The TPP and State Sovereignty: A Toothless Preamble, Weak Code of Conduct, Secret Proceedings, and a Tobacco Carve-Out That Might Not Carve Out

By Lambert Strether of Corrente.

In this post, I’m going to take what might at first sight look like a deep dive into the text of the TPP. However, as I’ve discovered, international law, and international trade law, are both insanely complex, and so, in reality, this dive is very shallow.[1] (Of course, in finance, we know what complexity means: Opportunities for accounting control fraud and looting. But that is a topic for another post.)

Deep dive or no, however, I hope to show that coverage of TPP in the financial press after the complete text of the TPP was released has hitherto been abysmally shallow and naive, not so say counterfactual. Since, in my view, the Financial Times (FT) is the best of breed, I’m going to take its coverage as a proxy for the press as a whole, and I’m going to look at how the FT presented the Investor-State Dispute Settlement (ISDS) mechanism in Chapter 28. (Many of the TPP’s chapters cover, as it were, vertical markets, like intellectual property, agriculture, or the environment, but the ISDS is horizontal, in that it provides a facility for dispute resolution that applies across all the verticals. If you believe that the TPP is part of an emergent global apparatus superseding sovereign states and tuned to the needs of global trans- and post-national elites, then Chapter 28 is the chapter to read.)

Coverage of ISDS from the Financial Times

Here’s how the Financial Times (FT) summarized chapter (28) of the TPP in its initial coverage (“Breaking down 5 big sections of the TPP”):

Foreign investors will be allowed to ‘sue’ governments but the TPP makes the process harder

{1} A big criticism of the TPP is that it will allow foreign companies to challenge governments and their decisions before opaque arbitration panels. By including an “Investor State Dispute Settlement” mechanism, the TPP’s investment chapter in effect undermines democracy, critics charge.

{2} That is open to debate. Business groups insist ISDS provisions are crucial to protecting foreign investors from rogue local courts and governments and are already a feature in thousands of bilateral investment treaties. Sceptics argue that the world has moved on since investment treaties first began including such mechanisms in the 1960s.

{3} But there is no doubt the TPP tightens the rules. It establishes a code of conduct for arbitrators and requires all proceeding in ISDS cases to be public. It also contains provisions intended to limit the ability of companies to challenge government regulations, such as those meant to regulate tobacco use.

{4} In the preamble to the agreement the TPP members . . . “Recognise their inherent right to regulate and resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals”.

I’ve numbered the paragraphs in squiggly brackets. And I’m going to skip paragraph 2, because on the FT’s own showing, ISDS mechanisms are already embedded in a multitude of bilateral treaties, so there’s no need for an extra dollop of ISDS goodness from TPP. That said, does ISDS “make the process harder”? The FT argues that the answer to the question is “yes.” I believe that the corrrect answer is “no.” To show this, I’ll cover the topics the FT covers — the TPP’s Preamble, the ISDS code of conduct, ISDS proceedings, and tobacco — in that order. In each case, the FT’s coverage is wrong, or misleading.

The TPP’s Preamble is Toothless

A literal-minded Martian reading paragraph 4, above, would notice that the FT makes no actual claim that the TPP’s Preamble has any effect whatever; it merely quotes it. However, the last sentence of paragraph 3 starts “[The TPP] also contains provisions intended to limit the ability of companies to challenge government regulation” and is juxtaposed with paragraph 4, which starts “In the preamble to the agreement,” and so a less literal-minded reader might be forgiven for assuming that the TPP’s Preamble is such a provision.

But if the FT meant to imply this, it’s wrong. Here’s why. (And here let me take a moment to thank, again, readers Synoia and marxmarv for making the chapters and annexes of the TPP available both as PDF, for reading, and as text, for searching. It’s important to be able to grep the entire text, and, at least so far, the tools available online are miserably inadequate for that purpose.) From TTP’s Chapter 28, “Dispute Settlement, Article 28.11, “Functions of Panels” (“panel” is TPP’s word for ISDS tribunal):

3. The panel shall consider this Agreement in accordance with applicable rules of interpretation under international law as reflected in Articles 31 and 32 of the Vienna Convention on the Law of Treaties (1969).

The International Investment Law Centre of the University of Cologne has been “putting together, in the form of a digest, the decisions and awards of international arbitral tribunals” since 2011. Here’s the digest of the Vienna Convention, and what it has to say about preambles in Article 31 (“General rule of interpretation”):

An IIT’s [International Investment Treaty] preamble is relevant for its interpretation

However:

Although a statement in a preamble does not create legal obligations, it sheds light on the object and purpose of the treaty

So, fine words like “recognise their inherent right to regulate” butter no parsnips, if they’re included in a Preamble.[3] They do not “create a legal obligation.” (The preamble is not even a “provision,” as the FT seems to imply in paragraph 3, if provisions are contained in the articles of the agreement proper, as opposed to its preamble.) “Shedding light” and “relevant to its intepretation” make the FT’s “process” “harder” only in the most tenuous sense; in particular, since interpretation can take place only after a suit is brought, the Preamble does nothing to protect States from the chilling effect of corporations simply threatening to sue them, for billions, before extremely expensive panels.

