U.S. trade proposal would let corporations overrule laws

By Stephen C. Webster
Wednesday, June 13, 2012 14:44 EDT
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President Barack Obama in Hawaii with trade negotiators from around the Pacific-rim. Photo: AFP.
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The Trans-Pacific Partnership (TPP), a forthcoming U.S. trade agreement that looks to solidify a seamless regional economy in the Pacific-rim, would give multinational corporations the power to challenge and even avoid compliance with laws in member countries — including the U.S. — provided a super-national corporate tribunal agrees with their claim.

That’s according to documents leaked this week by the Citizens Trade Campaign, an activist group responsible for leaking TPP proposals on intellectual property last year. The latest leak details a TPP draft chapter on “investments,” which proposes an independent dispute arbitration process that would be empowered to supersede domestic laws or regulatory actions in member states if they are seen as conflicting with the TPP’s framework.

Consumer advocacy group Public Citizen said Wednesday that it “has verified that the text is authentic,” and described the proposals as being fraught with “dangers.”

“It reveals that negotiators already have agreed to many radical terms granting expansive new rights and privileges for foreign investors and their private corporate enforcement through extra-judicial ‘investor-state’ tribunals,” they explained.

“Although TPP has been branded as a ‘trade’ agreement, the leaked text shows that TPP would limit how signatory countries may regulate foreign firms operating within their boundaries, with requirements to provide them greater rights than domestic firms,” Public Citizen’s analysis added. “The leaked text reveals a two-track legal system, with foreign firms empowered to skirt domestic courts and laws to directly sue TPP governments in foreign tribunals. There they can demand compensation for domestic financial, health, environmental, land use laws and other laws they claim undermine their new TPP privileges.”

The tribunals, which already exist under the framework established by prior trade deals during the Clinton and Bush administrations — like NAFTA and CAFTA — are also problematic, according to Public Citizen. Because their proceedings are conducted in private, no media may access their deliberations, and various international trade attorneys take turns filling the role of judges, who are selected by stakeholders.

In the event of a dispute between two entities incorporated in two different countries that are both members of one of these treaties, a trade tribunal serves essentially as a parallel legal system that exists outside of national laws and wields the power to knock down those laws or free multinational corporations from their obligation to comply with them. Considerations pertaining to labor rights or environmental protections are often not factored in to these decisions.

Although President Barack Obama had pledged during the 2008 presidential campaign to “not support NAFTA style trade agreements in the future,” he appears to have embraced them instead.

The TPP agreement has been in negotiations for years now, with major revisions being made during each successive round of talks, so it’s not clear if these proposals are set in stone just yet. Public Citizen noted that while nearly all of the TPP member states have agreed to these terms — including New Zealand, Singapore, Malaysia, Vietnam, Chile and Peru — Australia has not, which could hold up the continuing talks, set to resume this July in San Diego.

One of the reasons Australia appears hesitant is the country’s own experience with corporate trade tribunals organized through the World Trade Organization (WTO). British American Tobacco has admitted that it provided assistance to other big tobacco companies looking to use that system to fight forthcoming regulations that ban artwork on cigarette packaging. By incorporating in a country that has a trade agreement with Australia that’s similar to the TPP proposal, those tobacco companies gain access to the WTO’s trade tribunal process, which could ultimately overrule the country’s own laws.

But even if Australia’s reluctance does cause a problem for TPP negotiators, the press and public won’t likely find out about it, as U.S. trade talks are always conducted behind closed doors and usually with stakeholders from private industry present. With the TPP talks, that secrecy has been particularly contentious, and even some of President Barack Obama’s own allies in Congress have called upon him to force the U.S. Trade Representative to open the meetings to press and publish documents online.

Despite the push-back from members of his own party, President Obama has called the creation of “a seamless regional economy” in the Pacific-rim a “top priority” for his administration. “And we consider it a top priority because we’re not going to be able to put our folks back to work and grow our economy and expand opportunity unless the Asia-Pacific region is also successful,” he explained last November.

Public Citizen’s Lori Wallach explained in prepared text that the most startling details in TPP’s leaked “investment” chapter “may well be why U.S. trade officials have been so extremely secretive about these past two years of TPP negotiations.”

“Via closed-door negotiations, U.S. officials are rewriting swaths of U.S. law that have nothing to do with trade and in a move that will infuriate left and right alike have agreed to submit the U.S. government to the jurisdiction of foreign tribunals that can order unlimited payments of our tax dollars to foreign corporations that don’t want to comply with the same laws our domestic firms do,” she said.

The U.S. Trade Representative’s public affairs office did not respond to Raw Story’s request for comment.

Photo: AFP

Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
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