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Corporations Seeking More Power than Governments: Ideas for working with power-flow

Last month a report (1) was published by five international rights groups analysing the possible side effects of a new free trade agreement, the Regional Comprehensive Economic Partnership (2), currently being negotiated among 16 Asian and Pacific states.

The main concern of the report is that the agreement would put into law the ISDS, or Investor-State Dispute Settlement, essentially giving multi-national corporations the right not to adhere to national legislation and to sue governments if they pass legislation which the corporations do not like (3).

But what are the repercussions for the people of the countries involved (who represent over 50% of the world’s population) (1)? And, from a permaculture perspective, could free trade deals be more representative of truly free culture than previously supposed?

What are the free trade deals?

Free trade negotiations amongst groups of sovereign states are not a new phenomenon and many have received international criticism from, among other groups, the United Nations, as being detrimental to people’s human rights (see for example 4). Indeed, the free trade agreement between the USA and the EU, known as TTIP, has received so much criticism that it is has been put on hold (5).

Trans-national free trade agreements aim to deregulate markets within the states who are signed up to the agreement, which is economics jargon for allowing corporations to buy, sell and advertise products without having to worry about restrictions set on the products by state laws (see for example 6).

Why the controversy?

Part of the reason people are concerned about trade agreements is that the content of much of the negotiations is generally unavailable to the public (7), so from the very outset they could be seen as contravening our right to information about decisions which will probably affect our lives. If the corporations and governments involved are involved in cases which could have a beneficial impact on citizens or shareholders why aren’t they public? This lack of knowledge means that there is the possible danger of hyperbole on the critical side, as critics are free to imagine the worst possible scenario without danger of contradiction.

Another controversial thing about free trade agreements is that many laws probably exist in order to protect people, animals or the ecosystem and the agreements would allow corporations to bypass these protections or, even more counter-productively, demand that the governments pay the corporations to make up for the inconvenience caused by them.

Hidden Costs?

Corporations 01

ISDS is one part of the negotiations which is at least partially public. The report – ‘The Hidden Cost of RECP’ (1)- focuses on ISDS cases in the 16 countries publicly negotiating the agreement (there may be more who have not been made public): Australia, New Zealand, South Korea, China, Japan, Thailand, Laos, Cambodia, Myanmar, The Philippines, Indonesia, Singapore, Malaysia, India, Vietnam and Brunei (8).

Millions of dollars of public money have already been spent on fighting these lawsuits throughout the Asia-Pacific region (1), with corporations whose managers feel they have been unfairly treated by state law.

The language of the report and of the websites publicizing it seems generally to imply that the ISDS cases are negative. There are a number of reasons why from a permaculture perspective these can be seen as detrimental. Firstly, there is the secrecy element. Though the report analyses as much data as possible, as they admit,

“Some ISDS cases are kept entirely confidential, even in cases where the dispute may be a matter of public interest….. Not all cases are published or fully documented.” (1)

Here we come back to the criticism of free trade treaties in general, that if they were uncontroversial they would not be being negotiated in secret. Though there is, of course, the chance that the secret things may not be as bad as the critics imagine, sometimes they are confirmed, such as recently “leaked documents” about TTIP which seemed to affirm that the critics’ arguments against the agreement were not entirely unfounded (9).

Of the cases which the report could find to document, they found that “36% of cases against RCEP countries concern environmentally relevant sectors”(1).

These include the case of Churchill Mining vs. The state of Indonesia, in which the British-owned mining corporation took the Indonesian government to court for revoking their license to open a coal mine in East Kalimantan, described in the report as “containing the world’s second largest…undeveloped coal reserve” (1).

The Indonesian government eventually won the court case in mid-December 2016 after a four-year dispute (10), though the report estimates they ended up spending around 10 billion USD in court costs (1).

Another example of an “environmentally relevant” ISDS case is that of the Dabhol project in Maharastra, India. In 1992 the Indian state agreed to let 3 US energy companies – Enron, Bechtel and General Electric – initiate the “world’s largest gas-fired electricity plant” (1) in Dabhol, in spite of “widespread public opposition” (1).

Subsequent Indian governments scrapped the project whereupon Bechtel and General Electric (who both bought out Enron after its collapse in 2000) filed an international arbitration case against India, resulting in payouts of 160m USD for Bechtel and 145m for General Electric in 2005 (1).

Possible benefits?

The above cases illustrate how the ISDS provision can mean that governments end up paying corporations for not allowing them to damage the environment. From this perspective, the ISDS seems to be detrimental to ecosystems in general and also seems to contravene ‘Energy Efficient Planning’ as even if the states win the cases or the cases are dismissed, the states still have to pay court costs.