The ISDS Code of Conduct Is Weak

In paragraph 2, the FT claims that TPP “establishes a code of conduct for arbitrators” (though the TPP itself uses the word “panellist”). Let’s grep “code of conduct”:

ls$ pwd

/Users/ls/www.nakedcapitalism.com/TPP_text

ls$ grep "code of conduct" *.*

TPP-Final-Text-Dispute-Settlement.txt:9. If a disputing Party believes [...]

TPP-Final-Text-Dispute-Settlement.txt: comply with the code [...]

ls$

So, that’s easy. Two mentions, both from TTP’s Chapter 28, “Dispute Settlement.” Let’s go find them. The first mention is from Article 28.9, “Composition of Panels”:

9. If a disputing Party believes that a panellist is in violation of the code of conduct referred to in Article 28.10(1)(d) (Qualification of Panellists and Roster Members), the disputing Parties shall consult and, if they agree, that panellist shall be removed and a new panellist shall be selected in accordance with this Article.

That’s not very encouraging; when I hear “Code of Conduct,” I think of the code being enforced by some entity outside the dispute (for example, the ABA or a medical society disciplining a member). Not so here. So let’s go to Article 28.10(1)(d). It reads:

d) comply with the code of conduct contained in the Rules of Procedure.

So let’s go to the “Rules of Procedure,” which is “Article 28.12: Rules of Procedure for Panels.” It’s not that long, and so I’m going to quote the article in its entirety (and as you will notice, we’ve seen some of it already):

Article 28.12: Rules of Procedure for Panels
1. The Rules of Procedure, as established under this Agreement in accordance with Article 27.2.1(e), shall ensure:

(a) a right to at least one hearing before the panel at which each disputing Party may present views orally;
(b) that, subject to subparagraph (f), any hearing before the panel shall be open to the public, unless the disputing Parties agree otherwise;
(c) an opportunity for each disputing Party to provide an initial and a rebuttal written submission;
(d) that, subject to paragraph (f), each disputing Party shall make its best efforts to release to the public any written submission, written version of an oral statement, and written response to a request or question from the panel, as soon as possible after they are filed and, if not already released, will release all such documents by the time the final panel report is issued;
(e) that the panel shall consider requests from non-governmental entities located in the territory of any disputing Party to provide written views regarding the dispute that may assist the panel in evaluating the submissions and arguments of the disputing Parties;
(f) the protection of confidential information;
(g) that written submissions and oral arguments shall be made in English, unless the disputing Parties agree otherwise; and
(h) that unless otherwise agreed by the disputing Parties, hearings shall be held in the capital of the responding Party.

Does this look any a code of conduct you’ve ever seen? Here’s how the Code of Conduct for United States Judges begins:

The Code of Conduct for United States Judges includes the ethical canons that apply to federal judges and provides guidance on their performance of official duties and engagement in a variety of outside activities.

No “ethical canons” to be found in Article 28.12, am I right? No “guidance” on “engagement in a variety of outside activities” either, am I right? MR SUBLIMINAL Ka-ching! These lacunue are especially important for the ISDS panels, since, as NC readers know:

First, the ISDS tribunals, putatively courts, are completely unaccountable. Public Citizen:

TPP ISDS tribunals would be staffed by highly paid corporate lawyers unaccountable to any electorate or system of legal precedent.

Second, the ISDS tribunals are riddled with conflicts of interest and open invitations to corruption. Public Citizen:

Many of [the corporate lawyers] involved rotate between acting as “judges” and as advocates for the investors launching cases against governments. Such dual roles would be deemed unethical in most legal systems. The leaked text does not include new conflict of interest rules, despite growing concern about the bias inherent in the ISDS system.

Third, there is no appeal from the judgements of these putative courts. Public Citizen:

There is no internal or external mechanism to appeal the tribunal members’ decisions on the merits, and claims of procedural errors would be decided by another tribunal of corporate lawyers.

Fourth and finally, the discretion of the ISDS tribunals is so great that they can write the rules, as well as interpret them. Public Citizen:

There are no new safeguards that limit ISDS tribunals’ discretion to create ever-expanding interpretations of governments’ obligations to foreign investors and order compensation on that basis.The leaked text reveals the same “safeguard” terms that have been included in U.S. pacts since the 2005 Central America Free Trade Agreement (CAFTA). CAFTA tribunals have simply ignored the “safeguard” provisions that the leaked text replicates for the TPP, and have continued to rule against governments based on concocted obligations to which governments never agreed.

In the first three points, the ISDS tribunals are acting as putative courts, albeit conflicted, potentially corrupt, and anti-democratic and unaccountable courts. However, in the fourth point, the tribunals are, functionally, legislatures. Here is what Madison had to say about mixing judicial and legislative power. Federalist 47:

The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny. … Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator.

