Photograph Source: The White House – Public Domain
President Joe Biden recently convened Latin American leaders in Washington for the inaugural summit of the Americas Partnership for Economic Prosperity, a forum the administration claims will help boost “high-standard” investment in the hemisphere.
What do they mean by “high standard”? In their final declaration, the leaders committed to encouraging “private sector investment that meets environment, social, and governance criteria.”
But unfortunately, the assembled leaders missed a big opportunity to dismantle existing investment rules that paradoxically allow foreign investors to sue governments when they try to pass regulations that would enforce these exact criteria.
This was particularly disappointing, given the growing calls from members of the U.S. Congress and civil society organizations demanding that Biden take action to dismantle the deeply flawed neoliberal approach to international investment rules that the U.S. government has pushed for several decades.
A web of existing bilateral and regional trade and investment treaties locks most countries in the region into a system that elevates the narrow interests of corporations and wealthy investors above the interests of people and the environment. Under this investor-state dispute settlement system (ISDS), private investors can file claims before supranational arbitration bodies, demanding compensation for environmental and other government actions that might reduce their expected profits.
Two decades ago, the U.S. government drove a process to further entrench these anti-democratic rules through a proposed pact called the Free Trade Area of the Americas. Those negotiations, involving 34 countries, collapsed in 2005.
The Americas Partnership for Economic Prosperity appears to be a weak attempt to revive this failed project. Which countries are at the table this time? They include two that are seeking trade agreements with the United States (Uruguay and Ecuador) and nine that already have such pacts (Mexico, Peru, Chile, Colombia, Costa Rica, Canada, the Dominican Republic, Panama, and Barbados).
Mexico’s representative, Secretary of Foreign Affairs Alicia Bárcena Ibarra, did call for the process to be opened up to all Latin American and Caribbean countries, but it’s unlikely that many other countries will be interested. Brazil for instance, has not ratified any agreements with ISDS provisions and others like Venezuela and Bolivia have exited the World Bank court that handles most investor-state cases, the International Centre for the Settlement of Investment Disputes.
The whole process is a response to the loss of U.S. hegemony in the hemisphere in light of China’s growing economic influence and the EU’s new so-called “Global Gateway” initiative, through which it seeks to secure natural resources from the region.
If the summit process leads to yet another investment deal that fails to challenge transnational corporations’ excessive powers, these leaders will further undermine their own sovereignty. According to a recent report, the 12 countries involved in the summit are facing more than 73 pending investor lawsuits, with claims totaling $47 billion. Almost a quarter of these are claims against Mexico, totaling more than $11 billion. The actual figure may be higher since some lawsuits are not public.
This total also includes a $15 billion lawsuit filed by the Canadian company TC Energy against the United States. The claim is in retaliation for the canceling of the Keystone Pipeline, given opposition from indigenous peoples and communities over the project’s environmental threats.
On the eve of the summit, Senator Elizabeth Warren and 40 other members of Congress sent a letter to the Biden administration urging them to remove investor-state dispute settlement provisions from all existing U.S. trade deals. More than 200 U.S. civil society organizations, including the AFL-CIO and many other labor, human rights, consumer protection, rural, Latin American solidarity, and environmental organizations sent Biden a letter reinforcing this demand.
AFL-CIO international director Cathy Feingold said in a statement that the current investment regime “creates an unfair playing field that prioritizes the needs of corporations over those of workers, their families and the environment.” She called for an alternative framework that actually promotes “good jobs, strong communities and a sustainable environment.”
The letter from U.S. organizations was inspired, to a large extent, by the demands of Latin American organizations that have struggled for decades to break the shackles that prevent their governments’ rights and obligations to regulate in favor of public welfare and the environment. Last May, more than 300 organizations signed a declaration calling on Colombian President Gustavo Petro’s government to review and withdraw from treaties that give such powers to transnational companies, especially extractive companies.
The Washington summit was a missed opportunity, but the dialogue has just begun. Progressive Latin American leaders, including Colombia´s Gustavo Petro, Mexico’s Andrés Manuel López Obrador, and Chile’s Gabriel Boric, should pay more attention to Brazil, which has attracted significant foreign investment without ever ceding its sovereignty to the investor-state system. Together, these leaders could form a powerful alliance to liberate Latin America and the Caribbean from this neocolonial yoke.
Continuing to give power to transnational corporations is not the path to prosperity for the hemisphere.
Adapted from the original published in Spanish in La Jornada and translated by Liam Crisan.
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