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Why is the United States pushing the Trans-Atlantic Investment and Trade Partnership if not

for trade liberalisation?

The current global trade trend is no longer

multilateralism but regionalism, following the stalemate

of the Doha round of the WTO and the Transatlantic

Investment and Trade Partnership (TTIP) fits into this

context (Balineau and Melo, 2011:2; Choblet and Hager,

2014:9). TTIP is a free trade agreement (FTA) between the

United States and the 28 member states of European Union

that is currently being negotiated, rather quietly, under

liberal arguments for free trade (Aktar and Jones, 2014;

Francois et al, 2013; Hamilton, 2014:82). If it goes

through, it will represent the richest, most powerful

agreement globally because together the two economies

account for approximately three-quarters of global

financial markets (Hamilton, 2014:82). It is presented to

be beneficial for the two parties involved, as well as

countries excluded from the deal because trade, through

competition and specialisation boosts growth and,

supposedly, therefore, spreads and improves quality of

life (De Gucht, 2014; Feensta and Taylor, 2008:32;

Francois et al, 2013; Grimwade, 2000:29-35).

However many contest this positive point of view

(Choblet and Hager, 2014; Jones, 2014; Trigkas, 2014;

Wallach, 2013; Williams, 2014). Some put forward that

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labour will be threatened in both the US and the EU

(Stamoulis, 2013;Williams, 2014). Others believe that the

accord will have a negative impact on countries excluded

from it (Richter and Schäffer, 2014:5; Winter, 2014 cited

in Richter and Schäffer). Therefore, there is a definite

conflict regarding the expected economic results of the

accord. In addition, I argue that there is a tension when

analysing the intentions of TTIP. Although, it is framed

as a tool for growth some argue that it is, in fact, a

response to our current global political context (Choblet

and Hager, 204; Hamilton, 2014; Ikenson, 2014; Richter

and Schäffer, 2014; Trigkas, 2014; Van Ham, 2014). Some

authors consider that TTIP is actually a response to the

rising power of China in East Asia (Akhtar and Jones,

2014:1; Hamilton, 2014;Ikenson, 2013;Richter and

Schäffer, 2014:1; Van Ham, 2014). Further, some

understand TTIP to be a tactic to revitalise the US-EU

relationship, particularly during its time of difficulty

(Choblet and Hager, 2014; Van Ham, 2014). Other opponents

give importance to the investment state dispute

settlement, which ultimately gives the right to

corporations to sue governments, in sometimes secret

tribunals, if their policy displeases them (Capling and

Nossal, 2006; Jones, 2014, The Economist, 2014; Wallach,

2013; William, 2014). This fits in with liberalised trade

discourse to reduce state intervention, however one may

question how this affects state sovereignty. I would like

to explore these problems further in this essay. Free

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trade arguments are seemingly overused in the

justification of economic and political policy; for

example trade liberalisation was used to advocate both

regionalism and multilateralism once a solution was lost

(Staubhaar, 2014). Hence, I intend to explore the

intentions for TTIP that lie under the surface of free

trade justification. Its global geopolitical context and

the investment state dispute settlement shall be examined

because they reveal much more about it. I shall show that

the United States is using TTIP as a tool to maintain its

global influence.

The essay shall be split into three main parts.

Firstly, I shall analyse the literature surrounding TTIP

and point out we must go beyond a free trade view of the

FTA. Secondly, as Duina (2006:1-2) points out, we must

acknowledge and give importance to context when analysing

regional trade agreements. Thus, I shall analyse the

agreement using a geopolitical, wider-lensed framework. I

will explore how TTIP is of strategic interest to the US

as it reinvigorates the EU-US relationship as well as

providing a counterbalance for the rise of China. Hence,

I shall argue the FTA is a means for the US to maintain

its global position. Finally, I will engage with one of

the specificities of TTIP: the investor-state dispute

settlement (Capling and Nossal, 2006; Jones, 2014, The

Economist, 2014; Wallach, 2013; William, 2014). I do

this because this because it is a novel advancement in

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the US-EU relationship. Historically, the United States

has been a key advocate of this policy, accordingly I

intend to explore why this is so. For this I will look at

how the American state has treated the corporation,

through law.

