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  • Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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October 25, 2013

Report: "A Brave New Transatlantic Partnership"

When negotiations on the proposed Trans-Atlantic Free Trade Agreement (TAFTA) took a hiatus during the government shutdown, corporate groups urged the Obama administration to push forward with the sweeping deal.  U.S. and EU officials now plan to restart closed-door TAFTA talks in Washington in December. 

What will they be talking about?  Given that tariffs between the U.S. and the EU are already low, TAFTA proponents readily acknowledge that the agreement is not really about trade, but rather the rewriting of regulatory policies so as to remove “non-tariff barriers” –- a corporate code name for environmental, health, and consumer safeguards on which we all depend.

What particular safeguards could be dismantled via these corporate-advised "trade" negotiations?  The European organization Seattle to Brussels Network has released a worrisome report that outlines some of the public priorities that corporations on both sides of the Atlantic have asked to be placed on the TAFTA chopping block:

1. Clean air and water:
The report notes that industry groups on both sides of the Atlantic have been calling for TAFTA to "harmonize" U.S. and EU environmental rules -- that is, replacing existing domestic environmental protections with ones negotiated to be more convenient to business. Corporations have been taking particular aim at the EU's climate stability policies, pushing for a downward "harmonization" with U.S. standards via TAFTA. The report also explains how TAFTA could encourage a surge in the dangerous process of fracking in the U.S. while chilling green jobs programs.

2. Food safety:
So-called “non-tariff barriers” also include food labeling and sanitary standards that keep consumers safe. In Europe, bans on genetically-modified food, hormone-treated beef and pork, and chlorine-sterilized chicken could be weakened. In the U.S., basic dairy standards and restrictions on "mad cow" beef could be threatened.

3. Internet freedom:
If a chapter on "intellectual property rights" is included in the deal, TAFTA could serve as a backdoor way for business groups to quietly push through components of the controversial Stop Online Piracy Act (SOPA) and Anti-Counterfeiting Trade Agreement (ACTA), both of which were defeated due to intense public protest. The report notes that the leaked European Commission mandate for TAFTA, which sets a blueprint for the agreement, indeed proposes the inclusion of "intellectual property" provisions, opening the door to SOPA/ACTA-like rules.

4. Chemical safeguards:
According to the report, there are about 30,000 chemicals associated with cancer, infertility, diabetes, and obesity that have to undergo much stricter testing requirements in the EU than in the U.S. "If the EU caves in under industry pressure," states the report, "a likely casualty of [TAFTA] will be REACH – the EU’s iconic safe chemicals law that many consumer, health and environmental groups in the US have tried to replicate." Such an outcome would not only undermine the EU's stronger chemical safety standards, but make it far more difficult to improve the weaker U.S. standards.

5. Wall Street reform:
As regulators draft rules for big banks to prevent the sort of risk-taking that led to the financial crisis, the banks themselves are pushing for TAFTA to restrict such reregulatory efforts.  The report notes that European banks have openly called for TAFTA to be used to roll back key components of U.S. Wall Street reforms.  In response, EU TAFTA negotiators have pushed for financial regulation to be included in TAFTA's deregulatory framework, posing a threat to financial stability.

And that’s only a sampling of the issues at stake under TAFTA. To learn more, check out Seattle to Brussels’ full report, “A Brave New Transatlantic Partnership.”

October 16, 2013

Corporations Now Using Foreign Tribunals to Attack Domestic Court Rulings

Should an international tribunal of three private attorneys, sitting outside of any domestic legal system, have the power to overrule domestic courts? 

That’s the question addressed in the recent analysis, “Investment Agreements versus the Rule of Law?,” published on UNCTAD’s Investment Policy Hub by Todd Tucker, Gates Scholar at the University of Cambridge’s Centre of Development Studies.  The piece highlights the little-known but creeping practice of corporations asking foreign tribunals to second-guess domestic court decisions not in their favor and to order taxpayer payment as compensation. 

