New Trade Secretary warned not to roll out the red carpet for big business in post-Brexit trade deals
31 July 2019
Trade Secretary Liz Truss must not roll out the red carpet for big business in post-Brexit trade deals with poor countries, warns international development charity Traidcraft Exchange today.
A potential new trade deal with the United States has gained a lot of attention. But the government’s plans to include a controversial mechanism known as investor-state dispute settlement (ISDS) in trade deals with poor countries will allow British-linked companies to sue national governments for millions for taking measures that could harm their profits.
The new Trade Secretary must reverse this plan and stop the roll out of ‘red carpet courts’.
“By including ISDS in trade deals, the government will give big business free licence to sue poor countries for millions for simply acting in the public interest, for example, by regulating to protect the environment or safeguarding the rights of indigenous people,” said Emilie Schultze, Campaigns Officer at Traidcraft Exchange.
“It’s a deeply unfair system sold to poorer countries under the premise of attracting foreign investment. But rather than doing this, it has given multinational companies a powerful tool to challenge policies aimed at protecting human rights, public health and the environment. This completely contradicts the UK’s commitments towards the Sustainable Development Goals and to tackle the climate crisis.”
ISDS has proliferated in trade and investment deals in the past two decades and companies have sued national governments more than 900 times.
For example, Argentina has been ordered to pay water companies, including Anglian Water, £251 million after freezing water prices during a financial crisis to make it affordable for its people, in line with human rights obligations; and Vodafone has sued India for receiving a US$2 billion tax bill after avoiding taxes by using offshore companies on the Cayman Islands.
Poor countries are particularly vulnerable to ISDS. Due to a greater need to bring in social, public health and environmental protections, they are subject to a high potential for lawsuits – or threats of cases. Consequently, regulations in the public interest can be withdrawn, and limited revenues that could fund vital public services are threatened by compensation for ‘lost profits’, including future lost profits.
In response, Traidcraft Exchange launches its new campaign - ‘Stop rolling out the red carpet’ - today. It highlights the risk that ISDS poses to poor countries and calls on the government to remove ISDS from all UK trade and investment agreements.
It is part of the UK-wide ‘Stop ISDS’ campaign, which brings together more than 40 civil society organisations, trade unions and faith groups. So far more than 30,000 people have signed a petition calling on the government to remove ISDS from UK trade and investment agreements. In Europe, a similar petition to the EU has attracted more than half a million signatures.
“In country after country, people are calling for an end to the ISDS system. Governments are speaking up and countries including South Africa, Ecuador and New Zealand have now cancelled deals that include it. There are better alternatives to ISDS and the new Trade Secretary now has the chance to remove this unfair system from UK trade and investment,” concluded Emilie Schultze.
For more information or to interview Emilie Schultze please contact Tom Sharman: email@example.com or +44 (0)191 497 6443 or +44 (0)7757 753 318
Notes for editors:
Traidcraft Exchange is an international development charity which uses the power of trade to bring about lasting solutions to poverty. It runs development programmes in South Asia and Africa, works directly with businesses to improve their supply chains, and does advocacy and campaigning in the UK to promote justice and fairness in international trade. It works closely with specialist fair trade company Traidcraft plc. Traidcraft Exchange is a registered charity, no. 1048752: https://www.traidcraft.org.uk/
‘Stop rolling out the red carpet’ is a new Traidcraft Exchange campaign and can be found here: https://www.traidcraft.org.uk/red-carpet-courts
The campaign is part of the UK-wide Stop ISDS campaign: https://stopisds.org.uk/
As of July 2019, 942 ISDS disputes have been recorded: https://investmentpolicy.unctad.org/investment-dispute-settlement
Argentina was ordered to pay £251 million to water companies after freezing water prices: https://www.italaw.com/documents/SuezVivendiAWGDecisiononLiability.pdf
Vodaphone has sued India after being ordered to pay taxes which they had avoided: https://www.italaw.com/cases/2544
In February, the former Secretary of State for International Trade Liam Fox reaffirmed the government’s support for ISDS: https://hansard.parliament.uk/commons/2019-02-07/debates/62744CD3-44E8-463B-8947-6D1A8B01CF42/NewTradeAgreementsHumanRights