Literature Review

The establishment of TTIP represents a shift towards

a regionalised form of multilateralism. The ascendency of

multilateralism has seemed to be failing; this is

represented by the stalemate at Doha round of the WTO

(Balineau and Melo, 2011:2; Hamilton, 2014:84;

Straubhaar, 2014). As Straubhaar (2014:34) puts it:

“Homogeneity has gone. Heterogeneity is in”. States have

turned towards a form of regional multilateralism through

regional and multiparty free trade agreements (Duina,

2006:1). With fewer parties involved, not only are

regional trade agreements (RTAs) easier to establish on a

practical level but also they enable member states to

pursue more aggressive liberalisation and market creation

(Duina, 2006:24-31). The economic arguments for the

establishment of RTAs are the same as with multilateral

free trade: increased trade through competition and

specialisation are beneficial because they stimulate

growth, which spreads and betters standard of living

(Feensta and Taylor, 2008:32; Grimwade, 2000:29-35). The

economic justifications specific to regionalism are:

trade creation, trade diversion and trade expansion

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(Feensta and Taylor, 2008:375; Straubhaar, 2014:30).

NAFTA, for example, was setup to “to promote long-term

efficiencies of production, expand opportunities for

capital investment, and increase commodity trade” which

would lead to “rising standards of living for all three

countries" (McConnell and MacPherson, 1994:169 cited in

Duina, 2006:31). Henceforth, the rise of RTAs can be

understood as an extension of the acceptance of the

principle of free trade (Duina, 2006:1).

However, I intend to question the economic arguments

for regionalism because they offer the same analysis for

multilateralism and regionalism, despite them being

evidently different policy outcomes. This is how TTIP has

been presented and justified; within a free trade

paradigm (Aktar and Jones, 2014). A report for the

Congressional Research Service (Aktar and Jones, 2014)

has noted the three main aims of the agreement, which are

in line with a neoclassical free trade discourse.

Firstly, it is supposed to increase market access through

removing barriers to trade. Secondly, the agreement will

better cooperation and suitable regulation between the

two economics. Finally, it will enable for the

development of new ‘20th century’ rules for certain areas

like FDI, intellectual property rights (Akhtar and Jones,

2014:3; De Gucht, 2014:3). However, we must note that it

is currently very difficult to assess the results of

TTIP, because they would be mere speculation. Francois et

al. (2013) have, nonetheless, put together a very

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comprehensive one-hundred-and-twenty-four page report of

the anticipated results of the partnership; that it is

also trying to justify the agreement. The report gives a

few predictions according to varying levels of ambition

and liberalisation; generally it shows that the TTIP will

benefit all sectors: income, employment, GDP to name a

few. It also, surprisingly, claims that the spillovers

from it will benefit countries excluded from the accord

(Francois et al, 2013). However, it must be highlighted

this is all merely speculation, and more to the point,

numbers and statistics are easily manipulated, to suit

certain goals.

Equally, we can use economic theory to argue the

opposite, as we have seen with theorising multilateralism

and regionalism. In regards to TTIP some argue that it

will have negative economic impacts on local economies

for example; specifically, they argue that it risks to

threaten job security, as jobs in the US may be lost to

countries in the EU with lower wage norms. (Stamoulis,

2013:1). Further, looking at it differently, Williams

(2014), writing for The Independent, claims that the EU

has revealed that it will cause unemployment because jobs

will switch to the US where there are worse trade and

union rights. Overall, these claims suggest labour will

negatively be affected due to increased competition, a

factor traditionally argued to increase standard of

living through growth (Grimwade, 2000:29-35) In addition,

some argue that TTIP will not have spillover effects to

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other economies; in reality countries may actually suffer

from the exclusionary nature of the agreement (Richter

and Schäffer, 2014:5). Winters (2014 cited in Richter and

Schäffer) signals that emerging economies like India,

China or Brazil be affected by the isolation. These

counter economic arguments calls the economic study of

TTIP into question, indeed, how can economics say more

than one thing at once? On one hand, TTIP will benefit

all (Francois et al., 2013), on the other it could

jeopardise job security (Stamoulis, 2013:1; Williams,

2014) and will not have spill over effects (Richter and

Schäffer, 2014:5). I argue, henceforth, that the economic

study of TTIP may not be convincing in analysing its true

intentions as they can be easily manipulated as we have

seen. Thus I shall use other analyses of the TTIP in

exploring its intentions.

