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Secret “Free Trade” Negotiations Will Gut Regulations, Further Enrich Multinationals and Big Financial Firms

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It’s a sign of the times that a reputable economist, Dean Baker, can use the word “corruption” in the headline of an article describing two major trade deals under negotiation and no one bats an eye.

By way of background, the Administration is taking the unusual step of trying to negotiate two major trade deals in the same timeframe. Apparently Obama wants to make sure his corporate masters get as many goodies as possible before he leaves office. The Trans-Pacific Partnership and the US-European Union “Free Trade” Agreement are both inaccurately depicted as being helpful to ordinary Americans by virtue of liberalizing trade. Instead, the have perilous little to do with trade. They are both intended to make the world more lucrative for major corporations by weakening regulations and by strengthening intellectual property laws. The TPP has an additional wrinkle of being an “everybody but China” deal, intended to strengthen ties among nations who will then be presumed allies of America in its efforts to contain China. As we indicated via a link to an Asia Times article over the weekend, that’s proving to be a bit fraught as Japan is flexing its muscles militarily and thus less inclined to follow US directives tamely.

One of the most disturbing aspects of both negotiations is that they are being held in secret….secret, that is, if you are anybody other that a big US multinational who has a stake in the outcome.

Baker describes in scathing terms why these types of deals are bad policy:

…these deals are about securing regulatory gains for major corporate interests. In some cases, such as increased patent and copyright protection, these deals are 180 degrees at odds with free trade. They are about increasing protectionist barriers.

All the arguments that trade economists make against tariffs and quotas apply to patent and copyright protection. The main difference is the order of magnitude. Tariffs and quotas might raise the price of various items by 20 or 30 percent. By contrast, patent and copyright protection is likely to raise the price of protected items 2,000 percent or even 20,000 percent above the free market price. Drugs that would sell for a few dollars per prescription in a free market would sell for hundreds or even thousands of dollars when the government gives a drug company a patent monopoly…

The idea is that once a deal is completed there will be enormous political pressure for Congress to approve it no matter what it contains….news outlets like the Washington Post will use both their news and opinion sections to bash members of Congress who oppose a deal. They will be endlessly portrayed as ignorant Neanderthals who do not understand economics.

The reality of course is that it is the “free traders” who either do not understand economics or deliberately choose to ignore it. Many of the provisions that we are likely to see in these deals, like stronger patent protections, will slow growth and cost jobs.

These deals will also lead to more upward redistribution of income. The more money that people in the developing world pay to Pfizer for drugs and Microsoft for software, the less money they will pay for the products that we export, as opposed to “intellectual property rights”….

This is yet another case where the government is working for a tiny elite against the interests of the bulk of the population.

If that isn’t bad enough, there’s another side of these planned pacts that is often simply ignored. These “trade” deals are Trojan horses to erode or eliminate national regulations. Baker anticipates that these deals will include sections that would limit government regulation (including at the state and local level) on fracking and could revive much of the internet surveillance that reared its ugly head in the failed SOPA.

And this sort of erosion of the right to regulate will most assuredly extend to financial services. Dodd Frank? The Brown-Vitter bill that some see as a great new hope for tougher financial regulation? They are already unworkable under existing trade agreements. As Public Citizen noted:

One of the most controversial WTO agreements is the General Agreement on Trade in Services (GATS)…One of the most controversial service sectors covered by the GATS is finance….

Taken as a whole, the WTO’s limits on financial service sector regulation are expansive. These rules not only guarantee foreign financial firms and their products access to U.S. markets, but also include numerous additional rules that limit how our domestic governments may regulate foreign firms operating here:

No new regulation: The United States agreed to a “standstill provision” which requires that we not create new regulations (or reverse liberalization) for the list of financial services bound to comply with WTO rules. Translated out of GATSese, this means that the United States has bound itself not to do what Congress, regulators and scholars deem necessary – create new financial service regulations.

Certain forms of regulation banned outright: The United States agreed that it would not set limits on the size of financial firms, the types of financial service one entity may provide or the types of legal entities through which a financial service may be provided in the broad array of financial services signed up to the WTO. These WTO rules conflict with countries’ efforts to put size limitations on banks (so that they do not become “too big too fail”) and to “firewall” different financial services (a policy tool used to limit the spread of risk across sectors).

Treating foreign and domestic firms alike is not sufficient: The GATS Market Access limits on U.S. domestic regulation apply in absolute terms. In other words, even if a policy applies to domestic and foreign firms alike, if it goes beyond what WTO rules permit, it is forbidden. And, forms of regulation not outright banned by these rules must not inadvertently “modify the conditions of competition in favor of services or service suppliers” of the United States, even if they apply identically to foreign and domestic firms. Might aspects of the Wall Street bailout eventually “change the conditions of competition” in favor of U.S. firms? Other WTO members have begun reviewing just this question.

No bans on new financial service “products”: The United States is also required to allow all foreign financial firms operating here “to offer in its territory any new financial service,” a conflict with proposals to limit various risky investment instruments, such as types of derivatives.

Other non-discriminatory domestic regulations also subject to review: GATS subjects policies of general application that may affect service sector firms to review, with WTO tribunals empowered to determine if they are “reasonable”, whether they “could not reasonably have been expected” and whether licensing and qualification requirements and technical standards limit foreign firms’ access.

And the TPP would tilt the table even further in favor of financial firms. Public Citizen again:

The draft text of the Trans-Pacific Partnership (TPP), a NAFTA-style FTA under negotiation between the United States and 10 Pacific Rim countries, contains the same limits on financial regulation as the WTO, and more. In addition, these rules would be privately enforceable by foreign financial firms that could “sue” the U.S. government in foreign tribunals, which would be empowered to order payment of unlimted sums of U.S. taxpayer money if they saw our laws as undermining such firms’ “expected profits.” Also, even as the International Monetary Fund has officially shifted from opposition to qualified endorsement of capital controls, which are used to avoid destabilizing floods of speculative money into and out of countries, the TPP would ban the use of these important regulatory tools. Despite years of pressure from former House Financial Services Committee Chair Rep. Barney Frank to permit capital controls, the Obama administration is the strongest promoter of this ban in the TPP.

