The TPP, if Passed, Spells the End of Popular Sovereignty for The United States

By Lambert Strether of Corrente.

You’ve heard of popular sovereignty, right? It’s embodied in the Preamble of the United States Constitution.[1] I’ll quote it for the sheer majesty of the language, archaic though it may seem in these “innovative” days:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

A popular website (“We Speak Student”) explains in its Constitution FAQ:

What is the principle of popular sovereignty?

The principle of popular sovereignty is the idea that a government’s power derives only from the consent of the people being governed. The Constitution’s first three words—”We the People…”—establish from the very start that the United States government draws its authority and legitimacy directly from the people. The concept of popular sovereignty differs from the old monarchical belief in the divine right of kings (in which the monarch was said to draw his right to rule directly from God) and also from the British principle of parliamentary sovereignty (in which ultimate authority rested with Parliament rather than with the people directly).

Making it all the more remarkable, or not, that our political class — Barack Obama, Hillary Clinton, Max Baucus and Orrin Hatch a bipartisan caucus, the Chamber of Commerce, and the Editorial Board of The New York Times, to name a few of the usual suspects — would pursue an agreement, the Trans Pacific Partnership (TPP) that sells out popular sovereignty to transnational investors, and allows them to rule us. I know your friends think this sounds like nutty black helicopter stuff, but it’s true! It’s true! (Tell them to watch Yves on Bill Moyers, in a really sharp transcript.) So bear with me, please, as I work through the thesis. First, I’ll look at how TPP replaces popular sovereignty with transnational investor rule, in two ways. Next, I’ll take a very quick look at the state of play. Finally, I’ll suggest that all is not lost, and in fact the TPP can be defeated.

First, TPP undermines popular sovereignty because it’s being written in secret. I’ll give a few quotes here, mostly to illustrate that the farther away you get from K Street, the more precise the language becomes. First, Campaign for America’s Future:

The next “trade” treaty will be the Trans-Pacific Partnership (TPP). This is a huge treaty with only a small part covering trade. Most of the agreement (according to leaks) sets down a new kind of regulatory structure [what does that mean?] for the giant corporations that would supersede the ability of any country to rein them in. The treaty is being negotiated in secret with only business interests “at the table.” Representatives of others with a stake in the outcome are not part of the process. Groups representing the interests of consumers, labor, human rights, the environment, democracy or even smaller and innovative companies that might want to compete with the giant multinationals are not part of the negotiations.

To bad about the verticals, not to mention the American people, or their elected representatives. CEPR:

Of course the TPP is not about free trade, in most cases the formal trade barriers between the countries negotiating the pact are relatively low. The main thrust of the negotiations is to impose a regulator[y] structure in a wide range of areas — health, safety, environmental — which will override national and sub-national rules. This has little to do with trade and in some cases, such as the increased patent protection for prescription drugs being pushed as part of the deal (which is noted in the article), will actually involve increased barriers to trade.

And now Expose the TPP, which makes “regulatory structure” just a wee bit more precise while, again, agreeing on the secrecy:

The Trans-Pacific Partnership n. 1. A “free trade” agreement that would set rules on non-trade matters such as food safety, internet freedom, medicine costs, financial regulation, and the environment. 2. A binding international governance system that would require the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and any other country that signs on to conform their domestic policies to its rules.  3. A secret trade negotiation that has included over 600 official corporate “trade advisors” while hiding the text from Members of Congress, governors, state legislators, the press, civil society, and the public.

Fortunately, and bringing me to the second and more important reason the TPP undermines popular sovereignty, the investment chapter for the TPP was leaked, and the excellent Public Citizen[2] published it (link to the PDF). Their summary in relevant part describes the investor-state dispute settlement (ISDS) provisions:

These provisions are so extreme that many people unfamiliar with them tend to dismiss description of them or their implications…

Procedural rights that are not available to domestic investors to sue governments outside of national court systems, unconstrained by the rights and obligations of countries’ constitutions, laws and domestic court procedures (Section B). There is simply no reason for foreign investors to pursue claims against a nation outside of that nation’s judicial system, unless it is in an attempt to obtain greater rights than those provided under national law. Moreover, many of the TPP partners have strong domestic legal systems . For example, TPP partners New Zealand, Australia and Singapore are all ranked by the World Bank as performing at least as well as the United States with regard to control of corruption and adherence to rule of law. Yet in a manner that would enrage right and left alike, the private “investor-state” enforcement system included in the leaked TPP text would empower foreign investors and corporations to skirt domestic courts and laws and sue governments in foreign tribunals. There, they can demand cash compensation from domestic treasuries over domestic policies that they claim undermine their new investor rights and expected future profits. This establishes an alarming two-track system of justice that privileges foreign corporations in myriad ways relative to governments or domestic businesses. It also exposes signatory countries to vast liabilities, as foreign firms use foreign tribunals to raid public treasuries.

