Yves here. Concern about the toxic misnamed trade deals known as Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership are finally breaking out of the blogosphere ghetto as the Obama administration is making another push to get so-called fast track approval from Congress. Note that Obama failed in the last Congress due mainly to considerable opposition in the Democratic party, along with some resistance among Republicans as well.
What may have torched the latest Administration salvo is a well-timed joint publication by Wikileaks and the New York Times of a recent version of the so-called investment chapter. That section sets forth one of the worst features of the agreement, the investor-state dispute settlement process (ISDS). As we’ve described at length in earlier posts, the ISDS mechanism strengthens the existing ISDS process. It allows for secret arbitration panels to effectively overrule national regulations by allowing foreign investors to sue governments over lost potential future profits in secret arbitration panels. Those panels have been proved to be conflict-ridden and arbitrary. And the grounds for appeal are limited and technical.
Mind you, the dangers of this pact are hardly unknown to anyone who has been paying attention. Elizabeth Warren tried to escalate concerns via a Washington Post op ed late last month. However, the administration has gone to unusual lengths to prevent Congress from making a proper review of the draft text, so the significance of the leak should not be underestimated. As we wrote:
And finally, for the Administration to insinuate that the TPP will result in greater transparency is dubious, given that it’s made it well-nigh impossible for anyone in Congress to do a proper review of the text. While the US Trade Representative technically allows access, in practice, that right is empty. The Congressman himself must read the text; no sending staffers or bringing experts allowed, and only staffers from the committees with direct oversight of trade bills (the Senate Finance Committee and the House Ways and Means Committee) are allowed to join their bosses. The USTR insists that the Congressman specify what chapter he wants to review in advance. The USTR then insists that the negotiator of those chapters be present. Since those negotiators travel, it usually takes three or four weeks to find a convenient time.
No note-taking is allowed. The text is full of bracketed sections where if language is disputed, the revisions suggested by other countries are in the brackets, with the country initials listed but then redacted, making it difficult to read (as in you can’t even read this dense text straight through; the flow of the document is interrupted by the various suggested changes). Having people from the USTR staring over your shoulder is distracting. And it’s an open question as to whether asking them questions is prudent, since it gives the USTR insight into what the Congressman is concerned about.
Perhaps these Congressmen have exceptional powers of concentration. But I read cases and legally dense material with some regularity, and I find my concentration starts going after an hour to an hour and a half. And I also find it difficult to get much more than a general sense of a contract of any length in one pass. You need to go over it again and again to see how the various sections tie together to even have an approximate grasp of what it means. There’s simply no way that any Congressman has anything more than a very fuzzy idea of what is in the TPP and the TTIP.
They very fact that the Administration is going to such absurd lengths to prevent informed Congressional review should be sufficient reason in and of itself to turn down the Administration’s request for fast-track authority.
So the significance of this particular document release cannot be overstated. For the first time, Congress can do a decent review of this critical section. Not surprisingly, they are finding a lot not to like. For instance, from the New York Times:
“This is really troubling,” said Senator Charles E. Schumer of New York, the Senate’s No. 3 Democrat. “It seems to indicate that savvy, deep-pocketed foreign conglomerates could challenge a broad range of laws we pass at every level of government, such as made-in-America laws or anti-tobacco laws. I think people on both sides of the aisle will have trouble with this”…
“U.S.T.R. will say the U.S. has never lost a case, but you’re going to see a lot more challenges in the future,” said Senator Sherrod Brown, Democrat of Ohio. “There’s a huge pot of gold at the end of the rainbow for these companies”…
Senator Brown contended that the overall accord, not just the investment provisions, was troubling. “This continues the great American tradition of corporations writing trade agreements, sharing them with almost nobody, so often at the expense of consumers, public health and workers,” he said…
Critics say the text’s definition of an investment is so broad that it could open enormous avenues of legal challenge.
This post by Joe Firestone raises some not-widely-discussed concerns about the ISDS provisions.
By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone. Cross posted from New Economic Perspectives
During a recent Amy Goodman interview of Lori Wallach, director of Public Citizen’s Global Trade Watch, on her Democracy Now show, Wallach neatly summarized the problems of progressives with the TPP:
Well, fast-tracking the TPP would make it easier to offshore our jobs and would put downward pressure, enormous downward pressure, on Americans’ wages, because it would throw American workers into competition with workers in Vietnam who are paid less than 60 cents an hour and have no labor rights to organize, to better their situation. Plus, the TPP would empower another 25,000 foreign corporations to use the investor state tribunals, the corporate tribunals, to attack our laws. And then there would be another 25,000 U.S. corporations in the other TPP countries who could use investor state to attack their environmental and health and labor and safety laws. And if all that weren’t enough, Big Pharma would get new monopoly patent rights that would jack up medicine prices, cutting off affordable access. And there’s rollback of financial regulations put in place after the global financial crisis. And there’s a ban on “Buy Local,” “buy domestic” policies. And it would undermine the policy space that we have to deal with the climate crisis—energy policies are covered. Basically, almost any progressive policy or goal would be undermined, rolled back. Plus, we would see more offshoring of jobs and more downward pressure on wages. So the big battle is over fast track, the process. And right now, thanks to a lot of pushback by activists across the country, actually, they don’t have a majority to pass it. But there’s an enormous push to change that, and that’s basically where we all come in.
