Who Is Writing the TPP?

By Elizabeth Warren and Rosa DeLauro, The Boston Globe

23 May 15

ALSO SEE: TPP Is in Trouble, Thanks to Public Interest

ongress is in an intense debate over trade bills that will shape the course of the US economy for decades. Much of this debate has been characterized as a fight over whether international trade itself creates or destroys American jobs. There is, however, another major concern — that modern “trade” agreements are often less about trade and more about giant multinational corporations finding new ways to rig the economic system to benefit themselves. Hillary Clinton has said that the “United States should be advocating a level and fair playing field, not special favors” for big business, in our trade deals. We agree with this blunt assessment – and believe every member of Congress should consider this carefully before voting to help advance these agreements.

Advocates of the pending Trans-Pacific Partnership, a massive 12-country agreement, sell this proposal as a free trade deal — but the United States already has free trade agreements with half of the countries at the negotiating table, and only five of the treaty’s 29 draft chapters reportedly deal with traditional trade issues. While reducing traditional barriers to trade with countries like Japan will facilitate some international commerce, the TPP is about more than reducing tariffs.

The president argues that the TPP is about who will “write the rules” for 40 percent of the world’s economy — the United States or China. But who is writing the TPP? The text has been classified and the public isn’t permitted to see it, but 28 trade advisory committees have been intimately involved in the negotiations. Of the 566 committee members, 480, or 85 percent, are senior corporate executives or representatives from industry lobbying groups. Many of the advisory committees are made up entirely of industry representatives.

A rigged process leads to a rigged outcome. For evidence of that tilt, look at a key TPP provision: Investor-State Dispute Settlement where big companies get the right to challenge laws they don’t like in front of industry-friendly arbitration panels that sit outside of any court system. Those panels can force taxpayers to write huge checks to big corporations — with no appeals. Workers, environmentalists, and human rights advocates don’t get that special right.

Most Americans don’t think of the minimum wage or antismoking regulations as trade barriers. But a foreign corporation has used ISDS to sue Egypt because Egypt raised its minimum wage. Phillip Morris has gone after Australia and Uruguay to stop them from implementing rules to cut smoking rates. Under the TPP, companies could use ISDS to challenge these kinds of government policy decisions — including food safety rules.

The president dismisses these concerns, but some of the nation’s top experts in law and economics are pushing to drop ISDS provisions from future trade agreements. Economist Joe Stiglitz, Harvard Law professor Laurence Tribe, and others recently noted that “the threat and expense of ISDS proceedings have forced nations to abandon important public policies” and that “laws and regulations enacted by democratically elected officials are put at risk in a process insulated from democratic input.” That was exactly what Germany did in 2011 when it cut back on environmental protections after an ISDS lawsuit.

Congress will soon vote on whether to enact “fast-track” authority to grease the skids for the approval of the TPP and other upcoming trade deals. Clinton has called for trade agreements to “avoid some of the provisions sought by business interests, including our own,” such as ISDS. By definition, massive trade deals like the TPP override domestic laws written, debated, and passed by Congress. If fast-track passes, Congress will have given up its power to strip out any backroom arrangements and special favors like ISDS without tanking the whole deal that contains those giveaways.

We will have also given up our right to strip out whatever other special favors industry can bury in new trade agreements – not just in the TPP, but in potential trade deals for the next six years. Treasury Secretary Jack Lew has testified before Congress that trade negotiations involve “pressure to lower standards” on financial regulations and other public interest laws, and that President Obama has resisted that pressure. But Obama will soon leave office, and he cannot bind a future president. We hope he is succeeded by a Democrat, but if not, this legislation risks giving a future president a powerful tool to undermine public interest regulations under the guise of promoting commerce.

Powerful corporate interests have spent a lot of time and money trying to bend Washington’s rules to benefit themselves, and now they want Congress to grease the skids for a TPP deal that corporations have helped write but the public can’t see — and for six years of future agreements that haven’t even been written. Congress should refuse to vote for any expedited procedures to approve the TPP before the trade agreement is made public. And Congress certainly shouldn’t vote for expedited procedures to enact trade deals that don’t yet even exist.

