The scorecard of NAFTA: Losses for all three countries

The North American Free Trade Agreement has been a lose-lose-lose proposition for working people in Canada, the United States and Mexico.

Let us count the ways: Lost jobs, reduced wages, more unemployment, higher food prices and reversals of environmental laws. NAFTA, a 20-year laboratory for mainstream economics, has been a bonanza for the executives of multi-national corporations, and that is all you need to know why the so-called “free trade” model continues to be promoted despite the immiseration and dislocation it spawns. Agreements like NAFTA, and proposed deals that would go further in handing power to corporate executives and financiers such as the Trans-Pacific Partnership, have little to do with trade and much with ensuring corporate wish lists are brought to life.

Not dissimilar to medieval doctors who insisted that having leeches bleed the patient was the only course of action, neoclassical economists, who dominate the field, won’t budge from their prescriptions of neoliberal austerity. But although the medical field has made enormous strides in recent centuries, there is no such progress among neoclassical economists. That is because said economists — most often under the banner of “Chicago School” but sometimes using other names — promote ideology on behalf of the powerful, not science for all humanity.

"Canada in fog" photo by Kat Spence

“Canada in fog” photo by Kat Spence

Thus the spectacularly wrong predictions made for NAFTA before it was went into force on January 1, 1994, have no effect on their predictions for new deals. To provide one example, in 1993 the Peterson Institute for International Economics predicted 170,000 jobs would be created in the U.S. alone by 1995, that the U.S. would enjoy an expanded trade surplus with Mexico and that the Mexican economy would grow by four to five percent annually under NAFTA.

As we will see presently, none of those rosy predictions came close to becoming reality. (True to neoliberal form, the institute is grandly predicting “gains of $1.9 trillion” for the Trans-Pacific Partnership.) The point here isn’t to pick on one particular institution — in fact, it is quite typical. The models developed to make these predictions and explain economics are mathematical constructs disconnected from the real world.

Sure it works better in a dream world

The Chicago School and other mainstream neoclassical schools of economics rest their models on the concept of “perfect competition,” which assumes that all prices automatically calibrate to optimum levels, and that there are so many buyers and sellers that none possess sufficient power to affect the market. This model assumes that employees are in their jobs due to personal choice, and wages are based only on individual achievement independent of race, gender and other differences. That this bears little resemblance to the real world is not your imagination.

From this, mainstream economists assume all trade will be beneficial because all economic activity quickly adjusts to create a new equilibrium following a disruption. As Martin Hart-Landsberg wrote in his 2013 book Capitalist Globalization: Consequences, Resistance and Alternatives:

“[T]his kind of modeling assumes a world in which liberalization cannot, by assumption, cause or worsen unemployment, capital flight or trade imbalances. Thanks to these assumptions, if a country drops its trade restrictions, market forces will quickly and effortlessly lead capital and labor to shift into new, more productive uses. And since trade always remains in balance, this restructuring will generate a dollar’s worth of new exports for every dollar of new imports. Given these assumptions, it is no wonder that mainstream economic studies always produce results supporting ratification of free trade agreements.” [page 104]

World Bank studies promoting “free trade” agreements, Professor Hart-Landsberg wrote, assumes that tariff reductions will have no effect on government deficits, governments will automatically be able to replace lost tariff revenue with revenue from other sources and that there is full employment. He writes:

“Although working people have been ill served by capitalist globalization, many are reluctant to challenge it because they have been intimidated by the ‘scholarly’ arguments of those who support it. However … these arguments are based on theories and highly artificial simulations that deliberately misrepresent the workings of capitalism. They can and should be challenged and rejected.” [page 80]

Mexican farmers forced off their lands

Mexico had annual per capita gross domestic product growth of 0.9 percent in the first 20 years of NAFTA — one-fifth of the per capita GDP growth of the preceding 20 years. The Center for Economic and Policy Research reports that Mexico’s growth during the past 20 years under NAFTA ranks the country 18th of 20 Latin American countries and is half of the average Latin American growth rate. Among other results, the center reports:

• 4.9 million family farmers have been been displaced — more than half the total number of Mexican farmers in 1991.
• More than 14 million more Mexicans live below the poverty line than in 1994. Just more than half of Mexicans are below the poverty line, nearly identical to the 1994 rate, but the population has increased.
• Inflation-adjusted wages have risen two percent over 18 years and are barely above the 1980 level.

Subsidized corn from the United States flooded Mexico, sold below the costs of small Mexican farmers. Corn imports from the U.S. increased fivefold and pork imports from the U.S. increased by more than 20 times, according to a Truthout report by David Bacon.

As a result, Mexican farmers forced off their land either became seasonal workers on growing agribusiness farms, sought work in the cities or migrated north. Seasonal agricultural workers (those working less than six months per year) grew by almost three million — more than doubling their ranks — during the same period that 4.9 million family farmers were displaced. The number of Mexicans emigrating to the U.S. rose by almost 80 percent from 1994 to 2000, before falling significantly afterword because of the post-9/11 increased border security.

Nor did Mexicans get cheaper food as a result of the flood of U.S. corn. Public Citizen, in its just released report on NAFTA, reports that the deregulated price of tortillas nearly tripled in the first 10 years of the agreement and that a Mexican minimum-wage earner can buy 38 percent less than he or she could when NAFTA went into effect.

The only countervailing effect, the increase in factory jobs as maquiladoras (factories near the U.S. border producing for export) increased for a time, but those low-wage jobs are now dwindling because China’s wages are far cheaper than Mexico’s. The same pitiless market competition that sent jobs south now sends them across the Pacific. China now accounts for 23 percent of U.S. imports as compared to Mexico’s 12 percent, according to International Monetary Fund statistics.

A 2011 paper issued by the Economic Policy Institute summarized the effects of NAFTA on Mexico:

“From the standpoint of the business community, NAFTA’s most important achievement was that it made Mexico a much safer and more attractive location to invest and outsource U.S. manufacturing production. NAFTA’s investment provisions created new and improved safeguards for foreign investors, including new dispute settlement tribunals providing a mechanism for settling disputes with foreign governments outside of the Mexican legal system. By eliminating Mexico’s developmental state and use of local content rules, and other demands and conditions on foreign investors, the trade agreement greatly reduced the cost of doing business in Mexico, and increased the security of those investments.” [page 6]

Mexico’s conversion into an export platform does not mean higher skills for its workforce. The biggest initiative in job creation came during the administration of Vicente Fox, which offered training in low-skill jobs for landscapers, construction workers, factory workers and maids.

Hundreds of thousands of jobs leave the United States

The United States has seen a net displacement of almost 700,000 jobs through 2010 directly attributable to NAFTA, according to Economic Policy Institute calculations. Moreover, the U.S. has had large annual trade deficits with Mexico since NAFTA was implemented; in earlier years, trade was roughly balanced between the two. In addition to the job losses, Public Citizen reports these negative impacts on U.S. workers:

• U.S. food prices have risen 67 percent since NAFTA took effect, despite an increase in food imported from Mexico and Canada.
• Purchasing power for U.S. workers without a college degree, adjusted for inflation and taking into account those consumer goods that have become cheaper, has declined 12 percent under NAFTA.
• Two-thirds of displaced manufacturing workers who were rehired in 2012 experienced a wage cut; the reduction in the majority of cases was at least 20 percent.
• U.S. manufacturing and services exports to Mexico and Canada grew slower after NAFTA took effect than it had been earlier.

By making it easier for capitalists to move production, NAFTA has directly contributed downward pressure on wages. With fewer well-paying manufacturing jobs, pressure on wages not only affects manufacturing but other industries as well as displaced workers seek employment elsewhere.

