The weekly newsletter of the Mexico Solidarity Project

Every issue archived online at mexicosolidarityproject.org

January 15, 2025 

Brave New World: Corporate Nationhood

Meizhu Lui, for the editorial team

War is peace. Freedom is slavery. Money is speech. Corporations are persons.

Not just any persons — persons more powerful than nations. As we find out in today’s interview with Manuel Perez-Rocha, single corporations, mostly from the US, can influence the entire economy of another country. Using the rules of free trade agreements, they can force a country to allow them to enter it freely (that’s the “free” in free trade), extract resources like silver or oil, leech off the public infrastructure, pay dirt wages and laugh all the way to the bank.

Resistance is futile. Corporations can sue a country that tries to stop them from damaging its environment or threatening its people’s health. And sue they do. When Mexico moved to regain public control of its energy sector — foreign domination had caused skyrocketing gas prices —11 suits were filed in 2023 alone.

Mexico already owed US $341 million in fines to transnational companies. While the US complains that Mexico has not done enough to stop crime, that $341 million is more than the combined 2024 budget to search for the disappeared, for the Special Prosecutor’s Office to investigate crimes of forced disappearance and to investigate crimes of torture. Thus, the profits of a single corporate “person” trumps the lives of millions of people made of flesh and blood.

What’s to be done? Get rid of the free trade agreement mechanisms that empower corporations to overrule nations. Make it workers who have “freedom”— the same freedoms corporations now enjoy — freedom of movement across borders, freedom to protect their jobs, freedom to enjoy economic security.

Freedom is not slavery. Trade is not free. Corporations are neither people nor nations. Our world is upside down. We must never accept it as normal!

For a deeper dive into current news and analysis in English, check out our media website. And definitely see the new English podcast ¡Soberanía! (Sovereignty) with José Luis Granados Ceja and Kurt Hackbarth.

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ISDS: Trading Away National Sovereignty

Manuel Pérez-Rocha is an Associate Fellow of the Institute for Policy Studies in Washington and an Associate of the Transnational Institute (TNI) in Amsterdam. He is a US and Mexican citizen who has led efforts to promote just and sustainable alternative approaches to trade and investment agreements for more than two decades. He’s a regular contributor for the Mexican newspaper La Jornada.

Is it fair to say that corporations have equal status to nations, according to provisions in most free trade agreements (FTAs) and bilateral investment treaties (BITs)?

Corporations are more powerful than most nations. FTAs and BITs contain supranational Investor-State Dispute Settlement (ISDS) clauses, designed to protect investors from state actions that threaten their profits. A common clause allows corporations to appeal to international arbitration tribunals — usually the World Bank’s International Center for the Settlement of Investment Disputes (ICSID) — to resolve disputes between countries and foreign investors, rather than having the two nations settle the disputes.

The ISDS mechanism is a neo-colonial tool. Foreign investors, mainly transnational companies, can sue a country by alleging that its laws, regulations or legal decisions violate their rights enshrined in trade and investment agreements to freely maximize their profits. Through this process, they extract wealth from poorer countries. Moreover, it means that private companies have the authority to make decisions over issues affecting the sovereignty of other treaty members.

ISDS clauses were included in most trade agreements since the 1990s, but more recently, richer countries have been removing ISDS from agreements among themselves — but not between themselves and poorer countries. For example, in the 2018 USMCA, Canada and the US removed the provision allowing them to sue each other, but not the provision between the US hydrocarbon sector and Mexico — a ticking time bomb for the Morena government.

Must a company lose money before it can sue?

No. With the “Indirect Expropriation” clause, companies can sue for potential loss of “expected profits.” Their common practice is to greatly inflate the amount of expected profits, so that when they win, they get significant awards, even though far less than what they asked for. We call this “extraction casino” because the demand for ridiculously high penalties is like placing a bet.

Mining companies are particularly notorious for this practice. Since it’s impossible to know what minerals and how much of them are in the ground, the estimate is just a guess.

In a recent case, the Florida-based company Odyssey Marine Exploration, a small treasure-hunting firm with no mining experience, filed a suit concerning a concession allowing them to explore mining in the waters off Baja California Sur.

Odyssey Marine Exploration

Local fisher people — joined by environmental groups — objected. SEMARNAT, Mexico’s Secretariat of Environment and Natural Resources, supported the objections and denied Odyssey environmental permits, citing damage to fauna, the seabed and the livelihood of the traditional fishing community.

Odyssey had insufficient money of its own to sue and contracted with a third-party funder, which became another party to the suit. They asked for a whopping $3.5 billion compensation! Odyssey and friend won the case, but Mexico must pay them “only” $37 million.

How do the ISDS suits impact Mexico?

