My Blog List

Sunday, May 17, 2015

Why Opposition to the Trans Pacific Partnership "Trade Promotion Authority" is warranted

I get offended when folks condemn criticism of the current effort to pass "Trade Promotion Authority" as undemocratic. As I've noted before my principle concerns have been about the TPSD provisions and the intense secrecy around it. But now I have to ad the viciousness of the campaign to try to get it passed. The promoters don't seem to mind offending and alienating half the Democratic party and 90% of labor. Anyway these are some of the objections I've gathered.

My Friend Matt Turner lists ten reasons:

Matt Turner posting in Occupy Economics writes, "10 Ways that TPP would hurt Working Families":
  1. TPP will allow corporations to outsource even more jobs overseas.
  2. According to the Economic Policy Institute,
    "if the TPP is agreed to, the U.S. will lose more than 130,000 jobs to Vietnam and Japan alone. But that is just the tip of the iceberg. ·∙ Service Sector Jobs will be lost. At a time when corporations have already outsourced over 3 million service sector jobs in the U.S., TPP includes rules that will make it even easier for corporate America to outsource call centers; computer programming; engineering; accounting; and medical diagnostic jobs.
    ·∙ Manufacturing jobs will be lost. As a result of NAFTA, the U.S. lost nearly 700,000 jobs. As a result of Permanent Normal Trade Relations with China, the U.S. lost over 2.7 million jobs. As a result of the Korea Free Trade Agreement, the U.S. has lost 70,000 jobs. The TPP would make matters worse by providing special benefits to firms that offshore jobs and by reducing the risks associated with operating in low-wage countries.
  3. U.S. sovereignty will be undermined by giving corporations the right to challenge our laws before international tribunals.
  4. The TPP creates a special dispute resolution process that allows corporations to challenge any domestic laws that could adversely impact their “expected future profits.” These challenges would be heard before UN and World Bank tribunals which could require taxpayer compensation to corporations.
    This process undermines our sovereignty and subverts democratically passed laws including those dealing with labor, health, and the environment.
  5. Wages, benefits, and collective bargaining will be threatened.
  6. NAFTA, CAFTA, PNTR with China, and other free trade agreements have helped drive down the wages and benefits of American workers and have eroded collective bargaining rights. The TPP will make the race to the bottom worse because it forces American workers to compete with desperate workers in Vietnam where the minimum wage is just 56 cents an hour.
  7. Our ability to protect the environment will be undermined.
  8. The TPP [ISDS provisions] will allow corporations to challenge any law that would adversely impact their future profits. Pending claims worth over $14 billion have been filed based on similar language in other trade agreements. Most of these claims deal with challenges to environmental laws in a number of countries. The TPP will make matters even worse by giving corporations the right to sue any of the nations that sign onto the TPP. These lawsuits would be heard in international tribunals bypassing domestic courts.
  9. Food Safety Standards will be threatened.
  10. The TPP would make it easier for countries like Vietnam to export contaminated fish and seafood into the U.S. The FDA has already prevented hundreds of seafood imports from TPP countries because of salmonella, e-coli, methyl-mercury and drug residues. But the FDA only inspects 1-2 percent of food imports and will be overwhelmed by the vast expansion of these imports if the TPP is agreed to.
  11. Buy America laws could come to an end.
  12. The U.S. has several laws on the books that require the federal government to buy goods and services that are made in America or mostly made in this country. Under TPP, foreign corporations must be given equal access to compete for these government contracts with companies that make products in America. Under TPP, the U.S. could not even prevent companies that have horrible human rights records from receiving government contracts paid by U.S. taxpayers.
    Note from Chris: This is already happening with other previous trade deals
  13. Prescription drug prices will increase, access to life saving drugs will decrease, and the profits of drug companies will go up.
  14. Big pharmaceutical companies are working hard to ensure that the TPP extends the monopolies they have for prescription drugs by extending their patents (which currently can last 20 years or more). This would expand the profits of big drug companies, keep drug prices artificially high, and leave millions of people around the world without access to life saving drugs. Doctors without Borders stated that “the TPP agreement is on track to become the most harmful trade pact ever for access to medicines in developing countries.”
  15. Wall Street would benefit at the expense of everyone else.
  16. Under TPP, governments would be barred from imposing “capital controls” that have been successfully used to avoid financial crises. These controls range from establishing a financial speculation tax to limiting the massive flows of speculative capital flowing into and out of countries responsible for the Asian financial crisis in the 1990s. In other words, the TPP would expand the rights and power of the same Wall Street firms that nearly destroyed the world economy just five years ago and would create the conditions for more financial instability in the future. Last year, I co-sponsored a bill with Sen. Harkin to create a Wall Street speculation tax of just 0.03 percent on trades of derivatives, credit default swaps, and large amounts of stock. If TPP were enacted, such a financial speculation tax may be in violation of this trade agreement.
  17. The TPP would reward authoritarian regimes like Vietnam that systematically violate human rights.
  18. The State Department, the U.S. Department of Labor, Human Rights Watch, and Amnesty International have all documented Vietnam’s widespread violations of basic international standards for human rights. Yet, the TPP would reward Vietnam’s bad behavior by giving it duty free access to the U.S. market.
  19. The TPP has no expiration date, making it virtually impossible to repeal.