These tribunals are the product of the “investor-state” system, a little-known creation of “trade” and investment deals that empowers foreign corporations to skirt domestic courts and directly challenge governments before extrajudicial tribunals for policies and decisions that they claim as undermining “future expected profits.”  Under this extreme system, foreign corporations have challenged toxics bans, land-use rules, regulatory permits, water and timber policies, medicine patent policies, pollution clean ups, climate and energy laws, and other public interest polices. 

As if undermining a government’s public interest laws and regulations was not enough, foreign investors are increasingly using the investor-state system to challenge court judgments, undermining the principles of legal certainty, state sovereignty, and rule of law more generally.  While domestic courts often employ safeguards, such as the principle of judicial review, judicial independence and transparency in their decision-making, these safeguards are notably absent in investor-state arbitrations, where lawyers who represent the investors take turns as ostensibly “impartial” arbitrators, interpretations of international law are regularly inconsistent and erroneous, and decisions often cannot be appealed.

In his compelling piece, Mr. Tucker cites examples from three investor-state case decisions issued in the last several years, Mr. Franck Charles Arif v. Republic of Moldova and two iterations of Chevron v. Ecuador, in which the tribunals found Moldova’s and Ecuador’s domestic court decisions to be in violation of these countries’ obligations to foreign investors under Bilateral Investment Treaties (BITs).

In the Moldovan case, Moldovan airport officials gave Franck Arif, a French national, an exclusive concession to operate tax-free shops at an airport.  When his competitors challenged this in court, Moldovan courts found that the non-competitive concession was illegal.  In response, Franck Arif launched an investor-state case against Moldova under the France-Moldova BIT, arguing that the courts’ ruling violated the “fair and equitable treatment” provision in the BIT – the vague obligation that inventive tribunals have interpreted as corporations’ “right” to a legal framework that conforms to their “expectations.” The tribunal first conceded that the Moldovan courts had “…applied Moldovan law legitimately and in good faith in the proceedings commenced by Claimant’s competitors.” Nevertheless, the tribunal still decided that the Moldovan courts’ rulings conflicted with the airport officials’ granting of the non-competitive concession, and therefore constituted a violation of the vague “fair and equitable treatment” obligation as a “breach” of Mr. Arif’s “expectations.”

In one of the Chevron v. Ecuador cases, a three-person tribunal last year ordered Ecuador’s government to interfere in the operations of its independent court system on behalf of Chevron by suspending enforcement of a historic $18 billion judgment against the oil corporation for mass contamination of the Amazonian rain forest.  The ruling against Chevron, rendered by Ecuador’s courts, was the result of 18 years of litigation in both the U.S. and Ecuadorian legal systems.  Ecuador had explained to the panel that compliance with any order to suspend enforcement of the ruling would violate the separation of powers enshrined in the country’s Constitution – as in the United States, Ecuador’s executive branch is constitutionally prohibited from interfering with the independent judiciary.  Undeterred, the tribunal proceeded to order Ecuador “to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment [against Chevron].”

This dangerous trend of private three-person tribunals assuming the authority to contravene domestic court decisions at the behest of multinational corporations should raise the ire of those who support the independence of courts, the sovereignty of nations, the rule of law, or even the core democratic notion that a system of legal decision-making should be accountable to those who will live with the decisions.  Now the Trans-Atlantic Free Trade Agreement (TAFTA) and the Trans-Pacific Partnership (TPP) threaten to expand the investor-state system across two oceans, subjecting domestic court decisions to a new wave of second-guessing by unaccountable tribunals.  Now is the time to halt the advance of this extreme system – to restore the authority of our courts and the principles of our democracy.  

October 10, 2013

Fast Track: New Report Proves Difficulty of Defending the Indefensible

When most people hear about a political maneuver that empowered corporate-advised executive branch negotiators to skirt Congress and rewrite policies that affect our daily lives, they don’t say, “Well, that sounds like something worth defending.”  But that improbable response is exactly the position being taken by corporate defendants of Fast Track who have announced a desperate push to revive the undemocratic maneuver by the end of this year. 