How Trade Agreements Amount to a Secret Corporate Takeover

By Joseph Stiglitz, Reader Supported News

23 May 15

he United States and the world are engaged in a great debate about new trade agreements. Such pacts used to be called "free-trade agreements"; in fact, they were managed trade agreements, tailored to corporate interests, largely in the US and the European Union. Today, such deals are more often referred to as "partnerships,"as in the Trans-Pacific Partnership (TPP). But they are not partnerships of equals: the US effectively dictates the terms. Fortunately, America's "partners" are becoming increasingly resistant.

It is not hard to see why. These agreements go well beyond trade, governing investment and intellectual property as well, imposing fundamental changes to countries' legal, judicial, and regulatory frameworks, without input or accountability through democratic institutions.

Perhaps the most invidious - and most dishonest - part of such agreements concerns investor protection. Of course, investors have to be protected against the risk that rogue governments will seize their property. But that is not what these provisions are about. There have been very few expropriations in recent decades, and investors who want to protect themselves can buy insurance from the Multilateral Investment Guarantee Agency, a World Bank affiliate (the US and other governments provide similar insurance). Nonetheless, the US is demanding such provisions in the TPP, even though many of its "partners" have property protections and judicial systems that are as good as its own.

The real intent of these provisions is to impede health, environmental, safety, and, yes, even financial regulations meant to protect America's own economy and citizens. Companies can sue governments for full compensation for any reduction in their future expected profits resulting from regulatory changes.

This is not just a theoretical possibility. Philip Morris is suing Uruguay and Australia for requiring warning labels on cigarettes. Admittedly, both countries went a little further than the US, mandating the inclusion of graphic images showing the consequences of cigarette smoking.

The labeling is working. It is discouraging smoking. So now Philip Morris is demanding to be compensated for lost profits.

In the future, if we discover that some other product causes health problems (think of asbestos), rather than facing lawsuits for the costs imposed on us, the manufacturer could sue governments for restraining them from killing more people. The same thing could happen if our governments impose more stringent regulations to protect us from the impact of greenhouse-gas emissions.

When I chaired President Bill Clinton's Council of Economic Advisers, anti-environmentalists tried to enact a similar provision, called "regulatory takings." They knew that once enacted, regulations would be brought to a halt, simply because government could not afford to pay the compensation. Fortunately, we succeeded in beating back the initiative, both in the courts and in the US Congress.

But now the same groups are attempting an end run around democratic processes by inserting such provisions in trade bills, the contents of which are being kept largely secret from the public (but not from the corporations that are pushing for them). It is only from leaks, and from talking to government officials who seem more committed to democratic processes, that we know what is happening.

Fundamental to America's system of government is an impartial public judiciary, with legal standards built up over the decades, based on principles of transparency, precedent, and the opportunity to appeal unfavorable decisions. All of this is being set aside, as the new agreements call for private, non-transparent, and very expensive arbitration. Moreover, this arrangement is often rife with conflicts of interest; for example, arbitrators may be a "judge" in one case and an advocate in a related case.

The proceedings are so expensive that Uruguay has had to turn to Michael Bloomberg and other wealthy Americans committed to health to defend itself against Philip Morris. And, though corporations can bring suit, others cannot. If there is a violation of other commitments - on labor and environmental standards, for example - citizens, unions, and civil-society groups have no recourse.

If there ever was a one-sided dispute-resolution mechanism that violates basic principles, this is it. That is why I joined leading US legal experts, including from Harvard, Yale, and Berkeley, in writing a letter to President Barack Obama explaining how damaging to our system of justice these agreements are.

American supporters of such agreements point out that the US has been sued only a few times so far, and has not lost a case. Corporations, however, are just learning how to use these agreements to their advantage.

And high-priced corporate lawyers in the US, Europe, and Japan will likely outmatch the underpaid government lawyers attempting to defend the public interest. Worse still, corporations in advanced countries can create subsidiaries in member countries through which to invest back home, and then sue, giving them a new channel to bloc regulations.

If there were a need for better property protection, and if this private, expensive dispute-resolution mechanism were superior to a public judiciary, we should be changing the law not just for well-heeled foreign companies, but also for our own citizens and small businesses. But there has been no suggestion that this is the case.

Rules and regulations determine the kind of economy and society in which people live. They affect relative bargaining power, with important implications for inequality, a growing problem around the world. The question is whether we should allow rich corporations to use provisions hidden in so-called trade agreements to dictate how we will live in the twenty-first century. I hope citizens in the US, Europe, and the Pacific answer with a resounding no.