When we have to look to Barney Frank as a lonely defender of the public’s interest, you know you’ve gone past an event horizon. The very fact that trade negotiations, which are normally so sophorific that they remain out of the public’s mind, are being held in secret says that what is afoot is most decidedly not in the average person’s best interest. At a minimum, voters and the press need to demand that these talks be conducted in the open to prevent Congress from being presented with a fait accompli.

The one good bit of news is Obama is looking more and more like a lame duck every day and his overplaying his hand on these bills could well backfire. But the stakes are sufficiently high that relying on nature to take its course is risky, particularly since corporate lobbying dollars will buy a lot of Congressional complacency. So make noise early and often about this outrage, particularly with local media outlets.

Update: A couple of people have tried taking issue with the notion that the drafting of the TPP is taking place in secret. This isn’t an exaggeration, but some clarification is in order.

Congressional staffers have confirmed that the text of the TPP draft is classified. That means that only people with security clearances, which for practical matters means Congressmen and certain staffers on key committees (House Ways and Means and the Senate Finance Committee) in theory have access. That is already a monster impediment. Congressmen almost never have the time (even where they have the ability) to read long agreements in full and parse how key sections work (which often mean going back to definitions and in some cases, existing law). So keeping most staffers and third parties with expertise away assures that (until the last minute) the discussion and “clarifications” of the provisions under negotiation will come only from parties that are already in the tank.

But practice is even worse than theory. The full draft text is being withheld. And as anyone who has been involved in legal-related drafting knows, the actual language is critical. General terms and concepts that sound innocuous can serve as Trojan horses for all sorts of clever “gotcha” provisions.

From Truthout (hat tip SN):

Under federal law, members of the House Ways and Means and the Senate Finance Committees are designated official advisers to the USTR. In addition to every Representative and Senator, those panels’ staffers – being on “committees of jurisdiction” – are made privy to the American delegation’s proposals.

Not a single person in Congress, however – or in any legislature of any country party to the deal – is allowed to even once-over the latest version of the actual draft agreement. In an email to Truthout, USTR spokesperson Carol Guthrie confirmed that senators and Congresspeople on committees of jurisdiction, along with their staffers, are only allowed to see the USTR proposals – not the working agreement. She added that “others at the discretion of the committees’ chair and ranking member” are given access to USTR proposals.

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63 comments

  1. YankeeFrank

    The mindset that fights for the right to sue governments for “expected profits” if a business opportunity is “lost” due to government regulations is truly twisted. Essentially, it establishes a “right to profit”. Of course, there is no right to profit that disregards the norms and limitations a society establishes for itself and its environs, not in any moral or ethical sense. But there’s the rub. The right to profit, it is now (semi-secretly) claimed, supersedes moral, ethical, environmental, human or cultural considerations. Its testimony to how much government no longer exists to express the will of the people. Government is handmaiden to international corporations, and is required only to grease the channels of their commerce, and can be fined when it doesn’t perform its job adequately. That is it. That’s what government is to the elite criminal class.

    1. Ben Johannson

      Not just right to profit, right to expectation of profit. So any time you have a bad quarter (or can juggle the books to make it look like a loss) you pull the cord to start up your RoboLawyer and have them figure out how to blame the public for the mess. When you win you recieve the proceeds of the judgement and the rule gets tossed down the well. It’s legislation by corporate lawsuit.

      This President makes George Bush look benign.

      1. Massinissa

        I would feel so terrible if I voted Obama right now. I dont know if I would be able to live with myself, literally. Its very helpful to my self-esteem and mental health that I voted Green Party.

        That one guy at the black agenda report (cant remember his name) was right. Obama really is the ‘more effective evil’.

        And even if Romney WAS a tiny eensy weensy bit worse, I cant believe Romney would be, say, for an arbitrary number, any more than 5% worse. Its not like it would have been a sea change. And im not even sure it would be 5%. As far as I am concerned there is no functional difference between the two.

        Margaret Thatcher’s TINA was right, at least when it comes to politicians. There Is No Alternative to choosing neoliberal candidates, because they all are neoliberal.

        1. Gerard Pierce

          There was a difference between electing Obama and electing Romney: The Republicans automatically oppose any thing Obama proposes even if it was a former Republican policty. If Romney had been elected, the only opposition would have been from the Democratic Party. BwaHaHaHa…

          1. Massinissa

            Its a sad day when we need to rely on people like Mitch McConnel and John Boehner to protect things like social security…

            Its like wolves defending the chicken coop from… More wolves.

            This cant end well.

        2. Chauncey Gardiner

          Thanks, Massinissa. I too voted “Green” in the last election.

          The secrecy in which the TransPacific Partnership negotiations have been conducted, and the conversation here today, remind me of the words of a Soviet dissident, Vladimir Blukovsky:

          “Justice is always naive and self-confident; believing that it will immediately win once recognized. That is the reason why the forces of Justice are so poorly organized.

          On the other hand, the Evil is cynic, sly and fantastically organized. It never ever has the illusion of the ability to stand on its own feet and to win in a fair competition. That is why it is ready to use any kind of means without hesitation. And of course it does – under the banners of the most noble ideas.”

          Oh, regarding the performance of non-legacy political parties and political legitimacy, I wonder?… See: http://www.blackboxvoting.org

        3. hyperpolarizer

          I didn’t vote for president in 2012.

          For the first time since 1972, when I voted for McGovern.

          I barely voted for Obama in 2008, and then only because of Sarah Palin.

    2. Massinissa

      When you consider that, when looked from one perspective, profit signifies an imbalance in a trade (If something was sold for exactly its value there would be no profit), that companies have a ‘right to profit’ is rather even more disturbing.