So that explains the “new kind of” “regulatory structure,” the “binding international governance system” a lot better than I can. Because this new “governance system” is literally, and not metaphorically, revolutionary[3], I took a look at the actual text of the Investment Chapter, made some screen shots, and added some (really sloppy) yellow magic marker highlighting. I should say that I am by no stretch of the imagination a subject matter expert in the language of international trade treaties, though I do know a “shall” when I see it; my purpose in highlighting the text is simply to show passages that the cynical would characterize as “weasel wording,” or subject to “lawyerly parsing,” or containing, in the vulgate, “loopholes that you could drive a truck through.” Also, you may wish to contrast the majesty of the language of the U.S. Constitution with the fluorescent-lit, Orwellian bureaucratese of the Investment Chapter. Also too, you’ve really got to read this stuff to believe it. So herewith, all from Section 12 and following:


The goal: Equal treatment for investment capital, globally. Does anybody think that’s going to be a race to the top for anybody but the global investor class?


Note that the expectation of profit is one of the characteristics of an investment. And what better judge of those expectations could there be than the investor?


Can “expropriation” include state actions that damage an investors expectation of profit? You betcha! Here’s how that “direct or indirect” wording gets teased out:


Get a load of those loopholes! “Intangible property rights” and  “indirect expropriation” are to be determined on a “case-by-case, fact-based inquiry” as to whether “distinct” (sez who) and “reasonable” (sez who) “expectations” (sea who) were “interfered with.” But don’t worry, little governments! Only in “rare circumstances” will your “legitimate” (sez who) “public welfare objectives” be considered expropriations. And never mind that one “rare circumstance,” if the “expectations” were large enough — say, the expectations of the health insurance companies that ObamaCare would never be repealed? — could sink a sovereign state entirely.


I really like the part where the writ of your government runs “where applicable.” 


So the proceedings of the tribunal are “open,” unless one of the parties decides it should be closed.


This is the part where, after its open except when randomly closed hearing, the tribunal can order your government to pay an investor for damages to their investment which may, as we saw in the definition of investment, include expectations of a return. (And just in case you think it can’t happen here, here’s one example, and here’s another of the same sort of tribunal, though not yet the TPP.)

Second, and briefly, the state of play. Via AEI:

[T]he potential impact of the president’s no-show at TPP negotiations [a positive result of the government shutdown] is a likewise negative development but not necessarily a fatal one to the successful conclusion of the agreement. With or without Obama’s presence, the situation with regards to the negotiations stands as follows. Since 2010, when serious bargaining began, there have been 19 negotiating sessions. At this point, most if not all of the technical underbrush has been cleared away by the trade bureaucrats from the 12 member states. What is left is a group of at least a dozen highly sensitive political questions and judgments that must be settled by political leaders. Among the issues outstanding are rules and commitments related to state-owned enterprises (SOEs), the environment, labor, market access and rules of origin, intellectual property (IP), government procurement, services and investment, regulatory coherence and coordination, and data flows and protection, among others. (The list will vary from observer to observer and cannot be conclusive since no actual potential text has been made public).

No potential for conflict there! But to get the TPP passed, Obama needs “fast track” trade promotion authority (TPA) that he doesn’t have. Can he get it? Politico:

As the administration is trying to wrap up talks on the Trans-Pacific Partnership by the end of the year, “they have handicapped themselves by not having trade promotion authority,” said a former U.S. trade official who asked not to be identified. “You cannot strike the right balance of ambition in the agreement [whatever that means] if you have one hand tied behind your back.”

Leaders of the 12 TPP countries wound up announcing the goal of finishing the talks by the end of the year, but some think if Obama had been there, they would have declared the deal virtually complete, creating the impetus for key committees in Congress to take up the trade promotion authority bill. Instead, it waits in the wings, assembly required, with no agreement yet on how to put it together.

Good. Let’s hope it rots there.

Finally, all is not lost, for at least four reasons:

1.) Obama is a lame duck. A guy who can’t launch a website for his signature domestic initiative shouldn’t be let anywhere near an international agreement that creates a “binding international governance system.” Yikes! Bad idea!

2.) Fast track is on the rocks because of yet another “strange bedfellows” alliance. FT:

The Obama administration’s efforts to secure “fast track” authority deemed vital to seal trade deals with Europe and Asia have run into resistance from “an unholy alliance” of Democrats and conservative Republicans on Capitol Hill.

3.) Lots of resistance back in the district. Here’s a handy map that states and localities can look at if they want to see who can sue them; and here’s a letter state legislators wrote.

4.) Other democracies don’t like the TPP any better than we do. Here’s one view from Japan.

So get it together, talk it up, write that letter to the editor, and do whatever else you can! The Constitution we’ve got will do ’til another one comes along, and the TPP isn’t that. Did you vote for this, or anything remotely like it?


[1] In connection with putative trade deals, there is also this language in Article I, Section 8:

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes…

[2] I sure wish Public Citizen weren’t so PDF heavy. It’s really hard to deep link into their stuff, or quote from it, and their work deserves the widest possible circulation.

[3] I know that the approach of TPP is similar to NAFTA, but TPP covers ~40% of the world’s GDP.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Banger

    Sovereignty has been attacked since WTO and GATT and this agreement would come close to destroying what we regard now as sovereignty. Having said that, this is yet another movement of power away from the nation-state to the corporate sector and this has been going on surely, steadily and inexorably with the approval of the American people. Sadly, most of us are glad to trade freedom for security and sovereignty for the ability to buy cheap toys.