However, there are some other things to consider with the ISDS in particular and free trade agreements in general which could shed a different kind of light on them.

Firstly, though 36% of ISDS of the cases from the report are “of environmental concern” – with corporations demanding compensation for states thwarting their plans to damage the environment – the reasons given by the states in these cases to stop the corporations’ activities are not actually normally concerned with the environment, but more on bureaucratic detail such as accusations of bribery, forgery or overpricing. From this, we can see that the governments involved also may not have the ecosystem’s best interest in mind.

Secondly, the ISDS system only allows corporations to sue governments which have decided to ‘host’ them in the first place (3). Therefore the problem is not just that the corporations take the governments to court; it’s a two-way relationship because the government in question originally allowed the corporation to begin activities in their country to start with.

States still have the power to refuse investment from certain companies and if the states involved in the RECP were really concerned about the environment they probably wouldn’t allow investment from corporations whose very existence is environmentally questionable, such as coal-mining companies or companies involved in fossil-fuel energy production.

Which can give more freedom to the planet?

Right now it seems we are at a critical point in international relations and the power-balance of states vs. corporations. On one hand, many states are at least theoretically democratically-run and so the people of these states, in theory, have the power to influence governmental decisions. However, some of the countries involved in the RCEP do not even pretend to give this option to their people. Among them are the People’s Republic of China, described as a “one-party state” (11) and Brunei, where the Sultan is also the head of the government and the state (12).

Even those states which have professed democratic systems may be questionable when it comes to putting this into practice, such as Indonesia, which is theoretically a democratic state using representative democracy but where “large numbers of political prisoners convicted for peaceful expression have yet to be released” (13). Human Rights Watch has criticisms of current events happening in many of the states in question, whether they are democratic or not (see for example 14).

When we take all of this into account, perhaps giving corporations more power than states is not such a negative thing?

Can multi-national corporations care more than states?

Corporate power also comes from people. CEOs and corporate directors may not be democratically elected but neither are many government leaders. Corporations also rely on the public buying their products so affecting corporate power can be seen as an even easier process than affecting state power as we all have consumer choice.

Of course, this is made difficult by the fact that many corporations operate in secret so it is difficult to tell who you are actually funding when you buy your products (15). However, many states also do not disclose where public spending goes, and those that do may not be using public money in a way in which many of the citizens would prefer, if given the choice.

For example, RCEP negotiating state Cambodia spent 13.5% of total government expenditure in 2015 on the military (16). In the same year, India spent 14.9% on military expenditure and Singapore 24.6% (16). Perhaps the citizens of these countries are happy for taxes to be spent in this way, but perhaps they’d prefer higher spending in other areas such as healthcare or infrastructure?

For multi-national corporations, in theory at least, anyone from anywhere in the world is a potential investor or customer so corporations could theoretically be much more easily swayed by international public opinion than state governments. Could we use this to encourage corporations to care more about the rights of the environment and of the ecosystems within which they operate?

Corporations have been growing in power for the last few decades and now “37 of the world’s 100 largest economies are corporations” (17). Viewed as energy, they represent a huge amount of resources and people as well as financial flow. Simply from the point of view of energy efficiency, it seems to make sense to harness this flow, if we can, rather than trying to stop it.

Practical Steps

a competition concept, clouds with ladders on blue

One thing the international free trade deals seem to be highlighting is that though many corporations are engaging in practices which seem detrimental to the Earth or to people’s human rights, the actions many governments engage in are just as bad. Both types of entity can be seen as needing improvements in this area. However, it seems increasingly clear that if we wish to address global issues we need to transcend individual national laws since issues such as climate change, land degradation, and air pollution do not recognize national borders.

These global issues call for global solutions and although multi-national corporations still have many faults, they also represent a lot of energy which it may be easier to encourage to flow towards Earth Care, People Care, and Fair Share than it is to encourage governments to do the same thing. If the trend of free trade agreements and ISDS continues it shows that governments are admitting that they have less power than corporations and that corporations can to some extent bypass state laws.

Since corporations are made up of people this would logically lead to individuals also having the ability to transcend state laws if they wish to. From this perspective the thing to be concerned about with RECP and other agreements is not necessarily loss of state power (which may or may not be negative) but how to organize the rise of a trans- or supra-national culture.