      Why do companies have the ‘right’ to having a trade balanced in their favour against the people?

    3. nonclassical

      ..for those who were paying attention, that is exactly what CAFTA did-and caused in the streets protest by millions…which americans largely ignored..(it’s not happening here-why worry?)

      ..Washington State’s “Puget Sound Electricity” (largely mountain-dam controlled-hydro-electric has already been sold off to Australian-Canadian consortium, which is indicative of what is to come.

      This played so well in South Americq, with regard to water resource, people began to catch rain water…and were then attacked by troops for so doing. Needless to say, this led to getting rid of government…huge backlash.

      of course it could never happen in “free” AmeriKa…

    4. john

      Just a minor point of dissent, it’s the CRIMINAL ELITE, not the elite criminal class.

      Frank Luntz has taught us a thing or two. Thanks Frank.

  2. from Mexico

    Neoliberalism is like the Lernaean Hydra. Chop off one head and it just grows two new ones.

    One wonders, however, if the IMF head has really been chopped off.

    After the World Bank/IMF 2013 Spring Meetings held April 19-21, the Argentine economic minister, Hernán Lorenzino, came away saying that “today the IMF has begun to understand that an economy is not possible without employment and public investment.” “However,” he cautioned, “one still observes in its technocrats the slant towards the Washington Consensus.”

    “A greater commitment to global financial reform is needed,” he went on to explain. “The slight recovery in the United States and Japan was not accompanied by financial sector reforms. The global financial architechture is of great concern to all countries and this was reflected in the meeting’s final document.” He then goes on to warn that “without regulation the logic of financial accumulation will not permit an exit from a speculative bubble.”

    “In this sense,” Lorenzino assured, “in Argentina we have taken steps so that international situation won’t affect us as gravely as it would have in the past.”

    http://www.americaeconomia.com/economia-mercados/finanzas/ministro-de-economia-argentino-destaca-el-rol-de-los-paises-emergentes

    In Columbia I read a newspaper (but now can’t find a link) that reported that the IMF and World Bank at the meeting were asking for South American countries to bear a greater share of the cost of bailing out Europe. Columbia wanted concessions, however. Unless the United States is willing to cede its monopoly control of the IMF and World Bank and share more decision making power, Columbia was unwilling to up its ante.

    1. bhikshuni

      Similarly, according to my recollection the previous rounds of GATT stalled in SA with BRICS countries.

      As SA moves on from neo-lib modus operandi, these latest TPP and US-UE FTA shunts the SA economies into a subculture.

      Could China (and Japan) jujitsu this move, letting the malleus maleficent fall on the toes of the northern giants?

      1. from Mexico

        I don’t see any rush, Venezuela notwithstanding, on the part of these countries to throw themselves into the arms of China. It seems to me what they’re doing is trying to play the two great empires, China and the US, off against each other in order to gain a little bit more room for autonomous and sovereign maneuver. The stakes are high for both China and the US, for these countries of the Southern Cone of South America are fabulously rich in mineral wealth.

        The reaction of the United States, however, has been beligerent and violent. It engineered the overthrow of the government in Paraguay last summer and is gathering forces, both covert and not so covert, there under the guise of “the War on Drugs.” Likewise it is increasing its military presence in Concón, Valparaíso, Chile and in Columbia adjacent to the Amazon and Orinoco basins (home to the the largest proved undeveloped petroleum reserves in the world), under Plan Columbia, or the Southern Command. Evan Ellis, a Pentagon spokesman, warned of Venezuela’s close relationship with China: “In the era of globalization, to have Chinese banking advisors is the equivalent of having Soviet military advisors in Cuba and Nicaragua during the Cold War.” http://www.jornada.unam.mx/2012/07/13/opinion/027a2pol

        I suppose that if the United States keeps up this beligerence, it could drive these countries into the arms of China. One should never, after all, underestimate the hubris, arrogance and stupidity of the Obama administration.

        1. Massinissa

          The overthrow in Paraguay, did it work?

          Damnit, I wish this whole business of overthrowing south american governments (Salvador Allende of Chile, Jacobo Arbenz of Guatemala, and Joao Guilart of Brazil, to name a few off the top of my head…) was a relic of the ‘cold war’, but America just doesnt effing stop doing it, and it effing pisses me off…

          And we pretty much all know America had to have given Capriles SOME sort of support in the recent venezuelan election. If nothing else, America still hasnt recognized Maduro’s legitimacy, unless that happened without me noticing. Even if America has, it took them too damn long.

          My country lost all morality years ago. If we ever had any at all. The saddest thing about America, is its difficult to pinpoint the exact moment this country of mine became an empire.

        2. OpenThePodBayDoorHAL

          Obomba tried his damndest to buy the election in Venezuela and may still get what he wants there.
          And this TPP has some very insidious features embedded: like controlling what a nation can pay as minimum wage; what kinds of benefits schemes are “legal”; and requiring all internet traffic to be routed through centralized servers that check for “unauthorized” content. All particularly hateful since I abandoned the US when Bush was reappointed; and now they’re going to screw up my new country Australia.
          Sieg Heil Obomba! Or should I say “Forward Soviet!”

    2. nonclassical

      ..as we are aware, other countries are at this moment creating their own response-version of IMF-World Bank…precisely because of…

  3. Claudius

    Look, I’m all for a rational understanding of the Trans-Pacific Partnership (TPP) negotiations and what it means to the US (of anyone else for that matter), but this post (and a previous post) has distorted ideas, incoherent facts and “misstatements” As I have said previously, “I don’t doubt the integrity and passion of opponents to the US ratification of the TPP. But, integrity and passion without objectivity is just a point of view. Objectively, there is more (and less) to the narrative …”

    The TPP is not a creation of the US government; it didn’t originate with the US’s corporate body in secret. The TPP trade negotiations grew out of an earlier preferential trade agreement (PTA) known as the ‘Pacific 4’ or ‘P4’ (Australia, Singapore, Chile and New Zealand – the United States held “observer” status on). At several Asia Pacific Economic Cooperation (APEC) meetings in the 1990s and held discussions to explore mechanisms for creating a new trade agreement among the ‘P4’ countries; though it amounted to little (due to Australia’s ambivalence) but resulted in the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP – the ‘P4’); which was announced at the APEC Trade Ministers meeting in June 2005.