Capital mobility has been an irresistible hammer for holding down wages and worsening job conditions — a study by Cornell University Professor Kate Bronfenbrenner found that more than 50 percent of employers made threats to shut down and/or move their facilities in response to unionization activity during the three-year period of 1993 to 1995, and that the rate of actual shutdowns tripled from the pre-NAFTA rate. She wrote:

“NAFTA has created a climate that has emboldened employers to more aggressively threaten to close, or actually close their plants to avoid unionization. The only way to create the kind of climate envisioned by the original drafters of the [National Labor Relations Act], where workers can organize free from coercion, threats, and intimidation, would be through a significant expansion of both worker and union rights and employer penalties in the organizing process both through substantive reform to U.S. labor laws and by amendments to the North American Agreement on Labor Cooperation.” [page 3]

That would take massive organizing to achieve. The Obama administration is actively trying to use the rules of NAFTA as a starting point for further weakening of labor, safety, health and environmental laws in the ongoing Trans-Pacific Partnership negotiations, which would tighten corporate control should the ongoing TPP negotiations be successful. The White House undoubtedly has the same goals for the Transatlantic Trade and Investment Partnership talks with the European Union.

Canadian safety net shredded to ‘compete’ in markets

Spending on Canada’s social safety net has decreased while corporate revenue has doubled and manufacturing jobs disappeared. In addition, a Canadian Centre for Policy Alternatives researcher reports, the country’s growing trade surplus with the United States has translated to few jobs. The study found:

• After 12 years of NAFTA, government transfers to individuals have dropped from 11.5% of GDP to 7.8% of the country’s GDP.
• “[M]uch of the growth in gross exports over the last decade reflected the markedly elevated use by Canadian-based companies of imported inputs in their production, significantly overstating the employment impact of the growth of manufactured exports.”
• The length that Canadians could collect unemployment benefits was reduced, the amount of the benefits were cut and the criteria for those eligible were reduced, reducing the proportion of unemployed people who qualified for unemployment insurance to one-third from three-quarters.
• Composite revenues of 40 of Canada’s biggest businesses increased 105 percent from 1988 to 2002, while their workforces shrank by 15 percent.

These developments fueled rising inequality, the centre’s executive director, Bruce Campbell, wrote:

“The most striking feature of this growing inequality has been the massive gains of the richest 1% of income earners at the expense of most of the population. The growth of precarious employment, the undermining of unions as a countervailing power to transnational capital, the erosion of the Canadian social state, and heightened economic dependence on the United States are the hallmarks of the free trade era in Canada.” [page 53]

Pressing its advantage, Canadian big business interests demanded and received tax cuts on the ground that Canada could not be competitive otherwise. Those cuts resulted in loss of C$20 billion in federal revenue for 2005 alone, the study said, on top of provincial revenue losses of $30 billion. The tax cuts were primarily given to high-income individuals and corporations, who argued that these would create “a level field of competition” with the United States but also increase labor market “flexibility” — a code word meaning lower wages and reduced job security, always the goal of capitalists.

It’s always our turn to ‘cut back,’ never the bosses’ turn

The key NAFTA provision is Chapter 11, which codifies the “equal treatment” of business interests in accordance with international law and enables corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or law that might prevent the corporation from extracting the maximum possible profit.

Under these provisions, 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 U.S. law. Older decisions become precedents for further expansions of investor “rights” and thus constitute the “evolving standard of investor rights” required under “free trade” agreements.

Toothless “side agreements” on labor rights are meaningless window dressing; the arbitration bodies that decide these cases (in secret with no accountability or right of appeal) are governed by the main body of the text, such as Chapter 11. Corporations can sue governments over regulations or laws they don’t like, but working people and governments have no right to sue.

As Mr. Bacon put it in his Truthout report:

“The most any union or group of workers got from filing a case was ‘consultations’ between the governments and public hearings. There is no process in the agreement for penalties for violation of union rights. And although there are minor penalties for violating child labor or occupational health laws, they’ve never been implemented. Not a single contract was signed as a result of the side-agreement process, nor was a single worker rehired. Those unions that have filed cases have generally sought to use the process to gain public exposure of abuses and exert indirect pressure on employers.”

The neoliberalism that began gathering steam with the rise of Margaret Thatcher and Ronald Reagan, and which has intensified since, is not the handiwork of some secretive cabal, nor is it some tragic bad turn from an otherwise “rational” system. It is the natural evolution of modern capitalism and its relentless competition. “Free trade” agreements that have little to do with trade and much to do with imposing corporate wish lists in the service of ever more inequality and power imbalances is an inevitable component.

Implementing a “reform” of agreements designed to maximize corporate profits above all other considerations and shred the remnants of democracy is less than an illusion. Overturning the entire “free trade” apparatus is indispensable to any serious project of building a better world. Trade should conducted for the benefit of all, not only the one percent — unlike the current global system in which human beings are in the service of markets instead of the other way around.

Putting a gun to their own heads: Governments give themselves a ‘free trade’ offer they can’t refuse

A frequent criticism of “free trade” agreements is that corporations are elevated to the level of a country. It might be more accurate to say that corporations are elevated above countries.

The muscle in trade agreements like the North American Free Trade Agreement or the proposed Trans-Pacific Partnership is the mandatory use of “investor-state dispute mechanisms.” That bland-sounding bureaucratic phrase is anything but bland in its application — these “mechanisms” are the tools used to turn corporate wish lists into undemocratic reality.

Labor, environmental, social-justice and other groups rally on the steps of New York City Hall on January 14 to demand Congress vote against fast-track legislation.  (Photo courtesy of New York State AFL-CIO)

Labor, environmental, social-justice and other groups rally on the steps of New York City Hall during a January 14 snowstorm to demand Congress vote against fast-track legislation.
(Photo courtesy of New York State AFL-CIO)

The concrete form of these “mechanisms” are corporate-dominated secret tribunals that hand down one-sided decisions with no oversight, no public notice and no appeals. This is so is because governments that sign trade agreements legally bind themselves to mandatory arbitration in these secret tribunals despite (or because of) their one-sided nature. It is a virtually certainty that, should be they passed into law, the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) will contain some of the most draconian language yet in this area.

Activists in the TPP countries, as well as those in the European Union, should pay particular attention to the experience of Canada under the North American Free Trade Agreement (NAFTA). Canada has been the principal target within NAFTA because of its superior environmental laws in comparison to the United States and Mexico, with U.S.-based multi-national corporations the primary suers. Environmental, safety, labor and “buy local” laws around the Pacific and in Europe will be targets should the TPP and TTIP be implemented.

The rules of NAFTA allow multi-national corporations to sue national governments because rules safeguarding the environment, for example, are interpreted to “unfairly” reduce profits. Decisions handed down in the secret tribunals — in which corporate lawyers who specialize in representing corporations in these kinds of cases sit as judges — further stretch the bases on which corporations can successfully sue governments. NAFTA, and tribunal judgements stretching it, constitutes the starting point from which the U.S. government, sometimes assisted by other governments, seeks to impose still more draconian rules.

Corporations can change laws to suit themselves

Decisions made under NAFTA rules are noteworthy because of their outrageousness, but also merit attention because they provide a preview of what is in store for other countries under the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership. Here are some “highlights”:

  • Eli Lilly and Company is suing Canada for $500 million because Canada would not grant it two patents, rulings upheld by the Supreme Court of Canada. Eli Lilly claims the denial is an illegal confiscation of profits — it is using NAFTA as a tool to dismantle Canada’s well-developed patent system. No tribunal ruling yet.
  • Ethyl Corporation sued Canada for $250 million because of a ban on a gasoline additive known as MMT, a chemical long believed to be dangerous to health. Ethyl claimed the Canadian ban was an “expropriation” of its “investment” and a violation of the principal of “equal treatment” even though, had a Canadian producer of MMT existed, it would have had the same standard applied. Canada settled to avoid a total defeat, paying Ethyl a smaller amount and reversing its ban.
  • A U.S. company, Metalclad, sued Mexico because a city government refused to grant it a permit for a waste dump (similarly denied to a Mexican company that previously wanted to use the site). Mexico lost, and had to grant the permit despite environmental concerns and pay $15.6 million to Metalclad.
  • Another U.S. company, S.D. Myers, sued Canada because of a ban on the transportation of PCBs that conformed with both a Canada-United States and a multi-lateral environmental treaty. A tribunal ordered Canada to pay $5.6 million and reverse the ban, negating the two environmental treaties and ignoring the fact that PCBs are known carcinogens banned since 1979 in the U.S. The tribunal ruled that, when formulating an environmental rule, a government “is obliged to adopt the alternative that is most consistent with open trade.” So much for democracy!

