The Media Discovers The TPP

The corporate nature of the Trans-Pacific Partnership (TPP), a so called free-trade agreement, is becoming more obvious thanks to a recent leak of the investment chapter by Wikileaks.

While the U.S. government likes to promote agreements like the TPP as good because they lower restrictions on trade, the fact is that trade liberalization itself does not automatically improve worker and community well-being.  In fact, most studies show negative consequences.    Even more importantly, pure trade issues play only a small part in these free-trade agreements; they are primarily designed to boost corporate power and profits through multiple chapters, each of which limit public regulation or control over different aspects of corporate decision making.

The investment chapter of the TPP is a case in point.  Here is what the New York Times has to say about the chapter:

The Trans-Pacific Partnership — a cornerstone of Mr. Obama’s remaining economic agenda — would grant broad powers to multinational companies operating in North America, South America and Asia. Under the accord, still under negotiation but nearing completion, companies and investors would be empowered to challenge regulations, rules, government actions and court rulings — federal, state or local — before tribunals organized under the World Bank or the United Nations. . . .

The sensitivity of the issue is reflected in the fact that the cover mandates that the chapter not be declassified until four years after the Trans-Pacific Partnership comes into force or trade negotiations end, should the agreement fail. . . .

 “This is really troubling,” said Senator Charles E. Schumer of New York, the Senate’s No. 3 Democrat. “It seems to indicate that savvy, deep-pocketed foreign conglomerates could challenge a broad range of laws we pass at every level of government, such as made-in-America laws or anti-tobacco laws. I think people on both sides of the aisle will have trouble with this.”. . .

Under the terms of the Pacific trade chapter, foreign investors could demand cash compensation if member nations “expropriate or nationalize a covered investment either directly or indirectly.” Opponents fear “indirect expropriation” will be interpreted broadly, especially by deep-pocketed multinational companies opposing regulatory or legal changes that diminish the value of their investments.

Included in the definition of “indirect expropriation” is government action that “interferes with distinct, reasonable investment-backed expectations,” according to the leaked document.

Critics say the text’s definition of an investment is so broad that it could open enormous avenues of legal challenge. An investment includes “every asset that an investor owns or controls, directly or indirectly, that has the characteristic of an investment,” including “regulatory permits; intellectual property rights; financial instruments such as stocks and derivatives”; construction, management, production, concession, revenue-sharing and other similar contracts; and “licenses, authorizations, permits and similar rights conferred pursuant to domestic law.” . . .

All of those disputes would be adjudicated under rules set by either the International Centre for Settlement of Investment Disputes or the United Nations Commission on International Trade Law. . . .

There are . . . mitigating provisions, but many have catches. For instance, one article states that “nothing in this chapter” should prevent a member country from regulating investment activity for “environmental, health or other regulatory objectives.” But that safety valve says such regulation must be “consistent” with the other strictures of the chapter, a provision even administration officials said rendered the clause more political than legal.

One of the chapter’s annexes states that regulatory actions meant “to protect legitimate public welfare objectives, such as public health, safety and the environment” do not constitute indirect expropriation, “except in rare circumstances.” That final exception could open such regulations to legal second-guessing, critics say.

There are many other chapters in the TPP, most of which are tailored to promote specific corporate interests—for example, there is a chapter that strengthens patent protection and monopoly profits for drug companies—an outcome that flies in the face of liberalization claims.

The corporate bias in these agreements is not surprising given that corporate leaders and lobby groups are the main advisers to the U.S. trade representative.

The media’s recent attention to the TPP’s investment chapter and the growing cries of alarm by politicians is somewhat surprising given that such chapters have been part of all recent trade agreements involving the U.S., for example the Korea-U.S. Free Trade Agreement.

Corporate use of these investment chapters and their associated investor state dispute settlement mechanisms [ISDS] is intensifying as the charts below highlight.

 

And, since the tribunals that rule on corporate initiated suits against governments are heard by corporate lawyers, it should not be surprising that most rulings go against governments.  In one of the largest, the tribunal agreed with Ecuador that Occidental Oil had violated its contract with the government but still ruled in Occidental’s favor to the tune of $2.4 billion.

Regardless of the reason, it is positive that the terms of the TPP are now sparking outrage.  However, since its investment and other chapters have been regularly included in past agreements with little fanfare or Congressional opposition, we need to recognize that current cries of alarm by politicians are more the result of unexpected public disclosure than real disapproval.

If we want to defend our interests we need to take advantage of the moment and strengthen our opposition to this and other free trade agreements.  But we shouldn’t stop there.  After all corporate dominance of public policy is not limited to international trade and investment agreements.

Corporations in Control

President Obama continues to press for a form of fast track approval to ensure Congressional support for two major trade agreements, the Trans-Pacific Trade Partnership Agreement with 11 other countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) and the Trans-Atlantic Trade and Investment Partnership Agreement with the entire European Union.

Both agreements, based on leaks of current negotiating positions, have been structured to promote business interests and will have negative consequences for working people relative to their wages and working conditions, access to public services, and the environment.

These agreements are being negotiated in secret: even members of Congress are locked out of the negotiating process.  The only people that know what is happening and are in a position to shape the end result are the U.S. trade representative and a select group of 566 advisory group members selected by the U.S. trade representative.

Thanks to a recent Washington Post blog we can see who these advisory group members are and, by extension, whose interests are served by the negotiations.  According to the blog post, 480 or 85% of the members are from either industry or trade association groups.  The remaining 15% are academics or members of unions, civil society organizations, or government committees.  The blog post includes actual names and affiliations.

Here we can see the general picture of corporate domination of U.S. trade policy as illustrated by the Washington Post.

In short, corporate interests are well placed to directly shape our trade policies.  No wonder drafts of these treaties include chapters that, among other things, lengthen patent protection for drugs, promote capital mobility and privatization of public enterprises, and allow corporations to sue governments in supra-national secret tribunals if public policies reduce expected profits.