Fast Track was a Nixon-crafted ploy, used to railroad through Congress unpopular “trade” deals that have empowered foreign corporations to attack domestic health and environmental policies, enabled pharmaceutical firms to raise medicine prices, and equipped banks with a tool to roll back financial regulation.  Under the U.S. Constitution, Congress is supposed to write the laws and set trade policy.  For 200 years, these key checks and balances helped ensure that no one branch of government had too much power.  But that changed with Fast Track. 

Fast Track delegated away Congress’ constitutional authority over trade pacts, empowering the executive branch to negotiate and sign an agreement before Congress approved the contents.  Then it allowed the executive branch to write legislation that could not be amended and to force a limited-debate vote on the sealed deal within 90 days.

As unpopular deals like the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) were rammed through Congress under Fast Track, mounting opposition to the maneuver grew strong enough to force Fast Track’s corporate proponents to attempt a rebranding (cynically redubbed as “Trade Promotion Authority”). 

It didn’t work.  Fast Track remained polemical and Congress finally allowed it to die in 2007. 

Now Fast Track’s corporate proponents are trying hard to revive it, because they’d like to shove another unpopular “free trade” agreement (FTA) through Congress.  Administration officials have admitted that Fast Track’s democracy-defying procedure will be essential to usher into law the controversial Trans-Pacific Partnership (TPP) – a sweeping U.S. pact under negotiation with 11 Pacific Rim countries that would impose new rules on daily realities ranging from access to medicines and food safety to Internet freedom and Wall Street reform

One of the most recent attempts to revive Fast Track is a report put out by the Third Way think tank – a glossy 10-pager that undertakes the unenviable task of defending Fast Track.  To do so, the think tank employs a series of claims that are as indefensible as Fast Track itself.  Here’s a sampling.

Claim: We must revive Fast Track to push through Congress the controversial TPP because the deal will boost U.S. exports (even to non-TPP countries). 

Reality:

  • The report hopes for big export gains…to non-TPP countries. The report touts a potential export growth of $600 billion to “Asia-Pacific markets” if the U.S. were to recapture its historical export share in the region.  Great.  But not relevant to the TPP.  The $600 billion projection is based on a hypothetical rise in exports to 12 countries.  Seven of them are not in the TPP.  Two more are in the TPP but already have FTAs with the United States.  That leaves three countries for which the TPP could even plausibly have a bearing on the question of how to increase exports (a question that, per the last point, deserves the answer: “not through another FTA”).  Yet, the report is content to use this hypothesized export growth “opportunity” that is 75% patently irrelevant to the TPP as the reason why the TPP should be railroaded through Congress.  
  • The TPP is not really about trade.  Only five of the TPP’s 29 proposed chapters actually pertain to traditional trade matters.  The rest would set new rules affecting everything from food safety and financial markets to medicine prices and Internet freedom.  The reason for wide-ranging public and congressional opposition to the TPP is because people don’t want more expensive healthcare, unsafe food, a rollback of Wall Street reform, corporate attacks on environmental safeguards, etc.  While there is no observed correlation between enacting an FTA and seeing exports rise, there is a correlation between enacting one and seeing public interest safeguards fall.  

Continue reading "Fast Track: New Report Proves Difficulty of Defending the Indefensible" »

October 09, 2013

Corporations Ask to Write their Own Regulations via "Trade" Deal

The New York Times has just reported that European government officials have been taking pains to entertain corporations' deregulatory demands for the Trans-Atlantic Free Trade Agreement (TAFTA).  The European Commission appears to have mistakenly released minutes of confidential government meetings held with U.S. and European corporations to see how their priorities could shape the proposed U.S.-EU deal.  This may not come as a shock to those in the U.S. who know that the Obama administration has been regularly soliciting private advice on both TAFTA and the Trans-Pacific Partnership (TPP) from about 600 corporate trade "advisors" who are granted privileged access to negotiators and secretive trade texts. 

But the just-released minutes of the meetings between EU officials and U.S. and European corporate heads (among other documents unearthed by Corporate Europe Observatory and the New York Times) reveal the incredible extent to which corporations are pushing for TAFTA to rewrite health, environmental, financial and other safeguards to be more convenient to industry interests.  Here are a few of the sweeping TAFTA demands explicitly expressed by the corporations of the U.S. Chamber of Commerce and BusinessEurope.

