Wikileaks releases Trans-Pacific Partnerhip investment chapter
Via Daily Kos, we learn that Wikileaks has released the investment chapter of the Trans-Pacific Partnership (TPP). This is a critical chapter, as it was in the North American Free Trade Agreement (NAFTA), because it establishes investor-state dispute settlement (ISDS) mechanisms.
Despite its neutral-sounding name, ISDS is actually a radical concept. Instead of using the courts to settle disputes, which have appeals procedures and build up case law via precedent, ISDS allows companies to take governments to arbitration, where neither precedent nor appeals exist.
Susan Sell gave several examples of ISDS in her guest post in February, which illustrate the dangers well. Eli Lilly had two of its pharmaceutical patents invalidated in Canada; the company appealed both of these decisions to the Canadian Supreme Court, and lost both times. Then the company turned to investor-state dispute settlement under NAFTA to receive $500 million in compensation for the Supreme Court decisions. That case is still ongoing.
In an example also noted by Wikileaks, Sell points out that U.S. tobacco maker is using ISDS against Australia because the country mandated plain packaging on cigarettes to make them look less attractive. This should not be possible, because the U.S.-Australia Free Trade Agreement does not include investor-state dispute settlement provisions. Instead, the company is using a subsidiary in Hong Kong, which has a free trade agreement with Australia that does include ISDS, to bring the complaint. Indeed, the government alleges that Philip Morris Asia bought the Australian subsidiary, already owned by the parent company, so that it could bring this complaint.
Unsurprisingly, Australia is opposed to including ISDS in the TPP agreement, and in the current draft has excluded itself completely from ISDS. However, the draft also shows that Australia might end its objection “subject to certain conditions.” Since the negotiation is being conducted in strict secrecy, there is no way to find out what those conditions might be, unless someone leaks them to the press.
The Obama administration continues to seek “fast track” negotiating authority from Congress for the TPP. This would allow the agreement to be voted on only as negotiated, with no amendments allowed. Note that this also means that the TPP would be incorporated as a U.S. law rather than as a treaty. As a law, it only needs a majority in both Houses of Congress. If it were to be offered for approval as a treaty, it would need a 2/3 majority in the Senate, with no House vote. Both NAFTA and the World Trade Organization agreements were passed as laws rather than treaties.
Don’t forget that ISDS is also on the negotiating table in the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. ISDS is also under fire in the European Union. In an ironic twist of events, the European Commission, a supporter of ISDS (h/t Washington Post) so far in the negotiations, has ruled in a state aid case involving Romania that paying an ISDS award (Micula v. Romania) to a company whose subsidies were terminated due to EU law, would itself be an illegal state aid! The Commission’s effort to effectively nullify the decision (further irony: brought under the Sweden-Romania bilateral investment treaty, so both EU members) is not sitting well with proponents of ISDS. Too bad!
If we’re lucky, the combined opposition of Germany, a large part of the EU public, some parts of the European Commission, and a growing portion of the U.S. public will kill off ISDS in the TTIP. We need to make sure it disappears from the TPP as well, even if that means rejecting the TPP. And we may well want to reject the TPP anyway over its provisions on medicines and other intellectual property issues.
Cross-posted from Middle Class Political Economist.
our frack-free group has been discussing the investor-state dispute settlement provisions for a few years now, along with the Sierra Club warning that TPP would mandate exports of natural oil & gas to Asia (where gas sells for 5 times as much as here), resulting in an even greater expansion of US fracking, for a couple years now…
while i’m pleased to see it come out now, i hope it isnt too late, as most Republican leaders have already been quoted as in favor of giving Obama fast track…
NB: should be “natural gas and oil” in the above..
For once we can put Tea Party paranoia to work.
They hate Obama.
They despise the idea that foreign or international law should govern anything in the U.S.
They don’t like jobs going overseas.
They are not particularly fond of lawyers.
They hate Muslim Kenyan Anti-Colonialist Communists who sell out the American people in secrecy so as to turn over all powers to the UN’s Agenda 21.
Which leaves a lot of Republicans in a bind. Because they have been feeding the base red meat on all these issues for years. And really all they have to fight back is “Ricardian Comparative Advantage” and the word ‘free’ in “Free Trade.
Yeah fighting the TPP on this ground is slightly dirty. But Obama is not on the ballot and our collective futures are. If pouring a little gas on the already raging anti-Obama anti-UN fires puts a scare into Congressional Republicans about Fast Track is what it takes then so be it. Because I am kind of loving this possible Breitbart headline:
“RINO leaders give Emperor Obama unlimited Fast Track powers to Sell Out American Workers”
Which works all the better if a plurality of Democrats vote against it because of ISDS and the sellout to Big Pharma and polluters. I hate most aspects of Nativism. But God knows it is powerful once let out of its cage. Give Jingoism a Chance. (This time).
We need a national debate on all trade agreements. It’s a festering sore that perhaps more than any issue appears to show that the DC policy elite really care more about their relationships with the comparably situated in other countries than with ordinary Americans out there in fly-over country. Nothing could reinforce that impression more than keeping negotiations secret and then demanding Fast Track for the result. It’s the kind of thing that makes Democrats wonder whether Obama really is a Democrat at all.
We will not have the national debate we need with Fast Track. If the case can be made for the rest of the TPP other than the abominable ISDS, let the proponents make the case in Congress in front of the American people.
And if Hillary wants to quiet the Draft Elizabeth movement, she needs to loudly oppose Fast Track, too.
fast track is the line in the sand…if Obama gets that, a majority vote to pass the agreement without debate will be relatively easy…if he doesn’t get fast track, then what’s in the trade agreements will be exposed for public debate, and hence will never be passed with the 2/3rds vote needed for a trade treaty…
@Rjs, I think you are correct: If it gets fast track, it will pass. Historical note: The Kennedy Round was negotiated without fast track, and Congress in fact threw out some of its provisions.