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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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September 13, 2016

U.S. Agricultural Exports Lag under Past Trade Deals

Proponents of the Trans-Pacific Partnership – or TPP – have spent decades promising U.S. farmers and ranchers that free trade agreements are good for agriculture. Time and again, these promises have been broken. Since becoming the researcher at Public Citizen’s Global Trade Watch, I have been digging through the agriculture trade data. The case is quote compelling:  our past trade agreements have had a negative impact on U.S. agriculture. That is worth considering, because the TPP would double down on the past model.

Since 2008, U.S. food exports to free-trade partners have lagged behind U.S. food exports to the rest of the world. In fact, the volume of U.S. food exports to non-FTA countries rebounded quickly after the 2009 drop in global trade following the financial crisis. But U.S. food exports to FTA partners remained below the 2008 level until 2014. Even then, U.S. food exports to FTA partners were just 1 percent higher than in 2008, while U.S. food exports to the rest of the world stood 4 percent above the 2008 level.

Agpic Now let’s consider what to make of the recycled promises that the TPP will be a boon for U.S. farmers. The TPP itself was modeled on the U.S.-Korea free trade agreement that entered into force in April 2012. Before its passage, U.S. Agriculture Secretary Tom Vilsack declared: “we believe a ratified U.S. Free Trade Agreement [with Korea] will expand agricultural exports by what we believe to be $1.8 billion.”

In reality, exports to Korea of all U.S. agricultural products fell $1.4 billion, or 19 percent, from the year before the FTA took effect to its recently-completed fourth year of implementation. During that same period, total U.S. agricultural exports to the world only declined by 9 percent.

And there are many products that have experienced declining exports since the U.S. – Korea FTA.

  • Apples:S. apple exports to Korea have fallen 8 percent in the first four years of the Korea FTA.
  • Corn:S. corn exports to Korea have plummeted 57 percent during the Korea FTA’s first four years – a loss of more than 3.6 million metric tons of corn exports each year.
  • Poultry: S. poultry exports to Korea have dropped 35 percent during the first four years of the Korea FTA – a loss of more than 25,300 metric tons of poultry exports each year.
  • Wine: While FTA proponents have claimed wine as a winner under the Korea FTA, U.S. exports to Korea of wine have declined 6 percent under the Korea FTA’s first four years – a loss of nearly 239 metric kiloliters of wine exports each year.

Those hardest hit by rising agricultural imports and declining trade balances are the smaller-scale U.S. family farms. Since 1993, the year before NAFTA took effect, one out of every ten small U.S. farms has disappeared. By 2015, nearly 198,000 small U.S. farms had been lost.

In addition to this report, the Department of Agriculture’s conducted its own study and found that the TPP would increase U.S. growth by 0.00 percent if all tariffs on all products were eliminated, which did not occur. The U.S. International Trade Commission’s study found that nearly half of all U.S. agricultural sectors would experience worsening trade deficits under the TPP. And this study was conducted under many false assumptions, including the assumption that countries won’t manipulate their currency to gain a competitive edge in exports.

Government data undermine the claim that farmers and ranchers benefit under free trade agreements. To read more of our findings on what trade agreements have meant for U.S. agriculture, please click here.

 

September 08, 2016

New Interactive Map Shows TPP Would Expand Multinational Corporations’ Power to Attack U.S. Laws Using System That Hundreds of Law Professors, VP Candidate Kaine Cite as Reason to Oppose Pact

TPP Would Double Number of Corporations Empowered to Demand U.S. Taxpayer Compensation After Years of the U.S. Government Dodging Investor-State Challenges Because Current U.S. Treaties Cover Few Major Foreign Investors Here

A new Public Citizen interactive map shows how enactment of the Trans-Pacific Partnership (TPP) would dramatically expand U.S. exposure to multinational corporate demands for taxpayer compensation using the controversial “investor state dispute settlement” (ISDS) system.

Under existing treaties, relatively few foreign investors are empowered to use the ISDS regime against the United States, which is why the U.S. has come close to losing cases, but to date has not been ordered to pay compensation. Implementation of the TPP would double the U.S. exposure, an unprecedented increase in U.S. investor-state liability that recent Colombia Law School analyses will make it highly probable that the U.S. will lose future cases.

As the White House escalates its push for a vote on the TPP in the lame-duck session, an explosive four-part investigative exposé by Pulitzer Prize-winning journalist Chris Hamby revealed how Justice Department, State Department and other government lawyers, and even some of the inside players in the ISDS system, view it as a threat to the U.S. justice system. Earlier this week, hundreds of prominent pro-free trade law and economics professors called on Congress to oppose the TPP because it would greatly expand the extra-judicial tribunal system.