  • Rules that cater to multinational corporations should be considered as an alternative to "domestic-oriented" safeguards: The corporate conglomerates asked the EU and U.S. government officials to establish in TAFTA a new methodology for second-guessing new consumer and environmental safeguards, pausing before enactment of the new protections to ask whether they are sufficiently convenient to trans-Atlantic corporations.  In particular, they asked that regulators consider the possible "benefits" of scrapping proposed "domestic-oriented regulation" in favor of a "transatlantic regulatory alternative."  Even the European Commission noted that this "would seem problematic, as most regulators will be mandated to achieve certain objectives in view of their domestic market and its citizens."  Ditching the core democratic tenet that policies should be made on behalf of the electorate?  Yes, that would be problematic. 
  • Foreign products that do not meet domestic standards should be allowed if foreign regulators mean well: The U.S. Chamber of Commerce has been pushing for TAFTA to include obligations for European products and services that do not meet U.S. standards to be allowed in the U.S. under a process called “equivalence" -- in which EU regulations, though different, would be deemed roughly "equivalent" to U.S. protections (the same would apply for U.S. products in the EU).  Now the unearthed minutes of the private meeting between European officials and corporate representatives reveal that the Chamber would like TAFTA to require such automatic U.S. acceptance of European products and services on the mere basis that both sides' vaguely-worded regulatory objectives sound similar.  In the private meeting minutes, the European Commission notes, "Chamber pushing strongly for 'top'-down, i.e. ‘if general objectives’ of regulation are the same we shall consider the regulations as equivalent without a thorough assessment."  Such a reckless approach to consumer safeguards could threaten everything from the safety of milk to the stability of banks. 

These unabashed corporate demands, and the European government's careful consideration of them, reveal what's at stake in TAFTA.  The safety standards on which we rely daily for our food, the energy policies needed to avert climate catastrophe, and the Wall Street reforms designed to prevent another financial crisis--these are policies that should be determined in open, democratic venues where we have a say.  Not in backroom discussions between government officials and corporate executives.  Not under the guise of a "trade" deal.  

October 08, 2013

Statement on Today's TPP Heads of State Declaration

Statement by Lori Wallach, Director of Public Citizen’s Global Trade Watch

“It is not surprising that the leaders could not announce a deal and in fact have eliminated the language in their official statement that negotiations are on track to meet the long-touted 2013 end-of-year deadline, despite all of the hype to the contrary leading up to the summit. [STATEMENT, ATTACHED, NOW SAYS: “…our countries are on track to complete the Trans-Pacific Partnership negotiations. FULL STOP”]

Public and parliamentary opposition in some TPP countries has grown as the true nature of the TPP “trade offs” in public health, financial stability, quality job creation, Internet freedom and more being demanded for this deal has emerged, forcing continued deadlocks on many of these issues. [SEE CHART BELOW FOR DEADLOCKED ISSUES]

That the leaders have admitted that there is no deal nor a clear path to obtaining one this year, despite the hype built up pre-summit, reveals the growing domestic political blowback against the TPP that the leaders are now trying to manage. At the last TPP Summit in 2011, the leaders gleefully announced a breakthrough when they did not have one. Since the last 2011 TPP leaders’ summit, opposition to the very notion that closed-door TPP “trade” negotiations with 600 official corporate advisors should rewrite wide swaths of 12 countries domestic laws has only grown in the U.S. and in other TPP counties, creating new political liabilities for any head of state associated with that agenda.

Perhaps the most lasting effect of Obama not attending the APEC summit due to the government shutdown is that it reveals there is little chance that this Congress will delegate its constitutional trade authority to grant Obama the extraordinary Fast Track powers he says he needs to finish TPP and that other countries want in place to ensure Congress is handcuffed before they make concessions that could cause them political woe at home.  

