It’s not everyday that I find myself agreeing (in part at least) with an organization founded by Ralph Nader. But all of us should share a sense of alarm over an otherwise obscure Canadian patent case that raises a clear and present danger to American’s own authority. In the case, pharmaceutical giant Eli Lilly – a company that endorsed Obamacare and refused requests by shareholders to support free market reforms of the health care system – is attempting to leverage a little-known provision in the North American Free Trade Agreement (NAFTA) to deep-six a valid court ruling.
It all started when Canadian courts upheld a challenge under the nation’s Patent Act to Lilly’s application to protect an attention deficit hyperactivity disorder drug named Strattera, ruling that the company had provided insufficient evidence of effectiveness. Rather than fight it in Canadian domestic court, in late 2012 Eli Lilly sued under the provisions of the North American Free Trade Agreement to contest Canada’s entire basis for granting patents. In a nutshell, NAFTA and other trade agreements empower private companies to directly challenge government policies in front of tribunals made up of three private-sector attorneys to claim that the policies undermine their investors’ expected future profits.
I know that’s a mouthful, so here’s another: Corporations are essentially taking advantage of loopholes in these trade agreements – and coming up with novel new interpretations of them – to exploit other countries’ patent laws and extract money by claiming potential future losses. Eli Lilly is demanding $100 million in compensation from Canadian taxpayers. Now: Why do we care about our neighbors in the Great White North?
Because if it can happen to them, it can happen to us – and it is as we speak.
But first of all, you’re probably thinking; “How can a foreign entity like Eli Lilly haul a sovereign government like Canada into a foreign tribunal made up of private-sector 3-snakes (I’m sorry, 3-‘lawyers’) to take taxpayer money over a domestic patent ruling? It’s because NAFTA and other U.S. trade deals secretly developed a complicated and shadowy dispute resolution system. This is a bunch of brand new corporate “privileges” with very private extra-judicial enforcement defined by some very radical features.
Worst of all, cases can be brought demanding taxpayer compensation for policies that they allege as violating “special rights” by free trade agreements. These as you can guess are so vague that they can include just about anything, including the “right” to a regulatory framework that conforms to a corporations “expectations.” With such expansive protections, foreign corporations have launched suits against a wide array of policies. You name it; they’re suing for it.
And here’s the payoff: Literally. When the foreign investor wins a case, the government must hand the corporation an amount of taxpayer money decided by the tribunal as compensation for the offending policy. Remember: The tribunal is made up of three snakes. The snakes saying how many rats the other snakes get. Under U.S. free trade agreements and related deals, private investors have already pocketed over $3 billion in taxpayer money via investor-state cases, while more than $15 billion remains in pending claims. If this trend continues, it will be “Katie, bar the door” in U.S. courts. Multinational corporations will be lining up to wield NAFTA to slap down any ruling or regulation that goes against them, and to drive cases to international tribunals empowered to override our own laws.
Unfortunately, this isn’t just a wild theory. Under a nearly identical trade agreement with Chile, foreigners are arguing that US taxpayers should pay up because we do not have enough economic regulations of the securities industry. Trade agreements were never intended to empower leftists to push for big government. But then again, NAFTA was passed during the Clinton Administration, so why doesn’t this surprise me?
America cannot afford to have multinational organizations trampling over our sovereign laws and rights in pursuit of their own narrow interest. The U.S. government should make its voice heard and reject this highly unorthodox and self-centered effort that could easily rebound against us here in the United States. That’s something all of us – wherever we lie on the ideological spectrum – can agree on.
Cross posted at JoeForAmerica