    We have lost faith in government whether it is Congress or the federal apparatus and rightly so–of course it has been sabotaged for decades by the corporate funded right-wing think tanks, astroturf PR campaigns and the propaganda media Fox/Limbaugh and the whole bunch.

    This is an ideal moment to ally ourselves with the right-wing radicals who have been crying about “one-world government” for generations (it turns out they were right doesn’t it?). This suspicion of internationalism, globalism, the U.N. and other international organization was visceral on their part because decades ago it was not obvious to most of us–if fact if we oppose corporate domination as we should we should oppose globalism as well.

    1. digi_owl

      Yep, but the governments of the world will still be maintained as a shell game against the larger public.

  2. Jack Lohman

    I am NOT a supporter of TPP for all of the negative reasons that have been discussed, but the millions like me do not give politicians bribes. Money talks, and ONLY public funding of campaigns will move the government from the moneyed interests back to the people. Our political leaders are corrupt, no better than the Mafia. Get used to it, or fix it.

    1. diptherio

      Do you have any suggestions for how we get from here (corrupt, money-driven politics) to there (publicly-financed elections)? What are your suggestions for convincing our representatives, who have been placed in power by the existing system, to radically alter that system in ways that may well undermine their own power? I ask these questions in earnest. I agree with you on where we should be heading, but I have no clue how to get there.

      1. Jack Lohman

        It’s complicated, and clearly public funding of campaigns must be the end goal. But I’ve grown to believe that ONLY threatening the politicians with their job will work. But that requires the electorate. That is, ignore the promises. If you are happy with our nation’s direction, vote for incumbents that caused it. Otherwise vote for the challengers whose vote hasn’t been bought.

        1. Brooklin Bridge

          That’s a reasonable answer, but not an effective one. For one thing, but by no means an exhaustive one, voting now has little more to do with the expression of popular choice than the media has to do with reporting the news as you would quickly find out if you were to convince everyone to vote against liar politicians. The liar politicians would amaze everyone and get elected anyway. Politicians may not put much priority in software to sign-up cattle for ACA, but they sure as hell have put their energy into corrupt party structure, re-districting, and yes, even software that can get them elected with as close to zero votes as possible.

          Diptherio’s question is a trick question even though he asked it sincerely. There is no political way to achieve the goals you list, worthwhile as they are. And the forces aligned to make sure that never happens are far more powerful than most of us can imagine. We do not live in a Democracy any more than people in advertisements live in real lives, but then it’s the best damned illusion your tax dollars can buy.

          1. ChrisPacific

            It is still technically a democracy, and would be one in fact given a sufficiently unified public position.

            If we had the power to make clones of Yves and Lambert in suficient numbers that they could go and sit down with every single voter and explain things to them in enough detail that they truly understood what was going on, I guarantee you that we would see dramatic change, probably in a fairly short timeframe. (Although Blogging HQ might get a bit crowded afterwards). Educating voters is the key. The Powers That Be know it, and it’s why they spend so much time and effort on subverting the media.

        2. anon y'mouse

          “Otherwise vote for the challengers whose vote hasn’t been bought.”

          are there any? these rich guys buy as many of them as they can. like betting on multiple horses in the race.

          and even if they are unbought, do they stay that way?

  3. eeyores enigma

    Yeah but we need those mega-corps so we can all supposedly get a job and so our savings and retirement funds that are invested in them grows.

    Mega-Corps – Can’t live with them, can’t live without them.

  4. JTFaraday

    “A secret trade negotiation that has included over 600 official corporate “trade advisors” while hiding the text from Members of Congress, governors, state legislators, the press, civil society, and the public.”

    Frankly, if I were a self-serving US congressperson I would never allow my power to slip away like that. I guess that’s why most of them are not in on the deal either.

    But it looks like the most fervently ideological anti-government libertarians are about to see their dreams come true.

    1. LifelongLib

      Well, that was the whole idea with the “checks and balances” in the U.S. constitution too — government branches jealous of their own authority would not allow the other ones to usurp it. How’s that worked out? Seems like officeholders don’t mind giving up authority as long as they can still get re-elected.

      1. JTFaraday

        I concede neither alternative– our contemporary elected government or rule by corporation– is very appealing.

        But it seems to me our contemporary self-serving office holders–you’ll notice I specifically said “self-serving”– don’t mind giving up authority so long as they can still get a payoff.

        If they render the government too toothless all at once, there isn’t going to be any payoff.

  5. Dan Kervick

    Well, in some sense every international treaty or trade agreement that the US has ever entered into is a voluntary limit on its sovereignty. But there are constitutionally established procedures for entering into such agreements, and they require legislative approval. A treaty or trade agreement a piece of legislation, not a blood pact. Countries withdraw from them all the time.

    I think the most important practical step at this stage is to make sure the TPP is not fast-tracked, so that there can be extended, open public debate on it. The very fact that they are trying to fast track it suggests they don’t believe it can withstand sustained public scrutiny.