The above is merely the tip of the iceberg. How do such extraordinarily one-sided decisions get handed down? Because the corporations dominate the tribunals and play a heavy role in writing the trade agreements to begin with. There are 605 corporate lobbyists who have access to the Trans-Pacific Partnership text — officially known as “trade advisers” — but no members of any legislative body are allowed to see it, and the public is completely shut out. The “advisers” are eagerly working to make the TPP a repository for their wish lists.

The key to making corporate dreams come true is the “investor-state dispute mechanism.” Under these mechanisms, governments legally bind themselves to settle “disputes” with “investors” in the secret tribunals. By far the most used of these tribunals is the International Centre for Settlement of Investor Disputes (ICSID) — an arbitration board that is an arm of 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 include most of the world’s countries.

Working to overturn Australian laws, but he’s ‘neutral’

These judges are not disinterested arbiters. For example, one of the judges appointed to the ICSID by New Zealand is David A.R. Williams, who is currently representing Philip Morris in its suit seeking to force Australia to overturn its tobacco regulations. Australia’s rules limiting tobacco advertising and packaging, enacted in the interests of public health, were found to be legal by Australia’s supreme court, the High Court.

Not willing to accept the Australian constitution, Philip Morris moved some of its assets to Hong Kong, so it could declare itself a Hong Kong company eligible to sue Australia under the Australia-Hong Kong bilateral investment treaty, which, unlike some Australian trade pacts, allows corporations to sue one or the other government. (This case is still pending.)

The ultimate arbiter of a constitution, or writer of laws, are not domestic bodies subject to democratic checks, but unaccountable corporate representatives acting in secret. Who are these mercenaries? As an example, each of the eight ICSID judges appointed by the United States has a long career dedicated to serving 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.

That is a common pattern. One of Australia’s appointees is Doug Jones, a lawyer with one of Australia’s largest corporate law firms, and one of Chile’s is Carlos Eugenio Jorquiera, a corporate lawyer and president of the country’s National Chamber of Commerce.

Further titling the scales are that only corporations, not governments nor public-interest groups, can sue under these treaties. Governments must pay expenses that can total tens of millions of dollars, regardless of outcome, with no provisions to block frivolous claims. The judges are paid by the hour, with no defined limits on costs, giving them an incentive to drag out proceedings, which in turn favors deep-pocketed “investors.”

In fact, the TPP would place no limits on who qualifies as an “investor”: 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, would be eligible to sue.

‘Customary law’ is what a corporation says it is

Leaked 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.”

But that exception is rendered meaningless not only by other, superseding, rules but by the rulings of the corporate-lawyer judges in the secret tribunals. Leaked TPP language specifically requires that excepted rules must be “not inconsistent with the Agreement.” The key sentence opens Article 12.6: “Each Party shall accord to covered investments treatment in accordance with customary international law.” The “Party” here are national governments, and the “customary international law” is that already established by NAFTA and the decisions made by ICSID and similar tribunals concerning disputes under NAFTA and other trade agreements.

Last year’s change of government in Australia has left working peoples in the 12 TPP negotiating countries more vulnerable. Under the previous Labor governments, Australia had refused to agree to the insertion of an investor-state dispute mechanism in the TPP. The new Tony Abbott government, however, has shown worrisome signs of reversal on this critical issue, claiming that such mechanisms would provide “greater market access for Australian exporters.”

The world’s 99 percent can’t afford to lose any bulwark against substituting corporate-dominated secret tribunals for democracy because the Obama administration is pushing hard for the most draconian rules. Knowing that secrecy is the only way for the TPP to gain approval of the U.S. Congress, the White House is pushing for “fast-track authority” — under which, Congress could not change so much as a comma of an agreement, would be severely limited in its ability to debate and would be obligated to vote yes or no in a very short period of time.

An increasingly strong pushback by activists in the U.S. has led to more than 200 members of Congress publicly committing themselves to voting against fast-track, which only Congress can impose on itself. Many of the other 11 national governments negotiating the TPP are nervously watching this development, because if Congress votes against fast-track, it will be far more difficult for TPP to earn congressional approval, leaving those governments less willing to buck their own internal oppositions.

If you believe that democracy is preferable to corporate dictatorship, the time is now to join an international fight against the Trans-Pacific Partnership and its spawn, such as the Transatlantic Trade and Investment Partnership.

Corporate power grab of Trans-Pacific Partnership clearer, but opposition building

The usual boilerplate announcements that “significant progress” was achieved in the just concluded round of Trans-Pacific Partnership negotiations can’t mask that public opposition is growing and that the United States seems to be having difficulty bullying its negotiating partners.

That does not mean that the TPP is dead — far from it — but the continued insistence of the Obama administration that the text will be complete by the end of 2013 is no more than wishful thinking. That Congress might not play its assigned role of rubber-stamping was strongly signaled last week when 151 Democratic Party members of the House of Representatives and more than two dozen Republicans signed various letters opposing “fast-track” trade authority. Many did so due to sustained grassroots activism.

“Fast-track” is a mechanism whereby Congress waives its right to debate and amend, instead binding itself to a straight up-or-down yes or no vote in a limited time frame. The worst trade deals, such as the North American Free Trade Agreement, have become U.S. law through this mechanism. The Obama administration is widely expected to introduce such a bill, passage of which would greatly increase the chances of the Trans-Pacific Partnership getting approved by Congress.

Activists have anticipated since early October that a bill for fast-track authority — formally known as trade promotion authority — might be introduced at any moment. That such a bill has been delayed is a sign that mounting opposition to the TPP within the U.S. has introduced an element of caution into the Obama administration’s thinking.

Demonstration against TPP in Salt Lake City (Photo courtesy of Citizens Trade Campaign)

Demonstration against TPP in Salt Lake City (Photo courtesy of Citizens Trade Campaign)

Strong opposition to draconian U.S. proposals by several of the 11 other Pacific Rim countries negotiating the text of the TPP has certainly played a role in slowing down the negotiations. The divergence of the negotiating positions became clear earlier this month when WikiLeaks published the full text of the TPP chapter on intellectual property. Despite being billed as a “free trade” agreement, this chapter, like most of the TPP, has nothing to do with trade. Rather, it — and, in particular, the U.S. negotiating positions — are the dreams of the most powerful multi-national corporations.

The same is true for the Transatlantic Trade and Investment Partnership, another “free trade” agreement simultaneously being negotiated between the United States and the European Union. The TTIP also just concluded a negotiating round, with similar opaqueness. What the U.S. is attempting to impose on Canada, Mexico, Australia, New Zealand, Chile and the other TPP countries on behalf of its multi-national corporations is undoubtedly the basis for what it seeks to impose on Europe. Corporate lobbyists have access to the text, but legislators and parliamentarians do not.

Sustained and organized mass opposition is the only thing that will stop these two extraordinary power grabs that will fatally undermine any semblance of democracy. If the TPP were to be implemented, labor safeguards, safety rules, environmental regulations and measures to rein in financial speculation would be struck down because a multi-national corporation’s profits might be affected — corporations would be able to bypass national laws and courts when they are in a dispute with a government, and instead can have their dispute adjudicated by a closed tribunal controlled by their lawyers.

Huge giveaways to pharmaceutical industry

The TPP intellectual property chapter, published by WikiLeaks, is crammed with corporate giveaways in its 96 pages. (This is only one of about two dozen chapters.) Japan is the country, at least in this chapter, most often in alignment with U.S. negotiating position, although frequently the U.S. is opposed by all other countries.

There are several sections that broaden what is patentable subject matter — if implemented, the TPP would make patents:

  • “Available for any new uses or methods of using a known product.”
  • Require patents to be granted if the patent “involves an inventive step,” even if there is no new use for it.
  • Allowable for living organisms, including plants and animals.

What these proposals would mean, if implemented, is that a name-brand pharmaceutical company, for example, would be able to claim a new use for high-priced medicines just before the patent was due to expire, thereby extending the patent and blocking a far less expensive generic equivalent from becoming available.

