Trade deals can allow international corporations to trample over the rights of governments in the Global South. That is the message from the Colombian government, which describes the effect of such deals as a “bloodbath” for their national sovereignty. And now, Colombia’s President Gustavo Petro has said he wants to renegotiate the deals his country has with the United States, European Union and the United Kingdom.
He has a strong case because, in the last couple of years, the US and European countries have also been renegotiating similar trade and investment deals, as they try to prevent themselves from being sued in the secretive “corporate courts” that these deals create.
Only this year, the British government withdrew from a toxic investment deal, called the Energy Charter Treaty, after a slew of cases in which European governments were sued by fossil fuel corporations for taking climate action which supposedly damaged the profits of said businesses.
So the question now is whether European countries are going to accept that southern countries need the same policy space to deal with climate change and numerous other problems they face. Or whether they will demand these countries continue to abide by these awful, one-sided deals.
At the core of the problem, is something known as investor-state dispute settlement or ISDS. In essence, ISDS creates a “corporate court”, which lets multinational corporations from a trade partner country sue governments in an international tribunal.
These “corporate courts” have been inserted into trade and investment deals since the 1950s, initially dreamt up as a way of protecting Western interests in developing countries. They created a legal system which would have made it harder for governments that might want to, say, nationalise oilfields owned by Western multinationals. So, from the outset, these deals were implicitly neocolonial.
But as time went by, the scope of these corporate courts was broadened by corporate lawyers. Today, corporations are able to sue for pretty much any law or regulation they do not like. Worse, these cases are often heard in secret, overseen by corporate lawyers who do not have to worry about the impact of their decisions on society, human rights or the environment – only investment law. And these “courts” usually have no right of appeal, and can only be utilised by foreign investors.
As such, ISDS has been used by tobacco corporations to challenge governments which want to ensure cigarettes are sold only in plain packaging. They have been used to challenge increases to the minimum wage and windfall taxes. But increasingly, they are being used to challenge all manner of environmental regulations necessary to halt climate change. In fact, they are becoming a major barrier to the climate action governments must undertake to keep our planet habitable.
As such, Western countries are finding themselves on the hook for hundreds of millions of dollars from corporations, simply for exercising their democratic duties. Unsurprisingly, they are revoking the treaties which have put them in this situation. But they are much less keen on allowing other governments to take the same measures. One rule for us, quite another for the Global South.
The Colombian government has decided to call out this hypocrisy and take matters into its own hands. President Petro has said allowing corporations to settle disputes outside national courts should never have happened, saying instead Colombia is forced “to put ourselves in the mouth of the wolf”.
He is right. In the last decade, 23 known cases have been brought against Colombia under ISDS, many issued by foreign mining companies in direct response to measures taken by Colombia to protect the natural environment and the rights of Indigenous peoples.
Mining giant Glencore, for example, sued Colombia following the decision of the country’s Constitutional Court to suspend a proposed expansion to what is already the largest open-pit coal mine in Latin America.
The Cerrejon mine has always faced fierce local opposition and has resulted in toxic contamination of air, soil and water supplies and the displacement of 35 Indigenous communities from their ancestral territories. The Constitutional Court decided that the expansion of the mine would severely impact the local community ecosystem.
Glencore said the court’s decision was discriminatory, unreasonable and arbitrary, and used ISDS to bring four separate cases against Colombia. It won the first case and was awarded $19m, while the other three are still in process for undisclosed sums of money.
In a separate case, Canadian mining company Eco Oro is claiming $696m in compensation when the Constitutional Court ruled to protect the paramos – rare, high-altitude wetland ecosystems that serve as vital sources of freshwater. Even though the ISDS system in question is explicitly supposed to guarantee governments policy space to protect the environment, the arbitration panel ruled that this environmental exception did not preclude the obligation to pay compensation.
Colombia is not alone. In recent years countries including Kenya, South Africa and Ecuador have begun to exit this deeply undemocratic system. One of the first treaties Colombia wants to renegotiate is the UK-Colombia deal. Colombia’s ambassador to the UK has been clear in denouncing the deal, saying these treaties “have become a drain on Colombia and many other countries”, specifically pointing out the power they give to the fossil fuel industry to push back on climate action and sue countries “for not earning what they intended to earn by polluting”.
But they will face serious opposition. That means they will need support from citizens and movements here in Britain. Fortunately, the trade union of the very civil servants working in the UK government to negotiate trade deals have already come out in support of the Colombian position, saying “we need real climate action”.
We must join them. ISDS is an arcane system, but in recent years campaigners have pulled it out of the shadows and begun to dismantle it in numerous trade deals. Seventy years on from when this neocolonial system first appeared, we can finally defeat it. And if we want to halt climate change and build democracy we need to do it fast. Colombia is now on the front line, and they need our support.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.