    What I’m interested is whether TPP either is or is not in the public interest, whether it would make our lives better or worse, who benefits from it, and who loses from it. Ringing the alarm bells on “sovereignty” strikes me as a right wing dog whistle aimed at the same characters who hate the UN, the World Court and every other international pact the US has ever entered into.

    1. diptherio

      Dude, you need to break out of this out-dated Right/Left paradigm. Citizens of this and other countries should care that their ability to legislate for themselves, their rights to self-determination, are being undermined by “free trade” deals. This isn’t about left or right, it’s about DEMOCRACY and self-governance, which I thought we had bi-partisan agreement on…

      Will it be “in the public interest?” If you even have to ask that question, you obviously haven’t been paying much attention to how things work in this world of ours. When’s the last time a bunch of industrialists secretly negotiated agreements that are “in the public interest?” Uhh…NEVER.

      Sorry to go off on you, but your attitude reminds me of my liberal econ profs when NAFTA was in the works. For my opposition to that deal, I was called an isolationist and accused of not understanding Ricardo. The road to (real, literal) hell, I sometimes think, is paved with liberal “reasonableness.” Giving the PTB the benefit of the doubt, at this late date in our history, is anything but reasonable.

      By the way, what is your opinion of NAFTA? Was that in the “public interest,” ya think, now that we’ve had time to see how it actually works?

      1. Alejandro

        I agree with your assessment of the “right/left” paradigm. It dichotomizes our thinking in “absolutes” with relativity terms. It limits the potential of coalescence, i.e., solidarity around what would otherwise be common interests of the ninety-niners.

        1. Vedicculture

          The only reason “right-hegelians” claim to be against international organizations, if they are doing stuff against their interest.

          So if a international court struck down a nation state’s environmental laws based around the TPP, would the so called ‘right wingers’ have a problem with it then?

      2. Dan Kervick

        I’m not defending the TPP. I’m defending the idea of treaties and trade agreements in general. Entering them doesn’t eliminate the ability of people to legislate for themselves, because they can always just withdraw from the agreement. You might think I’m fussing about some old left/right paradigm, but in fact the obsession with national sovereignty and the opposition to treaties is a traditional stale of right wing thought.

        1. lambert strether

          Dan, you ought to get that knee seen to. While you’re waiting for the orthopedic surgeon, you might consider taking a moment to read the post. I read and excerpted the text of the Investment Chapter exactly to pre-empt mindless tribal reactions on all sides.

          1. Dan Kervick

            Sorry Lambert, I can’t read most of your posts in full. They indulge too much in massive, full spectrum overkill for my taste.

            I stopped a few months ago after attempting one of your comprehensive dissertations on the word-by-word anatomical deconstruction a couple of paragraphs of Obama rhetoric.

            1. Yves Smith

              Then you should not comment on them. Period. It’s really out of line to opine on something you can’t be bothered to read.

              And I find your complaint to be perverse given that your posts are typically long and densely argued. You require attentiveness and patience from your readers, but you won’t extend that courtesy to other authors?

            2. Lambert Strether Post author

              Intellectual laziness? Cognitive dissonance? Both? Or just possibly… Agenda driven, in that “strange bedfellows” alliances, even when justified by policy outcomes, are anathema to tribal sensibilities?

              In any case, do feel free to move on; it’s a big Internet, and nobody’s asking to you to waste your time here, commenting on material you don’t read.

              1. Dan Kervick

                Excuse me. But I offered by opinion of TPP issues and am not the person who first jumped into the ad hominem arguments.

                I will be happy not to comment on your posts any longer.

            3. Foppe

              Grasping at straws, I see. Well, at least you’re honest, even if it’s only because your honesty doubles as a character attack. (One which is especially amusing considering the fact that it’s usually precisely academics who have misconceptions of the public value of their work.) It is telling that this is how you think you can provide yourself with a defense for (intellectual) laziness.
              Is it really that hard, with those academically honed skills, to skim articles to see whether you think you should read them before resorting to entitled kneejerk, besides-the-point advocacy of the general need for trade agreements in general, which are of course democratically legitimated via that bullshit in-the-eye-of-the-beholder procedure called public debate (in which the false alternatives are argued for by appointed Very Serious public intellectuals, who of course represent the public interest)? Or is it precisely because of your academic training that you felt the need to (“for the sake of argument”) put up that straw man? It is hard to decide which explanation would be the more disappointing one.

      3. Banger

        The “liberal agenda” for a couple of generations was to break down national boundaries and create and international system, i.e., globalization. This was a reaction to two world wars–anything, they thought, that could eliminate national chauvinism and increase common understanding was a good idea. It did not occur to this generation of liberals that corporate oligarchs would seize power in as crass a way as they did. Liberals of the post-WWII generation and even to this day are a stunningly naive bunch.

    2. guabin

      Well said. The public debate is sorely lacking here, compared with that for the FTAA – which explains the ‘Fast Tracking’. Again, who gains and loses from any agreement is the question, with jobs (quality, etc.) and the environment of important concern.

