In the coming weeks, a fight will be erupting within congress about the controversial and notoriously secretive trade deal that the Obama administration has quite adamantly supported, the Trans-Pacific Partnership (TPP). A Fast Track deal
will likely be voted on in the next week or two, and it will give President Obama the power to submit the free trade agreement for an up or down vote without any amendments. Outspoken liberals like Elizabeth Warren and Bernie Sanders have been sharply critical of this move, as well as the trade deal itself, while Republicans largely support the move and the deal.
The TPP has been negotiated in private over the past decade, and will include a massive part of the worlds economy -- about 40 percent GDP. Obama looks at its passage as a major part of his legacy, and the White House has vocally challenged critics like Elizabeth Warren on different aspects of the deal. But the fact that this agreement is so secretive, and that the public has had to rely on Wikileaks for information about it, is no doubt unsettling.
There are various reasons to be legitimately concerned about the passage of the TPP, with top worries being intellectual property extensions and the “investor-state dispute settlement” (ISDS) provision, which allows foreign investors to sue a countries government if a new regulation or law hurts its profit, or if a government expropriates the companies investment.
The Obama Administration has been quick to defend the ISDS as a tool used to protect family-owned businesses from big-bad foreign governments who may take over investments without compensation. “Under the Trans-Pacific Partnership,” wrote the White House, “ISDS is specifically designed to protect American investors abroad from discrimination and denial of justice.”
A few weeks ago, we had to take their word that this ISDS would be different from the many other ISDS provisions in other trade deals, like NAFTA. But late last March, Wikileaks released the ISDS chapter of the TPP trade negotiations, dated January 20, 2015. And alas, it isn’t all that different from other trade agreements. Lise Johnson, head of investment law and policy at Columbia Center on Sustainable Investment at Columbia University, told Vox “As compared to US and Canadian practice over roughly the past 10 years, there really isn't too much that is radically new...There are some tweaks here and there, but the basic model of investor-state dispute settlement those countries have been pursuing is still reflected here.”
So what does this mean? Looking at previous ISDS cases can help provide some insight. When it comes to environmental/health regulations, many companies have filed suit under the ISDS provision after countries pushed through regulations that hurt their business. One such example comes under NAFTA, with the extractive company Lone Pine, who sued the Canadian government after they declared a moratorium on hydraulic fracturing. American tobacco company Philip Morris is also utilizing the ISDS provision against the Australian government, after they passed a law that required all cigarettes to be plain-packaged without any branding. This has been shown to reduce smoking in young people, which Philip Morris seems to believe will hurt potential profits.
Another example comes with the investment company The Renco Group, owned by New York billionaire Ira Rennert (a family business?). The Renco Group filed a lawsuit against the Peruvian government, after they shut down a metal smelter in the town of La Oroya, which is one of the most polluted places in the world, where 99 percent of the children have lead blood levels that exceed the acceptable limit in America. The Peruvian government shut down the metal smelter after Renco Group delayed environmental improvements, and so they are being sued for $800 million.
Now, to be fair, the TPP ISDS chapter does have some language that seems to protect governments from being sued for protecting their citizens or the environment. For example, in the preamble it says “Recognizing the inherent right to regulate and resolving to preserve the flexibility of the Parties to protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, and public morals.” However, similar language appeared in other trade deals like NAFTA, and what constitutes “legitimate public welfare” can be disputed by lawyerly debate.
The chapter also states that companies have the right to compensation for both direct expropriation (nationalization) and indirect expropriation (regulations/moratoriums, etc.). Most people are not opposed to a country compensating a company if they nationalize their investment; that only seems fair. But when it comes to indirect expropriation, like if a businesses investment is hurt through regulation, for example, their is much controversy -- especially when it has to do with the environment or health of citizens. To address this issue, the document states the following:
“The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact based inquiry...Non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations, except in rare circumstances.”
So, it is up to the three highly paid lawyers to determine whether something constitutes indirect expropriation, and only in “rare circumstances” do regulatory actions constitute indirect expropriation. This opens the possibility of companies suing governments after legitimate regulations, and it would be best to remove the “rare circumstances” languate altogether.
So the ISDS still gives companies the ability to sue governments after they take regulatory actions. What about other controversial aspects of the TPP? Quite possibly one of the most vehemently opposed provisions is the intellectual property extensions for the pharmaceutical industry, which I have previously written about.
The TPP will provide patent extensions for big pharma, which will allow companies to extend drug patents beyond the original twenty years, preventing other companies from bringing generic versions, which are usually 30-80 percent cheaper, to the market. Critics say that this will give companies legal monopolies on sometimes life-saving medicines, and it will make it especially hard for people in the poorer nations to afford them. Other provisions will allow companies to re-patent drugs for “new uses” or by slightly altering the chemical. Further information on the intellectual property chapter can be found at Public Citizen.
What we can be sure of, thanks to the documents released by Wikileaks, is that the TPP negotiations are private for a reason. Most of the aspects within the trade deal have nothing to do with free trade, and everything to do with providing corporate welfare to multi-national corporations. The ISDS, for example, is basically a free insurance policy for corporations, paid for by citizens of the world. The best option would be to remove the ability for corporations to sue for indirect expropriations at all cost, and force them to purchase political risk insurance -- if this is really about “free trade.”
The TPP is a deal full of gift-wrapped provisions for multi-national corporations, so its not surprising how secretive the negotiations have been. Obama has sadly proven his corporatist bent with his rigid support of the TPP, but there are still strong Democratic opponents in Congress who, with any luck, can stop this in its tracks.