Ridiculing Concerns About TPP Tyranny

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 New Economic Perspectives. Originally published at New Economic Perspectives

People who support the Administration’s efforts on the TPP have been known to reply to my posts on this subject by attempting to ridicule the scenarios I’ve presented as possible under the TPP Agreement as “out there” speculation of the tin foil variety that will never actually happen. For those who think that my examples of what is possible under the TPP are just this kind of speculation, please keep in mind that I don’t have the proposed draft agreements to work from.

This is due to the President’s decision to classify the drafts and seek Fast Track Authority before disclosing them more freely even to Congress for an up or down vote. However, there is no indication from anyone that the actual drafts of the agreement contain rules that would definitively prevent the possible very damaging consequences I’ve mentioned here for example.

Elizabeth Warren and Bill Black make clear why the secrecy and Fast Track Authority (FTA) itself are anti-democratic, and they also point out that some speculation, or at least educated guesses about what exactly is in the TPP, is forced upon us in order to carry on political debate before it is too late to have it because Congress has given up its constitutionally important debate, negotiation, and amendment capabilities to the Fast Track process.

In short, debate on the TPP, and perhaps disclosure of it, must come first, before FTA is approved. Afterward no legitimate debate can be forced on those who want to push approval through Congress. So, why would they agree to one?

However, I don’t need access to the TPP text to counter the wild speculation charge. The fact is, that TPP Agreement provisions establishing Investor State Dispute Settlement (ISDS) tribunals allow supra-national elite authorities unaccountable to voters to trump domestic laws and in so doing subordinate the Government of the United States and the consent of the governed to such authorities.

There is no way around that, and no flood of propaganda about the good will and the debatable progressive bona fides of this President will compensate for this fact. The simple question is: “will ISDS tribunals be able to decide on disputes between sovereign governments and corporations without formal, enforceable constraints on the severity of the judgments that these tribunals can render?”

Is the discretion of ISDS judges in any way limited by the TPP language? And if it is, then do national sovereign governments have the uncontested right to enforce that language by simply rejecting these judgments? If not, national sovereignty, and in democracies, popular sovereignty and consent of the governed would be breached by the TPP.

To those who say that such a breach is only theoretical in nature because the past history of ISDS judgments doesn’t show a great number of extremist judgments, and none directed at the United States, that infringe on sovereignty in an unacceptable way, I reply that past history is often no guide to the future. If it were, we would never have had the crash of 2008.

Prior to the crash most economists had a very sanguine view of derivatives and did not consider them systemically dangerous. Now we know that they are. And we also know that their continued existence is an ever-present threat to the stability of the international financial system.

The trade agreements placed in force thus far, involve very few nations and are mostly bilateral in nature with trading partners that are small and have few rich corporations and individuals in a position to challenge the US or other major nations in an ISDS environment. With the passage of TPP, TTIP, and TISA, all that would change. 80% of the world’s trade would be subject to treaties of this sort, and the wealthiest corporations and individuals would be covered by these agreements.

Suing governments in the tribunals is an expanding line of business, and is viewed as such by multinationals. Actions against the United States will grow exponentially if the TPP and other expansive trade agreements are passed, and we would have to expect that regulations costing multinational firms billions of dollars would come under challenge by those firms, and also that they would win some judgments and that some of these would be substantial.

There is nothing in these agreements that places any constraints on the ISDS tribunals in relation to what they decide, or the amounts of the awards. They are empowered to ignore the stated objectives of the TPP and all manner of nice sounding language in it, because that language is not binding on their discretion, which is absolute, according to leaks of the text we have access to.

ISDS tribunals have already shown in relation to NAFTA that they will impose financial obligations on governments for new types of “violations” that have no explicit warrant in that agreement. They are sure to do the same in the new proposed agreements including the TPP.