Duina (2006:32-34) explores other reasons for RTAs ;

bringing in cultural, security, geopolitical, and

strategic elements. It can be argued, for example, that a

contributing security factor for the foundation of NAFTA

was to minimise illegal immigration by making Mexico a

more prosperous country through trade (Duina, 2006:33).

Further, he looks at the case of Mercasur and puts

forward the point it was, in part, a means of stabilising

ex-dictatorships in Latin America (2006:32). Hamilton

(2014:85-87) makes a convincing geopolitical argument for

the setting up of TTIP. He highlights the rise of China

and East Asia and argues the US has pushed the agreements

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balance this. Moreover, the superpower’s arrangement may

reassure Europe that it is the US’ “‘partner of choice”

(Hamilton, 2014:87). I would agree with these points, and

therefore argue that the US is actually pursuing the

agreement for geopolitical reasons, not for free trade.

As Duina (2006:2) states we must look at the context and

specificities of FTAs, in order to examine them properly.

I shall, therefore, analyse the Investment Protection

Clause, which is novel for such a large RTA. This sets up

an investor-state dispute settlement, which ultimately

gives investors the right to sue governments (Richter

and Shäffer, 2014:2-4). I shall put forward that TTIP is

a means of exporting the specifically American Corporate

model of capitalism, which belongs to a specific legal

history (Capling and Nossal, 2006; Jones, 2014, The

Economist, 2014; Wallach, 2013) I will argue that the

agreement asserts US power by extending its corporations’

legal powers internationally. The ubiquitous

justification for many policies is trade liberalisation,

as shown above, thus I believe we must look past this

discourse and examine the specificities and contexts of

policies, to able to analyse them properly.

A geopolitical analysis

As Miller (2014 cited in Van Ham, 2014:11) argues

the rise of RTAs has arisen from a mix of economics and

geopolitics. I wholeheartedly agree and shall, for this

reason, analyse the geopolitics involved with TTIP. I

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shall put forward the point that this particular RTA will

strengthen the slightly bruised US-EU relationship at the

same time balance rising economic powers, like China

(Aktar and Jones, 2014:3; Van Ham, 2014:5). Together the

EU and the US are a hugely powerful force on the world

stage; they account for nearly half of the world’s GDP,

and share approximately 30% of global exports (WTO, 2013

cited in Aktar and Jones, 2014:3). Thus, reinforcing this

relationship with a tighter more cooperative common

market will be highly beneficial for both sides to

maintain their powerful global influence (Van Ham,

2014:6). Ikenson (2013:24) notes the agreement may also

be a means to reassure Europe that the US is not just

focussing on its Asian pivot but still wants strong ties

with the bloc. Hamilton (2014:87) also makes this point,

as does Kupchan (2013, cited in cited in Choblet and

Hager, 2014:10). Indeed, there have been some European

Atlanticists that have been fearful that United States

has weakened the transatlantic relationship with its

focus on the TransPacific Partnership (Frankenberfer,

2012; Parello-Plesner, 2013 cited in Choblet and Hager,

2014:9). In addition, given the current uncertainty of

the EU with the Greek crisis as well as the UK’s possible

in/out referendum, the TTIP will be a means of revitalise

European organisation and cooperation (Ikenson, 2013:24;

Van ham, 2014:19). I therefore reiterate that a

contextual analysis is more convincing than focusing on

free trade because this investigation has revealed the

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geopolitical reasons for pursuing TTIP, and has resulted

in more nuanced investigation.

