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What’s ISDS in the TPP? Very Scary!

What’s ISDS in the TPP? Very Scary!

If anyone needs more evidence why the Trans-Pacific Partnership (TPP) free trade agreement shouldn’t be rushed through Congress on the “Fast Track,” which does not allow any amendments or improvements in the deal—just a take-it-or-leave-it, yes-or-no vote—read Sen. Elizabeth Warren’s (D-Mass.) column in today’s Washington Post.

While it’s pretty much a given that big corporations—not working people—have been the winners in free trade agreements like the North American Free Trade Agreement and Central America Free Trade Agreement over the years, Warren exposes a frightening tool in the TPP that gives corporations unimaginable power over the United States’ legal system. Here’s how she describes the “Investor-State Dispute Settlement,” or ISDS, provision.

ISDS would allow foreign companies to challenge U.S. laws—and to potentially pick up huge payouts from taxpayers—without ever stepping foot in a U.S. court. Here’s how it would work. Imagine that the United States bans a toxic chemical that is often added to gasoline because of its health and environmental consequences. If a foreign company that makes the toxic chemical opposes the law, it would normally have to challenge it in a U.S. court. But with ISDS, the company could skip the U.S. courts and go before an international panel of arbitrators. If the company won, the ruling couldn’t be challenged in U.S. courts, and the arbitration panel could require America's taxpayers to cough up millions—and even billions—of dollars in damages. 

But that’s not the worst of it, she writes. The panel of arbitrators wouldn’t employ independent judges. Nope.

Instead, highly paid corporate lawyers would go back and forth between representing corporations one day and sitting in judgment the next. Maybe that makes sense in an arbitration between two corporations, but not in cases between corporations and governments. If you’re a lawyer looking to maintain or attract high-paying corporate clients, how likely are you to rule against those corporations when it’s your turn in the judge’s seat?

We know how that would turn out.

Here’s an example of how ISDS works, but keep in mind only international investors—by and large big corporations—get to use the special tribunals:

So if a Vietnamese company with U.S. operations wanted to challenge an increase in the U.S. minimum wage, it could use ISDS. But if an American labor union believed Vietnam was allowing Vietnamese companies to pay slave wages in violation of trade commitments, the union would have to make its case in the Vietnamese courts.

As Warren points out, ISDS is not a partisan issue: “Giving foreign corporations special rights to challenge our laws outside of our legal system would be a bad deal.”  For all of us.  

Click here to read her full column

Download a fact sheet on these “corporate courts” and share it with a friend or family member. 

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