Now We Know Why Huge TPP Trade Deal Is Kept Secret From the Public

Now We Know Why Huge TPP Trade Deal Is Kept Secret From the Public

03/27/2015 Updated May 27, 2015

Huffington Post

Dave Johnson

Fellow, Campaign for America’s Future

The Times‘ report explains that this clause also “giv[es] greater priority to protecting corporate interests than promoting free trade and competition that benefits consumers.”

A key section of the secret Trans-Pacific Partnership (TPP) trade agreement has been leaked to the public. The New York Times has a major story on the contents of the leaked chapter, and it’s as bad as many of us feared.

Now we know why the corporations and the Obama administration want the TPP, a huge “trade” agreement being negotiated between the United States and 11 other countries, kept secret from the public until it’s too late to stop it.

The section of the TPP that has leaked is the “Investment” chapter that includes investor-state dispute settlement (ISDS) clauses. WikiLeaks has the text and analysis, and the Times has the story, in “Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S.“:

An ambitious 12-nation trade accord pushed by President Obama would allow foreign corporations to sue the United States government for actions that undermine their investment “expectations” and hurt their business, according to a classified document.

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 TPP has developed in secret an unaccountable supranational court for multinationals to sue states. This system is a challenge to parliamentary and judicial sovereignty. Similar tribunals have already been shown to chill the adoption of sane environmental protection, public health and public transport policies.”

WikiLeaks editor, Julian Assange

The WikiLeaks analysis explains that this lets firms “sue” governments to obtain taxpayer compensation for loss of “expected future profits.”

Let that sink in for a moment: “[C]ompanies and investors would be empowered to challenge regulations, rules, government actions and court rulings — federal, state or local — before tribunals....” And they can collect not just for lost property or seized assets; they can collect if laws or regulations interfere with these giant companies’ ability to collect what they claim are “expected future profits.”

The Times‘ report explains that this clause also “giv[es] greater priority to protecting corporate interests than promoting free trade and competition that benefits consumers.”

The tribunals that adjudicate these cases will be made up of private-sector (i.e., corporate) attorneys. These attorneys will rotate between serving on the tribunals and representing corporations that bring cases to be heard by the tribunals. This is a conflict of interest because the attorneys serving on the tribunals will have tremendous incentive to rule for the corporations if they want to continue to get lucrative corporate business.

The Corporate Influence Over the TPP

Largely ignored by the media — until now — the TPP has been in a negotiation process for more than five years. The TPP has 29 “chapters” covering various issues, but only five of these chapters cover what would normally be considered “trade.” It is a “docking” agreement, which means that any country in the region (e.g., China) can add themselves to the agreement just by signing on.

These negotiations have been conducted in secret, but more than 500 corporate “trade advisors” have access to the text of the agreement. Many of the negotiators themselves are past (and/or likely expect to be future) corporate attorneys or executives. U.S. Trade Representative Michael Froman, for example, “received over $4 million as part of multiple exit payments when he left Citigroup to join the Obama administration,” according to a report, “Obama Admin’s TPP Trade Officials Received Hefty Bonuses From Big Banks,” by investigative journalist Lee Fang.

This one-sided process has been causing concern among representatives of many of the key “stakeholder” groups that have been excluded from the negotiating process. Labor unions, environmental groups, consumer groups, health groups, and food-safety groups, as well as LGBT, democracy, faith, and other “stakeholders” who have been denied a seat at the TPP negotiating table, have feared that the process would produce an agreement that tilts the democracy/plutocracy power balance even further in the direction of corporations and billionaires than it is now.

ISDS Tilts Playing Field to Corporations

AFL-CIO President Richard Trumka, speaking March 18 at the Peterson Institute for International Economics, compared the extraordinary ability of corporations to sue governments to the lack of redress when labor organizers are murdered to explain how ISDS tilts the playing field to corporations over other stakeholders:

ISDS is just a fancy way to give corporations a special legal system that circumvents democratically accountable laws and courts.

ISDS allows corporations to directly challenge almost any law or regulation based on ill-defined concepts such as “fair and equitable treatment.” In contrast, all provisions for enforcing labor rights in the TPP require action by member governments — neither workers nor unions can enforce the labor rights provisions on their own even by suing in national courts.

I’m not just talking theory here. In the first three years of the Labor Action Plan in Colombia, 73 trade unionists were murdered for trying to organize workers. These are men and women just like you and me who were killed for trying to exercise their rights under the law and speak in a collective voice. That’s terrible, and yet these trade deals have been completely ineffective in addressing this injustice. And the U.S. government has taken no official “trade” action in response. Anyone with a lick of common sense can tell you that not only are these killings a human rights catastrophe, they are driving down wages and workplace standards in Colombia — and in every country that trades with Colombia.

But here’s the thing: unlike the clunky labor provisions, which require workers to wait for government action, these ISDS provisions can be used immediately by multinational firms to challenge efforts by TPP member countries to develop a modern regulatory state in key areas. ISDS tilts the playing field away from democracy, from workers and consumers, and toward big business and multinational investors.

In sum, if corporations feel they have been denied “expected” profits by a government regulation, ISDS lets them circumvent a country’s courts and go to an international corporate tribunal with their grievance. But if labor organizers are murdered, workers and their families have nowhere to go.