Many make a strong case arguing that agreement is

responding to rising regional powers such as China and

other BRIC countries (Akhtar and Jones, 2014:1; Hamilton,

2014;Ikenson, 2013;Richter and Schäffer, 2014:1; Van Ham,

2014). Van Ham (2014) puts forward the point that the

partnership will rejuvenate what he calls ‘The

Transatlantic West’, relative to the rise of China in

particular. Indeed, China has become a very important

economy in recent years and the Economic capital of Asia;

in 2001, Chinese exports accounted for approximately 5%

of world exports, whereas in 2012, this had increased to

12%, plus in 2013 95 Chinese companies were in the

Fortune 50 which was a drastic increase (Susted &

Nishioka 2013; Li 2012.cited in Trigkas, 2014:55). This

is becoming a very real threat to the dominance of the US

and Europe (German Marshal Fund, 2013 cited in Trigkas,

2014:56). Richter and Schäffer (2014:3) argue that the

rise of emerging nations like China, but also Brazil,

India and Russia represent a very real decline in the

important of the EU and the US in global trade. Trigkas’

(2014) examination of this tension, I believe is very

persuasive. First, the author questions the idea of TTIP

as an economic NATO, which will enhance the EU-US

economic security and advance cooperation between the

blocs, as well as, more importantly create a powerful

economic bloc to counter rising China. This I believe is

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a convincing point, however the situation is not quite as

black and white as this. Trigkas’ (2014:55) more

interesting argument is that through TTIP, and the

Transpacific Partnership, the US may actually be able to

influence Chinese policymaking. Indeed the powerful

western bloc is not only threatened by the rise of China

itself but also about the success of the Chinese model,

particularly regarding China’s many state-owned

enterprises (SOEs). Indeed, the rise of China may be

cause for a shift in paradigm away from western-style

liberalism, towards a (arguably) communist, or at least

more state-centrist approach to economic policy. The

Obama administration and EU officials realise if they do

not act quickly there may be a further decline of their

political power, but also trust in their current model

(Van Ham, 2014:5). Trigkas (2014:54) argues that TTIP

may be a means of liberalising the Chinese economy; away

from SEOs towards a “western shaped liberal order”.

Related to this, Van Ham (2014) makes a very

plausible argument concerning the regulatory power of the

EU, in relation to TTIP. He puts forward the point that

the key to TTIP’s success and thus its global influence

will be its regulatory power; that regulatory divergence

between the two blocs could influence global standards

and rule setting (ECORYS, 2009 cited in Van Ham, 2014:7).

Brussels is still, for the time being, “The world’s

regulatory capital”(The Economist, 2007:42 cited in Van

Ham, 2014:8). TTIP would therefore spread some of this

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power to the US. Specifically, the EU’s precautionary

principle has proved extremely influential

internationally, along with its successful common market;

therefore the economic bloc has become a major

trendsetter for international standardisation (Van Ham,

2014:8). According to Van Ham (2014:8), the dominance of

EU regulatory power is highly attractive to the US in

pursuing TTIP, because the country will be able to use

this power to influence global standards of trade. In

addition, EU standards can be tough on US firms and it is

known that following EU standards has become essential to

entry into the many markets (Schapiro, 2007; Navdi, 2008

cited in Van Ham, 2014:9). Hence, accessing EU’s

regulatory power will be crucial for the US. Nonetheless,

the EU and the US have different regulatory approaches

(Choblet and Hager, 2014). For this reason, TTIP will

difficult to manoeuvre; according to Ikenson (2013:25)

regulatory divergence is the second hardest factor to

negotiate, behind the use of GMO crops. Even so, TTIP

still intends to “set globally-relevant rules and

standards, and address challenges associated with the

growing role of China and other emerging markets in the

global economy” (Akhtar and Jones, 2014:1). Ikenson

(2013:24) argues that TTIP could wield the power to

create international rules that even China would have to

adhere to, giving ‘the Transatlantic West’ a considerable

advantage. China is well aware of these developments to

create global trade rules (Van Ham, 2014:10). Its

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response is to negotiate its own RTA: The Regional

