AFL-CIO and Uruguayan Workers in Solidarity to Protect Democracy From 'Corporate Courts'

This post was co-authored by Andrea Sosa (AFL-CIO).

Why is the AFL-CIO standing in strong solidarity with the workers of Uruguay in that country's fight to protect its democracy against policy intervention by foreign corporations? We believe that the people, through their elected officials, should be the ones to determine which policies are best for their health, their environment and the general welfare.

Unfortunately, a major foreign multinational corporation is using the investor-to-state dispute settlement (ISDS) provision of the Switzerland-Uruguay Bilateral Investment Treaty (BIT) to challenge such democratic decision making in Uruguay. Specifically, the suit is challenging Uruguay's plain packaging law.

ISDS is a special legal right used by foreign investors to challenge laws, regulations or any government decision in the country in which they are investing. This mechanism bypasses all democratic processes, such as domestic courts, to directly sue a host country in an unaccountable private tribunal in order to receive compensation for government actions that could potentially harm corporate profits.

Who makes the decisions in these tribunals?

Unaccountable and unelected private arbitrators -- usually lawyers who sit on tribunals one week and represent global investors the next. In other words, ISDS is essentially a "corporate court," a legal system by and for corporations and the global elites.

Just how much of a threat to democracy is ISDS?

Forbes magazine says, "that's actually the point and purpose of the agreement, to protect investments from whatever nonsenses might cross the synapses of the body politic."

The libertarian Cato Institute calls it "a subsidy that mitigates risk for U.S. multinational corporations."

And a leading American lawyer, once named "Dealmaker of the Year," has tried to raise the alarm about the danger of investment treaties like the Switzerland-Uruguay BIT at issue here, calling them "weapons of legal destruction."

ISDS cases not only risk undermining the will of the people, but they also give foreign corporations an absurd amount of influence on the domestic policy of another country -- as AFL-CIO President Richard Trumka mentioned in a letter to the Plenario Intersindical de Trabajadores-Convención Nacional de Trabajadores (PIT-CNT), an Uruguayan national trade union center:

The ISDS system is a neo-colonial relic used to constrain the choices democratic societies can make about how to best protect the public interest by putting a government's duty to secure the general welfare on par with private interest in profit.

This mechanism has allowed for countless cases in which multinationals are given more power than citizens -- recently, a French transportation company brought an ISDS case against Egypt for raising the minimum wage and a Swedish corporation is using ISDS to sue Germany over its decision to phase out nuclear power. Given the staggering amounts that are sometimes at issue, like a $1.7 billion (that's billion with a B) award plus more than half a billion in interest that Ecuador must pay to Occidental Petroleum Corp. and the more than $1.6 billion that Poland paid the Dutch company Eureko (now known as Achmea) to settle an ISDS case, it's impossible to argue that these cases -- or even the threat of these cases -- do not have a chilling effect on public decision making.

Simply put, ISDS's threat to democracy is a threat to workers. Historically, workers gained rights as we gained access to the ballot box, as we organized in both the workplace and in the body politic, and were able to persuade elected officials to eliminate laws to favored employers and the status quo, replacing them with laws that promoted safe workplaces, secure retirements and equal opportunities for families all across the income scale.

As people who work, we must stand with our brothers and sisters who are battling threats to their democracy so they can stand with us when foreign corporations threaten ours.

The AFL-CIO opposes ISDS because it undermines the democratic process of policymaking by giving multinational corporations greater rights than nations or their citizens. This is a matter of upholding democracy, of upholding the voices of the people that private interests are trying to silence.

Are you as appalled as we are? You can take action by calling for a Trans-Pacific Partnership that is ISDS-free.