This fear is based on a few failed attempts to do this in previous trade deals. It's 99% FUD. In reality, it's extremely unlikely. Further, if ISDS ever tried to impose an outrageous judgment that outweighed the benefits of the partnership, the loser could opt to not comply and drop out of the deal.
Exactly, all this guff about overriding elected governments is rubbish. Each government is still sovereign and free to withdraw from the treaty, negotiate changes to it or change its laws as it sees fit. As it happens the US is doing exactly that by withdrawing from the treaty, which they could hVe done after ratifying it just as well as before. So has TPP restricted the sovereignty of the US? Er, no. Could it have? Same answer.
Re:US Announces Withdrawal from TPP
by Silhouette on Sunday January 22, 2017 @05:22PM
(#13457969)
The point of ISDS isn't that it magically constrains the governments in question. It's that the price of choosing not to comply with a ruling is so high (typically, abandoning the entire free trade agreement and reverting to WTO rules) that it's a serious barrier to a government actually doing that.
That doesn't mean we should fear the bogeyman, since in reality such provisions have not been unusual in previous free trade agreements and the most notable ISDS cases were ultimately failures for plaintiffs like Big Tobacco. But even though results have usually gone the right way in the past, they have still cost the governments involved a lot of time and money to fight the case, and that alone is grounds for asking whether the ISDS provisions are a good idea.
In particular, a government that changed the law because certain behaviour was found to be harmful would potentially be required to pay huge amounts of compensation to a company whose business model relied on doing those harmful things. This is particularly relevant in fields like public health, environmental protection and sustainable exploitation of natural resources.
The problem with this is that the same governments that might genuinely legislate to, say, protect public health by banning smoking in restaurants or protect the environment by banning diesel-powered vehicles with unacceptable levels of particulate emissions can also legislate for protectionist purposes in ways that really do screw over foreign companies. This makes countries with such governments, or the fear that their government go down this path, much less attractive for foreign investors. And so those investors look for safeguards that will ensure governments can't arbitrarily take advantage of them once they've put their money in.
Which brings us back to step 1 in the case of foreign investors whose investments turn out to be in harmful things, whether or not anyone realised that in advance, and so the cycle continues.