ISDS Dance

For example one person claimed:

“Direct challenges to the government’s legislative or regulatory powers have occasionally been made, but have always been unsuccessful. In the NAFTA case, Chemtura v. Canada, the investor challenged Canadian pesticide regulations. The tribunal ruled against Chemtura on all claims and the panel expressly recognized Canada’s right to make scientific and environmental regulatory decisions. In another NAFTA case, Methanex v. United States, the tribunal dismissed all of Methanex’s claims of discriminatory treatment and expropriation, noting that “as a matter of general international law, a nondiscriminatory regulation for a public purpose, which is enacted in accordance with due process and affects foreign investors, ‘is not deemed expropriatory and compensable unless specific commitment had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation.’ Finally, there is no evidence that any government has changed a policy position or refrained from acting in a policy area for fear of potential ISDS claims. To the contrary, many BITs (including all U.S. agreements since 2004) stipulate that, “except in rare circumstances, nondiscriminatory regulatory actions that are designed and applied to protect legitimate public welfare objectives…do not constitute an indirect expropriation.”

He claimed to be quoting from https://csis.org/files/publication/141029_investor_state_dispute_settlement.pdf And he also claims:

"Many of the criticisms of ISDS are overblown. Some claim that ISDS gives investors “special rights,” yet most treaty protections are identical to universal civil rights accorded most citizens. Further, critics exaggerate the notion that investors “sue to overturn regulations;” BITs explicitly limit awards to monetary damages. Finally, conflating ISDS with “big corporations” ignores the fact that the majority of U.S. investors who have filed investment arbitration claims are firms with fewer than 500 employees." [PDF]

But this was smoke. The very name "Investor State Dispute Settlement" and it's constitution under arbitrators selected from Investor lawyers gives an advantage to investors over consumers, labor, and environmental concerns. The number of employees of a firm is irrelevant to this equation of power. Moreover the outcome in the Chemtura case the one person cited was less clearcut than he claimed:

Chemtura versus Canada Redux

"COMMENT: The case has been cited by some proponents of investment arbitration as putting to rest concerns that NAFTA Chapter 11 impedes public health and the environmental regulation. Yet the award itself is troubling on this point."
"First, the tribunal, like the earlier Glamis Gold v United States tribunal, rejected submissions by Canada that tribunals should defer to good faith regulatory measures of governments."
"Second, the tribunal noted repeatedly that lindane was banned in many other countries, making it unclear whether the ban would have been upheld had Canada been a regulatory first-mover in limiting the pesticide on health or environmental grounds."
"Third, the tribunal declined to adopt the approach of the earlier Glamis Gold tribunal, which required the claimant to provide affirmative evidence of any alleged expansion of the NAFTA minimum standard of treatment beyond its established content in international custom. Canada, Mexico, and the U.S. have argued that claimants must satisfy this requirement. However, arbitrators in numerous NAFTA cases have rejected this position, thus facilitating investor claims." © Gus Van Harten 2011. www.iiapp.org.