So, what Madison warned of is exactly what ISDS does: The judge is the legislator, leading to “arbitary control.” And arbritary control is absolutism, just as surely as it was in the age of the divine right of kings.[2] And for bonus points, the judges and the legislators are conflicted, open to corruption, and accountable neither to the voters nor to any system of precedent.[3]

The FT is, again, at best deceptive. The TPP’s “code of conduct” is like no code of conduct I’ve ever seen, and it opens the door to an arbitrary and corrupt process.

ISDS Proceedings Are Not Required to Be Public

Also in paragraph 2, the FT claims that ISDS “requires all proceeding in ISDS cases to be public.” Let’s go to the text: from TTP’s Chapter 28, “Dispute Settlement, Article 28.12, “Rules of Procedure for Panels”:

1.The Rules of Procedure, as established under this Agreement in accordance with Article 27.2.1(e), shall ensure:

(b) that, subject to subparagraph (f), any hearing before the panel shall be open to the public, unless the disputing Parties agree otherwise; […]

(f) the protection of confidential information;

In no sense whatever, then, does TPP require “all proceeding in ISDS cases to be public.” First, the parties may collude. Second, we’ve already seen grossly abusive claims of confidentiality by powerful corporations; there’s no reason at all to think ISDS cases will be any different, or that ISDS panels will curb any abuse. The FT is simply and shockingly wrong.

The TPP Tobacco Carveout May Still Allow Challenge

Recall that in paragraph 3, the FT claims that the TPP “limit[s] the ability of companies to challenge government regulations, such as those meant to regulate tobacco use.” Simon Lester, at the The International Economic Law and Policy Blog, has this to say about the tobacco carveout clause, which is in TPP’s Chapter 29, “Exceptions and General Provisions:

Analyzing the TPP should keep us all busy for the next year or so. I’ll start with one of my favorite subjects, the tobacco carveout: […]

Article 29.5: Tobacco Control Measures12

A Party may elect to deny the benefits of Section B of Chapter 9 (Investment) with respect to claims challenging a tobacco control measure13 of the Party. Such a claim shall not be submitted to arbitration under Section B of Chapter 9 (Investment) if a Party has made such an election. If a Party has not elected to deny benefits with respect to such claims by the time of the submission of such a claim to arbitration under Section B of Chapter 9 (Investment), a Party may elect to deny benefits during the proceedings. For greater certainty, if a Party elects to deny benefits with respect to such claims, any such claim shall be dismissed.

12 For greater certainty, this Article does not prejudice: (i) the operation of Article 9.14 (Denial of Benefits); or (ii) a Party’s rights under Chapter 28 (Dispute Settlement) in relation to a tobacco control measure.

13 A tobacco control measure means a measure of a Party related to the production or consumption of manufactured tobacco products (including products made or derived from tobacco), their distribution, labeling, packaging, advertising, marketing, promotion, sale, purchase, or use, as well as enforcement measures, such as inspection, recordkeeping, and reporting requirements. For greater certainty, a measure with respect to tobacco leaf that is not in the possession of a manufacturer of tobacco products or that is not part of a manufactured tobacco product is not a tobacco control measure.

Here’s my first question: Is this provision self-judging? In other words, who decides whether a measure is a “tobacco control measure”?

The language about a party “electing” to deny benefits suggests maybe it is self-judging. The whole provision depends on what governments “elect” to do.

“Self-judging” is a term of art in international trade law. A presentation titled “Self-Judging Clauses in International Dispute Settlement: Overview and Context” from the Max Planck Institute for Comparative Public Law and International law explains how to spot self-judging clauses, and what they mean:

What is a self-judging clause? Definition: “provision in an international legal instrument by means of which States retain their right to escape or derogate from an international obligation based on unilateral considerations and based on their subjective appreciation of whether to make use of and invoke the clause vis-à-vis other States or international organization

What makes a clause self-judging?

Subject matter (national security, essential security interests)

  • Relevant wordings: “it considers”, “it determines”, “in the state’s opinion”, etc.

  • Residue of sovereignty-centered international law in a modern system of inter-State cooperation

(“Residue.” Hmm.) So, it looks to me, if “elect” is relevant wording, that the tobacco clause is indeed self-judging, that is, states retain the right to regulate. But not so fast! That doesn’t mean that their regulation isn’t open to challenge. First, it depends on what the meaning of “tobacco control” is. Back to Lester’s post:

On the other hand, you need some oversight of these things, or a government might claim that any ordinary regulation is a tobacco control measure because of some distant relationship it has to tobacco control. A party can “elect” to use the exception, but only, of course, if the measure is a tobacco control measure. So perhaps the investment tribunal would need to decide this question?

Next, what about expropriation?

Next up, let’s say a government wants to eliminate production of tobacco, and to do so, it expropriates a foreign tobacco company’s factory. Would that fall under this exception?

The author concludes:

It would be a lot of fun [!!] if some day there is a case that explores some of these issues. So far there have only been two ISDS challenges of this kind of measure, so it seems unlikely any such cases are coming, but you never know.