    What caused the US to suddenly stop observing and start participating was that TPSEP was being advanced in response to the difficulties of concluding the Doha round negotiations in the WTO. Notable for the US was that the twenty chapters of TPSEP agreement had two memoranda of understanding (MOUs – later ‘Chapters’) attached: ‘Environmental’ and ‘Labor’ cooperation (largely, seen as positive by the TPSEP members, businesses, trade unions and workers councils throughout Asia Pacific).

    Although the MOUs were announced as separate documents; any member wanting to exit any part of the existing chapters automatically exited all chapters – the whole TPSEP agreement. In short, TPSEP members could not sign up to all chapters of the agreement believing that they could later abrogate say, Labor Agreements by driving down wages “anti-competitively” (in the same way Germany had) or existing labor laws and protections out of existence. This worried the US. Who then US expressed interest in membership and immediately made request to hold off on ratification of the TPSEP (The agreements came into effect in 2006) the year after the US request for a delay.

    The other twist (which the US realized too late) was that TPSEP was negotiated from its inception with an ‘accession clause’, which permitted other nations an opportunity to join TPSEP providing, upon entry, they agreed with existing chapters (including the Environmental and Labor MOU’s). This clause was viewed, as essential, as a means of expediently and progressively reaching a larger trade agreement with a larger coalition of states (Singapore had learned a hard lesson in trying to establish free trade agreement with the ten members Association of Southeast Asian Nations (ASEAN) and the 21-member APEC).

    What pleased the original P4 members (but not the US observer) was that TPSEP was regarded as being of a high standard; it openly highlighted a ‘negative list’ – broadly viewed as more trade ‘liberalizing’ (i.e. disadvantageous compared to a nation’s existing PTAs) and a ‘Positive List’ (advantages). The positive list included additional chapters such as Technical Barriers to Trade, Competition Policy, Government Procurement, Intellectual Property Rights, Dispute Settlement, and Importantly (despite its perfunctory title) Sanitary and Phyto-sanitary Standards (SPS – setting standards for GMO, Food and bio-products above those of the US, for example).

    So the US is not even party to TPSEP. It’s a treaty that may expand further to include a large proportion of APEC members with Singapore (HK-SAR (China)) at the Financial center; and the qualifying terms (arguably negative terms, from a US perspective) of their future participation had already been set down, and continue to be promulgated, with the US absent.

    Still, it took three years (September 2008) before George W. Bush’s Office of the U.S. Trade Representative (USTR) Susan Schwab announced that the United States would join the TPSEP agreement. Acknowledging, their concerns, perhaps, Schwab says: ‘This high-standard regional agreement will enhance the competitiveness of the countries that are part of it and help promote and facilitate trade and investment among them, increasing their economic growth and development.’ And, (arrogantly?): ‘Ultimately, the objective is to expand the membership of the Agreement to other nations that share our vision of free and fair trade. Australia and Peru joined, Vietnam asked for observer status, Japan ‘mulled and in November 2009, the US officially became participant in the talks. TPSEP transmuted into the Trans-Pacific Partnership (TPP) talks. The first round of TPP negotiations was held in Melbourne in March 2010, Vietnam participated as an observer, and in October 2010, Malaysia officially joined to become the ninth TPP member.

    The February 2011 meeting in Chile the United States, finally joined in negotiations proper (on two TPSEP “deficient” chapters) financial services and investment (acting as a ‘counter-party’ peer to Singapore to better progress ratification).

    Notably, is that for the first time the scheduled of official meetings, topic, speakers and participants were published, publicly; each member engage with various domestic stakeholders. These range from encouraging public submissions and comments for officials to small, private sessions arranged by industry or by government. Even the USTR reached out to all fifty states (http://www.ustr.gov/about-us/press-office/blog/2010/june/us-stakeholders. Similar stakeholder meetings, in all member countries have occurred, subsequently, with each negotiating round. And, while it’s always the case that any negotiation has as its premise a confidential undertone, certainly while negotiating are on-going; but, this type of outreach to various stakeholders is hardly the “…negotiated pretty much in secret except for corporate advisors… and MNC lackeys” or captains of industry hidden away in smoke filled rooms harmonized by incantations of the illuminate.

    There’s too much one can say about the general process and openness of the TPP negotiations compared with, say NAFTA. But, in short: if there has been one overarching criticism it is of the US‘s “request” to transpose its current PTA (existing, narrow, trade agreements agreed through bilateral negotiations with member countries) onto the TPP (the basis of which was the original TPSEP and its accession agreement). The US is fighting a rear-guard action on this and is up against 9 nations who see the US as attempting undermine much of what they have achieved once Japan is fully engaged (reinforcing the accession agreement) it will become an even more difficult task for US negotiators.

    Typically, in bilateral negotiations, the US being the most powerful country in the talks with a size that dominates can, typically, get what it wants. But dominating the TPP negotiations has proven (and will prove to be) more difficult as the existing members remain united in opposition to US PTA transpositions.

    Perhaps, because of the TPP’s origins, there are a lot of good (and not so good) initiatives in there not usually found in trade agreements undertaken from a hegemonic position That, for many ordinary US citizens might be a good thing (or least a better thing) than is generally the case, whether one is an advocate for the TPP or against it.

