laboriously recreating the same materials, in order to avoid charges of copyright infringement.

That's an absurd waste of effort: the facts are the same, so once they are established it's clearly much more efficient to share them and then move on to create new content. The current system doesn't encourage that, which is why we need to change it.

Given the article gets things exactly the wrong way round, it's natural to ask how the gentleman who penned these words might have come to these erroneous conclusions. First, we might look at where he's coming from - literally:

Frederick M. Hess is director of education-policy studies at the American Enterprise Institute.

Here's what SourceWatch has to say on this organisation:

The American Enterprise Institute for Public Policy Research (AEI) is an extremely influential, pro-business, conservative think tank founded in 1943 by Lewis H. Brown. It promotes the advancement of free enterprise capitalism, and succeeds in placing its people in influential governmental positions. It is the center base for many neo-conservatives.

And if that doesn't quite explain why Mr Hess might be pushing a somewhat incorrect characterisation of the situation, try this:

In 1980, the American Enterprise Institute for the sum of $25,000 produced a study in support of the tobacco industry titled, Cost-Benefit Analysis of Regulation: Consumer Products. The study was designed to counteract "social cost" arguments against smoking by broadening the social cost issue to include other consumer products such as alcohol and saccharin. The social cost arguments against smoking hold that smoking burdens society with additional costs from on-the-job absenteeism, medical costs, cleaning costs and fires. The report was part of the global tobacco industry's 1980s Social Costs/Social Values Project, carried out to refute emerging social cost arguments against smoking.

So, someone coming from an organisation that has no qualms defending the tobacco industry is unlikely to have much problem denouncing initiatives that spread learning, participation, collaboration, creativity, generosity and general joy in favour of all their antitheses. And the fact that such a mighty machine of FUD should stoop to attack little old opencourseware shows that we are clearly winning.

In Denial

This is an important story - not so much for what it says, but for the fact that it is being said by a major US title like Newsweek:

Since the late 1980s, this well-coordinated, well-funded campaign by contrarian scientists, free-market think tanks and industry has created a paralyzing fog of doubt around climate change. Through advertisements, op-eds, lobbying and media attention, greenhouse doubters (they hate being called deniers) argued first that the world is not warming; measurements indicating otherwise are flawed, they said. Then they claimed that any warming is natural, not caused by human activities. Now they contend that the looming warming will be minuscule and harmless. "They patterned what they did after the tobacco industry," says former senator Tim Wirth, who spearheaded environmental issues as an under secretary of State in the Clinton administration. "Both figured, sow enough doubt, call the science uncertain and in dispute. That's had a huge impact on both the public and Congress."

Even though the feature has little that's new, the detail in which it reports the cynical efforts of powerful industries to stymie attempts to mitigate the damage that climate change will cause is truly sickening. It is cold (sic) comfort that the people behind this intellectual travesty will rightly be judged extremely harshly by future generations - assuming we're lucky enough to have a future. (Via Open the Future.)