 

Continue reading "Statement on Today's TPP Heads of State Declaration" »

October 04, 2013

Obama Cancels Trip to Asia Trade Summit as Elected, Labor and Business Leaders Detail TPP Trade Pact Problems

President Obama has now announced that due to the government shutdown, he will not be attending the summit in Indonesia that his administration had (mis)identified as a deadline for concluding the long-lingering negotiations for the sprawling Trans-Pacific Partnership (TPP) "trade" pact.  Long before the shutdown, it became clear that this deadline would be missed given the TPP's laundry list of unresolved controversies, forcing the administration to reframe the summit as a "milestone." Obama's absence further downgrades the summit (more of a "speed bump" than a "milestone") and further dashes the administration's attempts to claim that the polemical TPP is in an "end game."  

The announcement came just after members of Congress, business leaders, and labor leaders joined together yesterday to detail the critical threats of the TPP to U.S. jobs, food safety and affordable medicines, and to throw a dose of reality onto the administration's claims about a quick fix to the beleaguered TPP negotiations. The subsequent announcement of Obama's no-show at the TPP summit bolstered their arguments.  Here's what they said:  

October 3, 2013

As White House Weighs Attending Trade Summit during Government Shutdown, Major Unresolved TPP Issues, Growing Opposition to Fast Track Authority Highlighted

Today, House Democratic Steering and Policy Committee Co-chair  Rosa DeLauro, Ways & Means member Jim McDermott, CWA President Larry Cohen and Brian O'Shaughnessy, Chairman of Revere Copper Products  warned of severe threats to U.S. jobs, food safety and affordable medicines posed by the Trans-Pacific Partnership (TPP) free trade agreement.  With negotiations far from over, Congress should retain its authority to ensure that any final deal benefits most Americans and not pass Fast Track trade authority. Comments were made during a teleconference call moderated by Lori Wallach, Director of Public Citizen's Global Trade Watch.

President Obama is facing the choice of staying in Washington for on-going government shutdown and debt ceiling negotiations or traveling to Bali to attend a summit with the heads of state of the 11 other nations  involved in TPP talks on the sidelines of the 21st Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting October 7-8.

At the Summit, President Obama hoped to announce a final TPP deal after four years of contentious negotiations. However, there is no consensus on key TPP terms relating to job offshoring, a ban on Buy American procurement, disciplines against State Owned Enterprises subsidizing their operations or enforceable labor and environmental rules.  Most other TPP nations strongly oppose U.S. proposals that could increase medicine prices and undermine financial regulation. Talks on sensitive auto, dairy, textile, and sugar market access issues are still in their early stages. Despite bipartisan demands in recent weeks by 60 U.S. Senators and 230 Representatives that TPP include disciplines against currency manipulation, talks on the subject have not even begun.

Rep. Rosa DeLauro (D-CT) said, “The Trans-Pacific Partnership is an agreement of broad scope and I have been particularly concerned with food safety issues.  We would see an influx in seafood products from Vietnam and Malaysia, which have terrible food safety records, with any TPP agreement and I am afraid the food safety dispute resolution process being negotiated may further jeopardize food safety.

“On top of this, I do not believe all Members of Congress are being given a sufficient opportunity to provide input or have a meaningful role in the negotiating process. Twentieth Century ‘Fast Track’ is simply not appropriate for 21st Century agreements like the TPP agreement that is moving toward completion. It must be replaced with trade promotion authority that increases Congress’s role in the process.”

Rep. Jim McDermott (D-WA) said, “Washington State knows the value of a good trade agreement, and our economy depends on robust trade relations. I have voted for some trade agreements and against others, because substance matters.  On fast track authority, I voted against it in 2002 because I did not think it included mechanisms to ensure that a President will consult meaningfully with Congress during a trade negotiation. The Obama administration has been better on consultations compared to the Bush administration, but more can be done to improve the process so that there is greater transparency and larger role for Congress. 

“On the Trans-Pacific Partnership, I will be watching closely to see what kind of an agreement we get out, particularly related to ensuring access to medicines and provisions related to labor and the environment.”