So the FT is at least partially correct on this; the power of corporations to challenge tobacco regulation is in some sense “limited.” But notice that the tobacco regulation can still be challenged under any of the theories presented by Lester, and if corporations have the right to challenge, they have the power to intimidate, as we have seen. Notice also that the Lester says it’s going to take a year to figure out what the language of the tobacco carve-out really means. However, TPP, if it is to be passed, can be passed in less than a year. So, once again, we might have to pass a bill to find out what’s in it (and in this case, we’ll be informed by the decisions of unaccountable international tribunals with no ethical canons. What could go wrong?).

Conclusion

In summary, then, the FT coverage of the ISDS chapter of the TPP ranges from outright wrong to weakly mis- or disinformative.

1) The Preamble is only, as it were, informative. It is not normative, and in itself does not establish the rights of states to regulate for the welfare of their citizens;

2) The ISDS “Code of Conduct” is no such thing, since it does not include ethical canons or guidelines for outside activity;

3) ISDS proceeedings are most definitely not required to be public; the parties can agree that they be secret, and the confidentiality clause is a loophole even a bad lawyer could drive a truck through;

4) The so-called tobacco carve-out still permits challenge, and hence does not change the power imbalance between rich and threatening corporations and states that are small or poor.

In other words, if NC were WaPo, it would be awarding the FT multiple Pinocchios for its coverage of the ISDS.[4] Could do better!

The TPP is a major international agreement. Is it too much to ask that the financial press take this story seriously?

NOTES

[1] I can only hope my shallow dive isn’t a belly flop. If we have any readers who are international trade lawyers or subject matter experts, I hope they will correct or expand these points in comments.

[2] I found a few other Easter Eggs in the digest of the Vienna Convention:

Negotiation records are a well recognized category of interpretative material in international law

Well and good, but the TPP’s negotiation records are secret, and will be kept secret for, IIRC, a decade.

And then there’s this:

If a national law has effect on the international plane, e.g. a state’s unilateral offer to arbitration, that law has to be interpreted according to the rules of interpretation of international law, not the state’s national rules of interpretation

And here’s a pleasingly wonky post on “multiple permissible interpretations under the Vienna Convention.” International law is complicated. No wonder the ISDS panellists are paid so well.

[3] Dylan Matthews makes this argument for the Preamble in the TPP’s Development chapter, but doesn’t generalize it to apply to the entire agreement.

[4] Yes, as of today, November 8, the story I have analyzed, from November 5, is the only significant story on TPP from the FT.

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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.

57 comments

    1. Chauncey Gardiner

      In addition to negating the possibility as a practical matter of restoration of the Glass-Steagall Act separating commercial banking from Wall Street’s markets speculations, and re-regulation to reduce control and securities frauds similar to those that crashed the financial system in 2008, the TPP would as a practical matter obligate the American people to underwrite their derivatives and markets speculations. Further, it would make changes to the nation’s monetary system, including their distribution of money through the primary dealer network that has led to recurring bubbles, and a a modern monetary system restructure, very difficult.

      Among many other detrimental aspects of this proposed document, it represents a pathetic lobbyist-written end run effort to lock us into a Wall Street-corporatist legacy status quo over the next decade. That this effort is occurring in the final year of the most neoliberal administration in our nation’s history and in the face of widespread public opposition is no accident.

  1. mary k

    So how will this affect western public lands and the Decisions on projects made by BLM and Forest Service? Especially since so many of the environmentally harmful activities impacting our public lands are conducted by foreign-owned hard rock mining corporations, oil and gas companies, industrial renewable energy developers engulfing the deserts, etc. Even public lands “welfare” ranching – where extraordinarily subsidized near-free grazing permits are increasingly held by gold mines and others who buy up private lands for water and attached to those lands (“base properties”) are the permits for vast grazing allotments. Yes I know that many of the existing regulations are strongly weighted towards industry already , but …

      1. Paul P

        Incorporate outside the US or incorporate a subsidiary outside the US—and “US corporations” will be able to sue for lost profits.

        “Foreign corporations” means all corporations.

  2. David

    However, TPP, if it is to be passed, must be passed in less than a year.

    Do you have a source for this? I haven’t seen anything that says that TPP has an expiration date.

    Vietnam has said that they could take 18 months to 2 years to approve.

    Thanks for the article.

  3. Portia

    Please pardon me if I missed it, but who will enforce the decisions of the ISDS tribunals? If they can circumvent the Federal and State judicial systems, will they have their own enforcers, or will the sovereign entities have to enforce their decisions? This seems bizarre.

    1. C

      I suspect based upon other reporting that this will function like the EU and WTO do. States are expected to “harmonize” their laws with the TPP interpretations. States that are out of line will simply be fined at the federal level until they comply. That is also what has been done with NAFTA. So the force here is purely economic and, crucially, is always directed at the remotest, and most captive, segment of the government, the federal executive.

      1. Lambert Strether Post author

        And if we want to see what “purely economic” forces can do, we need only look at what happened to Greece (and before Greece, Cyprus (and before Cyprus….)).

        1. Portia

          In America, people are already against the wall. I think in Greece there was an element of shock and surprise. Here, we have more of a learning curve. I don’t see people everywhere lying down and taking it.

          1. Ian

            Greece doesn’t have anywhere near the level of militarization of the police force nor does it have drones.

