Wolf Richter: NAFTA Negotiations Start in Secrecy, despite Fake Promises of Transparency. Lobbying Heats Up

Lambert here: Of course the negotiations are secret. And of course the national sovereignty-destroying Investor State Dispute Settlement (ISDS) system isn’t up for discussion. For those not up to speed on ISDS, here’s a sampling of NC posts (mostly about TPP, but ISDS is ISDS, whether the trade agreement under discussion is TPP or NAFTA.

From Public Citizen: Top 10 Most Pernicious Investor-State Dispute Settlement Lawsuits

Gaius Publius: ISDS Provisions in TPP Violate Article III of the U.S. Constitution

Framing Votes for TPP as the Surrender of National Sovereignty (i.e., Treason)
The Investor Arbitration Clauses in TPP Are Indeed Very Bad

Investor-State Dispute Settlement (ISDS) Suits Become Favored Hedge Fund Investment

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street

The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations “classified” and they’ll be cloaked in secrecy.

But corporate lobbyists have access. And they’re all over it.

The Electronic Frontier Foundation put it this way:

Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018.

But during his confirmation hearing in March, Lighthizer had promised to make the negotiations transparent and to listen to more stakeholders and the public. The EFF reported at the time that in response to Senator Ron Wyden question – “What specific steps will you take to improve transparency and consultations with the public?” – Lighthizer replied in writing:

“If confirmed, I will ensure that USTR follows the TPA [Trade Promotion Authority, aka. Fast Track] requirements related to transparency in any potential trade agreement negotiation. I will also look forward to discussing with you ways to ensure that USTR fully understands and takes into account the views of a broad cross-section of stakeholders, including labor, environmental organizations, and public health groups, during the course of any trade negotiation.

“My view is that we can do more in this area to ensure that as we formulate and execute our trade policy, we receive fulsome input and have a broad and vigorous dialogue with the full range of stakeholders in our country.”

I added the emphasis.

Senator Maria Cantwell tried to have Lighthizer address the skewed Trade Advisory Committees that currently advise the USTR, by asking:

“Do you agree that it is problematic for a select group of primarily corporate elites to have special access to shape US trade proposals that are not generally available to American workers and those impacted by our flawed trade deals?”

Lighthizer replied:

“It is important that USTR’s Trade Advisory Committees represent all types of stakeholders to ensure that USTR benefits fully from a diverse set of viewpoints in considering the positions it takes in negotiations.”

He also said that he’d look forward to discussing “additional means for ensuring public input into US trade negotiations.

All of them were fake promises. The negotiations and the texts are classified and secret, and unless something is leaked, Americans (along with Canadians and Mexicans) will not know what is being negotiated at their expense.

But lobbyists have access, and they’re being listened to. One big topic is the inclusion of an Investment State Dispute Settlement (ISDS) procedure.

This is important for Big Oil, as represented by the American Petroleum Institute, which said in its brief that “NAFTA must include Investor-State Dispute Settlement.” It called ISDS “a neutral, international arbitration procedure” that “is necessary to ensure that, when US oil and natural gas companies invest abroad, they can seek protection for their investments if they do not have access to developed and independent court systems.”

This also goes for Mexican and Canadian oil and gas companies that invest in the US. But API doesn’t give a hoot about that.

ISDS is an arbitration procedure outside of the national court system. Its rulings force legislatures to change laws in favor of foreign corporations, and the courts are helpless. The Big Oil lobbying group also said this in the brief:

API is not aware of any adverse decisions among the handful of ISDS cases ever brought against the US. US companies have won or favorably settled many of the approximately 35 cases they have brought against Canada and Mexico.

“Adverse decision” is in the eye of the beholder. Here is an ISDS case that the US lost against Canada and Mexico. It whacked American consumers and reduced Congress to a rubber-stamping entity.

On December 2015, a WTO arbitration panel, in siding with Canadian and Mexican beef and pork producers, ruled against the US Country-Of-Origin Labeling (COOL) requirements for beef and pork, originally passed by Congress in 2002 and strengthened in 2013.

After that strengthened act became effective, beef and pork products sold in the US had to show where the animal was born, raised, and slaughtered. Americans finally could make decisions based on this knowledge. The labeling was very popular in the US. A little consumer knowledge goes a long way.

But the WTO claimed that the labeling requirements discriminated against Canadian and Mexican meat imports. And to heck with consumers. It allowed those countries to impose up to $1 billion a year in trade sanctions against US exports if the COOL requirements weren’t removed. Congress buckled in no time and voted to repeal the COOL law.

This is how ISDS operates. Consumers and workers have no seat at the table. What matters are corporate interests lined up against the rules and laws put in place by elected governments. The ruling is a deal made between companies and an arbitration panel, and Congress then has to repeal its offending laws.

ISDS provisions are an attack on national sovereignty. Big Oil doesn’t want governments to get in the way with rules and laws that might trim their profits or limit their power or curtail their freedom to operate wherever and however they see fit.

So if the USTR contemplates handing over this power to some arbitration panel, the negotiations should at least be public, and the documents should be public, and the lists of lobbyists and their priorities should be public so that outrageous portions of the agreement could elicit public outrage. And it should be public from the very beginning, not just when the final package of thousands of pages is presented to Congress, which then is under tremendous pressure to rubber-stamp the thing.

But fat chance. Already, penalties imposed during the first half of 2017 on Wall Street firms by their regulators have plunged compared to the same period in 2016. The Financial Crisis is forgotten. Even sounds of gentle wrist-slapping fade. Read… Wall Street Firms Win Again, Regulators Capitulate

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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.