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.