Corporate Equality: Should Corporations have the Same Rights as Nations?

by douglas reeser on March 3, 2013
A recent piece in the Huffington Post by political journalists Zach Carter and Ryan Grim reports on a new trade agreement that is in the works between the US and EU. While the agreement is still in its early stages, the content threatens to be quite disconcerting, as it may give corporations unprecedented power and influence over sovereign nations, including the US and European countries. The authors explain: "Exactly how broad these corporate political powers will be is undetermined, but one aspect of the agreement, known as 'investor-state dispute resolution,' would allow a company to appeal a regulatory rule or law to an international court, most likely the World Bank." Such an arrangement would grant the World Bank, which already has the promotion and protection of investment and development interests at the core of its mission, even greater influence around the globe. Even more troubling is that it potentially places "multinational companies on the same political plain as sovereign nations."

Under current international trade agreements, corporations must convince the host nation that they have been wronged in some way, leaving the decision to bring cases to international court in the hands of elected governments. In this scenario, some semblance of power is granted to sovereign nations, such that they are able to determine if an international corporation has acted appropriately within their borders, and what action to take, if any. This current scenario does pose some risk to the corporations, but in theory, it also drives them to act more responsibly. This risk, however, hasn't stopped corporations from polluting environments, exploiting workers, or corrupting officials. It's just that sometimes, they are brought to court for such indiscretions.

So let's try to imagine how this proposed trade agreement might change things out there in the world. I'll use a case that I'm familiar with from southern Belize, where a US corporation is drilling for oil. The case has some complexities that bring to light the many interests at play. In southern Belize, Maya communities have only in the last couple of years won rights to their land through a landmark Supreme Court ruling. However, the Belizean government has appealed the case, and titles to Maya lands have not been distributed. While Maya families have been living and surviving off of these lands for generations, the State currently does not recognize their right to those lands.

In this context, the Belizean government has granted a concession to a US oil company to perform exploratory drilling on these very lands that the Maya claim as ancestral. The drilling concession was granted with no consultation with the local communities or organizations that manage the land. And herein lies the risk for the oil corporation - their investment in drilling in remote parts of the Belizean rainforest could be put at risk if the land rights case is enforced. Key here, is the word "could." The Belizean government could grant land titles, and the oil company could go on drilling on State land, and nothing would change. Still, there is the risk that the communities would be able to force the oil company out.

Under current arrangements, the US oil company would have little recourse if they invested in the drilling project, and then were forced out of the region by new developments in the land rights case. This is a risk oil companies have been willingly taking for decades, and its the risk that has helped drive record profits for corporations like Shell and ExxonMobile, which don't exactly have the cleanest of environmental records. In short, the current arrangements have worked out well for international corporations, and not always that great for sovereign nations - consider the recent case of oil pollution of Peru as just one of far too many possible examples.

This new arrangement offers to minimize this risk even more for corporations. In the case of Belize, for example, if the land rights case were to impact oil drilling such that the company was forced to abandon the project, the company could now take Belize to international court. This court is actually run by the World Bank, which holds dear the interests of development and investment. Does anyone see a conflict of interest here? So now, not only would the oil company likely be able to continue drilling by way of international court verdict, but they could possibly receive damages in the ruling, effectively getting paid by the State to keep on drilling. It's not a stretch to see how even the threat of bringing cases to International Court could vastly change relations between States, corporations, and people.

This new trade agreement would be yet another step towards global domination for elite international corporations. Governments, however deep their flaws, are supposed to have the interests of their people central to their actions. Corporations have the interest of profit at the core of their actions, and this has consistently been shown to be at odds with the rights of people and the environment. There seems to be a tacit belief within the corporate world that corporations have the right to pursue profit, no matter the external costs. It's not a stretch to see corporations suing States for their "right" to drill for oil on their lands. Nevermind the rights of the people, the rights of the environment - corporations have a right to that oil.