Under the North American Free Trade Agreement, the U.S. pharmaceutical company Eli Lilly sued Canada for $500 million because the Supreme Court of Canada upheld the invalidation of an Eli Lilly patent. Canada’s ability to enforce its own laws would be undermined by the TPP, according to a Public Citizen analysis:

“Canada’s decisions are based in its ‘promise doctrine,’ a patent rule which requires patents claiming a future usefulness to demonstrate or soundly predict that usefulness at the time of filing. The United States has proposed a rule for the Trans-Pacific Partnership negotiations that could undermine Canada’s promise doctrine. Whether purposeful or not, this would support Big Pharma’s plans to transform Canadian practice and even, seemingly, some of the goals of Lilly’s outrageous suit.”

Stop TPPCompanies like Eli Lilly would be in a stronger position to overturn any law they don’t like. The TPP’s intellectual property chapter would also attack rules such as the Indian Patent Act that protect access to affordable medicines worldwide, and would require extensions of patents on the demand of a corporation if it deems the period of time required to approve its patent “unreasonable.” Doctors Without Borders/Médecins Sans Frontières reports:

“The leak confirms our worst fears—the US is continuing its attempts to impose an unprecedented package of new trade rules that would keep affordable generic medicines out of the hands of millions of people.”

The return of SOPA

The defeat of the Stop Online Piracy Act (SOPA) and the Anti-Counterfeiting Trade Agreement (ACTA) — thinly veiled attempts at Internet censorship stopped by popular pressure — would be reversed under the TPP. A proposal by the U.S. and Australia would require Internet service providers to police their users, with ISPs required to cut off Internet access, block content and actively monitor usage to avoid liability if a copyright holder claims one of its copyrights is being infringed.

Monica Horten, a visiting Fellow at the London School of Economics writing on her Iptegrity.com web site, summarizes the TPP’s dangers to the free flow of information:

“[T]t is a toxic potion that would force the Internet Service Providers (ISPs) to police their networks, and turns current law on its head. … Where it concerns the Internet and digital content, much of the TPP intellectual property chapter looks like a cut-and-paste from ACTA. Certainly, it brings in similar secondary liability and criminal measures that were in ACTA. However, there are specific new proposals that give more reasons for concern. … Within the Internet section, is a  USA/Australian proposal that contains the core desires of Hollywood and the Motion Picture Association.”

Canada, back by several countries, is seeking less onerous restrictions, University of Ottawa law professor Michael Geist writes:

“From a Canadian perspective, the U.S. demands would require an overhaul of Canadian copyright law and potential changes to privacy law. For many other TPP countries, the issue is creating a clear divide, with the U.S. conditioning ISP safe harbours on subscriber termination and content blocking, while the Canadian model favours greater flexibility in establishing systems that create incentives to address alleged infringements online.”

Will Canadian negotiators hold firm or capitulate? Given the harsh policies of Prime Minister Stephen Harper — the George W. Bush of the North — much activism will be required to avoid SOPA getting in through the back door.

You won’t be able to know what is in your food

At the behest of corporations like Monsanto, which seeks to control the world’s food supply, labeling of genetically modified organisms would be illegal. Specific Trans-Pacific Partnership language on GMOs and GMO labeling has not yet surfaced, but because the goal of Monsanto and other U.S. manufacturers of GMO foods is to remove European restrictions against GMOs, this is likely to be an area where U.S. negotiators are pushing hard.

The European Union’s chief trade negotiator Ignacio Garcia Bercero, said “We are not in the business of lowering standards” in response to concerns that food safety rules will be lowered if the Transatlantic Trade and Investment Partnership comes to fruition, and European Union justice and rights commissioner Viviane Reding threatened this week that the E.U. would “freeze crucial data-sharing arrangements with the U.S.” if the U.S. refuses to acquiesce to European privacy standards.

But despite huffing and puffing from various European leaders, the latest round of TTIP talks proceeded smoothly. A European Commission press release happily declared, “A good atmosphere and the active involvement of regulators from both sides meant significant progress was made.” But, as usual, no details were forthcoming. The Office of the U.S. Trade Representative similarly reported “a very successful and productive set of meetings” about the TTIP and “significant progress” in the just concluded Salt Lake City round of TPP negotiations.

This latest round of TPP talks was even more secret than usual, with negotiators not bothering this time with the pretense of meeting with civil-society groups; thus much caution is advised. A potential turn for the worse is possible with the recent election of the right-wing Tony Abbott government in Australia, which may reverse some of the previous positions Canberra had taken against certain U.S. proposals. For example, previous Australian governments opposed investor-state disputes being adjudicated by secret tribunals controlled by corporate lawyers. It is unknown if the Abbott government will reverse that position.

The Australian television program Lateline reports that Prime Minister Abbott is in favor of “fast-tracking” the TPP and other trade agreements. A worrisome sign, as the U.S. is pushing hard for anti-democratic provisions such as investor-state disputes to be adjudicated in the secret tribunals. These mechanisms are in force in the North America Free Trade Agreement and many bi-lateral trade agreements. NAFTA, for example, uses a tribunal that is an arm of the World Bank in which only two of the more than 200 cases it has heard have been open to the public.

Agreements like TPP and TTIP have little to do with trade and much to do with imposing a corporate dictatorship. There is no time to waste.

More tobacco, less health care as Trans-Pacific Partnership secrecy tightens

The secret Trans-Pacific Partnership is about to become even more secret, perhaps seen as a necessity in light of plans to make it easier for tobacco companies to sue while making health care more difficult to obtain.

Stop TPPThe governments negotiating the draconian TPP still don’t want you to know what’s in it. Many of them issued cheery press releases congratulating themselves for the “progress” they made last week in Brunei. But you will search in vain for any information on what TPP negotiators are up to. They will now end their practice of “consultation” — the August 23 to 30 negotiations (the 19th round) are the last scheduled. Instead, negotiators will begin to meet in unannounced meetings.

In other words, not only is the text of the TPP to remain a secret, the negotiations themselves are to now be secret.

Formal negotiating rounds had occurred roughly every three months, but now negotiators henceforth will meet “intersessionally in the coming weeks” before meeting again at an Asia-Pacific Economic Cooperation (APEC) meeting in Bali, Indonesia, in early October. Although the good news is that, despite the efforts of several governments, most forcefully the Obama administration, it appears virtually certain there will be no deal to sign then.

The bad news is that obtaining details may become more difficult. The new, less formal format can reasonably be interpreted to mean that particularly harsh text is being discussed. Several of the 12 negotiating governments are balking at various proposals, but given that each remains inside the talks and issues content-free press releases, the secrecy shrouding the TPP text remains in place, with a stronger curtain apparently about to shut out any stray sunshine.

Yes to tobacco, no to medicine

The Obama administration has consistently pushed for the most draconian rules. Washington’s latest outrage concerns regulations on tobacco products, universally opposed by tobacco companies. Early drafts of the TPP included “safe harbor” provisions protecting national tobacco-control measures — such as package warnings and advertising and marketing restrictions — from corporate challenges. But the Obama administration has reversed course under tobacco industry and U.S. Chamber of Commerce pressure, intending to severely limit the ability of signatory governments to maintain their laws.

The Office of the U.S. Trade Representative said its counter-proposal would “contain a general exception for matters necessary to protect human life or health” and add a provision that a complaining “party” (that is, a corporation) must first meet with “health authorities … to discuss the measure.”

Note that there is nothing in the proposal that prevents a complaining “party” from suing to overturn a regulation following a discussion. And the “general exception” is meaningless as the arbitration boards that hear investor complaints (controlled by entities such as the World Bank) consistently rule that any environmental or safety rule that reduces a corporation’s profits be overturned. For example, Canada was forced to pay Ethyl Corporation $13 million and issue an apology because it had banned a gasoline additive that causes neurological damage and contributes to air pollution. This additive was already banned in the U.S., where Ethyl is based, but the chemical company claimed Canada’s ban “expropriated” its profits.

U.S. trade negotiators can write with a straight face that their proposals “work together to preserve the right to regulate tobacco products domestically,” but health advocates aren’t laughing. The Campaign for Tobacco-Free Kids and four other health care advocacy groups issued a joint statement condemning the cave-in to the tobacco industry:

“[T]his language is far weaker than [the] original proposal, would not cover lawsuits initiated by tobacco companies and would not provide nations that adopt strong tobacco control measures with the protection they need from tobacco industry challenges.”