            1. Portia

              Hmmm. Well, that will certainly be a point of no return, if the corps truly take power over the police and military forces and go after all of us. I don’t think they really want any of the hard work or the cost of suppressing a huge population which will certainly evolve into underground resistance if necessary. They are cowardly bullies who prefer to rule by fear, and they will need more organization than they have to truly enforce their theft.

              http://inthesetimes.com/rural-america/entry/18569/the-new-economy-movement

              1. Ulysses

                “If the corps truly take power over the police and military forces and go after all of us.”

                This has already begun to happen, as I witnessed myself many times in lower Manhattan during late 2011 and early 2012:

                http://www.counterpunch.org/2011/10/18/wall-street-firms-spy-on-protestors-in-tax-funded-center/

                Recently they have tried to use mostly non-lethal weapons like LRAD etc., yet Kent State shows that the U.S. MIC and militarized police have never been shy about gunning down peaceful protestors.

                Why do you think J.P. Morgan gave a nearly $5million dollar bribe to the NYPD in late 2011? Do you really think they protect and serve anyone other than the powerful kleptocrats?

                1. Portia

                  That is Wall Street in New York. I am not talking about that. I am talking about State sovereignty, and the threats to environment and labor laws by Corps who decide they have a right to do business as they please anywhere they like, and run roughshod over the citizens via ISDS Tribunal decisions which take place elsewhere. Will they bring an army or private police force, as they did in Iraq, and build compounds, as if in a war zone? I have an idea how pissed off people get where I live, and Corps will have to go to great lengths.

            2. Portia

              They will also have to deal with these folks:
              http://commondreams.org/news/2015/11/08/our-generation-our-choice-say-youth-readying-mass-civil-disobedience

              But the real emphasis, say organizers, will be on grassroots movement-building.
              “The choice is clear: politicians are failing to take our country to where it needs to go, so a movement of young people will lead us there,” wrote Yong Jung Cho of 350.org, Waleed Shahid of Working Families, Devontae Torriente of Million Hoodies, and Sara Blazevic of the Fossil Fuel Student Divestment Network in a recent statement.

              Are they going to start mowing everyone down?

              1. different clue

                Well . . . yes. They will certainly try it and see if it works quickly. The Young Civil Disobeyers should think about how they would respond to government massacres. They should have their response ready to go.

                They should also think about how to respond to “less-lethal” government crowd suppression methods. The Raytheon portable microwave Oven Ray.
                The LRAD ear-splitter/deafenizer. Mass disorientation and/or mass nausea inducing fog-cloud gas-downs. Those would probably the the sophisticated first resort of the government forces with mass machine gunning being a second resort.

                Perhaps mass spraying with electro-conductive salty fog and then the application of powerful electric currents to spread throughout the fog to whatever the fog touches.

                Potential Civil Disobeyers should be ready for all of that.

                1. Ulysses

                  If by “you Americans,” you mean “you American wealthy investors”, then yes. For 99% of us Americans this stick is even shittier than the NAFTA, CAFTA, and other sticks that have already done enormous damage to us.

                2. Portia

                  The picture you paint will not take apart the diversity of the creative cooperative movements in this country. It will just bleed the resources of the forces trying to dominate. And distract them. The Parasite will die, it will just be a matter of time.

      2. Portia

        I expect especially the Western States to be uncooperative, to say the least. Look what happened with the Bundy Ranch. I think even in Vermont, where I live, corps may bite off more than they can handle. They may think they can starve and fine people into submission, but that remains to be seen. It can only go so far, IMO.

        1. Oregoncharles

          There is an active national movement promoting civil resistance BY local governments: Community Environmental Legal Defense Fund, http://www.celdf.org.

          It appears, as noted in this thread, that ISDS penalties (and it’s a very good question: who DOES collect those) are directed ONLY to the federal level. Given our “federal” system, how will the feds collect from the local governments that violate the agreement? Certainly trying to will cause an enormous political stink.

          This strategy is already being used for environmental measures that negate corporate personhood/”rights”. The ISDS mechanism appears to be an open invitation to a movement for local and state resistance along these lines. They can cost the federal government huge penalties, then defy the feds to make them change their policy.

          1. C

            We have already been sued under ISDS with other agreements, notably NAFTA. According to USTR Froman we have never lost a case but the costs of defending ourselves have been real. To the best of my knowledge those costs have simply been taken out of the federal budget. Canada and Mexico have lost cases but I am not sure who paid in those cases.

            As to who collects, these are generally run as if they are civil suits so I suspect that in general: to the victor go the spoils.

      3. JTMcPhee

        C, when a local, state or federal judiciary, or arbitrator, resolves the “merits” of a Dispute, and “enters its judgment,” whether for monetary damages, or injunctive relief, there has to be a mechanism for enforcement, whether to levy on assets or receive a check in satisfaction or throw the former homeowners and their stuff to the curb. A whole lot of people, including large corporations and our great federal, state and local governments, (think George Wallace and Bull Connor and Dickless Cheney, eg) and angry spouses and stalkers, thumb their noses at judgment orders and injunction. The Great Decider Tribunals are going to need some way to force “states” to heel, unless the states are in on the scam and just issue money or turn over parks and other public assets to the Shits in the bespoke suits and custom footgear.