An ISDS tribunal has already delivered a $2.3 Billion judgment against Ecuador that is such a great proportion of its GDP that it places a burden on that country that would be equivalent to a judgment of $340 Billion levied against the US Government. Ecuador has no recourse in contesting that judgment, and the US also would have no recourse if it received a judgment of proportionate size from an ISDS court.

The important thing to realize is that no one can predict exactly what the ISDS tribunals will do under this agreement, because they have the authority to be as extreme as they want to be in their judgments. So, I ask supporters of the TPP who think opponents of it like myself are creating ridiculous scenarios and inferences about what its consequences may be, does it make any sense at all to subject the United States or other sovereign governments to the risk of extreme financial judgments for the highly uncertain and small gains that are likely to result from these trade deals? Is it even constitutional for the Congress to give away its sovereign legislative authority to foreign bodies staffed by attorneys whose bills are paid for by corporations, or even to any foreign bodies, however staffed.

And if it does make sense to do that, isn’t such a fundamental change in legislative authority something that can only be legally done through the process of amending the constitution? Is it really constitutional for the Congress to delegate a portion of its legislative authority through a mere Congressional-Executive Agreement, which is what the TPP would be?

I’m afraid I don’t think so. What I do think is that an agreement like the TPP will never be accepted by the majority of Americans as legitimate, if it is railroaded through Congress while it is secret under FTA. It will be constantly challenged by conservatives and progressives alike.

Even it it is pushed through now by corporate interests, it will never be accepted by the majority of Americans once they see its effects. It will always be viewed as an attempt to turn the United States over to foreign powers, and the legacy of those passing it will be one of dishonor, and opprobrium.

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  1. Brindle

    Rep. Peter DeFazio exposes the pro-Monsanto provision in TPP:

    “Call it the smoking gun,” said Oregon Congressman Peter DeFazio. “Proof that fast track and massive free trade agreements like the Trans-Pacific Partnership are written by and for multinational corporations such as agriculture giant Monsanto. Instead of using trade deals as an opportunity to protect and strengthen consumer rights by joining the countries which require genetically engineered food to be labeled, this administration wants to benefit wealthy corporations at the expense of the public.”


    1. Marko

      DeFazio put this out as a press release , but the American press decided that it wasn’t eligible for release , so they locked it up and threw away the key.

      I hope Telesur lets us know if they find any pro-Washington Post or pro-NYT provisions in the TPP.

      1. hunkerdown

        What’s good for Amazon is good for the WaPo. What I’m curious about is why the Boston Globe seems to have appointed itself a salesperson for the deal.

    2. JTMcPhee

      Speaking of “smoking guns,” how about this one, pointed at the heads, lungs, hearts and livers of the rest of us by the dead Hand of Jesse Helms and his crew:

      “Watch Out, Joe Camel Is Back: Big Tobacco and the TPP,”
      By Michelle Goodwin, Co-authored by Sergio Puig and Gregory Shaffer.

      The Obama administration is poised to finalize the Trans-Pacific Partnership (TPP) agreement. If Congress passes the current trade promotion authority bill, the TPP will become subject to a simple up or down vote, without possibility for any amendment. The Obama administration refuses to tell the public what’s in the agreement and Congress seems pressed to accept provisions that many Americans might deplore. This is a problem. Consider the TPP’s secretive advocacy for big tobacco.

      The U.S. government is supporting big tobacco companies by negotiating dozens of international trade and investment agreements, but largely without the public’s knowledge. Historically, the U.S. has supported big tobacco to expand their profitability abroad, despite known health risks. For example, dating back to the 1990s the U.S. Government Accountability Office (GAO) reported that US tobacco trade surpluses doubled after “the U.S. government provided assistance in removing [trade] barriers.” The GAO report also notes how the prevalence of smoking in “Taiwan and South Korea had increased since the removal of U.S. cigarette export barriers,” which resulted in “the opening of Asian cigarette markets, [and increased] cigarette advertising…”

      These agreements reduce tariffs on tobacco products around the world and grant big tobacco companies the right to sue governments that post aggressive warning labels on cigarettes. For example, Australia enacted a “plain packaging law” that depicts disquieting, smoking-related images on cigarette packages sold in its country above the brand of the cigarette. Tobacco companies sued. But it’s not just the big nations these companies go after — it’s also the poorest.