Larry Cohen, President of the Communications Workers of America said, “If we keep going down the same trade road as we have over the past 40 years, America will soon be the one country on Earth that has not just exported our manufacturing base but also the only one that offshores its service sector jobs like those at call centers. We are going to fight to make sure that doesn’t happen.”

Brian O'Shaughnessy, Chairman, Revere Copper Products and Chief Co-Chair of the Coalition for a Prosperous America said, “Companies like mine are the manufacturing cornerstones that our economic revival is supposed to be built on, but year after year, trade bill after trade bill, I see more and more of our customers moving their operations overseas. The lack of transparency during negotiations leads to numerous loopholes in our Free Trade Agreements other countries use to export unemployment and import full time jobs. Just to name three of them, other countries can still manipulate their currency; change their border adjustable taxes to act like tariffs; and, ignore labor, environmental and human rights.”

Lori Wallach, Director of Public Citizen's Global Trade Watch said, “At the last TPP Summit in 2011, heads of state announced they had a deal when they did not and since then opposition to the very notion that closed-door “trade” negotiations with 600 official corporate advisors should rewrite wide swaths of 12 countries domestic laws has only grown in the U.S. and in other TPP counties. This TPP we-have-a-deal kabuki theatre is aimed at trying to create a sense of inevitability when in fact the talks are deadlocked in no small part because increasingly people in the countries involved are realizing that TPP is not mainly about trade, but would promote more job offshoring, raise medicine prices and roll back vital food safety, financial and other safeguards we all rely on.”

The diversity of the speakers on today’s call - senior members of Congress and business and labor leaders – reveal how concerns about the TPP are growing as details about the secretive negotiations have begun to emerge. The speakers were united in insisting that the pact’s draft texts must be aired fully before the American people and the Congress and not railroaded through Congress using the extraordinary Nixon-era Fast Track procedure. Fast Track has only been used 16 times among hundreds of U.S. trade agreements. Congress refused to delegate its authority using Fast Track when requested by President George W. Bush in 2007 and by President Bill Clinton in 1995, 1997 and 1998. 

October 03, 2013

Trans-Pacific Partnership: What End Game? (No End in Sight...)

The heads of state of the 12 nations involved in Trans-Pacific Partnership (TPP) negotiations meeting on the sidelines of the Bali APEC Summit are expected to announce again that the outlines of a TPP deal have been achieved. But wait, that was the story pitched after a similar meeting at the Hawaii APEC summit in 2011. (USTR Release: On November 12, 2011, the Leaders of the nine Trans-Pacific Partnership countries … announced the achievement of the broad outlines of an ambitious, 21st-century Trans-Pacific Partnership (TPP) agreement…”)  Until recently, USTR Michael Froman was declaring that the TPP was in its “end game.”  Except:

  • There is no text agreed for major swaths of at least three of the pact’s 29 chapters.
  • There are multi-year deadlocks on a long list of controversial “behind the borders” issues in a dozen other chapters – one chapter has 300 “brackets.” (Brackets mark disputed text.)
  • There are no deals on any of the controversial market access issues— from sugar and dairy to textiles/apparel and autos, in part because the most basic question remains contested: how will the TPP relate to the more than 30 bilateral trade pacts already existing between the parties?

And, as details have leaked out about the draft texts that have emerged from three years of extremely secretive negotiations, political opposition is building in several TPP countries among parliamentarians, powerful professional associations, business sectors, unions and the public. Signatory countries would be required to conform all of their domestic laws to the TPP terms. And, only five of the pact’s chapters cover traditional trade matters. The rest would set rules on patents and copyright, medicine pricing policies and health care, financial regulation, food safety, immigration visas, government procurement, land-use, energy policy and more.

CHECK LIST: WERE THESE CONTROVERSIAL TPP ISSUES SUDDENLY RESOLVED*?

□  Entire patent section of Intellectual Property chapter and text on medicine pricing rules both deadlocked

A U.S. proposal that would deliver on Big Pharma’s demands for extended patents, data exclusivity and other monopoly powers that raise medicine prices has faced unwavering multi-year opposition by most other TPP countries. The entire patent section of the IP text is in brackets. In another chapter, an Annex cynically dubbed “Annex on Transparency and Procedural Fairness for Healthcare Technologies,” is also deadlocked. This text would allow Big Pharma to challenge the decisions of doctors and pharmacologists who determine the cost-saving medicine formularies of countries’ healthcare systems. These issues have become a major political liability in numerous TPP nations. 