        Saying that the New Lord’s of World Commerce are going to “impose fines” begs, at least I think it does, the question kids on the playground respond to challenges like this with: “Oh yeah? You and what army are gonna make me do X?”

        Or as I asked the other day, have these rodents and tapeworms done enough advance work in suborning the rest of us and our governments and political economies and individual and group resolves and wills that “Resistance is futile”?

        1. Portia

          have these rodents and tapeworms done enough advance work in suborning the rest of us and our governments and political economies and individual and group resolves and wills that “Resistance is futile”?

          If they think that, there will be a bloody answer, I fear.

        2. Synoia

          Enforcement is provided by the World Bank and IMF.

          Also the US can enforce the fines though its control of the Dollar.

            1. Oregoncharles

              There are advantages in being the Big Dog. It’s one reason the administration sees the trade agreements as very one-sided. And to a great extent the whole thing is a scam: a back-door way for our government, and especially Democrats, to take back everything they supposedly stand for. So they’ll comply when they want to. And as I just posted above, their relationship with local governments may turn out to be very vexed.

              Does anyone know what the enforcement mechanism is supposed to be? Between governments, it takes the form of duties on specific items of trade, but can corporations do that?

              1. TedWa

                I don’t have any faith in the states fighting anything that big money wants. Look at the AG’s settlement for robo-signing when they could have banded together and taken the banks to court for fraud and instead we get states going bankrupt.

        3. C

          This is, I think, one of the interesting issues here. Prior cases before the WTO and NAFTA that I am familiar with have generally had two features: 1) They are focused on national decisions (e.g. Poland’s decision to regulate its insurance market); and 2) that the losing nation was not us.

          Some large and seemingly dominant nations have lost such as China before the WTO and Canada under NAFTA. In the China case (market dumping) the cost was paid by other countries being permitted to slap tarrifs on them. In the Canada cases I am not so sure. In the case of Poland they were simply forced to cough up money lest their be blocked from trading elsewhere.

          I am not exactly sure how enforcement would work given our distributed governing structure but I suspect three things:

          First I suspect that they have not given a lot of thought to how we would be fined given that President Obama and USTR Froman keep insisting that we have never lost. What they leave out is that we have also regularly dropped our standards in ways that make likely suits less common, in effect complying with their wished “of our own free will.”

          Secondly, I suspect that most of the interesting actions will be in areas such as Finance which are largely federal law and where pressure can be brought to bear by simply fining our financial transactions. Jacking up tarrifs on a single money flow could wreak large-scale havoc. In that case any fines would likely come out of the federal coffers and Congress could simply be pursuaded to comply by dropping our regulatory bar still lower. In this respect the front page article at the Intercept is enlightening.

          Thirdly, in cases where a state or local jurisdiction is “at fault” I suspect that any fines would still just be federal but that “compliance” would have to be done by passing federal laws that limit state’s rights and local jurisdiction at which point it becomes a national problem. Would there be opposition? Of course. Would it get ugly? Definitely. But I suspect in President Obama’s mind, that is the next guy’s problem.

    2. Dwight

      My understanding is that arbitration awards under TPP will be enforceable in domestic courts, as are other international arbitration awards. Courts won’t question the substance of the decisions, and will only refuse enforcement in certain limited situations involving procedural flaws.

  4. C

    Lambert, thank you very much for this coverage. In your dive, did you find anything regarding immigration? I know that one fear from many sources such as Breitbart was that this treaty could essentially force “immigration reform” by requiring states to accept workers from anywhere thus making any existing limits a joke. I have yet to see that in what I have looked at other than the link I posted yesterday which conflates contractors and immigrants.

  5. GlassHammer

    “Is it too much to ask that the financial press take this story seriously?”

    Ruthless/brutal criticism is an uncommon characterisitic.
    Maybe this is the best they can do.

    There is a reason I read NC more frequently than Bloomberg, WSJ, FT, etc…

  6. sgt_doom

    A lot of verbiage, but no offense, how’s about just a short synopsis?

    It does away with food safety standards, while raising the cost of medicine. (profit, profit, profit)

    It enables ISDS, which is essentiall the forced arbitration clause on the global level.

    Nothing to halt slave labor.

    More jobs offshored.

    1. Lambert Strether Post author

      You didn’t consider “If you believe that the TPP is part of an emergent global apparatus superseding sovereign states and tuned to the needs of global trans- and post-national elites, then Chapter 28 is the chapter to read” a short synopsis?

  7. Oregoncharles

    Lambert: Is there a practical way to maintain a running compilation of posts on the TPP, post release of the text? Maybe in a sidebar? These are valuable political tools, so the more easily they can be referenced, the better.

    Come to think, this would also apply to some of NC’s other topics, like the ACA or private equity. But I think the politics will be liveliest on the TPP, given the timeline.

    Just suggesting the best term for the internal search would be helpful. (It may be obvious that my bookmarks are not well organized.)