      Big tobacco companies claim developing countries like Uruguay, Uganda, Togo, Namibia, Gabon, and others are interfering with their brand names and violating intellectual property rights. To defend themselves against the little guys, tobacco companies have instigated or threatened litigation that could cost poor nations millions of dollars to fight. If the Obama administration caves to big tobacco, it would give the impression that Americans support not only these tactics, but also the general principle that smoking is safe and it doesn’t kill. They argue cigarettes should be treated like any other product.

      In the U.S. alone, tobacco annually costs over $170 billion in direct medical expenses and $150 billion in lost productivity. Globally, that figure rises to $300 billion per year. And the costs are not financial alone. According to the Centers for Disease Control (CDC), “more than 16 million Americans are living with a disease caused by smoking,” and what’s more “for every person who dies because of smoking, at least 30 people live with a serious smoking-related illness.” Yet, unless revised, the TPP will reduce tobacco tariff rates to zero and provide new rights to tobacco companies, pitting global public health in developing countries against the deep pockets of an industry that sells products known to cause serious health risks, including cancer and death. …

      As if us ordinary people actually needed yet another reason to hate, fear and resist the f___ers in the White House. When there was still a vox populi, these monsters were at least butted mostly to a standstill by regulatory power here in what used to be called America, and a few brave juries and courts and billions of dollars in intentional-tort awards have made them dislike the “rule of law” even more, and do even more to try to destroy it. But add this to the stack…

  2. Fair Economist

    In short, debate on the TPP, and perhaps disclosure of it, must come first, before FTA is approved.

    This, in itself, is so d*** obvious. Why is there even a debate?

    (Rhetorical question, I know the answer is “Because it’s absolutely horrible”.)

  3. AQ

    I’m curious, how about suits in reverse for lost tax revenues and costs associated in order to ‘give’ corporations profits. Would ‘regular’ people have standing or would they need to form their own foreign corporation?

    What about if a company loses a government bid and therefore expected profits? Heck, not even a bid but one of those ‘for business investment grants?’

    What if one company wants a regulation because it increases their profits dramatically and the other wants the regulation removed because it would increase their profits dramatically? Do the companies sue each other in this tribunal or do they each take a back and forth turn suing the government e.g., I’m thinking of Ambaroff playing one group of Indians in one state against another group of Indians in a different state so perhaps wind industry against the nuclear industry. So maybe The Donald’s scottish golf course against wind turbine makers in Spain.

    Gee, this could be fun to see the lawyers go to town. So many options for extraction. Sucks to be regular people though.

    1. Vatch

      Gee, this could be fun to see the lawyers go to town. So many options for extraction. Sucks to be regular people though.

      This reminds me of the Farscape episode about the planet Litigara:

      The society is divided into two classes: the lawyers (90% of the population) and the utility workers (10%). The “Utilities” are oppressed by the lawyers and are seeking equal rights.

  4. Alejandro

    These so-called “partnerships” ARE “partnerships” between life-sucking oners everywhere, who have proven to be incapable of rehabilitating their addiction to cheap labor…that’s what these “deals” are mostly about. Not contented with having effectively legalized their addiction, they are now intent on metastasizing their paid for ‘legalese’ by de-linking themselves from any responsibility or liability to society, any country or the planet, i.e., they don’t give a shit about anything but themselves.

    “Fast-track” is not only an admission of incompetence and/or irrelevance of legislators but a gimmick that has been circulating for at least 20 years (at least). Which leads me to conclude that if after twenty years (at least) of debating and argumentation, they can’t reconcile most of the legitimate concerns and have to resort to dense legalese, then the camouflage offered by this legalese can only benefit the life-sucking oners. To which I say, not just NO, not even hell NO but F–K NO!