Trade agreements wielded as battering rams

Already, tobacco companies, which must continually create new smokers to replace those who die, are not shy about using existing trade agreements to knock down regulations. The Campaign for Tobacco-Free Kids statement notes:

“The tobacco industry and its allies in government increasingly use trade and investment agreements to challenge legitimate tobacco control measures, and have done so specifically against laws adopted in the U.S., Australia, Uruguay, Ireland, Norway and Turkey. … Tobacco companies and several countries have filed trade challenges to Australia’s law requiring that cigarettes be sold in plain packaging, while Philip Morris International has used an investment agreement to challenge Uruguay’s tobacco control laws, including its requirement for large, graphic health warnings. These costly challenges are aimed not only at defeating tobacco control measures, but also at discouraging governments from enacting them in the first place.”

Philip Morris is also suing Australia for damages because of tobacco regulations, despite the country’s High Court ruling that it has no right to sue. Philip Morris moved assets to Hong Kong to be able to sue Australia under a bilateral trade agreement, and the TPP would open the floodgates to similar suits.

At the same time, U.S. intellectual-property proposals would make medicines more expensive through rules that would extend patents and data exclusivity periods for brand-name drugs, impeding trade in generic medicines, and putting new limits on how drug prices are set or regulated, according to the Council of Canadians. Already, Eli Lilly and Company, one of the world’s largest pharmaceutical companies, is suing Canada for C$500 million because Canada would not grant it two patents. Eli Lilly claims the denial is an illegal confiscation of profits under the North American Free Trade Agreement.

The Global Treatment Access Group, a coalition of Canadian civil society organizations, in a discussion of health issues, writes that the proposed TPP provisions concern public health policy and therefore do not belong in a trade agreement. These provisions would, inter alia:

“regulate countries’ drug pricing programs to the benefit of patented, brand-name pharmaceutical companies, undermining the ability of governments’ public insurance programs to negotiate reduced prices from manufacturers. … Undermining governments’ ability to manage costs of its public insurance schemes by ensuring value-for-money when it comes to pharmaceutical reimbursement is obviously of great concern.”

What you don’t know can hurt you

The more TPP negotiating governments proclaim their transparency, the more opaque the talks. Here’s a sampling of what governments had to say after last week’s Brunei round ended. The U.S. Office of the Trade Representative provided this happy talk:

“Buoyed by the ministerial engagement and their commitment to actively guide the negotiations, negotiators advanced their technical work this round on the texts covering market access, rules of origin, investment, financial services, intellectual property, competition, and environment. They also made progress on the packages providing access to each other’s markets for goods, services, investment, financial services, temporary entry, and government procurement.”

You’ll wait in vain for any details of said work. Apparently wishing to end any pretense of independence, the Australia Department of Foreign Affairs and Trade issued the same four-paragraph release, word for word. The New Zealand Ministry of Foreign Affairs & Trade couldn’t be bothered to issue a report at all, merely publishing the chief negotiators’ joint statement, which was similar pablum.

The Canada Ministry of Foreign Affairs, Trade and Development did manage its own statement, but, alas, is no more substantive than the others:

“During the 19th round, negotiators built on the progress made to date in several areas, including on goods market access, rules of origin, investment, services, financial services, temporary entry, intellectual property, government procurement and environment.”

No word from Ottawa, either, on what the negotiated text might include. The ministry did say that it saw no problem with the U.S. reversal on tobacco.

Signs of resistance?

Thus far, the only signs of resistance among TPP negotiators comes from Malaysia, which reportedly will not sign anything this year as it conducts a “cost-benefit analysis.” On August 27, Malaysia put forth a proposal to completely “carve out” tobacco regulations from the agreement. It is not known if any other countries have joined Malaysia in seeking to preserve tobacco regulations.

The Vietnamese newspaper Thanh Nien reports that the U.S. is the only TPP negotiating country not a signatory to the World Health Organization Framework Convention on Tobacco Control, which mandates policies to reduce tobacco usage. Passage of the U.S. tobacco proposal would put Vietnam and the other countries in violation of their WHO obligations. So much for the “rule of law.”

In the meantime, legislators around the Pacific Rim continue to demand access to the secret TPP text. Two years ago, in 2011, the New Zealand government denied a hearing on the TPP asked for by 13 organizations and there is no indication that any hearing will be held. A Canadian opposition member of parliament, Don Davies of the New Democratic Party, has asked the government of Stephen Harper “to give Canadian MPs the same information that US Members of Congress have about the ongoing Trans Pacific Partnership negotiations.”

Perhaps Mr. Davies should aim higher, as few members of the U.S. Congress have seen the TPP text, and then only because of loud demands and under condition that they not reveal any of the text in public. They haven’t.

Malaysia and, it is believed, New Zealand, are balking at U.S. demands aimed at dismantling state-owned enterprises; New Zealand and Australia are resisting demands on dairy and sugar products, respectively; and Japan is likely to resist U.S. demands that it open its borders for automobiles. And Chile’s former chief TPP negotiator recently resigned, expressing strong doubts about the wisdom of health-related proposals, although that country’s negotiating stands do not appear to have changed.

Another development that could delay any agreement is if Barack Obama fails to goad the U.S. Congress into re-approving “fast track” trade authority. If such an authority is granted, Congress can only vote yes or no with no amendments allowed. But if Congress does not vote to give away its authority, the process is significantly slowed down because amendments can be made, which would require the text to go back to the negotiators. Activists believe Congress might vote on fast-track authority the first week of October.

Stopping the TPP will happen in the streets, however, not in legislative bodies. It is impossible to overstate the disaster that would occur from an implemented TPP: Labor and environmental laws would be outlawed as fetters on the right to maximum profits; national sovereignty would be a relic of the past; and smaller countries would have no control over the plunder of their resources by the larger countries’ multi-national corporations. Under the TPP, the task of governments, codified in law, would be to maximize corporate profits.

Such is the dystopia that awaits us unless there is a massive international movement against the TPP, and then to overturn existing “free trade” agreements.

Spying? Who cares? Profits are at stake!

Actions do speak louder than words, and thus the start of European Union-United States trade talks as previously scheduled would seem to hold more weight than European political leaders’ displays of public anger at the extent of the spying against them.

Resignation to their subordinate status, the extent of their own spying networks and the knowledge that considerable dirty work is necessary to remain a leading capitalist country are among the contradictory factors at work here. So, too, is a willingness by European leaders to rely on the U.S. to perform much of the dirty work, while European big business needs to sell to U.S. consumers. Business is business at the end of the day. Or at the (hoped) end of the scandal.

With the stream of new revelations showing no signs of stopping, the end of the scandal does not appear anywhere in sight. Nor does the spectacle of contradictory behavior by European countries, most dramatically exemplified by France.

Navy communicationsOn the one hand, the French government declared revelations that the U.S. has spied on E.U. offices and computer networks “completely unacceptable” and demanded a delay in the start of the E.U.-U.S. trade talks, intended to form a “Transatlantic Trade and Investment Partnership.” Yet France not only meekly agreed to the trade talks beginning on time but acceded to U.S. arm-twisting that it close its air space to the plane carrying Bolivian President Evo Morales on the mere suspicion that whistleblower Edward Snowden was aboard.

How much of the complaints from France, Germany and elsewhere in Europe are posturing and how much is genuine anger is an open question, but perhaps ultimately irrelevant. Le Monde has revealed that the France intelligence agency DGSE spies on the French public’s phone calls, e-mails and Internet activity in a manner similar to that of the U.S. National Security Agency (NSA). And Mr. Snowden has revealed that German spy agencies are “in bed together” with U.S. spy agencies.

The chief of Germany’s foreign intelligence agency has confirmed that his agency works closely with the NSA, Der Spiegel reports, with the U.S. agency using several German locations to engage in data collection. The arrangement is justified by the “fight against terrorism,” the favorite all-purpose excuse to trample constitutional norms and privacy concerns, both of which tend to be taken more seriously among Europeans than United Statesians. In its report, Der Spiegel asked:

“Is it really conceivable that the German government knows nothing of what the NSA is doing on its own doorstep? Last month Interior Minister [Hans-Peter] Friedrich said in a parliamentary debate on the NSA snooping: ‘Germany has fortunately been spared big attacks in recent years. We owe that in part to the information provided by our American friends.’ Sentences like that reveal a pragmatic view of the US surveillance apparatus: What the NSA gets up to in detail is secondary — what counts is what its snooping reveals. And that information, intelligence officials admit, is indispensable.”