□  Deadlock over enforceability of labor rights

The U.S. seeks labor standards that are enforceable on equal terms with the pact’s other provisions. Most TPP countries oppose enforceable labor standards altogether.

□  Environment chapter at an impasse

The text still has 300 brackets - connoting text that is not agreed, which is most of the text.

□  Deadlock over the State Owned Enterprises (SOE) text

To start with, there is no agreed definition of SoEs! The U.S. has proposed disciplines on SoEs forbidding the use of government resources to subsidize SoE activities within TPP nations. A sizable bloc of nations opposes the U.S. text absolutely. Recently Australia tabled an alternative text altogether. The result: this text is all brackets and no agreement.

□  United opposition to the U.S. demand that TPP ban the use of capital controls

With the IMF now endorsing the usage of capital controls as a legitimate policy to avoid floods of speculative capital that cause financial crises, it is not surprising that there is united opposition to the unbending U.S. demand that TPP include a ban on countries’ use of  various common-sense macro-prudential measures, including capital controls and financial transaction taxes.

□  Deadlocks over various aspects of controversial “investor-state” private corporate enforcement of TPP

Australia’s newly-elected conservative government has reiterated that it will not be bound to the investor-state enforcement system, which elevates individual corporations to equal status with sovereign nations in order to enforce privately a public treaty by demanding compensation from governments before panels of private-sector attorneys for government actions that undermine expected future profits. Japanese Prime Minister Abe’s Liberal Democratic Party parliamentary majority has set as a condition for Japan’s TPP participation that the deal not include investor-state enforcement. Other TPP nations oppose the U.S. demand that government natural resource concession, private-public-partnership utility management contracts and procurement contracts be subject to such extra-judicial processes. Key text remains in brackets with respect to both the substantive rights which investors would be granted and the enforcement system.

□  Negotiations on sensitive Market Access issues not even started

Japan’s parliament has listed five “sacred” commodities – rice, beef and pork, wheat and barley, sugar and dairy - that it demands be excluded from TPP rules zeroing out tariffs. Other TPP countries insist that no sector can be excluded. The rules of origin – how much of a product’s value must come from TPP countries – have not been agreed for sensitive sectors such as apparel/textiles, autos and more, so actual tariff-cutting negotiations have not started on these products. Battles over sugar, dairy and more remain unresolved.

□  Impasse on Copyright Rules 

Hollywood and recording industry-inspired proposals to limit internet freedom and access to educational materials, to force internet providers to act as copyright cops, and to cut off peoples’ internet access have triggered public outrage and led to a negotiation stalemate. There is entrenched disagreement about whether copyright should be able to keep works of art and literature out of the public domain 70 years after death of the author, with no resolution in sight.

□  Negotiations on Currency Disciplines Not Even Started

Despite bipartisan demands in recent weeks by 60 U.S. Senators and 230 Representatives that TPP include disciplines against currency manipulation, talks on the subject have not even begun.

* And, that’s just a sample of the issues that are raising opposition in both the negotiations suites and TPP nations’ streets…

October 02, 2013

Corporate TPP Factsheet Flurry: Many Sheets, Few Facts

Corporate America has just felled a (closed) national park’s worth of trees to draft 51 fancy, fanciful factsheets in attempt to better sell to a skeptical Congress the controversial Trans-Pacific Partnership (TPP) –the sweeping 12-country “free trade” agreement (FTA) mired in deadline-missing negotiations.

In projecting TPP impacts, the factsheets are heavy on platitudes and light on, well, facts. 

