Corporate Sovereignty: Profits before Citizens

Originally published in the Informanté newspaper on Thursday, March 26, 2015.

Investor-State Dispute Settlement. A clause in bilateral and multilateral trade agreements that sounds so uninteresting that everyone assumed that is was. Envisioned as a reasonable system for protecting companies investing in emerging nations with weak judicial systems, it established independent tribunals where these self-same companies can seek arbitration against governments. But it has turned into a tikoloshe that lets foreign companies place themselves above national laws.

The ISDS clause, or corporate sovereignty clause, as it has become known, represents a troubling trend towards equating multinational corporations to nation states. This allows these multinationals a level of financial sovereignty – demanding compensation from national governments if its FUTURE profits could in any way be affected by a country’s laws or judicial rulings. This is especially troubling when you consider that nations can be sued for laws specifically designed to protect the health of their citizens.

Take the case of Australia, who in 2011 introduced to world’s first ever plain-packaging laws, which removes the branding from cigarette boxes. Just a few months later, it found itself facing an ISDS claim from Philip Morris Asia Ltd, claiming that removing its trademarks from packaging would reduce its future profits by enabling fake brands into the market.

And in 2009, the Uruguayan government instituted new regulations surrounding tobacco packaging and sales – requiring that 80 percent be covered by graphic health warnings. Shortly later, it too found itself facing Philip Morris International as well – PMI claiming that the new packaging requirements infringes on trademark guarantees included in a trade agreement. 

If you are a Namibian, these regulations might sound familiar to you. In a similar manner, when the Namibian Parliament passed the Tobacco Control Act in 2010, government suddenly found itself bombarded with letters and warnings from tobacco companies.

“We have bundles and bundles of them,” reported former Health Minister Dr Richard Kamwi. The effect of this was that the implementation of the act languished for almost 4 years before being implemented in 2014. 

Defending against these companies is not easy. According to The Tobacco Atlas there are about 1 billion smokers in the world, and tobacco will be responsible for the premature deaths of 66% of them. 80% of these deaths occur in low to middle income countries. The top 6 tobacco companies recorded over half a trillion in US dollar revenues during 2013, with profits of USD 44.1 billion.

When you compare that to Namibia’s 2013 GDP of USD 13.11 billion, it becomes clear that we’re facing an uphill fight for our national sovereignty. Luckily, countries are not alone in this fight. The efforts of tobacco companies have not gone unnoticed. In part, this is because of entertainers like John Oliver bringing their actions to the public consciousness.  In a scathing attack on the tobacco industry (in which Namibia is name-checked as well) on 15 February, John also launched an anti-tobacco mascot, Jeff the Diseased Lung (a play on the Marlboro man.)

In part, because of actions such as those, on Wednesday, 18 March, noted philanthropist Bill Gates and businessman Michael Bloomberg announced the creation of an anti-tobacco trade litigation fund. Thought their charitable foundations, they said that countries with limited resources should not be bullied into making bad health policy choices. Bloomberg previously assisted Uruguay in paying some US$375 million in its defence against Philip Morris. The Uruguayan government has stated that if not for Bloomberg’s monetary assistance, it would have had to repeal its anti-smoking regulations.

In that, Namibia is lucky to have had a strong and determined Health Minister in Dr Kamwi. As he said when our regulations came into effect: “We have decided to put our foot down. If they want to go to court, we will see them there.” With a new cabinet starting, Namibians are hoping that the new Minister of Health, Dr Bernhard Haufiku, is just as committed to putting citizens above foreign profits.