    1. Torsten

      Use the NC (WordPress) Search box or the “TPP” Category link on the NC front page. Crude tools, but helpful.

  8. Jim

    It seems that these global and post national elites are able to win victory after victory for their interests by creating initially secretive, hyper-complex and ambiguous pieces of (in this case trade legislation) with no real end-date for eventual implementation.

    In essence the checks and balances of representative government are incrementally overwhelmed by a purposefully created corporate/legal legislative maze.

    A successful, parallel, largely unelected government has already been created in the arena of national security and a second parallel unelected structure appears well on its way to being created for domestic economic, financial and international trade policy.

    Is any attempted alternative granular analysis likely to be overwhelmed by this same maze/structure largely because the minutia being discussed (while extremely important) only tends to end up as a rather boring debate between experts of various types?

    Or is such an alternative granular analysis a largely untried pathway to serous reform?

    1. JTMcPhee

      The presumption, possibly unwarranted, is that if enough people, ordinary people, can be brought to see what is being done to them “under color of law,” they will act to stop all that. It takes more than granular analysis, though that’s a necessary piece, to get to the simple fundamental comprehensible simple statements that can n rally the people to resist and persist.

      The hopeful among us hope that the frogs will notice the water in the pot is getting uncomfortably warm, before they succumb to the heat and while they still have the strength to jump out of the pot…

      1. Oregoncharles

        The old story is untrue: frogs do jump out, if they can, when the water gets too warm.

        Let’s hope people are that smart.

    2. human

      In other words: Why are we compelled to spend substantial amounts of our finite time analyzing these obviously treasonous proposals in order to educate what amounts to “the choir” when the bulk of our elected “representatives” are (just generally) ignorant.

      I fear for my children and am so sorry for what we have allowed to be done to their future.

    3. Ulysses

      Often what seems at first glance to be a minor technical detail can reveal huge new assertions of power. For example in chapter 3, of the final TPP text, we come across this language:

      “in the case of a verification visit, request the written consent of the exporter or producer whose premises are going to be visited, and state the proposed date and location for the visit and its specific purpose.”

      This means that even the very flimsy enforcement actions that may be taken against a multinational corporation in this new regime will be worthless. Would you trust the food safety certification of a restaurant’s kitchen, if you knew that any safety inspections were only conducted when convenient for the restaurant owner?

      This language demonstrates that the tail now wags the dog. “We’re going to be checking for contraband next Thursday at 10:00 A.M. If this proves inconvenient please let us know when we may be allowed to check for contraband at some other, more convenient time!”

    4. Oregoncharles

      Look back at Sgt. Doom’s short comment. It’s a short list of the slogans you can derive from the analysis. There are many more – if you think of more, post them under the next “dive” into the TPP.

      But at least in my rather academic town, it’s unwise to use slogans without analysis to back them up. You’ll wind up looking like a fool. Some people are convinced ONLY by granular analysis; there seem to be a lot of them coming to NC.

      In short, a truism: you need both.

      1. different clue

        Granular analysis would be a first step. Weaponization of the results and broad dissemination of the weaponized results would be a second step.

  9. C

    On the front of conservatives and the TPP I came across two very interesting articles from Breitbart.com

    The first is a long-form criticism of the TPP fromMike Huckabee who sounds a lot like Bernie Sanders in his opposition notably this passage:

    Huckabee argued that the trade agreement would assist the wealthiest in America but at the expense of the bottom 90 percent of Americans who had been suffering stagnant wages for 40 years.

    “If you’re in the very top investor class of the economy, it will be a great boost,” he said, “If you’re in the working class of the economy … this is an incredible threat to the future of the country, a great threat to our way of life.”

    He criticized an economic climate that was growing in America, allowing companies to “exploit the labor” of workers – without giving them enough opportunities to grow their future.

    Huckabee pointed out that government efforts to cut Social Security and Medicare was just one more sign that politicians were ripping off every day Americans but keep corporate giveaways in the tax code.

    “Social Security and Medicare are not welfare payments, people who are on those programs have paid in their money and it wasn’t like government gave them an option, they involuntarily confiscated it from their checks,” he said.

    The second is an article on Marco Rubio who is now critical of the TPP and of news sources who note his past support putting him very much in Hillary Clinton’s position save that he did cast a vote in favor of TPA and she did not.

  10. TarheelDem

    Good first dive, Lambert.

    Looking for the later articles that bring it down to the everyday implications of my friends, family, neighbors, and work colleagues. They got this linked on FB anyway. Maybe they will understand the ISDS stuff enough to get an “Aha!”.

    Thanks for this.

    1. nycTerrierist

      Here’s a good roundup from Public Citizen Global Trade Watch:

      Even with the extreme secrecy, we know enough, due to partial leaks of the secret text, to be very afraid.

      For instance, we know the TPP would:

      Lower U.S. wages by throwing Americans into competition with workers in Vietnam making less than 65 cents per hour.

      Provide incentives for multinational corporations to ship U.S. jobs overseas — yup, actual incentives to offshore more American jobs.

      Flood us with unsafe imported food by requiring us to accept meat and seafood imports from countries that do not meet our safety standards.