The factsheet series was released yesterday by the Business Roundtable (e.g. Goldman Sachs, Verizon, Pfizer, Exxon Mobil), the Coalition of Services Industries (e.g. Halliburton, Walmart, Citigroup), the National Association of Manufacturers (e.g. Lockheed Martin, Merck, Smithfield Foods), the U.S. Chamber of Commerce and other corporate conglomerates. The series posits one set of counterfactual claims, and then replicates them in 50 state-specific variations. The resulting 306-page ream of TPP cheerleading is impressive for its girth, if not its veracity.

Here are the corporate alliances’ three claims about the TPP – sourced from conjecture – followed by some inconvenient and contradictory facts – sourced from data:

1.  Claim: The TPP will “expand trade between the United States and existing FTA partners.” 

Fact: The U.S. is not even discussing trade expansion (i.e. tariff reduction) with most existing FTA partners in the TPP negotiations.  How can something not under discussion be promised as a result of the deal?

Of the 11 countries negotiating the TPP with the United States, six already have FTAs with the U.S.: Australia, Canada, Chile, Mexico, Peru, and Singapore.  The U.S. Trade Representative has stated that the U.S. is not negotiating tariff reductions with most of these countries, in part because tariffs with these FTA partners are already relatively low.  Despite this, the corporate factsheets state, “the TPP negotiations provide an opportunity to…address a range of important tariff…barriers that currently impede exports to these countries.”  Even the TPP-promoting government officials negotiating the deal would have to disagree.  

2.  Claim: The TPP will “open new markets in countries that are not current FTA partners.”

Fact: U.S. exports have actually suffered under FTAs, not gained.  How can we do more of the same and expect different results?

U.S. goods exports to Korea fell 10 percent in the first year of the U.S.-Korea FTA, a template for the TPP that took effect in March 2012. Overall, U.S. export growth has actually been better without FTAs than with them. Growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the last decade. Repeating the tired claim that we need FTAs to boost exports does not make it true.

In addition, some of the particular export growth “opportunities” highlighted by the corporate groups require a reality check.  For example, they cite New Zealand’s 5% tariff on U.S. lactose products as a barrier that, if only reduced via TPP, would herald an increase in U.S. dairy exports to New Zealand.  But U.S. dairy producers fear just the opposite.  U.S. dairy producers have lobbied against the reduction of dairy tariffs between New Zealand and the U.S., fearing that it would lead to their displacement, not a new export “opportunity.” The corporate factsheets’ tariff reduction promises are dotted with such inconvenient facts that, like flies on ointment, tarnish the rosy picture painted for Congress.

3.  Claim: The TPP will “encourage companies based in TPP countries to increase their business investment in the United States.”

Fact: Study after study has shown no correlation between a country’s foreign investment levels and its willingness to be bound to the extreme sort of investor privileges enshrined in the TPP.  With no proven upside, why would we sign up for the proven downside of empowering foreign investors to bypass domestic courts, drag the government to an extrajudicial tribunal, and demand taxpayer compensation for public interest policies that they find inconvenient?  

The corporate factsheets identify corporations based in TPP countries with operations in the United States, arguing (despite the evidence) that TPP investor privileges would encourage them to boost their business. In fact, the TPP would empower these foreign firms, on behalf of any of their 30,000 subsidiaries in the U.S., to directly attack U.S. health, financial, environmental and other public interest policies that they view as undermining new foreign investor rights that the TPP would establish. Extrajudicial tribunals, comprised of three private attorneys unaccountable to any electorate, would be authorized to determine the validity of the challenged policies and order unlimited taxpayer compensation if the policies undermined corporations’ “expected future profits.”  

This extreme “investor-state” system already has been included in a series of U.S. FTAs, forcing taxpayers to hand more than $400 million to corporations for toxics bans, land-use rules, regulatory permits, water and timber policies and more. Just under U.S. pacts, more than $14 billion remains pending in corporate claims against medicine patent policies, pollution clean ups, climate and energy laws, and other public interest polices. Are these the “barriers” to investment that the corporate alliances hope the TPP will remove? 

In the wake of this corporate factsheet flurry, the message to Congress is simple: check the facts.  For they are not found on these sheets.  And they reveal a truer and uglier picture of the TPP than the corporations’ latest attempt at airbrushing.

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