  5. James Levy

    The last refuge of the scoundrel in this case is not patriotism, but a defiant “you can’t PROVE it will lead to this result!” insolence on the part of TPP supporters. They will make claim that they cannot prove, then demand that you prove beyond a shadow of a doubt that the obvious chicanery that will be unleashed by this pact will actually happen. And they will do it all with a straight face and without breaking a sweat.

    The ability to lie convincingly, and without remorse, has become the sine qua non of all of our ruling elites.

    1. Doug Terpstra

      Lying convincingly without remorse is only half of it. Such calculated deceit is inflicted with relish and gusto, as are police brutality, torture, and militarized murder. In unbridled lust for filthy lucre and power, our ruling elites have equalled or surpassed the sadistic debauchery of ancient Rome. It is horrifying to witness.

      1. hunkerdown

        According to the Generalized Peter Principle, it’s because it works, and it works because we haven’t bruised any egos, let alone drawn any blood, in fighting back. If you see Buddha on the road, kick him in the nuts, I think the proverb went?

      2. hunkerdown

        Well, statecraft is just the art and science of making parasitism appear as symbiosis. If all the international relations literature were erased from humanity, Alexandria-style, from George Packer on back to Solon and through most of both Roman Empires’ intellectual produce, the world might be marginally better off.

  6. Sun-Tzu

    You know… It would be interesting if Anonymous, or any other public service oriented hacker group, would do some investigation and find what corporations, institutions or individual contributed to the writing of the TPP document. It would be good to know who are the frontline advocates of the TPP; by name.

  7. Rosario

    Well NAFTA worked great right? TPP is part of the same paradigm so whats all the fuss about? Let’s serve up some more… Anyone lining up to defend TPP in our modern economic climate is a stooge.

    For a good laugh go to the executive’s own webpage promoting TPP (https://ustr.gov/tpp).

    On labor power: “The TPP will level the playing field for American workers and businesses by building strong and enforceable labor standards.”

    Sources to prove this: zero. (I could almost hear the farting sound of a deflating balloon on this one.)

    On environmental protection: “Environmental protection is a core American value. Through the TPP, the United States is negotiating for robust environment standards and commitments from member countries, and addressing some of the region’s most pressing environmental challenges.”

    Sources to prove this: zero. (This one was pretty funny. I guess it is a value when there is enough outrage about environmental degradation.)

    On “small business”: “American small businesses are the backbone of the U.S. economy, and have accounted for nearly two thirds of new private sector jobs in recent decades. The TPP will improve transparency and regulations to help U.S. companies engage in and benefit from increased trade in the Asia Pacific.”

    Sources to prove this: zero. (In addition, how many mom and pop stores are going to take advantage of international shipping in a volume high enough to justify the costs? Really, anything involving international trade is a long shot for businesses in the sub million dollar category. I guess every American small business is a Hermes styled luxury goods shop with each order over $20000. I call super-BS on the small business stuff.)

    As for the part about supporting American made exports, I don’t really doubt it, but who cares? Apple would love to shove the few pieces of hardware assembled in the USA down everyone’s throats from South Korea to Australia, and Caterpillar would love more of their earth movers digging up rare earth metals in Mongolia and Gold in Australia.

    Anyway, I clicked through the site for fifteen minutes and realized there was not a single sourced link to the TPP document. This is feeding ideology to the public and nothing more. TPP is a corporate memorandum with zero democratic accountability.

    1. Doug Terpstra

      A good laugh indeed. A campaign of deceit worthy of this post-democratic regime: pure presidential teleprompter hokum without a shred of evidence…all of which is classified, presumably in the interest of national security. Complete farce.

  8. shinola

    Just because some sort of abuse “could” happen under TPP doesn’t mean that it will.
    After all, when promoting the gutting of Glass-Seagall, Mr. Greenspan assured us that the fear of “reputational damage” was more than enough to keep those big Wall St. banks in line.
    We know how that turned out…

  9. washunate

    Good read.