The German government sees itself as dependent on the U.S., and that counts for more than public displays of anger that culminated in a German minister condemning revelations of U.S. spying on Germany as “methods used by enemies during the Cold War.” Whatever momentary anger her government may have felt, Chancellor Angela Merkel has not wavered in her support for the Transatlantic Trade and Investment Partnership (TTIP) talks. Germany’s economy, after all, is dependent on exports — increasingly so during the past decade as German workers have absorbed a decade of wage cuts — and German manufacturers are likely salivating at the thought of increased exports to North America.

You can be angry, but you’re still subordinate

After all the displays of anger and assertions of sovereignty, European government showed themselves not only subordinate to the U.S. but to their own industrialists and financiers. The U.S. government is similarly a captive of its own big business interests — that is what right-wing calls to “starve” government are about. It was all smiles on July 8 as the TTIP talks began, on schedule, with embarrassing discussions of spying relegated to a “parallel” track, separate from what really counts, the main negotiations to dismantle regulations.

Both newly seated U.S. Trade Representative Michael Froman and European Trade Commissioner Karel De Gucht made the ritualistic grand claims of the benefits that will fall from the sky if the TTIP is implemented, and business groups competed with themselves to issue the highest “estimates” of the increase in wealth. The Centre for Economic Policy Research in London, for example, claimed the TTIP would stuff pockets with more than US$100 billion a year from added growth.

Similar pie in the sky promises were made for the North American Free Trade Agreement and many other trade deals, so, dear reader, all is forgiven if you are skeptical about such claims. “Free trade” agreements elevate corporations and investors to equal status with governments on paper, and above governments in reality because disputes between businesses and governments are sent to unaccountable tribunals controlled by organizations like the World Bank and in which the judges are frequently lawyers who specialize in representing corporations in disputes with governments.

Ambassador Froman, the new U.S. trade representative installed by the Obama administration, will not represent any change in direction. The American Enterprise Institute, a leading lobbyist for multi-national corporations, gave its seal of approval:

“No white smoke floated up from the White House when the president announced that he had chosen deputy security adviser Michael Froman as the new US Trade Representative; but there was a huge, collective sigh of relief from all elements of the US business and trade policy communities. … Michael Froman is an excellent choice. He is close to the president, was deeply involved in passage of the Bush [free-trade agreements] with [South] Korea, Colombia, and Panama.”

Ambassador Froman’s neoliberal credentials are assuredly in order. He worked as chief of staff to former Treasury Secretary Robert Rubin, who played a leading role in the Clinton administration’s deregulation of the financial industry, and before that was a managing partner at Citigroup. He seems to have done well at Citigroup, receiving more than $7.4 million from the company from January 2008 to when he joined the White House early in 2009, including a year-end bonus of $2.25 million.

Full speed ahead! The U.S. Chamber of Commerce — a hard-line organization that has never seen a regulation it likes or a tax that is justified — had already called for a speedy agreement before any pesky elections get in the way. Eurochambres had declared that it sought “the highest possible standards of protection for investors” — thinly disguised code for an elimination of rules and regulations. As Systemic Disorder has previously noted, the Trans-Pacific Partnership, intended to go beyond NAFTA and formally codify the maximization of corporate profits as the central principle of governments, is the model for the TTIP, and it is unlikely that it is a coincidence that the two giant trade pacts are being negotiated simultaneously.

Some country has to be the top dog

The growth of spying operations and the shrinking of democratic spaces that accompanies bilateral and multilateral trade agreements progress hand-in-hand. The capitalist system has always required a center to hold it together. Capitalism has had a succession of dominant centers; each successive center has been bigger to be able to cope with increasingly complex tasks.

When London succeeded Amsterdam as the financial center, the financial center became located within a country with a powerful military, not only a large merchant fleet as Amsterdam’s United Provinces possessed. When New York succeeded London, the country at the center became continental in size, possessing a military that can be projected around the world, further intensifying the links between financial and military power that had solidified during Britain’s rise to dominance.

The projection of, and willingness to apply, force is crucial to the maintenance and expansion of the capitalist system. That force nowadays may be more often financial and commercial rather than military, but the military and intelligence services are in reserve. From the dozens of coups in Latin America to the forcible installation of regimes willing to do U.S. bidding in Iran and Iraq decades apart to propping up dictatorships around the world, the common thread has been using power to gain advantage for U.S. multi-national corporations. “Free trade” agreements are another methodology to the same goal.

All of the world’s advanced capitalist countries are a part of this system. They acquiesce in it however much they sometimes chafe at their subordinate status (in relation to the U.S.); their willingness to enter into trade pacts binds them to the dominant power. No single country is large enough or possesses a big enough military to challenge U.S. domination; today, only a unified Europe could challenge U.S. hegemony. European capitalists desire the ability to challenge the United States for economic supremacy, but cannot do so without the combined clout of a united continent.

The E.U., in its current capitalist form, is a logical step for business leaders who desire greater commercial power on a global basis: It creates a “free trade” zone complete with suppression of social accountability while giving muscle to a currency that has the potential of challenging the U.S. dollar as the world’s pre-eminent currency.

Thus the proposed TTIP is in the interest of industrialists and financiers on both sides of the Atlantic Ocean at the same time that its approval would spell disaster for working people — more concentration of power in the biggest corporations; less ability for citizens to influence government policy; and weaker labor, safety and environmental regulations. Concentration of power and shriveling of democracy can’t be accomplished without a stifling of dissent, which in turn requires, inter alia, more spying and less accountability by spying agencies.

There are common interests at the same time that spying is also deployed to gain competitive advantages for favored corporations; the latter is exemplified by U.S. bugging of E.U. offices. Those shared interests in maintaining the system, however much the advanced capitalist countries may compete, tend toward cooperative relations. Thus although countries like France and Spain demonstrate their subordinate status in humiliating fashion by closing their air spaces under U.S. orders, the blocking of President Morales’ plane is not reducible to only that subordination; European governments have shared interests in maintaining the system. That force is what maintains it speaks for itself.

Hints of official Trans-Pacific Partnership resistance

A shroud of secrecy, by design, continues to envelop the Trans-Pacific Partnership negotiations. The latest statements from participating governments as usual offer nothing of substance, but that rebellion might be afoot is intimated in an article by Chile’s former chief TPP negotiator, who recently resigned his posts.

The article, published in the Peruvian magazine Caretas, did not contain any thundering denunciations; expecting such from someone who had been the director of Multilateral and Bilateral Economic Affairs for the Chilean Foreign Ministry would not be realistic. The ex-director, Rodrigo Contreras, quietly resigned recently without a public statement, but he did summarize his thinking in the Caretas article.

Codelco lands in Chile's Atacama desert. (Photo by Gerard Prins)

Codelco lands in Chile’s Atacama desert. (Photo by Gerard Prins)

Interspersed among two pages of soft language in which he praised the concept of trade agreements, he explicitly opposed Internet restrictions, expanding copyright terms, extending drug patent terms, restrictions on financial regulations and losing the ability to preserve biological and cultural diversity. Mr. Contreras wrote:

“The extension of drug patent protections beyond the current terms, or the restriction of challenges to frivolous patent applications, would delay the availability of generic drugs and increase the cost of medicines. Public health budgets and access to health services for the most vulnerable would be affected in our countries.”

Smaller countries such as Chile would be particularly vulnerable to corporate plunder as multi-national corporations would be allowed unfettered access to the resources of TPP signatories. Chile’s former chief TPP negotiator concluded his article with these words, likely as firm as anyone who had been a direct participant is likely to issue:

“It is critical to reject the imposition of a model designed according to realities of high-income countries, which are very different from the other participating countries. Otherwise, this agreement will become a threat for our countries: it will restrict our development options in health and education, in biological and cultural diversity, and in the design of public policies and the transformation of our economies. It will also generate pressures from increasingly active social movements, who are not willing to grant a pass to governments that accept an outcome of the TPP negotiations that limits possibilities to increase the prosperity and well-being of our countries.”

