Remember the days when a company decided to set up shop in a foreign country and were actually bound by that country's laws and regulations? Well, those days have evolved into a climate of 'anything goes'. With foreign investor protection clauses tucked away in these bi-lateral (more than 2500) and 'free trade' agreements, a country's laws and regulations are meaningless if it is perceived to infringe on a company's ability to generate current or future profits. Damn be democracy, damn be the environmental laws, damn what the people want, they say- We invested in your country and we have the right to realize our full profit potential and make this investment pay off. This is one of the sad realities of globalization. These rules are promoted by the World Bank and other international financial institutions and enforced through the World Bank's 'arbitration court' and other international tribunals.
Foreign investors can now sue for a laundry list of things. If a company perceives a country's environmental laws or public health laws to be in the way of their profit line, they can sue in this 'arbitration court' claiming that these laws diminish the value of their investment. Suppose for example that a Canadian mining company wishes to operate an open pit mine in Guatemala, for example, and Guatemala, a signatory member of CAFTA (Central American Free Trade Agreement) says that the project violates their environmental laws. Guess what? The company simply goes to the 'arbitration court' and sues the government of Guatemala. Great system, huh? And who pays when the companies win? Let's see...the corrupt politicians who signed these agreements....No...it's the working and poor citizens stuck with the bill.
These excessive investor protection laws must be replaced with just laws. This 'anything goes' model of business belongs in the trash bin of history and it is time for these foreign investors to act like the responsible global citizens that they should be.
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