    Personally, though, I’d go further. What debate is there to have about the alphabet soup of corporate trade pacts? NAFTA was passed two decades ago now. One either supports authoritarian treaties that undermine market-based economics and representative democracy or one opposes them.

    One detailed quibble:

    Prior to the crash most economists had a very sanguine view of derivatives and did not consider them systemically dangerous. Now we know that they are.

    Now we know? What does that mean?

  10. Chauncey Gardiner

    The fact that the antidemocratic Wall Street bankers and corporatists who control this administration are attempting to transfer the burden of proof by ridiculing the opponents of these highly secret, blatantly unconstitutional so called “trade agreements” tells us everything we need to know to oppose their efforts at “Fast Tracking” this legislation

    Their typical carrots-intimidation “Offer you can’t refuse” pressure on our legislators to “Fast Track” these secret agreements, together with their spin belittling citizens who oppose them, is a now familiar approach.

    “Investor-State Dispute Settlements” by 3-member corporate appointed arbitration panels is but one example of the egregious terms in these agreements that we know about from leaks.

    “Globalization” is dying! It just hasn’t been buried yet:


    1. susan the other

      An “investor state” is akin to a “stateless state” and therefore in league with a religious state like the Islamic state, or IS as it is known. IS should really be acronymed SS because religion has nothing to do with democracy. And etc.

  11. Kai

    Good opportunity here for an ambitious senator to take up the Jesse Helms role, ‘Senator No.’ He was the guy who passed the ‘Hague Invasion Act,’ negating US signatory status on the Rome Statute. He threw all kinds of poison pills into the ratification package (reservations, declarations, and provisos) for every human rights treaty. It’s not hard – the trick is to defeat the object and purpose of the treaty. The real artists can do it with lots of patriotic flourishes.

    1. susan the other

      All insurance products masquerading as financial instruments, derivatives, are systemically beneficial to special interests but dangerous to national economies, to people. ISDS is a tribunal of insurance executives. Fox in the henhouse. Forget the dreaded “trade wars.” What we now have is trade transmogrified into war itself. As my grandmother always used to say, “fuck trade.” What next, a monopoly on air? Water? This isn’t TPP, its WTF. Let’s stop, OK?. Let’s all take a breather, Congress especially, and then let’s all take a page from the Saudis. We need to realize how insane it is to profit at the expense of reality. In order for the TPP to have any validity, i.e. mutuality as a contract, it must have some equal access in the ISDS (faux legal) process. Or otherwise it’s gonna be the biggest circus in the history of the universe. Taxpayers, those victims of any TPP-ISDS proceeding, must have equal rights. Period. And the “tribunal” is a joke. Begging for redesign.

  12. John Candlish

    I am at a loss to understand how the TPP’s ISDS system can work without an enforcement mechanism.

    Will the Supra-national TPP business entities also have their own police and militaries? Without them how can they hope to enforce a collection action?

    1. Jesper

      Good question, one that I’ve been thinking about as well. The only answer I can think of is that by bundling the ISDS into a large trade agreement it becomes impossible to withdraw from the ISDS without also at the same time withdrawing from the trade agreement. Lawyers like complexity so an ISDS on its own would be too easy to ignore, bundle it together with as much other stuff as possible and then complexity is increased exponentially and ignoring an arbitrator ruling suddenly becomes more difficult.

      Would the ISDS happen outside of a trade deal? If not, why should it happen within a trade agreement?

      1. Jon

        Yeah, I was wondering specifically what happens if you ignore an arbitration tribunal’s ruling. It’s hard to find clear information on this point. I still don’t know the answer.

    2. Oregoncharles

      Good point.
      The actual answer is that these agreements – technically not treaties – also domestic law, passed by both houses of Congress and signed by the President. (It’s a good question whether this is Constitutional, since they’re also treaties, but the procedure has stood so far.)