    3. foppe

      What on earth does it mean to hold a public debate about the desirability of a trade agreement? How many pundits are there who will acknowledge the deleterious effects of writing and signing onto NAFTA, of the few who realize the effects were negative for ordinary people at all? And who do you think will be having this discussion? The people who are working two/three jobs to make ends meet, or the Dan Kervicks and Matt Yglesiases of the world? Given that it will be the latter, and given that pretty much every member of that class is a neoliberal/social climber either by choice, or because of fecklessness (does Krugman have an opinion of TPP beyond disliking its secretiveness?), what will the occurrence of a “debate” matter to the question of ‘legitimacy’?

      1. savedbyirony Just a small example (Obama and Corp. Co. didn’t make that October date for wrapping it up, too bad and such a shame anyone leaked any info about the TPP negotiations at all. Doubt that helped the administration’s cause much.) Brilliant reasoning! justifying a policy of: Do not tell people what you are up to so then they don’t talk about what you are up to and then blame them for not understanding,talking about and participating in designing/fighting to oppose what you are up to; and call it a Constitutionally grounded Representative Republic.

        1. Foppe

          What a fantastic conclusion to draw from my response. Care to explain what led you to it? Let me repeat myself a bit: No, my point is that the fact that there has been “public debate” on trade agreements is generally irrelevant — as in, it never leads to those trade agreements being exposed as corporate giveaways — while its having “survived” public debate is used as an argument for why its passage was/is legitimate. In other words, that it is a suspect procedure, given that “public debate” consists of false alternatives being argued for by myopic VSPs who allow economic models to tell them what the utility/disutility of said agreement will be.

          1. Dan Kervick

            What a fantastic conclusion to draw from my response. Care to explain what led you to it?

            Well, you said:

            “What on earth does it mean to hold a public debate about the desirability of a trade agreement?”

            and also:

            “… what will the occurrence of a “debate” matter to the question of ‘legitimacy’?”

            1. foppe

              Could you please my exceedingly interesting post again and again until you understand that what I am attacking is your notion of “public debate”, as the term is used, as little more than a sham, when it comes to treaties of this scope? Your repeated, unsubstantiated, suggestion is that all will be well once this is dropped into the postboxes of the legislators, because the desirability of this law will be determined then and there via thorough, all-encompassing debates that will leave no stone unturned. What I am trying to get you to recognize is that a. weighing and being found unwanting by VSPs does not convey legitimacy except perhaps in the eyes of lazy liberals, and b. this weighing will not be happening in the first place, because it will just be a rehash of the nafta nonsense discussion.

          2. savedbyirony

            No, what you are describing are fake and staged “public debates/oversigth” (such as fast tracking a completely undisclosed “trade” agreement through Congress and then post passage claiming it was properly passed by law and due diligence). There are plenty of knowledgable and experienced people in enviromental, scientific, economic, ect. interests NOT being included in these clandistine negotiations to prevent the need for excise movements well before the damage ever is placed in the deals AND that is why these negotiations are done undercover and allow for no outside and/or substantive input and debate what-so-ever.

    4. Yves Smith


      With all due respect, are you completely out of your mind?

      First, past more or less “trade” deals screwed over American workers. NAFTA produced nearly 1 million in job losses.

      Second, what about national sovereignity and investors getting to petition secret panels that can make governments pay awards don’t you understand? And no, governments DON’T withdraw from trade pacts all the time. Give me a SINGLE example.

      You can’t have meaningful regulation with this in place. Let me tell you about some actions taking place with WEAKER versions of these provisions under current trade pacts:

      1. Government of Quebec is being sued for $250 million for barring fracking in the Lawrence River Valley (ie, sued for loss of POTENTIAL profits)

      2. Government of Germany being sued for somewhere between $2 and $4 billion for phasing out nuclear power

      3. Government of Canada being sued by Eli Lilly for over $2 billion for having patent laws that are different (as in less ridiculous) than those of the US

      I can’t recall which country (I’ll track it down) but another country is being sued for damages for its minimum wage laws.

      I can’t believe how naive and uninformed your comment is. Did you even bother reading Lambert’s post?

      1. Dan Kervick

        The purported legal basis for all of those suits is the claim by the plaintiffs that the governments in question are violating the terms of agreements that those governments themselves entered and ratified. So if an agreement is bad for the country just don’t enter it. Fine. I’m pretty sure that once I see the actual provisions of TPP, I will think that its a pretty lousy deal for most ordinary Americans. And if that is true, then hopefully the agreement will get a full and extended public airing during which time the public can pressure their legislators to reject the agreement.

        But I’m not going to go down the road of rejecting an international agreement simply because it involves some supposed assault on “sovereignty”. All international compacts, treaties, agreements commit a country to placing restrictions on its law-making that wouldn’t exist if they hadn’t entered into the agreement.

        One example a country withdrawing from a trade agreement is Venezuela’s withdrawal form the Andean Trade Pact. Another example of withdrawal from a treaty is Bush’s withdrawal from the anti-ABM treaty. Another example is Columbia’s withdrawal last year from the Bogota Treaty after the ICJ ruled against Columbia in a territorial waters dispute with Nicaragua.

        1. Lambert Strether Post author

          Dan, the post, if you could be bothered to read it, addresses the issue of how the TPP differs from the examples you give. If you find the post too heavy going, there is a link to the Investment Chapter itself, and you can read that.