This shows the extent to which the playing field gets tilted. The same imbalance exists between corporate interests and the interests represented by environmental groups, consumer groups and all other non-corporate stakeholders: a special channel for corporations, and a brick wall for the interests of the rest of us.

Advantage: Foreign Firms

While ISDS would give American multinational corporations tremendous powers over other governments, it places non-U.S. corporations (and, of course, non-U.S. subsidiaries of American multinational corporations) at a tremendous advantage over U.S. firms by giving only them — not U.S.-based firms — this right to challenge U.S. laws and regulations.

Global Trade Watch explains this advantage:

The TPP would grant foreign investors and firms operating here expansive new substantive and procedural rights and privileges not available to U.S. firms under U.S. law, allowing foreign firms to demand compensation for the costs of complying with U.S. policies, court orders and government actions that apply equally to domestic and foreign firms. ... The text allows foreign investors to demand compensation for claims of “indirect expropriation” that apply to much wider categories of property than those to which similar rights apply in U.S. law.

The TPP is the largest trade agreement in history, involving more than 40 percent of the world’s GDP. One way President Obama and the Chamber of Commerce sell the TPP is by saying it will change everything and will rewrite the rules for doing business for the 21st century. This leak shows us that they are right about the TPP changing everything and rewriting the rules. But the leak shows that the people and organizations opposing the TPP were right too, because the changes give corporations vast new powers to overrule democratic governments.

Origins of ISDS

This ISDS mechanism originates from a time when investors in wealthy, developed countries wanted to invest in projects in unstable “third-world,” “banana-republic”-style countries but worried that dictators or revolutionary governments could decide to seize their property — a refinery, railroad or factory — leaving them with no recourse. So before investing, the target country agrees that in the case of disputes, a tribunal is set up outside and beyond the reach of the country’s justice system (courts where the judge is a brother or other crony of the dictator, for example), providing recourse in the event of unjust seizure of property. This would make investment less risky.

However, under agreements like the TPP, these provisions apply to and override the laws of modern, stable, developed countries with democratic governance and fair court systems. The corporate representatives negotiating modern trade agreements see such democratically run governments as “burdensome” and chaotic, introducing “uncertainties” and “interfering” or “meddling” with the corporate order. As one supporter of these ISDS provisions put it, they protect corporations from “the waves of madness that occasionally flit through the population.”

Secret and Rushed

It is understandable that the giant, multinational corporations want the TPP kept secret and want Congress to pass “fast-track” trade-promotion authority that requires Congress to pass the TPP within 90 “session” days after the agreement is made public. Fast track sets up a rushed process that does not give the public time to read, understand, analyze and consider the ramifications of it — never mind time to effectively organize opposition. This is because, as U.S Sen. Elizabeth Warren (D-Massachusetts) pointed out, “supporters of the deal say to me, ‘They have to be secret, because if the American people knew what was actually in them, they would be opposed.’” Warren continued:

Think about that. Real people, people whose jobs are at stake, small-business owners who don’t want to compete with overseas companies that dump their waste in rivers and hire workers for a dollar a day — those people, people without an army of lobbyists — they would be opposed. I believe if people across this country would be opposed to a particular trade agreement, then maybe that trade agreement should not happen.

Fast track also prevents members of Congress from amending (i.e., fixing) flaws that might be found in the agreement even in the limited time available to comprehend and analyze the agreement. With the expected massive corporate public-relations campaign that will occur as the agreement comes up for a vote, this sets up a rushed process where the Congress becomes more concerned with not “killing the whole agreement” than with getting it right.

Reaction

Larry Cohen, the president of the Communications Workers of America (CWA), says the leak shows that the TPP is “worse than imagined”:

The 56 pages of the Investor chapter of the Trans-Pacific Partnership are worse than imagined and must be a wake up call for our nation. Amazingly, this chapter is sealed for four years after either adoption or rejection of the TPP. Everything we read and learn makes “Fast Track” authority unimaginable. It’s secrecy on top of secrecy.

The TPP is shaping up to be an exercise in words about citizen rights that are not enforceable versus expanded corporate rights to sue governments for supposed diminishment of corporate profits. Section B of the leaked chapter documents new provisions of Investor State Dispute Settlement (ISDS), the secret tribunal process that is above national law or courts.

U.S. Sen. Sherrod Brown (D-Ohio) released the following statement:

It appears that the investor state provision being considered as part of TPP will still amount to a corporate handout at the expense of consumers despite the assurances of our negotiators. We need strong language to prevent multinational corporations — like Big Tobacco — from using trade agreements to challenge health and safety laws.

It’s telling when Members of Congress and their staff have an easier time accessing national security documents than proposed trade deals, but if I were negotiating this deal I suppose I wouldn’t want people to see it either. Trade agreements should lift American workers and their counterparts abroad, rather than creating a race to the bottom.

From the Wikileaks statement:

Julian Assange, WikiLeaks editor said: “The TPP has developed in secret an unaccountable supranational court for multinationals to sue states. This system is a challenge to parliamentary and judicial sovereignty. Similar tribunals have already been shown to chill the adoption of sane environmental protection, public health and public transport policies.”

Public Citizen’s Global Trade Watch has this analysis of the leaked text:

The leaked text provides stark warnings about the dangers of “trade” negotiations occurring without press, public or policymaker oversight. It reveals that TPP negotiators already have agreed to many radical terms that would give foreign investors expansive new substantive and procedural rights and privileges not available to domestic firms under domestic law.