The ISDS system at the heart of the TPP would grant new rights to thousands of foreign corporations to sue the U.S. government before a secret panel of three corporate lawyers. These lawyers would be able to award the corporations unlimited sums to be paid by America’s taxpayers, including for the loss of expected future profits. These foreign corporations need only convince the lawyers that a U.S. law or safety regulation violates their TPP rights. Their decisions would not be subject to appeal, and the amount awarded would have no limit.

The interactive map, released today, shows additional multinational corporations located in every U.S. state that would be able to launch ISDS attacks against the United States if the TPP were implemented as well as if the Transatlantic Trade and Investment Partnership (TTIP) (now being negotiated with European countries) were completed with ISDS included. If one counts all corporations in all countries covered by all 50 existing U.S. investor-state pacts, 9,829 U.S. subsidiaries owned by 4,100 foreign corporations from those 50 nations can currently launch investor-state cases against the U.S. government. The TPP alone would double U.S. ISDS exposure, with the additional 10,085 U.S. subsidiaries owned by 3,682 additional corporations in TPP countries not now covered by U.S. ISDS pacts newly able to launch investor-state cases against the U.S. government. The TTIP would newly empower the more than 26,900 U.S. subsidiaries of more than 12,100 European Union parent corporations invested here. .

Under existing U.S. pacts, nearly $3 billion in taxpayer money has been paid to corporations by other countries for toxics bans, land-use rules, regulatory permits, and water and timber policies, among others. More than $70 billion is pending under U.S. treaties in corporate claims against medicine patent policies, pollution cleanup requirements, climate and energy laws, and other public interest polices.

While the Obama administration is pushing for the TPP and TTIP pacts, other countries have begun to withdraw from the system after facing billions in claims, including South Africa, India, Indonesia and other nations. After Germany was hit with two major ISDS claims against its decision to phase out nuclear power and its new coal-fired electric plants regulations, the government notified the EU that it could not accept a TTIP pact that expanded the existing ISDS regime.

As White House Spotlights Conflict With Democratic Presidential and Congressional Candidates by Escalating Toward TPP Lame-Duck Vote, Sen. Warren and Hundreds of Academics Urge Rejection

Audio recording and transcription of press call with Senator Warren and prominent academics can be found here.

Economic and Legal Scholars Cite Multinational Corporate Rights to Unlimited Taxpayer Funds Via ISDS Tribunal System Named by VP Candidate Kaine as Basis for His Opposition

The investor-state dispute settlement (ISDS) regime at the heart of the Trans-Pacific Partnership (TPP) that would newly empower thousands of multinational corporations to challenge U.S. policies before panels of three private lawyers to demand taxpayer compensation is the target of a letter sent to Congress today by leading pro-free trade U.S. economics and law professors calling on Congress to reject the TPP.

The White House has escalated its efforts to pass the TPP in the lame-duck session, with Cabinet secretaries who are promoting the TPP crossing paths with Democratic presidential and congressional candidates campaigning against the TPP.  

Last year, several dozen legal scholars joined congressional Democrats in raising concerns about the ISDS regime and demanding that a final TPP deal exclude the parallel legal system for multinational corporations. President Barack Obama scorned the critics, declaring they were  “making this stuff up.” Today’s letter, signed by more than 200 prominent academics, including Obama’s Harvard Law School mentor Professor Larry Tribe, warns that the ISDS regime threatens the rule of law and undermines our nation’s democratic institutions. The academics call on Congress to reject the pact because the final deal would greatly expand the ISDS regime.

U.S. Sen. Elizabeth Warren (D-Mass.) praised the letter: “Today’s letter from top legal experts makes clear: ISDS undermines the American judicial system and tilts the playing field further in favor of big multinational corporations,” Warren said. “This provision empowers companies to challenge laws and regulations they don’t like, with friendly corporate lawyers instead of judges deciding their disputes. Congress should not approve a TPP agreement that includes ISDS.”

Tribe, Nobel laureate Joseph Stiglitz, former California Supreme Court Justice Cruz Reynoso, and Columbia University Professor and UN Senior Adviser Jeffrey Sachs are among the signers, many of whom have supported past U.S. trade agreements. The letter spotlights the danger of the ISDS provisions, which was the same reason Democratic vice presidential nominee Tim Kaine cited for opposing the final TPP deal.