          Please stop bloviating on about matters you can’t be bothered to study even cursorily. It sets a bad example for other commenters.

          1. Dan Kervick

            One of the things you cite as part of the revolutionary difference between TPP and other agreements is the part about “nationalization and expropriations”. But in fact, the identical languages is part of NAFTA. See Article 1110:


            A lot of the other language that you think is some revolutionary new plot, is in fact traditional in international law:


            Also, the fact that TPP is “written in secret” is not in itself a violation of popular sovereignty. It would only be a violation if it were somehow enacted and given the force of law in secret. Think about it. Legislation is introduced in Congress all the time where the public was in no way involved in the process of crafting the legislation. But once it is introduced it has to be entered into the public record, and that’s when the debate happens.

            Also the fact that international agreements might create new judicial institutions that permit one party to pursue claims against either a state, or the national of some state, outside of the nation’s own court system is, again, not new at all. Consider the International Court of Justice, for example. Those institutions become binding on the state only if the state ratifies the treaty. And even then, if the state decides that the burdens of being subject to this extra-national jurisdiction outweigh the benefits, it can withdraw from the pact – as the US has done on several occasions.

            1. Foppe

              And the consequences of NAFTA are well-understood by which public, exactly? I would point out (and I do wish you kept up with the news), as luck would have it, part of the secret terms being played with is “a strict nondisclosure agreement [that prohibits] members from releasing information for four years after the conclusion of a deal.” This should make it hard even for you to believe, let alone argue, that meaningful “public debate” will ensue once it has been presented to the US congress (as per usual) as a package up/down-vote, done deal.

              Next, of course stuff like this is in NAFTA already. However, spelling out the obvious, given how the races to the regulatory bottom work, it matters how many and which other parties are signatories, since that’s going to form the frame of reference when it comes to suits of opportunity deprivation are filed. Hence, scale may very well make this a whole different kind of beast.

              Secondly, while secret negotiations may not be problematic from the perspective of legitimacy per se, I would point out two trivial observations. Firstly, these things are usually presented as up/down, package deal votes. Secondly, very little time will be given to dissenters to read through. Thirdly, organizing resistance against proposed laws takes time (organization isn’t frictionless, as I’m certain you’re aware). This time is being denied purposely, and it should bother you greatly that this is purposely being organized this way. So given that the amount of time needed to come to grips with and organize a reaction to a proposal is directly related to the scope of the proposal being put forward, it seems to me that even while secret negotiations on whether, say, cars need to contain ash trays or not in order for car manufacturers to have the right to call them cars can indeed be held outside the public arena until a proposal is ready, it seems to me that it doesn’t follow that negotiation can happen in secret in all cases. As such, I would urge you to reconsider your nuance-free defense of the “principle of” secret negotiations/extranational courts/what have you, because you should recognize that the content matters much more than the form. And the specific clauses, and the extent of, the TPP (and its euro cousin) indeed make it far more likely than NAFTA ever did that it will spell the end of pop sov, much like the establishment of the EU has already done for the EZ countries.

              1. Dan Kervick

                That’s a non-disclosure agreement on the discussions, not non-disclosure of the terms of the agreement. Once the agreement is concluded, it’s full text will be introduced as legislation, at which time the public can go to work evaluating it and savaging it.

                1. foppe

                  You don’t feel it’s material to know which parties proposed what statutes? ok. Anyway, i’m getting tired of this, given your utter disinterest in actual discussion. It seems fairly clear to me, though, that you’ve constructed a safe academic bubble around yourself in which the only thing that matters is epistemic quality, and not in whether the way the negotiations are taking place make it possible for a democratic society to respond adequately, and in time, to the threat posed to them by these twin treaties.

        2. ChrisPacific

          I agree with Dan’s key point here. Restriction of national sovereignty, done within clear and reasonable bounds and for a sufficiently good cause, isn’t always a bad thing. As an example I offer the Geneva Conventions.

          TPP satisfies neither of those conditions – the bounds appear to be neither reasonable nor clear and the cause (maximization of corporate profits ahead of all other considerations) is reprehensible – and that’s why it’s a terrible idea. But it doesn’t follow that restriction of national sovereignty is always a bad thing. If you frame your argument along those lines then you’re undermining your point.

        3. Fiver

          Mr. Kervick,

          Your bars for passing the “democracy”/”public interest” tests with respect to the legitimacy of today’s “national” debates, legislative processes, goals of negotiations, even the degree of freedom allowed partners to say “No” to US objectives are impossibly low.

          These deals are designed to strip away restraints on corporate behaviour at the expense of the public interest everywhere. The very last thing on earth we need is more “free trade” meaning “free from sovereign law” meaning the power of the people of an entity recognized by the UN as a “country” to control their futures. The very idea of a corporation having equal standing with a sovereign is anti-democratic to the core.

  6. Code Name D

    If anything, I think Lambert is still under-stressing the problem here. I argue that what we are observing is the end of the nation state itself, which is being supplanted by a corporate state.

    The scary thing is that the transition is already mostly completed. Look at the raw power that the regulatory capture regime here in the US, or the TROKA in Europe has over policy. I don’t think we have seen such a dramatic shift of the political stage sense the collapse of the Roman Empire when ended the regime of the city state and replacing it with the monarchy which leads into the dark ages.