    The key to any understanding the TPP it is objective analysis, factual appreciation of events and not being wedded to a schism – NAFTA is a different agreement with different origins and a different degree of openness. I would agree that NAFTA’s a sore lesson should be learned and experience brought to bear, but it shouldn’t be conflagrated with TPP for the wrong reasons.

    1. Andrew Watts

      This raises quite a few fair points, but it neglects to mention the fact that the United States didn’t join the TPSEP agreement until well after it was rejected by the Shanghai Cooperation Organisation when it filed for observer status. This may have changed the nature or even the original intent of what would become the TPP treaty.

      In any case it’s a bit premature to assume that either of these treaties are a done deal. The European Union is hardly on the same page on policy issues. While the TPP treaty negotiations suffer from the bitter feuding between Japan and South Korea.

      1. Claudius

        I’m not aware that the SCO (China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) has ever been part of or invited to be part of the TPSEP or TPP.
        Canada, yes. They declined (initially). Do you have a reference?

        1. Andrew Watts

          My bad. I meant that the United States failed in it’s efforts to join the Shanghai Cooperation Organisation. It only later became apart of the TPSEP/TPP negotiations after it’s bid for observer status was rejected from the SCO.

          1. Claudius

            Right :-).
            Also, the US was heavily engaged at that time in drafting NAFT, and FTAs/PTAs (Peru and Chile I believe (?)), thinking that these trade agreements could be used as templates elsewhere.

        2. nonclassical

          …no more disinformation on “positives” of Trans-Pacific Partnership. Is THIS true, or not:

          “The TPP has been cleverly misbranded as a trade agreement by its corporate boosters. As a result, since George W. Bush initiated negotiations in 2008, it has cruised along under the radar. The Obama administration initially paused the talks, ostensibly to develop a new approach compatible with candidate Obama’s pledges to replace the old NAFTA-based trade model. But by late 2009, talks restarted just where Bush had left off.

          Since then, US negotiators have proposed new rights for Big Pharma and pushed into the text aspects of the Stop Online Piracy Act, which would limit Internet freedom, despite the derailing of SOPA in Congress earlier this year thanks to public activism. In June a text of the TPP investment chapter was leaked, revealing that US negotiators are even pushing to expand NAFTA’s notorious corporate tribunals, which have been used to attack domestic public interest laws.

          Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny. Indeed, only two of the twenty-six chapters of this corporate Trojan horse cover traditional trade matters. The rest embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.

          Countries would be obliged to conform all their domestic laws and regulations to the TPP’s rules—in effect, a corporate coup d’état. The proposed pact would limit even how governments can spend their tax dollars. Buy America and other Buy Local procurement preferences that invest in the US economy would be banned, and “sweat-free,” human rights or environmental conditions on government contracts could be challenged. If the TPP comes to fruition, its retrograde rules could be altered only if all countries agreed, regardless of domestic election outcomes or changes in public opinion. And unlike much domestic legislation, the TPP would have no expiration date.

          Failure to conform domestic laws to the rules would subject countries to lawsuits before TPP tribunals empowered to authorize trade sanctions against member countries. The leaked investment chapter also shows that the TPP would expand the parallel legal system included in NAFTA. Called Investor-State Dispute Resolution, it empowers corporations to sue governments—outside their domestic court systems—over any action the corporations believe undermines their expected future profits or rights under the pact. Three-person international tribunals of attorneys from the private sector would hear these cases. The lawyers rotate between serving as “judges”—empowered to order governments to pay corporations unlimited amounts in fines—and representing the corporations that use this system to raid government treasuries. The NAFTA version of this scheme has forced governments to pay more than $350 million to corporations after suits against toxic bans, land-use policies, forestry rules and more.”

          http://www.thenation.com/article/168627/nafta-steroids

    2. Casteelk

      I think you are missing the point. Doesn’t matter what “good” intentions this thing started. Since rule of law is completely absent, whatever it was intended to be, is nothing more than corporations setting their rules in favor of themselves, hell to anyone else. Words like integrity, morality, honesty, goodwill…those words will soon be removed from the English language.

      1. Claudius

        The point is that the “good intention” (in as much as it exists juxtaposition to the US’s FTAs/PTAs ) is inherent within the accession agreement – the very basis of the TPSEP/TPP.

        There are no “laws” (if I understand your meaning correctly) this is a treaty.

    3. Susan the other

      Why is it so important to deregulate even further financial services in order to make them internationally competitive? This means that a computer data base like MERS can trash state law and ignore county land title records not just in one country, but across the entire TPP. And any county that doesn’t like it and tries to demand proper recordation and fees and taxes, will simply be fined. This TPP financial deregulation on steroids is the beginning of the end of nation states.

    4. Lune

      Thanks for the informative post. It adds some historical context to the article. That said, while the article may be considered somewhat hyperventilating, are there any points it makes that are actually wrong about the TPP? Are the Public Citizen’s notes about the restrictions on regulation and the ability to “sue” for lost profits in a foreign court incorrect? I ask sincerely since I know very little about the trade pact.

      I’m also curious to learn more about the environmental and labor regulations that are included. But that said, IMHO, forgoing the right to ever alter regulations in the future (except downward) in exchange for a few labor protections that could easily be obtained if we ever get a real labor movement back, is a very bad deal (assuming this is the overall shape of the treaty), one that I personally would never want my government to sign.

      1. Claudius

        Lune,

        It will only be correct if the US is successful in transposing the existing FTAs (and CAFTA and NAFTA) agreements into the TPP. So, one has to hope they fail in doing so – and it looks like it at the moment.

        This nasty US investor-favorable definition of the concept of “fair and equitable treatment” under the minimum standard of treatment towards investors is pernicious and exploitative (see RDC v. Guatemala) in its interpretation.

