Trans-Pacific Partnership: A recipe for corporate dictatorship – Mun Loong Wong

The Star reported today that there is a systemic push for the Trans Pacific Partnership Agreement (TPPA) to be signed.

Published: 11 November 2014

The Star reported today that there is a systemic push for the Trans Pacific Partnership Agreement (TPPA) to be signed.

This is a momentous agreement and yet, there is very little critical and systemic debate surrounding it. In Malaysia Bantah TPPA and the Third World Network have been its most vociferous critics but its champions have also not been lacking e.g. the Ideas Centre.

Proponents of the TPPA argue that free trade is an inherent good. It will enlarge trade, reduce tariffs (and hence prices); people will benefit as the benefits of trade always trickles down.

Indeed, it is hard to fault free trade but the TPPA is not what it purports to be – about engendering free trade. Leaked reports surrounding the TPP negotiations show that the TPPA’s main concerns are as Noam Chosky correctly identifies, “extreme, highly protectionist…(and) about investor rights”. Others , including intellectual property expert, Dr. Matthew Rimmer , likened the TPPA to a “Christmas wish-list for major corporations”.

What is the TPPA?

The TPPA is the largest trade deal in history currently being negotiated by 12 countries: Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. These countries represent 792 million people and a combined GDP of $27.5 trillion, which accounts for 40 percent of the world economy. It purportedly aims to increase the liberalization of economies in the Pacific region through abolition of tariffs on trade as well as reregulation of critical aspects of the economy.

Because of its significance, scale and potential impact, we as citizens, need to know what our governments are signing up for. However, negotiations for the agreement have taken place behind closed doors and outside of the checks and balances that operate at traditional multilateral treaty-making organizations such as the World Intellectual Property Organization and the World Trade Organization (not that these bodies are fine examples of transparency and fair).

It is a non-transparent, secretive, multi-national trade agreement that raises significant concerns about citizens’ freedom of expression, due process, innovation, the future of the Internet’s global infrastructure, and the right of sovereign nations to develop policies and laws that best meet their domestic priorities.

We only know about the TPPA’s threats thanks to leaks. The public and political representatives (even in allegedly free, transparent and democratic countries like the USA) are not allowed to see the draft TPP text although more than 500 official corporate ‘trade advisors’ (605 advisors) have has such special access and privilege.  Corporate lobbyists have access to the text, but legislators and parliamentarians do not.

When such access and negotiations are held in secret, there is no way that the democratic process can exert the checks and balances required to put limits on the negative effects of these agreements. As such, the TPPA is a threat to our democratic rights and freedoms.

Free Trade?

Although the TPPA is called a “free trade” agreement, it is not mainly about trade. Of the TPP’s 29 draft chapters, only five deal with traditional trade issues e.g. tariffs or quotas. They include, include, for example:

  • domestic court decisions and international legal standards (e.g., overriding domestic laws on both trade and nontrade matters, foreign investors’ right to sue governments in international tribunals that would overrule the national sovereignty)
  • environmental regulations (e.g., nuclear energy, pollution, sustainability)
  • financial deregulation  (e.g., more power and privileges to the bankers and financiers)
  • food safety (e.g., lowering food self-sufficiency, prohibition of mandatory labeling of genetically modified products, or bovine spongiform encephalopathy (BSE) or mad cow disease)
  • Government procurement (e.g., no more buy locally produced/grown)
  • Internet freedom (e.g., monitoring and policing user activity)
  • labor (e.g., welfare regulation, workplace safety, relocating domestic jobs abroad)
  • patent protection, copyrights (e.g., decrease access to affordable medicine)
  • public access to essential services may be restricted due to investment rules (e.g., water, electricity, and gas)

The TPP is designed to tilt the scales still more heavily in favor of “investors” — not only via rules granting more “rights” to multi-national corporations, but further expanding the definition of “investor.” There are extensive rules governing the “right” to a near guarantee of profits, but no rules concerning labour, environment, public health or safety.

Some of its features include:

  • Governments  would also be required to pay attorney costs, win or lose, in addition to paying judgments.
  • Taxation and regulation constitute “indirect expropriation” mandating compensation (a reduction in the value of an asset is sufficient to establish expropriation rather than a physical taking of property as required under US law).
  • Older decisions become precedents for further expansions of investor “rights” and will be read as the “evolving standard of investor rights” required under the TPP.
  • An expansion of who or what constitutes an “investor” — extending those eligible to file a claim to anyone who applies for a permit or license, or who “channels” resources or capital to set up a business, without placing any limits on what qualifies for such a status.
  • No language to block frivolous claims.
  • The US is seeking to include government bonds as a covered investment; if that stands, speculators would have the right to recover the full value of government bonds bought at discounted prices.
  • Requiring new intellectual property laws that would criminalise many acts not currently classified as such.
  • Significantly tighten corporate control of the Internet and force service providers to hand over personal data.

Rules and Legality: The American Way

More importantly, the TPP would enable and accord individual foreign firms equal status with sovereign nations. This would enable these firms to privately enforce new rights and privileges, provided by the pact, by dragging governments to “closed” foreign tribunals to challenge public interest policies that they claim frustrate their expectations. The key to enable the realisation of these corporate dreams is the ‘investor-state-dispute mechanism”. Through these, governments legally bind themselves to settle “disputes” with investors in these secret tribunals.

These tribunals are not subjected to any oversight, public notice and any appeals; its decisions are binding and mandatory. They can and would be authorised to order taxpayer compensation to the foreign corporations for any “expected future profits” they surmise would be inhibited by the challenged policies.