      Raise prices on life-saving medicines by giving new monopoly rights to pharmaceutical companies.

      Undermine “Buy American” and “Buy Local” policies.

      Empower corporations to attack our environmental and health safeguards in tribunals of corporate lawyers, demanding unlimited taxpayer dollars as compensation.

      1. Carlos

        You Americans are not on the shitty end of the stick. If you ever did vote in a Government to regulate the banks you would just do it and flip a middle finger to the arbitrators.

        If we develop a generic drug to stop our population dying and flip the bird. We will be sanctioned to within an inch of our lives.

        A sharp, shitty stick right in the eye.

        1. different clue

          If you convince enough Americans that they get the clean and helpful end of the stick, you may just convert enough Americans into supporting Free Trade Agreements to get the Free Trade Agreements passed. I hope you are not a hidden-hand false-flag black-advance pro Free Trade Agreements Psy Ops warrior.

          1. Carlos

            Pys Ops warrior ….. Worst one ever I think.

            Ok so the stick is pointed at both ends. 1% holding it with tongs.

  11. Code Name D

    Seems to me that the tobacco “carveout” is itself a red flag. This is the tolerated acceptation to the rule. We can’t have the TPP going around and doing away with all the municipal smoking bans now can we. That’s a bridge too far. But for everything else? The chickencoop is open and ready for the taking.

  12. Ed

    If you search for “code of conduct” at the Washington Post’s searchable TPP site, you get more hits.

    At mininum Lambert, you should be using the “case-insensitive” option of grep: -i

    But even this isn’t enough, probably, because “grep” only searches on one line at a time, and so won’t find “code of” and “conduct” separated by a newline. For this, you should use a tool such as pcregrep, which searches across line breaks if you give it an appropriate pattern, such as “code\s+of\s+conduct”.

    1. Lambert Strether Post author

      Good point! Do your hits affect my interpretation? Adding:

      ls$ grep -i  "code of conduct" *.*
      TPP-Final-Text-Dispute-Settlement.txt:9.      If a disputing Party believes that a panellist is in violation of the code of conduct referred
      TPP-Final-Text-Dispute-Settlement.txt:       (d)     comply with the code of conduct contained in the Rules of Procedure.
      TPP-Final-Text-Environment.txt:Stocks, done at New York, 4 December 1995 (UN Fish Stocks Agreement), the FAO Code of Conduct for
      TPP-Final-Text-Investment.txt:application of the Code of Conduct for Dispute Settlement Proceedings under Chapter 28
      TPP-Final-Text-Investment.txt:pursuant to this Article, including any necessary modifications to the Code of Conduct to
      TPP-Final-Text-Transparency-and-Anti-corruption.txt:APEC Code of Conduct for Business: Business Integrity and Transparency Principles for the Private

      * * *

      Aw, what the heck. I went ahead and installed pcregrep on OS X. Results:

      ls$ pcregrep  ".ode\s+of\s+.onduct" *.*
      TPP-Final-Text-Dispute-Settlement.txt:9.      If a disputing Party believes that a panellist is in violation of the code of conduct referred
      TPP-Final-Text-Dispute-Settlement.txt:       (d)     comply with the code of conduct contained in the Rules of Procedure.
      TPP-Final-Text-Environment.txt:Stocks, done at New York, 4 December 1995 (UN Fish Stocks Agreement), the FAO Code of Conduct for
      TPP-Final-Text-Investment.txt:application of the Code of Conduct for Dispute Settlement Proceedings under Chapter 28
      TPP-Final-Text-Investment.txt:pursuant to this Article, including any necessary modifications to the Code of Conduct to
      TPP-Final-Text-Transparency-and-Anti-corruption.txt:APEC Code of Conduct for Business: Business Integrity and Transparency Principles for the Private
      

      So I don’t think my interpretation changes, based on these hits. Thanks for the suggestions!

  13. Danny

    International law is fascinating but very squishy. My understanding is that, as a general rule, sovereign states may agree to give up some rights as long as it’s legal according to local law. Subsequent versions of the government can step back from those agreements though may be penalized according to terms of the agreement, reinstituting customary relations and their negative aspects (e.g. protective tariffs, getting shut out of markets, etc), and cancellation of other benefits, among other things. I consider it the same treatment Greece would get if it leaves or gets kicked out of the Eurozone.
    FWIW, the ISDS panel decisions can still be challenged in federal court no matter what the enacting law says. The Constitution is the Supreme law of the land so there is always judicial recourse as long as the party has standing to sue. Unfortunately states are the most likely parties to have standing and in the best position to prevail. Federal agencies can’t sue because TPP would be federal law. For example if California is sued for creating new green house gas regulations that cause losses to a foreign corporation and then subsequently loses in an ISDS hearing, then it can file for an injunction in federal court against the decision and that the panel’s powers are a constitutional violation with a final appeal to SCOTUS. That could change if the federal government pays the penalty (I.e. it’s not directly assessed to the state) or changes federal law to preempt California – if constitutional. That said we shouldn’t ever get into that position. It’s such a sorrowful idea.

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