      However, even this is pretty theoretical. What happens if a signatory legislature and executive simply repeal some offending provision? After all, they’re technically just legislation. If they tell everyone else to go hang, what’s the resort?

      Very good question.

      1. hunkerdown

        Expropriation? In a fairly recent trade case Antigua received an indulgence from the WTO to knock-off $21mn worth of US-owned intellectual property and sell it abroad. So, I suppose that domestic “foreign investors” who don’t want to be frozen out of the game would put their uniquely effective pressure on domestic politicians to faithfully conform to adverse decisions, in order that their exclusive rights under other signatories will continue to be recognized.

        1. Oregoncharles

          That applies to assets that are available to the country bringing the suit. In general, trying to expropriate anything from the big dog on the block is a dubious proposition.

          1. hunkerdown

            Any US-based “foreign investor” placing money in foreign operations (say, mines) on foreign territory makes those assets available to a foreign government, no? That foreign government, if a TPP signatory, may be bound to honor the arbitrators’ directives to recognize the transfer. Besides, it’s the investor, not the government, petitioning for relief and receiving any consideration ordered by the arbitrators.

            I grant it’s more likely and less dodgy to expect that they’d opt for the usual course of action against rogue nations, the trade embargo.

    3. jrs

      Maybe you don’t need to enforce against someone who is actually on your side anyway. I don’t know about all the partners in crime (signatories to this agreement), but I’m saying the U.S. government is already on the side of the multinationals.

      So they will pay, and they will pay with money gotten out of our hides one way or other in the usual way (like don’t pay taxes, go to jail). See maybe it’s not really an investor STATE dispute. Maybe it’s really investors versus ordinary people who fund a state that DOES NOT represent them. The state is the middle man to steal from us.

      Of course if by some miracle the U.S. government decided it was on the masses side (hardy har har) there is blackmail as mentioned. There’s also blackmail as coverup to pretend they are in different sides, well we know all about kubuki.

      1. Tim K

        I assume an investor can enforce a favorable ISDS judgment in State or Federal Court. The judgment creditor would file an action asking the Court to recognize the validity of the ISDS judgment and subsequently apply to the Court for one or more executions to seize valuable assets owned by the judgment debtor and/or petition for Receivership so the judgment creditor can intercept revenues that are received periodically by the judgment debtor like taxes. This, of course, may lead the judgment debtor to seek the protection of US bankruptcy laws and then it will be up to the bankruptcy Court to interpret the Federal bankruptcy code as applied to TTP et al. In a situation like the City of Detroit’s municipal bankruptcy, that could mean a reorganization in which obligations such as medical and pension obligations due to retirees are significantly compromised.

  13. Oregoncharles

    There is an overlooked possibility (good and bad) in the ISDS mechanism.

    It is the Federal government that makes the agreement, and the Feds that get sued and presumably have to pay out. Of course, that would be everybody’s money, but if MMT is correct, why would we care? However, it’s going to be primarily local governments making the regulations, etc., that precipitate the suits.
    I see this as a major opportunity for civil disobedience on the part of local governments. In many cases, given our “federal” form of government, the Federal government doesn’t have the means to require compliance from the states (which control the local level). The only thing they can do is withhold funds, and this mostly requires federal legislation – and a huge fuss. Sending in Federal marshals to require compliance at the point of a gun would also cause a huge fuss – and probably bloodshed, in some places. (Such as Texas, presently up in arms about a military exercise – which, frankly, would make me nervous, too.)

    On the bad side: first, many governments will actually, if cluelessly, comply. Second: this mechanism is a dire threat to the federal system. If the Federal government (see how much difference a capital letter makes?) does enforce compliance, it will end large portions of the Constitution – at least that the SCOTUS has left intact. Arguably, a Federal agreement that restricts local law is un-Constitutional. Might be an interesting case to make, another example of civil resistance, if the “trade” agreements go through. Among other things, they’re a power grab by the national government.

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