Particularly salient is the International Centre for Settlement of Investor Disputes (ICSID) – an arbitration board that is an arm of, and controlled by, the World Bank. Cases that go before one of the Centre’s tribunals are decided by a panel of three judges that are selected from a roster. The judges are appointed by the national governments that have signed on to ICSID, which are most of the world’s countries.

Eight of the judges have been appointed by the United States. Each is a lawyer whose career has been spent in the service of large corporations. Six are currently partners in some of the world’s most formidable corporate law firms, one is an academic who formerly was a corporate lawyer and one is a lobbyist for a business group that seeks to codify pro-corporate trade rules under law. Five of the eight US-named lawyers have been counsel to various Republican Party administrations and several of the eight specialise in representing corporations before international arbitration boards.

These are the US panellists who are among those judging the merits of corporate claims against government regulations:

  • Fred Fielding: An attorney who bounces back and forth between Republican administrations and corporate law firms; among his clients has been the mercenary military contractor Blackwater.
  • William Park: Currently a law school professor but has practiced with three corporate law firms and has been an arbitrator on many business-arbitration boards.
  • Daniel Price: A corporate lawyer who represents companies in international arbitration and a former economic adviser to George W. Bush.
  • John M. Townsend: A corporate lawyer who represents pharmaceutical companies and specializes in representing companies in arbitrations against governments; he is also a trustee of a business lobbying group.
  • J. Caleb Boggs III: A corporate lawyer who specializes in representing financial institutions and other clients before regulators and helped write a law deregulating banks while a Senate aide.
  • William A. Burck: A corporate lawyer who specializes in representing companies and corporate officers in disputes with U.S. and other governments; he is a former legal adviser to George W. Bush.
  • Ronald A. Cass: The chair of a lobbying group that seeks to tilt international trade law further in favour of business; he was a trade representative for two Republican administrations.
  • Emmet Flood: A corporate lawyer who represents companies in disputes against government regulations and a former counsel to George W. Bush; among his past clients are the Koch brothers.

Others include:

  • David A Williams: A Lawyer who is currently representing Philip Morris in its suit seeking to overturn the Australian government to overturn its tobacco regulations, which it could not accept as binding and constitutional on the company as it it has declared itself to be a Hong Kong company eligible to sue Australia under the Australia-Hong Kong bilateral investment treaty.
  • Doug Jones: An Australian corporate lawyer
  • Carlos Eugenio Jorqueria: A Chilean corporate lawyer and president of the country’s National Chamber of Commerce.

The rules that panellists will adjudicate would supersede national laws. Article 12.7 of the TPP, for instance, provides a long list of prohibitions against government actions; under it, laws imposing capital controls (even to ameliorate a crisis), rules governing domestic content of products or any protections of any domestic industry would be illegal. It then provides a generic exception allowing environmental or other measures “that are not inconsistent with the Agreement; necessary to protect human, animal, or plant life or health; or related to the conservation of living or non-living exhaustible natural resources.” That exception, however, is meaningless. It specifically requires that excepted rules must be “not inconsistent with the Agreement” and “in accordance with customary international law.”

Decisions against corporations in these tribunals are often scarce. One 2007 report, Challenging Corporate Rule, issued by the Institute for Policy Studies and Food and Water Watch, noted that multi-national corporations have won 70% of the cases (it did not specify how many of the remainder were a loss for the corporation nor how many were not decided or withdrawn). These tribunals are conducted in secret; only two ICSID cases have been conducted with public attendance in its history, and really it does not bode well for transparency and accountability. Ironically, we are signing up to it when we desire a “Bersih” environment and polity.

Scalability and Globalisation

The TPP is certainly extraordinary. It seeks to lock in the dominance of industrialists and financiers through the multi-national corporations that they control. It is intended to be “scalable” i.e. other countries can join but are forbidden to oppose any measure already agreed upon. And critics have already argued that it will be a template for future trade agreements (as evident in discussions surrounding the Transatlantic Agreement).

Joseph E. Stiglitz has criticised the TPP in The New York Times stating that it will put us on the “wrong side of globalisation”.  According to him, from the leaked drafts of the agreement, it is likely that it will only benefit the wealthiest individuals of the most developed country at the expense of lower and middle class individuals. He further explains that the TPP is aiming to altogether remove tariffs that are essential to each nation’s development since they protect strategic industries.

Stiglitz also criticises TPP’s “race to the bottom” of regulation stating that without any regulation firms will create a risk of large amounts of negative social externalities. These externalities would largely take the form of environmental pollution, human rights violations, and shrinking the size of the labour market.

Obama and his supporters are pushing for a rapid conclusion to the TPP. In part, this was hastened by the Chinese push for a more global Free Trade Area of the Asia-Pacific at the recent November APEC meeting in China. This geo-political diplomatic and strategic gamesmanship should be seen for what it is – a USA push for control of the trade and strategic agenda and China is seen as a threat, and that we should not be stampeded into a process and mechanism that locks us into servitude for perpetuity.

The TPP is a flawed in both process and theory. It seeks to mortgage our future to corporate interests, threaten and truncate our democracies, rights and freedoms and if we love our rights and freedoms, requires us to oppose and challenge it, both locally and globally. We should seek to restore power and sovereignty back to us, the citizens and not allow corporate dictators to prevail. – November 11, 2014.

*Mun Loong Wong works at a university in Malaysia.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.