        Worse, under the FTAs terms disputes are specifically excluded from national judicial oversight, instead being referred to the International Center for the Settlement of Investment Disputes (ICSID); court of arbitration (It’s, essentially, a court of US corporate lawyers seconded to the role of judge periodically)

        But, note it is the US that has been, almost exclusively, suing (and winning) other nations under the egregious terms of the these FTAs, alleging breaches of foreign investment protections – specifically the clause (“minimum standard of treatment” ) which requires each CAFTA’s state party to provide, among other things, “fair and equitable treatment” to investors, where disputes are taken through .

        What worries corporatist and MNCs is that if the TPP is signed without this provision being transposed, they will lose a major lever in extracting wealth and exploiting FTA, CAFTA and NAFA nations. Additionally, they might worry that signatories to existing FTAs will jump ship.

        It’s one reason why I hope for the best of the TPP and not the worse.

    5. Yves Smith Post author

      Claudius,

      I’ve met with Congressional staffers as well as members of public interest groups, and they disagree 100% with this part of your narrative:

      Notably, is that for the first time the scheduled of official meetings, topic, speakers and participants were published, publicly; each member engage with various domestic stakeholders. These range from encouraging public submissions and comments for officials to small, private sessions arranged by industry or by government. Even the USTR reached out to all fifty states (http://www.ustr.gov/about-us/press-office/blog/2010/june/us-stakeholders. Similar stakeholder meetings, in all member countries have occurred, subsequently, with each negotiating round. And, while it’s always the case that any negotiation has as its premise a confidential undertone, certainly while negotiating are on-going; but, this type of outreach to various stakeholders is hardly the “…negotiated pretty much in secret except for corporate advisors… and MNC lackeys” or captains of industry hidden away in smoke filled rooms harmonized by incantations of the illuminate.

      I’ve had it confirmed that the text is CLASSIFIED. That means most staffers can’t read it and Congressmen can’t get expert opinion (the overwhelming majority of Congressmen lack the time and expertise to parse trade agreements, particularly given their typical considerable length). They can’t get readings and advice on it except from people who are in the tank, such as the USTR. Why the hell is a draft trade agreement CLASSIFIED? Yet as Baker and others have indicated, representatives of large interested corporations are being allowed to see and comment on draft text.

      Groups that represent true broad public interests are NOT being allowed to see text from or influence the TPP. The claim that “stakeholders” are being consulted, except for at best narrow tame Astroturf-ish groups, is a crock.

      More detail via reader SN:

      http://truth-out.org/news/item/15142-corporate-backed-trans-pacific-partnership-shrouded-in-secrecy

      Under federal law, members of the House Ways and Means and the Senate Finance Committees are designated official advisers to the USTR. In addition to every Representative and Senator, those panels’ staffers – being on “committees of jurisdiction” – are made privy to the American delegation’s proposals.

      Not a single person in Congress, however – or in any legislature of any country party to the deal – is allowed to even once-over the latest version of the actual draft agreement. In an email to Truthout, USTR spokesperson Carol Guthrie confirmed that senators and Congresspeople on committees of jurisdiction, along with their staffers, are only allowed to see the USTR proposals – not the working agreement. She added that “others at the discretion of the committees’ chair and ranking member” are given access to USTR proposals.

      So it looks like you’ve provided a long, historical, and largely irrelevant (to the points made in this post) narrative to establish credibility and then used THAT to present a claim about “openness,” which at least as far as the process in the US is concerned, is simply untrue.

      1. Claudius

        Yves,
        you need to read the comment again. And, not conflagrate my attempt at balance for being an apologist (whatever that might mean at this stage) or me being supporter of the TPP Agreement. I just like facts.

        My comment does not exclusive address the degree of openness of the TPP negotiations. I attempt to point out that contrary to many who equate the TPP with NAFTA, the genesis of TPP is not from the US and certainly not any kind of secret or organized cabal of Bankers or industrialists as many US centric commentators (such as the article’s author) might believe/promote.

        While the US has a history of promoting big business and its vested interests, typically on its own hegemonic terms, the US came very late to the drafting of the TPP agreement and was included in discussion only by accession. And, by being included in this way, is unable to simply impose its demands across each chapter – that there is a genuine dialogue occurring, and the US is getting pushback on its attempts to impose the worse parts of existing PTS/FTAs. And that’s, arguably, a good thing. A very god thing.

        And as for the degree of openness regarding the TPP negotiations I say:

        “Notably, .. for the first time the scheduled of official meetings, topic, speakers and participants were published, publicly; each member engage with various domestic stakeholders. These range from encouraging public submissions and comments for officials to small, private sessions arranged by industry or by government”.

        and,

        “Even the USTR reached out to all fifty states (http://www.ustr.gov/about-us/press-office/blog/2010/june/us-stakeholders. Similar stakeholder meetings, in all member countries have occurred, subsequently, with each negotiating round……”

        To which you responded:

        ‘…The claim that “stakeholders” are being consulted, except for at best narrow tame Astroturf-ish groups, is a crock.

        Yves, you seem to be hyperventilating. I do not claim “the” stakeholders or any particular stakeholder has or is being consulted (I certainly have no claim to who these might be). But in the context of my comment (ref ://www.ustr.gov/about-us/press-office/blog/2010/june/us-stakeholders) it’s obvious I’m using stakeholder in the same sense as the USTR communiqué (go to the link and review it)

        You continue, breathlessly:

        ‘In an email to Truthout, USTR spokesperson Carol Guthrie confirmed that senators and Congress people on committees of jurisdiction, along with their staffers, are only allowed to see the USTR proposals – not the working agreement. She added that “others at the discretion of the committees’ chair and ranking member” are given access to USTR proposals.’

        and,

        “I’ve had it confirmed that the text is “CLASSIFIED.”

        You had to seek confirmation of that? Well, whoopie aren’t you the sleuth?