    We are heading into a new dark age where the starving public becomes the new norm.

    Even if the TPP is in trouble, it is far from defeated. The TTP will hover where it is, indefinably. The way the negotiations are set up insures that they can only vote to enact it into law, but can never vote to defeat it and remove it from the table. The only two options are yes, or we will vote tomorrow. A no, never registers, only saying that this is not the real vote, which is always tomorrow.

    In the mean time, the economic hit men, fueled with intelligence fed to them by the NSA. (This is why Obama didn’t know about it, likely because he himself is also being spied upon.) They apply pressure on the no voters while working behind the seen to get those who support the plan into power.

    We already see this at work in the US congress, with the campaign fiancé regime. Congressmen often say that even though they take hundreds of million of dollars from special interests, that it doesn’t influence their decision making process. But this is only because the system selected those who already agreed with special interests. Those who don’t agree were never supported.

    1. Banger

      I think we are still not quite at the corporate state level which I and others call a neofeudal state–we are mostly there, however.

      This movement can be delayed. I don’t think TPP will pass in this country it is far too draconian and part of the left and a part of the right that cares about sovereignty and the Constitution is also against it–the same people who opposed the Syria war. I think this coalition will increase its cooperation and is the most interesting change in Washington politics I’ve seen in 20 years. I honestly believe there is a power vacuum in DC waiting to be filled. Should be an interesting 12 months.

    1. beerdignado

      Thank you Carla for bringing up what you termed TAFTA. It really is part of a double pincher movements – well, there’s three if you include the TISA, Trade in Services Agreement.

      I’ve seen it (TAFTA) referred to most often under the name Transatlantic Trade & Investment Partnership, or TTIP. It was highlighted in a recent NC post as well. See for example here which brings to the forefront this

      Unfortunately, we know much less about it (though we do have a leaked draft of the negotiation framework, here: ) and public awareness is below zero.

      So thanks again for bringing it up.

  7. Yata

    So what will this mean on the financial front. Does this sort of treaty offer a safe haven for every sort of nefarious Cayman and Bahamian account, SPV, re-insurance acitvity?

    1. Yves Smith

      No one has seen the actual text except for the negotiators and the 600 corporate insiders, but everyone who has gotten leaks says it will promote a race to the bottom on the bank regulation front.

  8. M

    Article 12.12 appears to more or less codify what is preexisting U.S. law regarding “regulatory takings” under the Fifth Amendment. In fact, the “investment-based expectations” language is already in American law. None of the approach is novel and it is not inherently insidious.

    In _Penn Central Transportation Co. v. New York City_, Justice Brennan wrote of regulatory takings that:

    [i]n engaging in these essentially ad hoc, factual inquiries, the Court’s decisions have identified several factors that have particular significance. The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations. See Goldblatt v. Hempstead, supra at 594. So, too, is the character of the governmental action. A “taking” may more readily be found when the interference with property can be characterized as a physical invasion by government, see, e.g., United States v. Causby, 328 U.S. 256 (1946), than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.

    438 U.S. 104, 124 (1978).

    You can see the outlines of the TPP Article in that passage. And that decision upheld New York City’s historical landmark law even though that law clearly did impose limits on real estate marketability, etc. So, the principles are not as clear cut as stated.

    So while there are a number of reasons to object to the TPP, the lack of nuance here is a bit disappointing.

    1. Lambert Strether Post author

      Doesn’t it make more sense to focus on the institution applying the wording — in this case an international body answering to no public, and able to act in secret — rather than the wording itself?

    2. Pokey

      Disingenuous or uninformed?

      Justice Brennan wrote for the majority rejecting the argument that Penn Central should be compensated for being denied the right to erect a tower above Grand Central Terminal.

      The right to use air space above one’s property is traditional, and the limitation of that right by the New York City Landmarks Law was a plausible taking or expropriation. As zoning laws show, property rights are not absolute.

      Far from codifying “preexisting U.S. law,” Art. 12.12(1) would legislatively overrule Penn Central Transportation Co. v. New York City. But the provision is far worse than that would alone suggest. The applicability of this provision to “reasonable investment-backed expectations” of “intangible property rights” imposes no limitation on the possible claims against sovereigns.

      Lack of nuance indeed. Disingenuous.

      1. M

        You may call me “uninformed and disingenuous” all you want. I do not normally post here but it bothered me that the original post did not recognize the origins of the various concepts of Article 12.12 in pretty well-established American law.

        In any case, Lambert’s point is to my mind what matters — that the tribunals are an unacceptable concession of sovereignty.

        However, I disagree with this analysis:

        “Far from codifying “preexisting U.S. law,” Art. 12.12(1) would legislatively overrule Penn Central Transportation Co. v. New York City. But the provision is far worse than that would alone suggest. The applicability of this provision to “reasonable investment-backed expectations” of “intangible property rights” imposes no limitation on the possible claims against sovereigns.”

        I agree that there is “no limitation on the possible claims against sovereigns.” But I am unaware of any case stating that the Takings Clause itself is limited to only tangible property rights. In other words, and feel free to “inform” me with cases, it appears to me that the Constitution itself already “imposes no limitation[s].”