I, too, am bothered by all the things Wallach mentioned and I, too, am strongly opposed to the TPP, and the upcoming Transatlantic Trade and Investment Partnership (TTIP), and the Trade in Services Agreement (TISA), which would impose similar agreements and rules to the TPP. So, I thought it would be worthwhile to add a few other concerns to the ones she mentions.
First, under the TPP, would the Government of the United States be sued and held liable in an investor state dispute action for a decision to stop issuing Treasury debt and fund deficit spending in an alternative way? Why not, since some private companies would lose profits as a result of that sort of action?
Second, under the TPP, would the Government of the United States be held liable if the Fed were to implement a policy maintaining negative interest rates for awhile? Why not, since this would cause investors in Government bonds to lose potential profits?
Third, under the Kingdom of the Netherlands – Czech Republic Trade Agreement, the Czech Republic was sued in an investor state proceeding for failing to bail out an insolvent bank which an investor company had an interest in. The investor company was awarded $236 million in the dispute settlement. So, under the TPP, or the TTIP, what would prevent a similar action against the Federal Reserve Bank of the United States, if it failed to bail out banks that were too big to fail in the future? And what could be the damages if the Fed decided to let the Bank of America fail, the FDIC took it into resolution and then a Saudi-based investment company decided to try to collect from the Federal Reserve?
Fourth, the TPP and the other agreements being put forward, provide for three-judge “courts” to conduct the dispute settlement proceeding. One of the judges is actually selected by the corporate plaintiffs. All of the judges are private attorneys who in other disputes may have represented corporate plaintiffs, and it is common for attorneys to be shifting roles from “corporate advocates” in one case to “judges” in another. Of course, the advocates get paid far more than the judges. Can anyone imagine a more criminogenic environment than this, where all the incentives are aligned in such a way as to extract funds from state treasuries for the benefit of corporations and corporate attorneys alike?
Fifth, in agreeing to such trade deals, Congress would, in essence, be turning over legislative power to the investor state dispute settlement courts and the corporations buying their loyalty. This is true because if Congress passes any laws that can be attacked in investor state disputes, the Government could find itself with billions in unanticipated costs suddenly levied upon it, and a law that cannot be enforced.
So, how long would it be until objections to legislation being contemplated by Congress surface taking the form of “. . . this legislation isn’t feasible to pass because its future costs arising out of litigation will be too high?” paralyze future Congresses when it comes to passing sorely needed legislation, because it would be easy to anticipate high cost law suits claiming that potential profits of multi-nationals were threatened by that legislation.
So, sixth this raises the question, of whether an Executive-Congressional agreement like the TPP would be maintained by future Congresses. The present Congress cannot bind a future Congress short of passing a Constitutional Amendment which is then ratified. So, let’s say the TPP passes, and a progressive Congress is elected in 2018 or 2020, after a few outrageous investor state settlements had been visited on previous Administrations. What then would prevent that future Congress from simply revoking its consent for the TPP?
This means that even if the TPP were to pass, that is no guarantee that the fight over it would end. Its opponents could simply refuse to accept ts passage and could and undoubtedly would work to get it revoked quickly, even to the point of making it an issue in the 2016 national campaigns. Moreover, each time there is a highly visible investor state settlement costing the United States billions, the issue of who benefits from the TPP would be raised again, and the forces opposing it would be strengthened.
Seventh, which brings us to another serious question, namely, would approval of the TPP with its investor-state dispute mechanisms even be constitutional? I think a case can be made that the TPP amounts to handing a legislative veto power over Congressional legislation to multinational corporation-dominated investor state courts. Does Congress really have the constitutional authority to provide such a veto power to authorities external to the United States?
It’s been established in law that Congress can delegate its legislative authority to all sorts of agencies it designates, but to do this, Congress has to set forth in legislation an “intelligible principle” under which its delegation of authority is constrained. General grants of legislative authority are clearly unconstitutional.
The “intelligible principle” in the TPP seems to be that these investor state three judge tribunals can invalidate future legislation, based on whether or not it is seen by such panels as hurting the potential profits of investor state plaintiffs, but otherwise their authority appears to be unconstrained. So, the constitutional question is whether this is a specific enough constraint for delegating Congress’s legislative authority to a private agency, as opposed to being an unconstitutional grant of arbitrary authority to an entity external to the United States.
Eighth, the TPP is reported to have a provision for expanding membership later, and China and Russia are often mentioned as states that might be added. Is this scenario at all likely or realistic? Can anyone reading this imagine that China would allow itself to be subject to decisions by 3 judge corporate-dominated courts on grounds that a corporate plaintiff’s future profits were jeopardized by an action of the Chinese state?
To those who offer this as a possibility, I say, please give the rest of us a break from pure fantasy. There is no way Beijing would ever bind itself in this way, given either its history or its current attitudes.
Ninth, and finally, I think we have to ask one final question in connection with Congress’s pending consideration of the TPP. How can it be that any Congressperson or Senator or president for that matter, would even consider for one moment delegating the legislative authority of the Congress to corporate dominated foreign powers acting in 3-judge courts?
Have they taken leave of their senses? Can’t they see the profound disloyalty to the United States and compromise to its sovereignty inherent in an agreement sacrificing the freedom of action of future Congresses on the altar of free trade and market fundamentalism? Have neoliberalism and corporate contributions blinded them so much that they cannot see that they are selling out the sovereignty of United States to a foreign power?