The Sharing Economy, ISDS and Foreign Trade Agreements in Latin America

This paper studies the huge and unrelenting growth of the sharing economy and how recent foreign trade agreements would ultimately help big corporations in the sector navigate labor legislations and relations in different countries notably in Latin America. Using the ISDS (Investor-to-State Dispute Settlement) clause also called ICS (Investor Court System) in the new generation of Foreign Trade Agreements, we demonstrate that the latest generation of trade agreements like CETA (Comprehensive and Economic Trade Agreement) or NAFTA 2.0 help protect the giant corporations by facilitating their entrance into new markets giving them an indomitable competitive edge over local businesses. Most developing economies, without the means or real choice of refusing these agreements, join and ratify them mainly because they are considered better than nothing. The recognition and approval of ISDS in European FTAs recently by the European Court of Justice, will serve as a precedent and the ISDS clause in CETA would most probably serve as a boilerplate for future free trade agreements. This clause would be imposed basically on countries willing to sign trade agreements with the EU notably Latin American countries. The giant sharing economy corporations such as Uber, Lyft, Blablacar, Didi Chuxing, Airbnb, etc., that refuse to be identified as traditional employers, but rather as online service providers, would make use of this new agreements to further strengthen their positions in markets around the world. These corporations are already present in many developing markets around the world notably in Latin American countries. In most cases, they do not have any local equivalent leading to the disruption of traditional market actors like taxi drivers in the case of Lyft and Uber, and hoteliers in the case of Airbnb. In a globalized economy, regulating these companies is no longer effective on an individual country basis leaving only the option of a unified multilateral approach. However, the language of free trade agreements notably that of the ISDS clause in these agreements would make this unified multilateral approach virtually impossible due to the free trade nature of the agreements. Specifically defining the meaning of employment and curtailing the excesses of the sharing economy becomes imperative going forward for most countries.