The U.S. has dodged ISDS liability to date because past treaties have covered only a limited number of foreign investors operating here. Research conducted by Public Citizen shows that the TPP, which includes Japan, Australia and other nations with more than 9,000 corporate subsidiaries in the United States, would double U.S. ISDS exposure. Nearly $3 billion in ISDS awards has been paid to corporations under U.S. treaties alone and claims worth more than $70 billion are pending.

Recent investigative reports by a Pulitzer-Prize-winning journalist and a new Columbia Global Reports book reveal how critics have understated the threats posed by the ISDS regime, which – if the TPP is approved – would empower thousands more multinational corporations to challenge U.S. federal, state and local laws, court decisions and government actions before panels of three private lawyers. Under ISDS, the panel of lawyers can award the companies unlimited taxpayer money, including for loss of expected future profits. The decisions cannot be appealed.

“In recent years, corporations have challenged a wide range of environmental, health and safety regulations, fiscal policies, bans on toxins, denials of permits including for toxic waste dumps, moratoria on extraction of natural resources, measures taken in response to financial crises, court decisions on issues ranging from the scope of intellectual property rights to the resolution of bankruptcy claims, policy decisions on privatizations of prisons and health care, and efforts to combat tax evasion, among others,” the letter notes.

The experts lament that despite the Obama administration’s claims to have addressed growing concerns about the ISDS system, “the final TPP text simply replicates nearly word-for-word many of the problematic provisions from past agreements, and indeed would vastly expand the U.S. government’s potential liability under the ISDS system.” They fear that the expansion of ISDS in the TPP and in ongoing negotiations with Europe “threatens to dilute constitutional protections, weaken the judicial branch and outsource our domestic legal system to a system of private arbitration that is isolated from essential checks and balances.”

This letter adds to a rising chorus of opposition to ISDS from prominent members of Congress such as Warren; the National Conference of State Legislatures; pro-free trade think tanks such as the Cato Institute; and hundreds of labor, environmental, consumer and faith organizations.

View the letter and list of signers.

What the signers are saying:

Jeffrey Sachs, professor of economics, Columbia University:

“We need trade agreements that protect worker rights and the environment. ISDS gravely threatens environmental protection and worker rights, and the rule of law more generally, as evidenced by the current lawsuit by TransCanada suing the U.S. government for $15 billion over the cancellation of the climate-wrecking Keystone XL Pipeline.” 

Jeffrey Sachs: lsachs1@law.columbia.edu


Cruz Reynoso, former California Supreme Court Justice and professor of law emeritus, University of California, Davis:

 “The right of foreign corporations and investors to challenge U.S. policies which allegedly violate investor rights is a frontal attack on our judicial system.”

Cruz Reynoso: creynoso@ucdavis.edu

 

Alan Morrison, associate dean, George Washington Law School:

“The United States Constitution simply does not allow Congress to assign the duty to assess the legality under the TPP of federal and state laws to the unreviewable discretion of three private individuals, instead of to our federal court system with full-time and unconflicted judges.”

Alan Morrison: abmorrison@law.gwu.edu

 

Lisa Sachs, professor of law, director of Columbia Center on Sustainable Investment:

“A multilateral agreement presents an opportunity to promote the rule of law, strengthen domestic judicial systems and ensure the rights of all, including the most vulnerable, are equally advanced. ISDS in its current form undermines each of those objectives. The whole system needs a rethink to better balance all stakeholders' interests and rights.”

Lisa Sachs: lsachs1@law.columbia.edu

 

Kevin Gallagher, professor of economics, Boston University:

“ISDS accentuates the regulatory risks that characterize the latest trade and investment pacts by granting foreign investors far greater rights over national democratic decision-making. Putting governments and their citizens back in charge of settling disputes is the first step toward the comprehensive reform that is needed.”   

September 02, 2016

TPP Is Not Dead, Unfortunately

The reports of the Trans-Pacific Partnership’s death have been greatly exaggerated, unfortunately.

It would great news if the pact, which would mean more power for corporations over our lives and government, and fewer good jobs for Americans, were ready to be boxed and buried.

But more urgently, if last week’s news stories convince the growing transpartisan movement fighting the TPP to stand down, the prospects that the pact’s powerful proponents can succeed in their plan to pass it after the election will increase.

Last week Senate Majority Leader Mitch McConnell (R-KY) said at the Kentucky Farm Bureau: "The current agreement…which has some serious flaws, will not be acted upon this year." This generated a wave of press coverage declaring that there would be no lame duck vote on the TPP.

Except, McConnell has said pretty much the same thing since the final TPP text was released, as have other Republican leaders.

