Levelling the Level Playing Field

Let’s level with each other. What we call a “level playing field” for economic development is played with Western rules on Southern turf, so that the New York Giants can take on some high school team from Timbuktu. The International Monetary Fund prepares the terrain and the World Trade Organization referees the game. Guess who wins.

Selective Rules

The rules of this game have been written by people educated in the economic canon of the already developed West. The “developing” countries of the world are supposed to open up their markets to global corporations that stand ready to enter with their manufactured goods.

Of course, the developed countries play by the specific nature of this rule too: their markets are already open to such goods. In fact they have been open since these countries became developed—but not before. (That’s the subject of next week’s TWOG: that countries develop primarily through a bottom-up indigenous model, not an outside-in globalization one.)

Unfortunately the poorer countries don’t have a lot of manufactured goods to sell. And when they try to sell what they do have, namely agricultural produce—to play the game on the fields of the rich countries—this rule is promptly suspended. You don’t mess with the countries that make the rules of this global game.

New Bullying

Now, just as the international economic agencies are waking up to the consequences of their levelling, a new set of rules is making the playing field even more level: companies can take on government themselves.

Thanks to intense lobbying, a host of bilateral trade agreements provide for special courts of arbitration that enable private companies to sue sovereign countries. This has been made necessary, so the argument goes, to protect companies from governments that renege on contracts. Fair enough.

But instead, these courts are being used by global companies to do something quite insidious: stop legislation, even on matters relating to health, culture, and environment, that they claim to reduce their current or expected profits. “Today, countries from Indonesia to Peru are facing investor-state suits.”¹ In fact, companies needn’t go that far: just by threating such lawsuits, which may require legal costs the countries can’t afford, some countries have been bullied into cancelling proposed legislation. And, by the way, in this version of the game the goals are scored at only one end: governments cannot use these courts to bring claims against the companies.

In December 2013, the New York Times ran an article and editorial about how “big tobacco” has been using such litigation to “intimidate” poor countries into rescinding regulations intended to control the use of tobacco. The health minister of Namibia reported receiving “bundles and bundles of letters” from the industry about its attempts to curb smoking rates among young women.”²

In an article in the Guardian about these courts, George Monbiot wrote:

The rules are enforced by panels which have none of the safeguards we expect in our own courts. The hearings are held in secret. The judges are corporate lawyers, many of whom work for companies of the kind whose cases they hear. Citizens and communities affected by their decisions have no legal standing. There is no right of appeal…

One NGO labeled this “a privatized justice system for global corporations”, and a judge on these courts was quoted that “it never ceases to amaze me that sovereign states have agreed to [such] arbitration at all…”³

Now we have Bill Gates and Michael Bloomberg to the rescue. They have set up a fund to help countries defend themselves against these tobacco suits. That’s noble. But more noble still would be for national courts to strike down these lop-sided courts as outrageous violations of the public interest and sovereignty of their nations.

Playing in our back yards too

This new version of the game is now really global: those of us who live in a “developed” country should know that it is being played in our own back yards, against us, by companies that claim we are their cherished customers.

In my back yard, the North American Free Trade Agreement includes such a court. One Canadian official reported seeing “the letters from the New York and D.C. law firms coming up to the Canadian government on virtually every new environmental regulation and proposition in the last five years.” These firms believe that we Canadians no longer have the right to legislate on pollution and global warming. One pharmaceutical company even “demand[ed] that Canada’s patent laws be changed” (Monbiot, 2013). How level must the playing field become before we throw the bullies out of the game?

If your back yard is European, your Union is negotiating a trade pact with the United States. As a consequence, the lobbying so prevalent in the United States has come to Brussels with full force: corporate lawyers are all over these negotiations, indeed have been even before they started.⁴ Will you Europeans acquiesce, the way we Canadians did? Or will you have the guts to stop this assault in its tracks, and thereby tell the rest of the world that public democracy is more important than private profiteering?

© Henry Mintzberg 2015. For more on these points, see Rebalancing Society…radical renewal beyond left, right, and center (Berrett-Kohler, Amazon.com, Amazon.co.uk)