With mounting opposition, US President Barack Obama is desperately trying to pass the Trans-Pacific Partnership (TPP) trade deal before his term ends in 2017. Both major party presidential nominees, former Secretary of State Hillary Clinton and Donald Trump have publicly stated that they would not sign the agreement if they become president. Though opposition to TPP has typically focused on the threat of losing American jobs, another concern that is being seen is the loss of sovereignty through a byzantine process known as investor-state dispute settlement (ISDS).
ISDS allows companies to sue states using private, three-man corporate tribunals as judges. The corporate tribunal process was originally intended to protect corporations from having their property nationalized by foreign countries. By allowing companies to recover lost funds, it was thought, states would be less likely to nationalize foreign assets. As a result, foreign investment would increase into countries in desperate need of it.
Under current practice, ISDS has become a means for transnational corporations to pressure governments to change health and safety regulations and let corporate executives walk on criminal charges. According to a recent study of the ISDS process, the system was designed to deal primarily with theft by autocrats, but, in the majority of cases today, businesses are suing democracies for enacting regulations. The Agency also found instances in Egypt, El Salvador and Indonesia where the threat of ISDS actions by a business led to criminal charges being dropped against company executives.