A secret, unless you are a corporate executive

It is precisely to minimize potential pressures from social movements that the TPP is being negotiated in complete secrecy, with no text publicly available. Not even the national legislatures of the 11 countries now involved in the Trans-Pacific Partnership know what is in it, even though many must vote on it. (By contrast, corporate executives do have access to the text and have significant influence in shaping it.)

The United States Congress, for instance, must approve the TPP for it to become effective in the U.S., and the Obama administration, which is pushing the most draconian rules, seeks a congressional vote on a “fast-track” basis — a straight yes-or-no vote with no amendments or changes allowed to the text. The reason for a fast-track vote is to increase the odds of passage — the vote happens far quicker than under normal rules, and no “free trade” agreement has been been voted down in the U.S. Congress under fast-track rules.

Following the latest round of negotiations, held earlier in May in Lima, Peru, once again no information was forthcoming. The Office of the United States Trade Representative issued its usual boilerplate language:

“[O]fficials reported that they continued to forge ahead toward their goal of concluding an ambitious 21st-century agreement in the timeframe envisioned by President Obama and the Leaders of the other ten TPP countries. … [T]he negotiators made progress across the agreement. The negotiating groups covering services, government procurement, sanitary and phytosanitary standards, trade remedies, labor, and dispute settlement moved their work forward significantly. The TPP countries also successfully advanced work on the other legal texts, including technical barriers to trade, e-commerce, rules of origin, investment, financial services, intellectual property, transparency, competition, environment and other issues.”

The Australian government’s report was almost word-for-word the same. In a similar Orwellian vein, Canada’s minister of international trade, Ed Fast, was quoted by the Canadian government as saying:

“The TPP is a key part of our government’s pro-trade plan to create jobs, growth and long-term prosperity in every region of the country.”

No details on what these agreements might be were offered, nor how eliminating workplace safety, labor and environmental regulations as part of an accelerated race to the bottom will create “prosperity.” Governments stripping themselves of sovereignty and allowing multi-national corporations to dictate laws and regulations, elevating corporate profits above all other human concerns, constitutes a perverse neoliberal definition of “prosperity.”

Swatting aside pesky notions of democracy

That anything at all is known about the TPP is because of leaks. Among the provisions under negotiation previously reported on the Systemic Disorder blog are:

  • Taxation and regulation constitute “indirect expropriation” mandating compensation (an asserted reduction in the value of an asset is sufficient to establish expropriation rather than a physical taking of property).
  • 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.
  • The U.S. is seeking to include government bonds as a covered investment; if that stands, speculators would have the right to recover the full face value of government bonds bought at discounted prices.
  • Significantly tighten corporate control of the Internet and force service providers to hand over personal data.
  • Energy export infrastructure projects, such as liquefied natural gas facilities, would be automatically approved as a matter of “right.”

The Trans-Pacific Partnership will go beyond, and supersede, the North American Free Trade Agreement and existing bi-lateral trade agreements, themselves already severely one-sided. The first dispute brought by a corporation against a government under the U.S.-Peru Free Trade Agreement, for instance, was by a mining company that demanded US$800 million from the Peruvian government because Peru refused to grant it a third extension of a deadline to install equipment to mitigate the toxic effects of a metal smelter that the company agreed to perform under a signed contract. Public Citizen reports:

“Renco v. Peru is a particularly egregious case, pitting one of the world’s wealthiest men, [U.S. multi-billionaire] Ira Rennert, on one side, and children in a poor and polluted community on the other. The case illustrates two deeply worrying implications of investor-state arbitration. First, it shows that corporations will use investor-state cases to put pressure on governments to weaken environment and health policies. Second, corporations are increasingly attempting to evade justice in domestic courts through the investor-state mechanism. And, if Peru loses the case, its taxpayers must compensate Renco. Governments have already been ordered to pay more than $2.5 billion in taxpayer funds to corporations in investor-state disputes under U.S. [free-trade agreements] and bilateral investment treaties.”

Disputes raised by corporations are heard in secret tribunals in which the judges are often corporate lawyers who specialize in representing companies in disputes with governments; each decision become a new standard leading to ever more one-sided results.

“Free trade” agreements don’t have anything to do with trade; they have everything to do with tightening the grip of corporate dominance over every aspect of life. Alisa Simmons of Global Trade Watch, speaking at a May 28 forum in New York City, said only five of the 29 TPP chapters concern traditional trade issues; the remainder cover other issues and three of the chapters are unknown because negotiators refuse to divulge the titles of the chapters.

Trade agreements like the TPP are specifically designed to override national laws by allowing corporations to sue in secret corporate-controlled tribunals empowered to order governments to do as corporate executives demand. Labor and environmental laws would be outlawed as fetters on the right to maximum profits; national sovereignty would be a relic of the past; and smaller countries would have no control over the plunder of their resources by the larger countries’ multi-national corporations. Links hands across borders before it is too late.

‘Transatlantic Partnership’ intended to duplicate secret Trans-Pacific Partnership

Neoliberalism knows no borders, so perhaps it should not come as a bolt out of the blue that the United States and European Union are set to negotiate a “Transatlantic Trade and Investment Partnership.”

It might be thought that the Obama administration would have its hands full with the ongoing, top-secret Trans-Pacific Partnership talks, but it seems that much can be done in the absence of any pesky oversight. It might be thought that European Union officials would have their hands full with their series of financial crises, but it appears this is an irresistible opportunity to safeguard austerity.

Ah, can’t you just imagine corporate leaders sitting around a camp fire singing, “We are all the Cayman Islands now.” Surely they would be jolly folks and allow the political leaders who so graciously granted their wishes seats close to the fire.

This dystopia is sponsored by the usual corporate organizations. The trans-Atlantic trade agreement evaded all radar until U.S. President Barack Obama’s announcement in his State of the Union address but had been in the works for more than a year. To the applause of business groups on both sides of the Atlantic.

No details of any kind have emerged about the trans-Atlantic trade agreement, only generalities. It would seem that holding two sets of negotiations among dozens of countries would be difficult, but then it is remembered that the Trans-Pacific Partnership is designed to be “scalable” — a euphemism meaning that the terms will be final. Any countries not among the present negotiators can join at any time but must accept that no terms already agreed upon are negotiable. Could this be the model for the Trans-Atlantic pact?

Big Business already cheering on the negotiators

A “U.S.-E.U. High Level Working Group on Jobs and Growth” was created at a United States-European Union summit meeting in November 2011, tasked with “identifying policies and measures to increase U.S.-EU trade and investment to support mutually beneficial job creation, economic growth, and international competitiveness,” according to the Office of the United States Trade Representative. It is unknown who sat on the “high-level” group, but it is chaired by European Trade Commissioner Karel De Gucht and U.S. Trade Representative Ron Kirk. Early in February 2013 — this seems to account for President Obama’s timing — the group said talks should go ahead.

Although it is impossible to be specific about the influences on the working group, the corporate interests who promote and benefit from “free-trade” agreements were not likely absent from the room. Eurochambres, a regional network of European chambers of commerce, published the paper it presented to the working group online. Eurochambres calls for harmonization of regulations, elimination of all tariffs and “the highest possible standards of protection for investors.”

That last wish should set off alarm bells. In pursuit of “protection for investors,” Eurochambres advocates that trade negotiators “Build on the Joint Statement of Principles on the Treatment of Foreign Investment elaborated by business organization on both sides of the Atlantic.” Those “principles” include:

“[T]he rule of law, transparency and predictability in government administration, regulatory fairness, the sanctity of contracts and private property, respect for intellectual property rights, and sound macro-economic policies. … This general approach should apply to the widest possible definition of investments, including all forms of assets and tangible and intangible property; property rights such as leases, mortgages, liens and pledges; intellectual property rights; rights conferred by law or contract, such as licenses and permits; business enterprises and equity and other forms of participation in them; claims to money and to performance; and returns.”