If such a culture is to exist in a world where there is also air to breathe, water to drink and animals and plants to share it with, the people in it will probably need to change our behavior somewhat. If we want to encourage governments and corporations to change, then practically the first step to take is always with ourselves;

“There can’t be any large-scale revolution until there’s a personal revolution, on an individual level. It’s got to happen inside first.” (18)

We can look outwards as well as inwards and if we design well, we can use the energies of the international arena as much as it serves us to create balanced healthy ecosystems. Growing community networks so that we rely less on either state or corporate power in order to help our lives seems also very important.

References

1. Friends of the Earth International, Transnational Institute, Indonesia for Global Justice, Focus on the Global South, Paung Ku, 2016. ‘The Hidden Costs of RCEP and Corporate Trade Deals in Asia’. Available as a PDF here: http://www.foei.org/wp-content/uploads/2016/12/The-hidden-costs-of-RCEP-and-corporate-trade-deals-in-Asia-FoEI.pdf – retrieved 25/1/17

2. Australian government, 2016. Regional Comprehensive Economic Partnership, Department of Foreign Affairs and Trade. http://dfat.gov.au/trade/agreements/rcep/Pages/regional-comprehensive-economic-partnership.aspx – retrieved 25/1/17

3. AFL-CIO, 2017. ‘What is ISDS?’ http://www.aflcio.org/Issues/Trade/What-Is-ISDS – retrieved 25/1/17

4. Inman, P, 2015. ‘UN calls for suspension of TTIP over fears of human rights abuses’. Guardian, 4/5/15. https://www.theguardian.com/global/2015/may/04/ttip-united-nations-human-right-secret-courts-multinationals – retrieved 25/1/17

5. Jones, O, 2016. ‘Protest never changes anything? Look at how TTIP has been derailed’. Guardian, 5/5/16. https://www.theguardian.com/commentisfree/2016/may/05/protest-never-changes-anything-derailing-ttip-trade-agreement– retrieved 25/1/17

6. Greer, J, Singh, K, 2000.’A Brief History of Transnational Corporations’. Global Policy Forum, 2000. https://www.globalpolicy.org/global-taxes/47068-a-brief-history-of-transnational-corporations.html– retrieved 25/1/17

7. Grass, C, 2016. ‘Why They Keep Trade Deals Secret’. Mises Wire, 17/10/16. https://mises.org/blog/why-they-keep-trade-deals-secret – retrieved 25/1/17

8. Friends of the Earth International, 2016. ‘Publications: The hidden costs of RCEP and corporate trade deals in Asia’. http://www.foei.org/resources/publications/hidden-costs-rcep-corporate-trade-deals-asia – retrieved 25/1/17

9. Neslen, A, 2016. ‘Leaked TTIP documentscast doubt on US-EU trade deal’. Guardian, 1/5/16. https://www.theguardian.com/business/2016/may/01/leaked-ttip-documents-cast-doubt-on-eu-us-trade-deal– retrieved 25/1/17

10. Director’s Talk, 2016. ‘Churchill Mining (CHL) East Kalimantan’s coal fiasco and the victory of the state’. http://www.directorstalk.com/churchill-mining-chl-east-kalimantans-coal-fiasco-victory-state/– retrieved 25/1/17

11. BBC, 2017. ‘Inside China’s Ruling Party: Political Reform’. http://news.bbc.co.uk/2/shared/spl/hi/asia_pac/02/china_party_congress/china_ruling_party/problems_mount/html/political_reform.stm– retrieved 25/1/17

12. Commonwealth, 2017. ‘Brunei Darussalam: Constitution and Politics’. http://thecommonwealth.org/our-member-countries/brunei-darussalam/constitution-politics– retrieved 25/1/17

13. Human Rights Watch, 2017. ‘Indonesia’. https://www.hrw.org/indonesia– retrieved 25/1/17

14. Human Rights Watch, 2017. ‘Asia’. https://www.hrw.org/asia – retrieved 25/1/17

15. Miles, C, 2013. ’10 Corporations Control Almost Everything You Buy’.Information Clearing House, 4/11/13. http://www.informationclearinghouse.info/article36743.htm

16. World Bank, 2015. ‘Military Expenditure (% of Central Government Expenditure).’ http://data.worldbank.org/indicator/MS.MIL.XPND.ZS– retrieved 25/1/17

17. Make Wealth History, 2017. ‘The Corporations Bigger Than Nations’. https://makewealthhistory.org/2014/02/03/the-corporations-bigger-than-nations/– retrieved 25/1/17

18. James, L, 2017. ‘Interview with Jim Morrison’. http://www.cinetropic.com/morrison/james.html – retrieved 25/1/17

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