Comprehensive Economic Partnership that is also presented

to reduce restrictions to trade. It excludes, however,

devices important to the US like intellectual property

rights, services or investments (Hamilton, 2014:86). The

agreement may change the global power structure, but we

have only to wait. Thus it is clear that the regulatory

power of the EU is of great interest to the US because

access to it will enable the superpower to set global

rules, even for China, this I argue will assert US

dominance, which is the main goal of the Transatlantic

Trading and Investment Partnership

A brief analysis of the Transpacific Partnership

(TPP) is useful when examining TTIP because it is a very

similar free trade agreement that is also currently in

the making. It is between 12 Pacific Rim countries,

including Australia, Brunei, Singapore and the US, to

name a few (Hamilton, 2014:822). I shall put forward the

point that this accord will give the US leverage to

influence power relations in the region. It is

interesting to note the agreement is actually an

extension of a FTA that did not originally include the US

but only Brunei, New Zealand, Chile and Singapore, and

the goal was actually create an alliance with more

members from “both sides of the pacific” (Lewis,

2011:29). Thus, with this in mind, it can be argued that

the US’ alignment in TPP is actually a means to access

ASEAN countries (Lewis, 2011:35-37;Williams, 2013:9-10).

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This Lewis’ (2011) reasoning, who questions, firstly, why

the United States would push for an RTA with countries

like New Zealand, which is not of high economic interest.

He argues (2011:35-37), the US’ interest stems from the

expansion principle in the TPP; to access more Pacific-

Asian countries that do not necessarily have strong

relations with the country due to the exclusiveness of

ASEAN. This is indeed what is happening, for example

influential Japan joined negotiations in 2013 (Van Ham,

2014:14). The TPP is framed very similarly to TTIP by

policymakers; as a means of liberalising trade and

enhancing cooperation, but it also explicitly aims to

broaden its reach the Asia-Pacific region (Williams,

2013:1). This will balance China within that region. I

would argue, therefore, that it is, like TTIP, a very

strategic move from the United States. Indeed “joining

the TPP could help the United States to play an active

role altering the regional balance” in Pacific-Asia

(Lewis, 2011:39). To sum, through TTIP, the superpower

will be able to influence free trade and access markets

in Asia, in addition its presence on both sides of

pacific will bring political gains with it, ultimately

enabling the country to be a leading force in the region

(Lewis, 2011). This comparison with TPP, I believe, is

telling for our study of TTIP as it gives us an insight

into the US’ larger global strategy to assert its power.

The Investor State Dispute: Exporting American corporate

law

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Although supporters of the agreement (Akhtar and

Jones, 2014:1; De Gucht, 2014:5) present that it aims to

reduce restrictions to trade, Richter and Stäffer

(2014:2) quite rightly point out that tariffs between the

two areas are already very low, therefore there must be

another reason for its negotiation. Hence, I intend to

draw attention to one of the crucial components of TTIP:

the investor state dispute mechanism (ISDS). The ISDS

accords international legal rights to private corporate

investors against democratically elected governments by

use of secret tribunals (Capling and Nossal, 2006; Jones,

2014, The Economist, 2014; Wallach, 2013; William, 2014).

It is not a new phenomenon, we must note, although it is

novel in the case of TTIP, because it is such a big FTA.

Indeed, The United States has extensively pushed for the

policy since the 1980s because the superpower is a large

global investor (Choi, 2007). I shall examine the ISDS,

in light of previous findings that the US is using the

TTIP to maintain its ascendency. I intend to argue that

the ISDS is a means of exporting very unique corporate

American Law, and that, through granting powers to

corporations, the US state will be able to gain more

market power in Europe. To contextualise, this legal

tradition originates 19th century America with the rise of

Corporate Personhood (CP), during a period of emerging

enterprising individuals, and growing corporations (Mark,

1987:1444). According to Mayer (1990:581), the

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“personification of the corporation occurred in 1886”,

with the Santa Clara Case. It makes use of the

fourteenth amendment (originally created for the

protection of freed slaves) to grant property tax

protections to Southern Pacific Railroad Company

(Blumberg, 1990:55; Pollman, 2012:1642). Henceforth, the

corporation began to be treated as a person, with rights.