        So, what matters is who decides because, as Lambert notes correctly, the principles at issue are infinitely malleable. As the use of confidential tribunals greatly increases the possibility of very broad applications of the principles, I find that a very convincing objection to the TPP.

  9. Vivek Jain

    It’d be valuable to get the analysis of James Petras, a brilliant scholar of imperialism, colonialism, political economy, and foreign policy. He’s previously written on fallacious thinking about nation states and corporations, the ubiquitous technocrats who advance the corporate-imperialist-Zionist agenda, the importance of “class struggle from below”

    When was popular sovereignty ever real? Isn’t it one of those fictions of liberalism, similar to the “social contract” which the ruling class has regularly ignored (that is until faced by pressure from below, by social movements), a bogus pretext that is used to conceal the narrow interests of the 1%?

    What did Howard Zinn say about putting too much faith in founding Documents?


    Americans are talking about the Constitution but asking the wrong questions, such as, Could the Founding Fathers have done better? That concern is pointless, 200 years after the fact. Or, Does the Constitution provide the framework for a just and democratic society today? That question is also misplaced, because the Constitution, whatever its language and however interpreted by the Supreme Court, does not determine the degree of justice, liberty or democracy in our society.

    The proper question, I believe, is not how good a document is or was the Constitution but, What effect does it have on the quality of our lives? And the answer to that, it seems to me, is, Very little. The Constitution makes promises it cannot by itself keep, and therefore deludes us into complacency about the rights we have. It is conspicuously silent on certain other rights that all human beings deserve. And it pretends to set limits on governmental powers, when in fact those limits are easily ignored.

    I am not arguing that the Constitution has no importance; words have moral power and principles can be useful even when ambiguous. But, like other historic documents, the Constitution is of minor importance compared with the actions that citizens take, especially when those actions are joined in social movements. Such movements have worked, historically, to secure the rights our human sensibilities tell us are self-evidently ours, whether or not those rights are “granted” by the Constitution.

  10. Podargus

    As an Australian I have even more reason to be concerned about the “TPP”. Trans Pacific? sure – Partnership? bullshit
    Australia already has a trade treaty with the USA which has resulted in significant disadvantage for Australia.

    As stated in the article this TPP abomination will be just another vehicle for major corporations (many of US origin) to ripoff even more nations and their people.

    To hell with your TPP,trade treaties and free trade in general.

    1. Banger

      I’m puzzled by Australia–I’ve met such nice people from Australia (I’ve never been there though) and I’m always surprised when they seem to roll over with such alacrity to U.S. desires almost before the USG even requests it? Don’t you all see what USG policy is about? What benefits do you get?

      I do know that the US national security state has been meddling in your affairs for some time–why do you tolerate it?

      1. Andrew

        re: nice Aussies. I’m a Canadian and we’re even nicer than them Aussies. We put up with being pushed around by big guys too, in this case, Uncle Sam.

        The reason is because guys and little guys are a system. The stronger the one side acts, the weaker the other acts. Deference to power. Americans can’t see that so easily ’cause their part of the system IS the power. And are more likely to be “bangers” than bangees. (Just thought of that and mean no disrespect, especially being Canadian :))

  11. Vedicculture

    The Nation State is no longer needed under this phase of capitalism’s developement. Once you understand that, you understand everything.

    You must have some rule of law that gives people money/property. It was why radicals in the 60’s wanted to bring down the government and abolish the money system. Overnight Millionares and Property Owners would be abolished. As Tyler Durden said, let the chips fall where they may.

    Now you have to bring down the global market state.

  12. anon y'mouse

    semi-related idiotic thought of the day:

    we need to be able to prosecute government officials that lie to us.

    they probably already have immunity, but they should not be allowed to get away with calling this series of agreements ‘trade’ deals, nor saying things like SS is going broke, or “you can keep your plan/doctor” or any of that other stuff. they are in charge of formulating and carrying out the laws. they need to be held accountable when they misrepresent them, misrepresent material conditions that impact whether laws are changed or passed, and most of all when they engage in propaganda meant to influence and misdirect the populace about what they are really doing.

    1. Paul P

      FAST TRACK also undermines popular sovereignty.

      Fast Track will be vote on shortly.


    2. bh2

      “we need to be able to prosecute government officials that lie to us.”

      Enterprising bankers and politicians are pretty much self-immunized from legal consequences of lying because it’s central to their career success.

      As natural allies, these worthies mutually conspire to massage the financial and legal systems to exonerate themselves from any duty under law which applies only to the “little people”.

      Anyone who believes crime doesn’t pay simply isn’t paying attention.

  13. Fiver

    The intention of this Treaty is quite simple: maximum extension looting opportunities for US-based corporate power in conjuction with a self-reinforcing military escalation involving a number of the signatories, including the US, Australia and Japan – all of them “concerned” about “the threat from China”.

    Note the opportunities for US companies of all kinds
    during the build-up. The spending can only grow from here. I have a feeling we’ll by seeing the “lily pads” referenced in this different perspective of the same fundamental political landscape and development.

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