        Yves, what the hell do you expect of ongoing international trade agreements, a free for all? Contemporaneous transcripts? As I say, there is a confidentiality to negotiating (“classified”), it’s impossible to negotiate in good faith without it; especially given that these negotiations are ‘political’ in nature and involve politics and politicians of other nations. And, being mere politicians, its not unsurprising to me that Subject Matter Experts (SMEs), individually or collectively are brought in on a ‘as needed’ basis, not just by the US, but by counterpoints in other nations. This is not all about the US; there are other nation’s views and prevailing opinions involved.

        Look, I certainly can’t answer for (or apologize for) the USTR’s view on how openly it wishes to divulge ongoing draft trade negotiation with Congress, the House and the public or at what point it should reveal details to third parties and ‘stakeholders’.

        But, heck, there’s even a Federal Register specifically seeking comments and participation: https://www.federalregister.gov/articles/2013/04/01/2013-07430/request-for-comments-concerning-proposed-transatlantic-trade-and-investment-agreement (as there is for all other participating countries). Even the respective TPP chapters can be found online: http://www.sice.oas.org/Trade/CHL_Asia_e/TransPacific_ind_e.asp (Perhaps US Congressmen and their staffer need internet access). Where was that for NAFTA?

        My main thrust of my comment is that this is not NAFTA (where there was nothing, nada!). However, there is information out there not only in the US but in all participating countries.

        As the TPP moves through drafting and iterative round of discussion, is it likely to be everything that everyone will wants? Unlikely. Could communications be better? No doubt. Nevertheless, the consequence and art of negotiation is: Discretion, diplomacy, compromise and consensus on an agreement. At what point a draft agreement is made public is a question, not a secret.

        1. Goat_farmers_of_the_CIA

          “Look, I certainly can’t answer for (or apologize for) the USTR’s view on how openly it wishes to divulge ongoing draft trade negotiation with Congress, the House and the public or at what point it should reveal details to third parties and ‘stakeholders’.”

          Nobody asked you to defend the USTR, Claudius. If there’s a blog comments hall of shame out there for pathetic attempts to defend the indefensible through obfuscation and intellectual attrition, your two posts certainly belong among the very top of the class.

          1. Claudius

            GFOTCIA
            Not that I wish to defend it the TPP agreement , per se. But, in what way is the TPP agreement, presently, indefensible?

            Or do you mean the lack of openness is indefensible?

            In context ,what do you mean by …”intellectual attrition”.

          2. Yves Smith Post author

            Claudius,

            Readers can see through you, You try undermining the post by going through a turgid and irrelevant account of past trade agreements, and then try insinuating that that the process is open. When I call you out on that, you then get snide.

            And then you try having it both ways, pretending you aren’t defending the TPP but asking readers to say what’s wrong with it when the substantive points in the post stand unrebutted.

            And neoclassical provides more detail from the Nation:

            http://www.nakedcapitalism.com/2013/05/secret-free-trade-negotiations-will-gut-regulations-further-enrich-multinationals-and-big-financial-firms.html#comment-1233943

          3. Claudius

            See through me? To my hidden motive of not being simplistically guided by partisan narrative? Clearly, you haven’t read my comments regarding the real danger being the US transposing its FTAs on to the TPP.

            As always Yves, you get the last word (as you should). But, if you really want to discuss the Nation’s article, post it on NC and open it for all to comment in detail. Then, we can avoid the history and focus on the “real” narrative.

        2. Lambert Strether

          In general, I find “Please read….” a far more useful approach than “You need to.” The first is a request, the second is an assignment. I don’t know about you, but I don’t do assignments (unless somebody wants to write me a check, of course).

        3. nonclassical

          ..really, Claudius-we DON’T “expect” THIS:

          “Indeed, only two of the twenty-six chapters of this corporate Trojan horse cover traditional trade matters. The rest embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.

          Countries would be obliged to conform all their domestic laws and regulations to the TPP’s rules—in effect, a corporate coup d’état. The proposed pact would limit even how governments can spend their tax dollars. Buy America and other Buy Local procurement preferences that invest in the US economy would be banned, and “sweat-free,” human rights or environmental conditions on government contracts could be challenged. If the TPP comes to fruition, its retrograde rules could be altered only if all countries agreed, regardless of domestic election outcomes or changes in public opinion. And unlike much domestic legislation, the TPP would have no expiration date.

          Failure to conform domestic laws to the rules would subject countries to lawsuits before TPP tribunals empowered to authorize trade sanctions against member countries. The leaked investment chapter also shows that the TPP would expand the parallel legal system included in NAFTA. Called Investor-State Dispute Resolution, it empowers corporations to sue governments—outside their domestic court systems—over any action the corporations believe undermines their expected future profits or rights under the pact. Three-person international tribunals of attorneys from the private sector would hear these cases. The lawyers rotate between serving as “judges”—empowered to order governments to pay corporations unlimited amounts in fines—and representing the corporations that use this system to raid government treasuries. The NAFTA version of this scheme has forced governments to pay more than $350 million to corporations after suits against toxic bans, land-use policies, forestry rules and more.”

          http://www.thenation.com/article/168627/nafta-steroids

        4. Chris Engel

          I’m frankly exhausted by your comments.

          We don’t know enough about the TPP (the link you provided doesn’t provide chapters of the TPP that are relevant in the latest round of negotiations, its just an old reference).

          You go through so many pointless details only to try and cast doubt on the rational cynicism people have with yet another trade agreement, after NAFTA bit us in the ass and we have the data to show it.

          There’s not sufficient information on the agreement’s specifics for anyone to really take strong specific positions, but there’s indications, as Baker and others have pointed out, that it’s like NAFTA, which gives people a cause for concern.

          But you’ve made such a voluminous and impassioned set of comments to…achieve what? I don’t see any reason to be less cynical about the TPP or the new European-American trade agreement, certainly not after your comments.

          1. Claudius

            I always read your comments with great interest. So thanks for commenting.
            Impassioned, yes.. a personal fault.

            I certainly wouldn’t try to persuade you to be less cynical about the TPP.

