Thursday 10 May 2012

But that's the point!

It's not nuts to criticise particular aspects of trade deals as being bad ideas. But it is a bit nuts to criticise them for being anti-democratic.
A group of prominent legal professionals, academics and political leaders has written to the negotiators of the Trans-Pacific Partnership calling on them to reject a provision that would allow investors to sue governments directly.
The TPP agreement would cover Pacific Rim countries, including the United States and New Zealand.
The open letter expresses concern that foreign investors are being granted greater rights than are provided to domestic firms and investors under the constitutions, laws and court systems of host countries.
Signatory Professor Bryan Gould says this would mean a significant loss of the power of democratic self-government.
He says governments could even be ordered to stop their courts from enforcing their own decisions.
The whole point of any treaty or trade agreement is to bind yourself against doing some particular things that you otherwise have the right to do, in exchange for others similarly binding themselves. Our free trade agreement with Australia means we've lost the democratic power to levy big tariffs against imports from Australia.

Investor protection provisions mean we bind ourselves against imposing uncompensated takings on foreign-owned companies trading here in exchange for others binding themselves against doing similar things to our companies. It's defensible to argue that provisions might be too strong. And a defensible reading of Gould's line is that these provisions tie all governments' hands too much, though I'd likely disagree. But folks who go on about the anti-democratic nature of the agreements miss the point of trade agreements.


  1. Not that you'll often find me defending Jane Kelsey and Annette Sykes, but I don't think the first paragraph of the Radio NZ article is a fair summary of the letter: the letter itself ( is not complaining about the enforceability of the treaty per se, it's about the submission of disputes under the treaty to an arbitral body, rather than in the courts of the country in question. When you're dealing with countries (like NZ) with fair and independent judicial systems, treaty enforcement should be left to the judicial system.

    No doubt, many of these signatories oppose free trade agreements themselves and their enforceability against states (which is ironic, because many of them are very much in favor of international tribunals enforcing treaties against their own sovereign governments in the case of "human rights" laws), but that is not the point of the letter.

    1. I didn't see the original letter. It's the "loss of democratic power" angle that bugs me. Maybe it's too great a loss given the benefits. But all treaties necessarily constrain democratic powers.

    2. My take on the original letter is that the main issue (at least, the main stated issue was arbitratal bodies vs. domestic courts, not the loss of sovereignty per se.

      Treaties do constrain democratic powers, but bear in mind that historically, at least post-Thirty Years War, treaties generally governed issues of diplomay, trade and war between states, and had very little effect on domestic politics. This changed post-WWII, and particularly in recent decades, with attempts to have human rights norms (some more tendentious than others) embodied in treaties form part of -- and perhaps override -- domestic law enacted by parliaments: for instance, in many countries in Europe, the Americas and even NZ, people have argued that treaties such as the International Covenant on Civil and Political Rights, the Convention on the Elimination of All Forms of Discrimination against Women, the Convention on the Elimination of Racial Discrimination, and the Right to Organize and Collective Bargaining Convention, should form part of domestic law. That is understandably controversial, since under our system treaties are agreed to by the executive and are not voted on by elected representatives: it's a pretty major constitutional shift when domestic law can be changed without parliament voting on it by agreement between governments.

      Having said that, the irony here is that many of the signatories on the TPP have been major forces behind recognizing international treaty norms as part of domestic law, and have been supportive of appeals to international human rights tribunals to get around domestic laws that supposedly violate them. So it's pretty rich for them to complain of this procedure being used for ends they dislike (i.e., protecting businesses from expropriation).

  2. i was reminded of this pearl of a letter in reply ...