On the other side of the Atlantic, the U.S. Chamber of Commerce — a hard-line organization that has never seen a regulation it likes or a tax that is justified — has similarly provided its wish list. The Chamber calls for the same things as its European counterpart, including a “a highest standard investment agreement.” The Chamber did go a bit further by demanding an immediate deal, insisting that negotiators:

“Complete a bilateral investment agreement between the United States and the 27 EU member countries. An updated and comprehensive bilateral agreement would improve the flow of capital, prevent discrimination against investors, and provide protection from expropriation. … The Chamber calls for a swift time frame to avoid delays from election calendars in any participating country.”

Trans-Atlantic echoes of the Trans-Pacific Partnership

These demands are staples of “free-trade” agreements, whether bilateral or multi-national. Bland-sounding calls for “equal treatment” for foreign and domestic investors and property rights only thinly mask a thicket of detail-loving devils. These platitudes form the basis of undemocratic, drastically one-sided trade agreements such as the North American Free Trade Agreement, which in turn provides the starting point for the Trans-Pacific Partnership, a negotiation being conducted in secret by 11 countries.

These agreements use the same language as that of the Big Business pressure groups quoted just above. It is not unreasonable to speculate that the Transatlantic Trade and Investment Partnership will contain rules mirroring those proposed for the Trans-Pacific Partnership. The TPP goes beyond NAFTA in several ways, via rules granting additional “rights” to multi-national corporations and further expanding the definition of “investor,” while containing no rules concerning labor, the environment, public health or safety.

For example, the TPP, if ratified, would overturn the policies of countries like Australia and New Zealand that force lower prices on medicines, significantly tighten corporate control of the Internet, and require that speculators be paid the full face value of a government bond even if bought at a deep discount from a third party.

The TPP would require disputes be judged in the International Centre for Settlement of Investor Disputes — a secret tribunal closed to the public that is an arm of, and controlled by, the World Bank. ICSID, and similar tribunals, are bodies that adjudicate disputes between investors and governments, but the judges who sit in judgment are often corporate lawyers who specialize in representing investors in disputes with governments. These tribunals issue a steady stream of rulings favoring corporate interests, and these decisions then become the standards to which future trade agreements will be held, building a floor for subsequent decisions that will be still more harsh.

The rules governing the TPP, if enacted, would require that maximizing corporate profits be the highest priority for governments, by law. Measures to reign in financial speculation, even during economic crises, would be illegal, and rules safeguarding workplace safety or the environment would be struck down as interference with corporate profits.

It is difficult to imagine that the corporations goading on the trans-Atlantic governments intend to settle for anything less. And also at risk for Europeans are laws blocking genetically modified foods — U.S. agribusinesses have sought to eliminate E.U. rules safeguarding food safety and the Transatlantic Trade and Investment Partnership may well be their route. “Harmonizing” rules ordinarily means “harmonizing” at the lowest level, and in this case that would mean the weaker safety regulations, and lackadaisical enforcement, of the U.S.

No Trans-Pacific Partnership text has ever been made available; the little that is publicly known is due to leaks published on the Internet by consumer organizations. The White House TPP page offers no substance. In its report on the most recent negotiation round, the White House provides this less than scintillating summary:

“Trans-Pacific Partnership (TPP) negotiators were pleased to report further solid steps forward in closing the remaining gaps between them during the 15th round of negotiations. … [T]he Leaders reaffirmed their mutual priority of concluding a state-of-the-art, comprehensive agreement as quickly as possible.”

The next round of TPP talks is in Singapore from March 4 to 13, where similar communiqués are likely forthcoming. Once again, it must be asked: What is being hidden?

Different ocean, but same concept

Information on the details of the Trans-Atlantic agreement are likely to be as scarce. Nonetheless, European leaders are mostly lining up in support. German Chancellor Angela Merkel and British Prime Minister David Cameron, for example, are pushing the idea. The corporate media is also lining up behind it, with “resistance” to an agreement portrayed as “interest groups” stubbornly clinging to parochial concerns. An excellent specimen of corporate ideology at work is provided by the centrist German newsmagazine Der Spiegel, which is presented not to single it out but rather because it is typical. Der Spiegel writes of potential opposition:

“Some interest groups have refused to budge. The powerful US agrarian lobby, for example, insists on unlimited access to European markets, including such products as genetically modified produce, which is controversial on the Continent. European companies, for their part, refuse to accept the diktats of US regulatory authorities regarding whether and how they can pursue state contracts. … Furthermore, promoting a trans-Atlantic agreement would allow Obama — on the eve of his planned visit to Berlin in June — to address European concerns that the US has turned away from the Continent in favor of Asia. … But in his Tuesday evening speech, Obama still lauded the benefits of a trans-Pacific trade agreement with Australia and Asian countries before he mentioned the trans-Atlantic deal.”

The primary controversy, a reader might be led to believe, centers on a potential lack of resolve in giving corporations what they want. That there might be interests other than that of corporate profits — say, workers’ ability to have jobs with good pay and dignity, or a desire not eat food untested and unlabeled, or avoiding environmental damage — are not mentioned. Such matters are immaterial, evidently, at most the concern of “interest groups.”

The only clue as to the contents of what a Transatlantic Trade and Investment Partnership might contain are in the final report issued by the High Level Working Group on Jobs and Growth. Two key passages in the final report’s six pages state:

“The [High Level Working Group] recommends that a comprehensive U.S.-EU trade agreement should include investment liberalization and protection provisions based on the highest levels of liberalization and highest standards of protection that both sides have negotiated to date. … The HLWG recommends that the two sides explore new means of addressing these ‘behind-the-border’ obstacles to trade, including, where possible, through provisions that serve to reduce unnecessary costs and administrative delays stemming from regulation.” [page 3]

These provision could include:

“[R]educ[ing] redundant and burdensome testing and certification requirements … [and inserting p]rovisions or annexes containing additional commitments or steps aimed at promoting regulatory compatibility.” [page 4]

Stripped of bureaucratic niceties, what the above passages mean is that the most one-sided trade agreements (and tribunal interpretation) will be in force. For now, that arguably means the standards of NAFTA, under which taxation and regulation constitute “indirect expropriation” that require  compensation for corporations. The Trans-Pacific Partnership, however, would supersede NAFTA if implemented, mostly because it would be more draconian but also because Canada and Mexico have formally joined the nine original TPP negotiating countries, making NAFTA superfluous. To add to the complexity, Canada is negotiating its own secret trade pact with the E.U. and, like the U.S. Congress vis-à-vis the TPP, Canadian members of parliament are being left in the dark.

Market forces demand a race to the bottom

In the High Level Working Group’s six-page report, environment and labor safeguards are discussed in one paragraph. Here it is:

“The EU and the United States are both committed to high levels of protection for the environment and workers. The HLWG recommends that the two sides explore opportunities to address these important issues, taking in to account work done in the Sustainable Development Chapter of EU trade agreements and the Environment and Labor Chapters of U.S. trade agreements.” [page 5]

There are no effective environment or labor chapters in U.S. trade agreements, only boilerplate language that is meaningless. If that is the standard, then labor rights, workplace safety rules and environmental safeguards will be under sustained assault under any Trans-Atlantic trade agreement. Protections for the environment and employees are barriers to corporate profits, and will be treated as such. Regulations will be “harmonized” at the lowest level because that is what the “market” demands — the market simply being the aggregate interests of the most powerful industrialists and financiers.

In the context of European Union elites sparring over financial policy, Chancellor Merkel is not a stubborn holdout nor obsessed with Weimar-era inflation; she is simply reminding other national political leaders that financial harmonization will conform to the tightest policy among them and Germany so happens to have that tightest policy. Trade harmonization, regardless of where the borders are drawn, will follow a similar dynamic. The United States will seek to impose its looser regulations and weaker labor laws on Europe, and further weaken its own.

That is not because there is something inherently evil about U.S. officials or due to some particular moral failing of the Obama administration, but because the U.S. government, like all capitalist countries, reflect the dominant interests within their countries. Large industrialists and financiers dominate their societies through control of the mass media and a range of other institutions to the point that their preferred policies become, through heavy repetition, the dominant ideas across society and the ideas adopted by the political leaders who become intellectually and financially dependent on them. That is a crucial part of the puzzle as to why governments around the world enter into agreements that are so one-sided against themselves.

Coordinated international struggle is the only counter-force that can block these draconian trade agreements.