Free trade agreements (FTAs) and bilateral investment treaties (BITs) are often described as instruments to promote international trade and foreign direct investment. More precisely, they can be seen as tools for transnational corporations to push their interests at the expense of people and the environment.
From the late 1950s into the 1970s, a wave of BITs were signed to protect the property of businesses in the former colonial powers from the governments of newly independent states. Companies argued that investment protection was needed because the rule of law was weak in many of these territories. They wanted protection against expropriation – that is to say, the taking of their private property by the government for any purpose, including the public interest. Another major wave of BITs was signed in the late 1980s and 1990s around the time of the demise of the Soviet bloc, and the dominance of free market capitalism across the world. Today, there are more than 3000 BITs in force.
With expansive definitions of “investment” and wide-ranging provisions to protect foreign capital, BITs help to protect and promote hazardous mining projects, land and water grabs and infrastructure development which wreak havoc on local communities and the environment. BITs usually include the controversial investor-state dispute settlement (ISDS) mechanism. This enables companies from one party to sue the government of the other party, if they deem that new laws or regulations negatively affect their expected profits. The mechanism relies on arbitration rather than public courts. About 1000 investor-state disputes have been brought against governments by corporations around the world.
FTAs are much broader agreements. They aim to promote global trade not only by lowering tariffs but also by addressing so-called non tariff barriers (i.e. norms and regulations), in order to boost trade in goods and services. These may be rules around workers rights, competition policy, public procurement regulations or patent laws. They also incorporate rules on investment, like BITs. The first modern comprehensive FTA was the North American Free Trade Agreement (NAFTA) which took effect in January 1994. Since then, FTAs have taken off as key tools to make business more profitable for transnational capital and to build political and economic coalitions among states. Today, there more than 250 comprehensive FTAs, locking countries into broad commitments that go far beyond what is agreed to at multilateral fora such as the World Trade Organisation.
Social movements have been resisting and fighting both FTAs and BITs since NAFTA. Because they are so broad in scope, they tend to threaten and mobilise a wide range of communities from teachers or farmers to students or union workers or environmentalists. In some countries, social movements against FTAs have nearly brought governments down.
Key concerns that mobilise people include:
Decades of debate have resulted in a better understanding and higher public scrutiny of these deals. But they continue to be pushed, as markets and political openings shift.
See also: Acronyms