Mexico is the third most sued country in Latin America and the fourth worldwide — 55 claims. And 23 ISDS suits are still pending; 16 were filed during AMLO’s presidency, 11 in 2023. Mexico’s renationalization of the energy sector triggered the suits, with the mining, gas and oil sectors filing the most claims.

Mexico has already paid out $641 million to corporations and funders; most suits were filed under NAFTA, which is responsible for 38 of the 55 claims. Today’s pending cases are asking for a total of $13.6 billion. Even if actual awards are lower, they’ll be a huge drain on Mexico’s economy.

ISDS can potentially bankrupt governments. It also has a “chilling effect” on government regulations. For example, Mexico banned GMO corn for human consumption due to health risks. A relatively small amount of US-imported corn is for food — most US corn is for cattle — but the US sued anyway. Mexico just lost the case in December 2024.

And if you just refuse to pay the fines? Your nation can become a pariah in international financial circles. For example, in 2015, five foreign companies required Argentina to pay around $600 million out of lawsuits that stemmed from Argentina’s measures to alleviate their economic crisis. With its economy struggling, then president Kirshner refused to pay, saying that these companies should first exhaust national legal remedies. The US threatened that if they didn’t pay, they would not get much-needed loans from the IMF and the World Bank and would lose trade preferences. There’s no way out.

AMLO railed against the evils of neoliberalism, and the free trade agreements are a big part of neoliberal economics. But AMLO and now Sheinbaum want these agreements to continue. Why not get rid of them altogether?

The task now is reform. With the deepening climate crisis, public health issues and vulnerable communities needing environmental protections, Mexico can’t afford to provide foreign corporations with investment privileges that weaken its own sovereignty. What must they do?

First, they must audit all the impacts of investment protection treaties and suspend the ISDS lawsuits while doing so. They must exit the World Bank’s ICSID tribunal and instead find national and regional options for resolution of investor-state disputes.

Most importantly — they must not sign new treaties with ISDS provisions! In 2026, the USMCA will be up for renegotiation. Mexico’s friends in the US and Canada who believe that national sovereignty cannot be sacrificed to corporate profit must step up. They must firmly support Mexico in getting rid of this dangerous neoliberal mechanism and work with Canada and other countries to eliminate it from the TPP as well.

Paradigm Shift in Education

Following the Mexican Revolution, in 1921, the Mexican government created the Secretariat of Public Education (Secretaría de Educación Pública or SEP). Since then, Mexico’s education system has been reconceptualized several times regarding its function in Mexican society.

Initially, the goal, in keeping with the project of nation-building, was to offer an education to the greatest number of people possible and to train more specialists. Later, the government also adopted the goal of “socialist education” and aimed to provide free, universal and secular education consistent with its socialist project. In the 1940s, the education system aimed to strengthen a sense of unity and nationalism. In the 1970s, a more scientific vision focused on preparing students for productive work. More women attended universities, although initially mostly in fields considered "suitable for women."

In the 1980s, neoliberalism was introduced to Mexico’s economy, and that changed the aims of education again to fit the new economic model of free trade agreements and globalization. SEP leaders incorporated the language, praxis, and logic of the market into the education system, which promoted competition, individualism and homogenization through standardized testing. The education system forced teachers into productivity schemes with the purpose of achieving measurable goals.

At the same time, millions of people didn’t know how to read or write. They were excluded from the system because of a lack of resources and infrastructure, content in their native languages, or teachers who could address the country’s diversity. Their exclusion deepened stratification and social inequality.

During AMLO’s presidency, the education system was reconceptualized once more. He promoted a new humanistic educational paradigm that respects differences and cultural diversity. The purpose of education became to train critical, analytical and open-minded people able to become agents of change.

This paradigm shift hasn’t been fully consolidated. It’s difficult to reverse years of training in neoliberal values; teaching staff often attack the new vision because of a normal resistance to drastic changes in what and how they teach. A transition plan is still incomplete, and theoretical and methodological gaps remain that make implementation challenging.

Despite all this, the paradigm shift is urgent and necessary. The great challenge we have now is for society and the teaching profession itself to take ownership of this new model and to make it real in every school and community of the country.

The Mexico Solidarity Project brings together activists from various socialist and left organizations and individuals committed to worker and global justice. We see the 2018 election of Andrés Manuel López Obrador as president of Mexico as a watershed moment. AMLO and his progressive Morena party aim to end generations of corruption, impoverishment, and subservience to US interests. Our Project supports not just Morena, but all Mexicans struggling for basic rights, and opposes US efforts to undermine organizing and Mexico’s national sovereignty.

Editorial committee: Meizhu Lui, Bruce Hobson, Agatha Hinman, Victoria Hamlin, Courtney Childs, Pedro Gellert.  To give feedback or get involved yourself, please email us!

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