Union Access to TPP?

The White House claims that TPP would extend ISDS access to Labor:

"If TPP is passed by Congress, it will also create strong, enforceable new labor protections that would allow the United States to take action – on its own, or on the basis of a petition from labor unions or other interested parties – against TPP governments that don't honor their labor commitments. The same is true for enforcing environmental commitments." [https://www.whitehouse.gov/blog/2015/02/26/investor-state-dispute-settlement-isds-questions-and-answers]

Someone tried to tell me that the TPP would give Labor access to the ISDL arbitration, but that's not true. The AFL-CIO notes:

"An "investor-to-state dispute settlement" (ISDS) is a special legal right that only those who invest in a foreign country can use to challenge a law, regulation, judicial or administrative ruling or any other government decision. Investors are those who buy property—whether it’s an acre of land, a factory or stocks and bonds."

But this arbitration is not available to Unions, Labor, etc... I'd be surprised if it were. The whole purpose of the courts is to protect investors **against** labor.

"ISDS allows the foreign property owner to skip domestic courts, administrative procedures, city hall hearings and the like (all the processes that home-grown property owners use) and sue the host-country government before a panel of private “arbitrators” (like judges, arbitrators have the power to make decisions in cases, but they are not democratically elected or appointed, and they are not subject to stringent conflict of interest rules). Not only that but the foreign property owners don’t lose access to the domestic U.S. processes—they can “double dip” to get what they want."

We've seen this Venue Shopping in numerous cases.

What’s the risk?

The AFL-CIO states the risk of ISDL courts pretty baldly:

"The risk is that foreign property owners can use this system of "corporate courts" to challenge anything from plain packaging rules for cigarettes to denials of permits for toxic waste dumps to increases in the minimum wage. For any law, regulation or other government decision that the foreign investor does not like, all it has to do is think of an argument for why the decision somehow violated its right to “fair and equitable treatment” or why it might reduce its expected profits and it’s got a case. And, sometimes, just threatening the case is enough for the proposed law or regulation to be withdrawn."

And they cite some examples withthe Metaclad case:

"The North American Free Trade Agreement (NAFTA): In the Metalclad case, a U.S. corporation sued the Mexican federal government over a local government’s decision to deny a permit to operate a toxic waste dump. Local citizens felt the dump would pollute their water supply and petitioned their government to deny the permit. Metalclad won more than $15 million."

And they note that the problem with ISDS is not with direct challenges to laws, but with the fact that investors can seek impunity for their money.

See, these decisions don’t, by themselves, “overturn” the law, regulation or decision that was challenged. But if the country loses a case and wants to keep the decision that was challenged, it has to pay a fine (sometimes a substantial fine: Ecuador was recently ordered to pay more than $2 billion to Occidental Petroleum). And many countries will just change the rule instead of paying the fine.

And I'm not even against TPP necessarily. I just don't want it rammed down my throat.

Further Reading:

Jim Hightower:

http://www.hightowerlowdown.org/node/3402#.VVlVsvlViko
https://icsid.worldbank.org/apps/ICSIDWEB/cases/Pages/AdvancedSearch.aspx
Obama:
http://ustr.gov/tpp
http://www.euractiv.com/sections/trade-society/malmstrom-only-minor-adjustments-isds-trade-deal-canada-309906
http://www.aflcio.org/Issues/Trade/What-Is-ISDS

No comments:

Post a Comment