Pollman’s (2012) critique of CP demonstrates the

obscurity of the concept. It is true the constitution

never explicitly references corporations; notwithstanding

American law considers the corporation a citizen (Mayer,

1990:579). As Baken (2004:16 cited in Wilks, 2013:11)

puts it:

“by the end of the nineteenth century, through a

bizarre legal alchemy, courts had fully transformed the

corporation into a ‘person’, with its own identity, separate

from the flesh and blood of people who were its owners and

manager.” (emphasis added)

In the contemporary context, corporations are known

have to rights and regularly evoke and manipulate the

bill rights in court cases, which are frequently on the

subject of state regulation (Mayer, 1990: 583-620).

Henceforth, it became well known that American

corporation can sue, be sued, own property, and can be

prosecuted (Blumberg, 1990:49; Millon, 2001:1;Wilks,

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2013:10). These powers were granted by the American

state.

I believe that this is an important history when

exploring TTIP because, the accord aims to essentially

extends these rights international with the ISDS. Some

may consider giving corporations rights threat to

sovereignty and that internationalising these rights will

result in a decline of the nation state (Jones, 2014).

However, I would agree with Panitch and Gindin (2004:10)

when they argue the state (specifically the capitalist

state) remains the ‘powerhouse’ and key to international

study and international relations. In the case of

America, corporations belong to the capitalist state

model and work with the US government to achieve power

internationally. This clearly links US’ corporate

history. In addition, Wilks (2013:15-16) bears light on

the Polanyian argument that claims the state creates the

environment for corporations to thrive who in turn

contribute to the maintenance of this structure;

therefore creating a governing elite. Thus we must stress

that corporate and state power are not in opposition but

work together within the country. This alliance I argue,

is the key to America’s ‘success’. Anderson (2002 cited

in Panitch and Gindin, 2004:10) characterises the

American capitalist structure: first with the invention

of the modern corporate form of scientific management and

a new form of industry, second by the creation of a

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consumerist “Hollywood style” culture. I believe this to

be a strong analysis and argue that the core of the US

model, which is so powerful, is the corporate-state

relationship.

TTIP I argue extends this very specific power to

international law (Capling and Nossal, 2006; Choi, 2007;

Sappideen and He,2012). Indeed, TTIP, and TPP for that

matter, both include Investor State Dispute Settlement

mechanisms that give special legal rights to investors

(Capling and Nossal, 2006; Choi, 2007; Sappideen and He,

2012). As a result corporations will be able to influence

the economic environment abroad. For example, opponents

of TTIP in the UK argue that the ISDS will open up the

public sector to foreign investors; the NHS, is believed

to be in danger of being sold off to the highest bidder

in the government’s bid for reform, which would result in

profits of the healthcare system going to the private

sector (Jones, 2014;Williams, 2014). Similarly,

challengers of TPP argue progressive health policy

regarding alcohol and tobacco is in danger for example,

as large tobacco and alcohol firms would be essentially

able to manipulate social policy through secret tribunals

(Kelsey, 2012). Thus ISDS will be greatly prosperous for

the American corporation, as they will be able to, on one

hand, gain access to more markets and on the other they

will be able to change conditions of those markets to

suit them. Thus I argue, through giving these

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corporations these powers, the American form of power

(the corporation) is being transmitted across the world

and, as a result, the US is able to maintain its

influence. As previously noted, American power is a mix

between a strong state-corporation relationship and

diffusion of US ideals from Hollywood, for example

(Anderson,2002 cited in Panitch and Gindin, 2004:10).

Thus the ISDS’ extended powers to the US Corporation

would result in a more powerful American state. However,

going back to the question of sovereignty, I ask a more

nuanced question: How does the ISDS impact on the

prosecuted state’s sovereignty? Olivet (2011:1) brings up

that the corporation is able to prosecute a country but

that a country is not able to legally contest

corporations if they commit human rights abuses or cause

environmental damage, for example. Thus ISDS leans

towards favouring the corporation. Therefore, I argue

that the ISDS may, in fact, encroach upon state

sovereignty, but only on the country that is being

prosecuted. This idea shall be continued in the next

part, where I shall focus on the US’ promulgation on the

ISDS.

