Biden should end the fossil fuel industry's secret weapon

There is a dark mechanism by which fossil fuel companies maintain their global domination even as their products destroy our future. Most grassroots climate activists haven't heard of it, and most media rarely discuss it in detail. It is a tool that has its origins in colonialism and privileges corporate power over democracy. The technical term for such a tool is Investor-State Dispute Settlement, or ISDS. And although it seems boring and technical, it is crucial that we become familiar with it in order to take it apart.

The Global ISDS tracker, a recently launched online database, describes them as “secret corporate courts.” When countries enter into trade agreements with each other, they usually include a clause on the use of ISDS, which seems innocuous, to resolve companies' disputes with national regulators. In other words, if a company from one country sees its profits threatened by regulations or nationalization in another country, it can sue that second government.

When applied to reducing carbon emissions in order to preserve our planet's ability to sustain life, it can be seen that such tribunals can be extremely problematic. Country A decides to move away from the oil and gas industry towards green and renewable energy. However, an oil company based in country B files a lawsuit through an ISDS agreement to recover its lost profits. That’s precisely what’s happening, to the tune of $327 billion, according to the Global ISDS Tracker. “[F]Fossil fuel cases… can devastate public budgets or even bankrupt a country.

For example, Nigeria is currently facing a series of massive damages determined by an ISDS tribunal to be paid to a UK-based company for a gas project to the tune of 30 percent of the country's foreign exchange reserves in his outfit. And foreign mining companies are demanding $30 billion from the Republic of Congo using the ISDS courts. This represents double the gross domestic product (GDP) of Congo.

Former UN climate envoy and former Irish president Mary Robinson, who said she was “outraged” when she discovered oil and gas companies were using ISDS to extort nations, explained that “if countries are doing it RIGHT thing about climate, they need to compensate fossil fuel companies.

Where did ISDS come from and how are they vaguely justifiable in an era where society largely agrees on democracy as the best form of government? Former US President Barack Obama's administration explained, in the context of the 2016 free trade agreement called the Trans-Pacific Partnership, that “ISDS is specifically designed to protect US investors abroad from discrimination and denial of justice” and that it is a “more peaceful mechanism”. , better way to resolve trade conflicts” compared to the “gunboat diplomacy” of earlier eras.

It is as if America's only option is to defend its corporations against the people's democracies of others rather than allowing private entities to fend for themselves. If only human beings were so protected from “discrimination and denial of justice”!

According to a 2023 report by David Boyd, the UN special rapporteur on human rights and the environment, “[o]Of the 12 largest ISDS awards to date, 11 involve cases brought by investors in the fossil fuel and mining sectors. The $95 billion they extracted from countries using ISDS “probably exceeds the total amount of damages awarded by all courts to victims of human rights violations in all states in the world,” he said. writes Boyd.

The Pulitzer Prize-winning media outlet Inside Climate News prefers to characterize ISDS as “economic colonialism,” especially since “the majority of complaints have been filed by companies in the United States, Europe and Canada against developing countries”. Colonialism is an apt descriptor. Gus Van Harten explained in his 2020 book “The Trouble with Foreign Investor Protection” that ISDS treaties “originated in the efforts of former colonial powers and international organizations, particularly the World Bank, to coerce newly independent countries “. In other words, ISDS is a means of extending colonialism after the end of physical occupation.

Nobel Prize-winning economist Joseph Stiglitz prefers even harsher terminology. He called ISDS mechanisms “contentious terrorism” because they “stir up fear of environmental and climate regulations, because we know it’s going to be expensive” for governments.

British commentators have put pressure on the British government to withdraw from treaties such as the 'Energy Charter Treaty' (ECT), which require the establishment of ISDS tribunals. In February 2024, the UK announced it would leave the ECT, following in the footsteps of France, Germany, Spain and the Netherlands. More recently, members of the European Parliament have also supported a proposal to end ECT membership. This is a “historic” vote against a treaty considered a “climate killer”.

It is time for the United States to do the same. Last November, hundreds of climate justice and civil society groups signed a letter urging President Joe Biden to end ISDS mechanisms embedded in a trade deal with nearly a dozen Latin American countries and Caribbean called Americas Partnership for Economic Prosperity. The signatories explained that ISDS was “a global governance regime that prioritizes the rights of corporations over those of governments, people and the planet.”

This was followed by a similar letter in December 2023, signed by more than 40 Senate and House lawmakers, urging Biden to remove ISDS provisions from all trade deals. The signatories, including Senators Elizabeth Warren and Sheldon Whitehouse, praised Biden for his “powerful action in stopping the Keystone XL pipeline project, preventing the construction of a tar sands pipeline,” and noted that “TC Energy (formerly known as TransCanada) – the company behind the now-defunct pipeline – has filed an ISDS claim for billions of dollars that will be litigated not in a US court, but in a court doubtful international.

What good does Biden and the United States do to be a climate champion if the steps he takes to undermine fossil fuel dominance are countered by a powerful, secret trade weapon?

Momentum against ISDS provisions is growing. In April 2024, hundreds of law and economics academics also wrote to Biden urging him to “eliminate ISDS liability from existing agreements” and offering valuable expertise on how to achieve this.

Biden said in 2020 that he was against ISDS provisions – despite his role as Obama's pro-ISDS vice president. In a letter to the United Steelworkers union, he said: “I oppose the ability of private companies to attack labor, health and environmental policies through the dispute resolution process between Investors and States (ISDS), and I oppose the inclusion of such provisions in the future. trade agreements.” But what about current trade agreements?

Disturbingly, American multinational corporations have initiated the largest number of ISDS cases in the world. The United States is currently the world's largest producer of crude oil. U.S. oil and gas companies are reaping extraordinarily high profits while enjoying billions of dollars in government subsidies in the form of tax breaks. The least Biden can do to curb a deadly industry that threatens our entire species is take action against the ISDS provisions of existing trade agreements.

This article was produced by An economy for alla project of the Independent Media Institute.