After Voting To 'Escape' EU Sovereignty, Post-Brexit UK Will Become Subject To Corporate Sovereignty On A Massive Scale

from the out-of-the-frying-pan,-into-the-fire dept

One of the slogans used by those in favor of the UK leaving the European Union -- aka Brexit -- was that it would allow Brits to "take back control." In particular, it was claimed, Brexit would stop the European Union and its top court from "imposing" their decisions that took precedence over national laws. It was an appealing slogan for many -- a bit like "Make America great again" -- but as with other appealing slogans, with time it proved rather hollow. In the wake of the UK referendum in favor of Brexit, the British government is faced with the task of coming up with large numbers of trade deals that will somehow compensate for the almost-certain loss of preferential access to the EU. Naturally, the most important of these "new" trade deals is with the US. Unfortunately, the British negotiating position is fatally undermined by the fact that the UK is desperate for a deal, whereas the US doesn't need it at all. Inevitably, then, the US will get to dictate its terms, and UK government will be forced to accept them, however bad they are, because it has no alternative. So much for "taking back control."

Rather belatedly, people are beginning to wake up to what that is likely to mean in practice. Here, for example, is an analysis on BuzzFeed of a key problem with the UK government's plan to sign lots of new trade deals to plug the gap left by exiting the EU:

Trade experts have warned that signing such deals without the EU judicial system will almost inevitably mean signing up to systems known as "ISDS" (Investor State Dispute Settlement) -- secretive, binding arbitration systems that can force countries to overturn their laws when it hurts corporate interests. These formed the core of international opposition to trade deals such as TTIP (between the EU and US) and CETA (between the EU and Canada).

It might be argued that ISDS -- corporate sovereignty -- isn't a new issue for the UK. The country already has many trade deals that include corporate sovereignty chapters:

UK corporations have been some of the most active users of ISDS to enforce their rights overseas, analysis of the 700 or so known disputes shows. Sixty-four of the 700 were made by UK companies against overseas governments, while only one ISDS dispute has ever been filed against the UK -- and didn’t go anywhere.

The UK has been able to use ISDS as an offensive weapon without being hit by many claims itself because most of its existing trade deals are with countries that have relatively small economies. They have few companies or individuals who are in a position to make major investments in the UK, which means few are able to use corporate sovereignty clauses against the UK. The UK, by contrast, has plenty of rich investors who can and do take advantage of secret ISDS tribunals.

That situation will change dramatically if and when the UK signs a trade deal with the US -- the British government has made clear that doing so will be a priority post-Brexit. The US has huge investments in the UK, and these are likely to be covered retrospectively by ISDS in any trade deal. That was the intention in TAFTA/TTIP, which now seems likely to suffer the same fate as TPP. After all, why wouldn't Trump demand this strong protection for investments made by US companies -- and by himself?

As the BuzzFeed article points out, requiring a corporate sovereignty chapter in a US-UK trade deal would lead to a rather ironic situation. The Brexit vote, which many insisted would allow the UK to throw off the yoke of supposedly "anti-democratic" supranational EU judgments, is almost certain to see a post-Brexit UK subject to large numbers of supranational ISDS judgments that are even less democratic.

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Filed Under: brexit, corporate sovereignty, eu, isds, trade agreements, trade deals, uk