Following the establishment of many bilateral trade

agreements in the 1970s, the US setup and provided for

the International Center for the Settlement of Investment

Disputes (ICSID) arbitration which offers a platform to

protect foreign investors without going through expensive

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and apparently burdensome domestic courts (Choi,

2007:732). The ICSID, according to Olivet (2011:2) is

extremely biased as 70% of its arbitrators are from

Western Europe and North America (ICSID, 2011). In

addition, these arbitrators supposedly have their fingers

in many pies; they are on counsels for companies or

governments, and sometimes “have a life in academia where

they give expert opinion” (Olivet, 2011:2). Thus the ISDS

has become a useful tool for the United States and the

‘West’, to protect their investors. The majority of US

FTAs now include ISDS provisions, for example NAFTA

(Choi, 2007: 734; Olivet, 2011:1). The policy is of

interest to the United States because it gives protection

to the American corporation which, as we have argued,

crucial to American international power. Generally, the

ISDS has favoured developed countries over developing

countries and corporations from developed countries gain

a lot from suing developing countries (Olivet, 2011:4;

UN, 2010 cited in Sappideen and He, 2012:213). Ecuador,

for example was sued for $2bn by an American oil company,

on top of having to pay hefty legal fees (Wallach, 2013).

This is interesting in regards to previous thoughts of

sovereignty; developing countries do not have a say in

these legal pursuits, resulting in expenses. Therefore, I

argue that the ISDS actually does impinge state

sovereignty; but specifically states that are on the

receiving end of court cases.

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But what about cases only involving developed

countries, as with TTIP? The EU also has some powerful

corporations. Perhaps a more telling example of ISDS, for

this analysis, is the notorious Philip Morris case in

Australia, wherein the cigarette company sued the country

for its plain packaging policy, which is still on-going

(Kelsey,2012; Sappideen and He, 2012:207;Wallach, 2013).

Philip Morris challenged Australia’s health policy that

required that 80 per cent of cigarette packaging should

be plain, on the grounds of property rights protections

(Sapideen and He 2014:222). I argue that by giving Philip

Morris legal leverage against the state, it was a direct

assault on Australian sovereignty. This case has actually

led to great opposition to ISDS from grass-roots groups

as well as developed and developing states (Capling and

Nossal, 2006; Choi, 2007, Sappideen and He, 2012:221-225;

The Economist, 2014). Australia is now one of the first

developed countries to take an official stance against

ISDS (Sappideen and He, 2012:221-225). Nonetheless, the

United States is still pushing the ISDS in trade

agreements (Choi, 2007:725). I argue, that this not only

because it is beneficial for US corporate interests but

it is also rooted in US law. To sum, the ISDS will give

US corporations the power to influence policy that does

not suit them. Secondly, I have shown that corporations

are key to US power because corporate and state interests

diverge. This brings me to conclude that the US

capitalist state is protected by the ISDS, further it

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Candidate: 129679

helps maintain its supremacy. However, countries on the

receiving end like Ecuador and Australia do lose some of

their national agency against these corporations because

the ISDS is balanced towards protecting the corporation.

To conclude, I have contended that the Transatlantic

Investment and Trade partnership has been pursued by the

United States in order to maintain its global influence,

despite it being framed as a free trade initiative.

Firstly, I have shown that it will be key in balancing

out rising powers like China, whilst also rejuvenating

its relations with a damaged, yet still very powerful,

Europe. Further, by comparing TTIP with TPP we begin to

gain an overview of the US’ global trading strategy, and

argue that, indeed, the US is pursing a vigorous economic

plan to maintain its dominance. The second part of the

essay looked at the investment dispute settlement of the

agreement. It demonstrated that the clause is part of an

American history that led to a strong relationship

between state and corporation, which I argued is key to

US power. I put forward the point that the ISDS is an

extension of this power, thus becomes a means of

extending the powerful US state.

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