In recent history, only nation states had the attribute of sovereignty, the power to govern a defined area, to make laws and exercise force in defence of perceived interests. Now what is called “corporate sovereignty” is assuming a superior position in the political hierarchy.
A little-discussed concept on this side of the Atlantic, it first saw the light in the North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada which came into effect in 1994. Under NAFTA, corporations were given some political powers to challenge national laws that, according to them, infringed the agreement.
Now the Obama administration is pushing for a view of corporate sovereignty that is so broad that its implementation would make national governments totally subordinate to the demands of the 100 powerful transnational enterprises who dominate global trade.
American officials are insisting on the incorporation of corporate sovereignty into two trade treaties currently under negotiation – the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), currently being negotiated in secret between the US and the European Commission. The latter is also known as the Transatlantic Free Trade Agreement (TAFTA).
As we have pointed out already, under TTIP, harmonisation of EU-US regulations will be designed to ensure a race to the bottom. America’s refusal to ratify key international standards and conventions would be replicated in Europe, adding to the intensity of conditions resulting from the recession.
In order to boost transatlantic trade, TTIP would remove environmental protection – including the European “precautionary principle” approach. Recently agreed restrictions on fracking could be overturned. National encouragement favouring local production would be outlawed. Resistance to GM foods would be defeated.
Essentially, under TTIP, corporations would be allowed to sue governments if they felt they were being obstructive. Naturally, the negotiations don’t actually use the term corporate sovereignty, preferring instead “investor-state dispute settlement” (ISDS).
The European Commission has put together a "factsheet" that, says Techdirt, a leading group blog site which reports on economic policy issues, makes a false equivalence between the right of states to regulate and the need to protect investors. The factsheet is a long-winded defence of ISDS. Techdirt’s analysis notes:
“In essence, it's a kind of syllogism: investment is critically important for the EU economy; investors needs corporate sovereignty guarantees to protect their investment; so TAFTA/TTIP must contain ISDS to ‘attract and maintain’ foreign investment – in this case, from the US. The clear implication is that without corporate sovereignty, US investors will be reluctant to put their money in Europe, and vice versa.”
Next week in Brussels, an alliance of Belgian citizens, farmers, NGOs and trade unions have called for a blockade of the EU summit on December 19 against austerity and the “attempt to give corporations the keys to Europe” through the new EU-US trade deal. In Westminster, there is a conspiracy of silence about the further diminishing of parliamentary democracy that is at stake here.
Green MP Caroline Lucas has published a motion warning of the dangers from the TTIP. As of today, only 14 of parliament’s 650 MPs had signed support, and just eight those are from Labour!
Techdirt’s analysis talks of the need to “preserve the sovereignty of nations, and prevent them becoming the object of multi-billion dollar lawsuits”, as is happening currently under other trade agreements like NAFTA, while the Democracy Centre warns that TTIP will create "a privatised justice system for global corporations".
However, sovereignty effectively passed from states to corporations during the capitalist globalisation process that took off in the late 1980s. A handful of transnational firms control the global economy while even fewer have the financial system in their grasp. They are more powerful than governments which is why parliaments do their bidding.They already sue governments around the world.
So we have arrived at a corporatocracy. Representative government is a toothless tiger, shorn of its bite and subservient to powerful interests. TTIP will roll on despite protests and we can only stop this destructive process if we have democratic ownership and control of both the political and economic systems. Let’s aim to replace corporate sovereignty with a people’s sovereignty.