  4. JCC

    Article 6, Paragraph 2 of the U.S. Constitution:

    This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

    It’s a great way to subvert democracy.

    1. TK421

      If only our nation’s chief law enforcement officer could be bothered to lift a finger regarding the treaties against torture we’ve signed.

    1. Claudius

      For why? If anything it was a Republican administration (under Bush) that ignored, delayed and obfuscated the TPSEP/TPP until after (2008) it was first ratified (2006), having already baked in much of what the republicans would hate hate about thii agreement – to wit,”their” administration wasn’t leading the charge on this agreement on behalf of corporate America.

      1. Massinissa

        Claud, TK is being sarcastic. As a joke, whenever Obama does something, TK parodies the liberals always complaining that Obama is ‘forced’ to by saying something like ‘Damn Republicans.

        Hes being snarky when he says that, dont take it seriously ^_^

  5. Casteelk

    Unfortunately it will pass, most people will get screwed. Ya we few can kick and scream but nobody listens. I write my ignorant Senators and Congressmen about issues. I never get a response. The will of the people is over, as much as the constitution is over. Most people are ignorant on these facts, and choose to remain so. Try to have this conversation with friends and family. They flat out just don’t want to know. The population is prime for the slaughter. Just tag us and put us on the ramp into the dark barn.

    1. Mr. Jack M. Hoff

      Ha Bud, if only it were that easy…. Fact is, they won’t slaughter you until they’ve picked every bit of flesh from your bones. As long as you have any means whatsoever of paying out, you’ll be kept in the pasture. Even broken down and destitute does not qualify you for slaughter, as you just became the means to wealth through others pockets. SO I’m afraid you’ll be around for a while yet…..

      1. Casteelk

        We are currently in the picking the meat off the bone stages. Anyone’s guess how long that will take. You would think after getting enough meat picked off the general public would say enough, yet we keep electing the same bozo’s republican and democratic. The masses would rather argue over gun control, abortion and immigration. Not that they aren’t important topics, well really they aren’t.

        1. nonclassical

          ..actually, it’s the “boil the frog slowly” american public phase…and the “kick the can down the road” political phase..

    2. Massinissa

      Im not sure if the life of a beef cow or a dairy cow is worse, but im afraid we are dairy cows, to be disposed of only when we are no longer useful, and no sooner.

      I think I envy the beef cows. At least they are harvested as soon as they are fully grown.

  6. Susan the other

    Wouldn’t it be more cost effective to simply decline to join the TPP and instead allow our international corporations to print all the money they might ever need. No not stocks and bonds – the actual currency. In the end it will be a better form of emergency aid to save our corporations – which is what TPP is – and less destructive to the fabric of our national laws and property rights. Why even bother with this big trade charade? It’s pure bullshit simply because, if for no other reason, no country needs to trade very much in an age of high technology. No matter how you look at it TPP is a mechanism to promote a new corporate merchantilism at the expense of citizenship. Hey, just print up your money and leave the rest of us alone. We are done with incredible heaviness of liberal enlightment.

  7. Klassy!

    Readers,
    I’ve wanted to ask this question. This is from the supposed anti trade pact Senator Sherrod Brown’s web site:
    http://www.brown.senate.gov/newsroom/press/release/in-trans-pacific-trade-talks-sen-brown-urges-administration-to-ensure-strong-rules-on-state-owned-enterprises

    What do you think? Am I missing something? It seems like a very pro “free” trade measure.
    I guess Brown’s role is to cast a “no” vote when these pacts are voted on and it is “safe” to do so.

    1. nonclassical

      ..occurs to me the U.S. “free market” system is competing with nationalized economies…who are perhaps more “successful” than some, somewhere, would
      like..

  8. washunate

    Yves, great description about how “free trade” agreements are mis-characterized, since they’re the opposite of free trade. The problems in our system aren’t caused by market-based economics and international trade with China.

    One thing I’m wondering after years of increasingly brazen assault on the Constitution is whether things like regulation ‘on the books’ even matters anymore? What does it matter if some corporatist treaty prevents the US from passing such and such a regulation on finance or oil or whatever?

    If our justice system cannot address even the most blatant and heinous violations of law, of what use are more laws?

  9. Chris Engel

    Watch the way the elites manipulate the press of this as they quickly speed it through Congress the way they recently eliminated the STOCK Act transparency provisions and the flight delay rectification bill.

    We’ll get some draft and analysis this summer, but we have to remind vigilant and make sure there’s consumer protections and proper balance in any kind of agreements. The current details leaked are absolutely unacceptable.

  10. sufferinsuccotash, moocher

    I suspect TPP will pass, mainly because it’ll provide future Congresses and Presidents with a standing alibi for doing nothing about the economy. Their hands will be tied by our treaty obligations, you see(wink wink).
    So between the TPP’s Trade Tribunals and the Fed, economic policy will be safely out of the hands of elected officials altogether. Which will probably be just fine with the elected officials; it’ll mean more time for fundraising.

  11. RBHoughton

    I think it is an imperial device – not for America or Britain or France to benefit from – but a devolution of power onto those great capitalists who own everything.

    North America and Europe may lack all sorts of things but one thing we have in copious amounts is money. TPP will help to use that to best effect.

  12. RBHoughton

    I should explain that further. The G7 can seldom agree anything (don’t mention the G20) because nationalistic lawyers and bean-counters want every last penny.

    These trade agreements will do what politicians cannot. Every businessman wants profit. They share a faith in it. They are intended to resolve the political difficulty by turning it into a commercial matter.

    International relations will turn on commercial values whilst political endeavours will relate solely to home.

  13. CurtisE

    If we expose TPP to the light of day it will die.

    There is growing opposition on the left and right to this misbegotten handmaiden of corporate globalism.

    Go to NoTPP dot US and send a message to Congress – no fast track, no TPP. Over 10,000 letters have been sent already. Lets make it 100,000.

Comments are closed.