Note that McConnell said the “current agreement” would not get a vote. A few weeks ago House Speaker Paul Ryan (R-WI) said: "I see no point in bringing up an agreement only to defeat it...it is not ready, the president has to renegotiate some critical components of it." Immediately after McConnell’s speech, a Ryan spokesman said: "As we have said for months, timing will be determined by progress on the substance – and the administration has a lot of work to do there."

Those statements need to be understood for what they are: negotiating for changes to obtain even more corporate goodies – longer monopoly protections for pharmaceutical firms’ high medicine prices, elimination of an exception protecting some tobacco regulations from TPP attack, and more. So far the corporate “we-want-more-or-else” tactic has pushed the White House into caving on Wall Street firms’ demands to “fix” TPP rules allowing governments to limit movement of financial data across borders. Since the administration has made no parallel moves to address criticisms coming from its own party, a very bad deal is getting even worse. 

At the same time, many senators and representatives who voted for Fast Track are using these statements to try and duck accountability by pretending that the TPP is a moot issue. If these members then turn around after the election and support the TPP, that will be a huge insult to the democratic process and the millions of voters who are loudly urging Congress to support fair trade deals that support workers, consumers and the environment, rather than corporate giveaways like the TPP.

The GOP leaders are not only trying to pressure the White House to meet their demands, but are trying to scare the other TPP countries off of their current positions that no changes are possible.

If the GOP leaders get what they want, they will be pushing hard to pass an even more damaging TPP in the lame duck session, despite their insincere political posturing over the unpopular agreement leading up to the elections.

It’s also possible congressional Republicans will jump into gear to pass the deal in the lame duck session even if they do not achieve that last one percent of corporate goodies for the one percent.

Thanks to Fast Track, President Obama gets to decide if the TPP vote clock is started – not the Republican leadership. It is risky, but Obama could call the GOP leaders’ negotiating bluff.

Fast Track is a one use tool. Failure to pass the TPP once a president starts the clock means that Fast Track for the TPP is “used up.” Knowing that corporations that fund the Republicans want the TPP, Obama could gamble that the GOP leaders would fold on their demands and start pressuring their members to vote “yes” if he submits the implementing legislation.

And make no mistake, the massive corporate coalition pushing for the TPP is aggressively lobbying to pass the pact in the lame duck session—that unique moment of minimum political accountability when the retired and fired in Congress get to come back and vote one more time knowing they will not be facing their voters again. These interests are rolling out big-money AstroTurf “field” operations to generate paid telephone calls for the TPP, wrangle corporate retirees to write their Representatives and carpet cyberspace with paid social media.

That is not the behavior one would expect from interests with close personal relationships to McConnell and Ryan if in fact the Republican leaders intended to block a lame duck TPP vote, something the GOP could do even if Obama started the clock.

Because there would not be the required 90 congressional session days to force floor votes under Fast Track, the Republican congressional leaders would have to bring the TPP to a vote quickly or run out of time. (That is why Sen. Bernie Sander’s statement last week, praising McConnell for announcing he would “block” the TPP was so very sly, because of course McConnell said no such thing.)

It is also worth noting that the administration is working relentlessly to line up the votes to pass the TPP in the lame duck. So far there have been 30 events featuring cabinet secretaries and other Obama officials in key districts during the congressional recess.


For those who want to ensure a real TPP funeral, the only path to ensure TPP RIP is by locking down the votes district by district. That is entirely doable.

Already a dozen House GOP that supported Fast Track last year have announced opposition to the TPP.  And, many of the 28 House Democrats that supported Fast Track have not announced support for TPP.

Perhaps they, like Vice Presidential nominee, Senator Tim Kaine, who announced opposition to the TPP after supporting Fast Track, have concerns about the gap between what they were told the final deal would include and what is in the actual final text on critical issues—such as the undemocratic investor-state corporate empowerment system

The current political context, with the presidential nominees of both parties against the TPP coupled with rising public anger across partisan lines about the influence corporations have over governments and the decisions that shape our daily lives means the TPP can be stopped.

The TPP exemplifies how the rules get rigged by the very few against the interests of the many: the deal was hatched with 500 official U.S. trade advisors representing corporate interests involved in years of closed-door negotiations while the public, press and Congress were locked out. The resulting core TPP provision grants thousands of corporations new rights to sue the U.S. government before a panel of three corporate lawyers that can award unlimited sums, including for loss of future expected profits, to be paid by American taxpayers when the corporations claim U.S. policies violate the new entitlements the TPP would provide them.

But, the only way that the TPP will be stopped is if local constituents make every member of Congress publicly state his or her position on the TPP before the election when being in favor of such an outrage will have a political price.

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