Trans-Pacific Partnership says if a corporation claims it’s true, it must be true

Corporations are elevated to the same status as national governments under “free trade” agreements, but if the Trans-Pacific Partnership is approved, corporations will be elevated above governments. New language inserted into the text of the TPP declares that, in certain circumstances, arbitrators hearing a suit by a corporation must assume the corporation’s claim is true.

We know this thanks to WikiLeaks, which has published another section of the TPP, the investment chapter that spells out the enforcement mechanism — the muscle — that will codify corporate dominance over democratic processes and governments. There is this tidbit, found within Article II.22 (“conduct of the arbitration”), which specifies what an arbitration panel is to do if a government objects that a complaint brought by a corporation does not qualify for a hearing:

“In deciding an objection under this paragraph, the tribunal shall assume to be true the claimant’s factual allegations in support of any claim in the notice of arbitration (or any amendment thereof).”

Thus, there is no basis on which a government can block the most frivolous of claims. TPP apologists might object that only a “technical” issue is being addressed in the above passage. But given the context, it is not a large step to go from a presumption that a corporation’s argument is true on its face for eligibility to be heard to presumptions in the hearing itself. The corporate lawyers who double as the arbitrators in the secret, unappealable tribunals in which cases are adjudicated under “free trade” agreements have interpreted the text of past agreements to strike down safety, health and environmental laws, and that “investors” should be guaranteed the highest possible profit. These are rulings that governments obligate themselves to carry out.

Protest at TPP negotiations in New York on January 26. (Photo by Cindy Trinh; puppet by Elliot Crown)

Protest at TPP negotiations in New York on January 26. (Photo by Cindy Trinh; puppet by Elliot Crown)

All the elements of agreements like the North American Free Trade Agreement and the many bilateral “free trade” agreements that mandate arbitration in secret, unappealable tribunals are in the Trans-Pacific Partnership. In fact, TPP mandates the same arbitration body, the International Centre for Settlement of Investor Disputes — an arm of the World Bank. ICSID is no friend of regulation.

No limitations on eligibility to sue for ‘lost profits’

Who will be eligible to sue under TPP? No, not the governments that wish to sign the agreement. Only “investors” are eligible to sue. There is no limitation on who or what is an “investor” — any person or entity that has “an expectation of gain or profit” in any form of participation in any enterprise, holds any financial instrument, possess any intellectual property right or has a “tangible or intangible” right in any “movable or immovable property,” even liens, is qualified to sue. Any decision, regulation or law by any level of government can be challenged, regardless of the democratic procedures used to promulgate it.

The real-world effect is that any corporate entity can move to overturn any government action, simply on the basis that its “right” to the maximum possible profit, regardless of cost to a community, has been “breached.”

Worse still, the expansive language of the TPP means that even more corporations will be eligible to sue governments, a Public Citizen analysis of the leaked investment chapter reports:

“Existing ISDS-enforced agreements of … developed TPP countries have been almost exclusively with developing countries whose firms have few investments in the developed nations. However, the enactment of the leaked chapter would dramatically expand each TPP government’s ISDS liability. The TPP would newly empower about 9,000 foreign-owned firms in the United States to launch ISDS cases against the U.S. government, while empowering more than 18,000 additional U.S.-owned firms to launch ISDS cases against other signatory governments.”

Corporations not based in a TPP country but which operate in a TPP country, even when they have no real investment in a TPP country, will be eligible to sue. (The “ISDS” in the above passage refers to “investor-state dispute settlement,” the technical term used to refer to rules that mandate the use of the secret arbitration bodies.) Additionally, previous language that purported to provide support for health, safety and environmental rules is missing from the latest text, according to Public Citizen.

That does not mean that the boilerplate language in past “free trade” deals concerning health, safety and the environment has any meaning. The most recent ruling on a complaint brought under the North American Free Trade Agreement, handed down on March 17, put Canada and the province of Nova Scotia on the hook for a minimum of C$300 million because a U.S. concrete company was denied a permit to turn an environmentally sensitive beach into a quarry.

Health and environment laws swept away

The list of decisions (which become precedents for future disputes) under NAFTA alone is infamous. Here is a sampling:

  • 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” of foreign capital even though had a Canadian producer of MMT existed, it would have been subject to the same standard. 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 the environmental dangers 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!

In another infamous case, the tobacco company 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. Philip Morris seeks to overturn Australia’s rules limiting tobacco advertising and packaging, enacted in the interests of public health, which were found to be legal by Australia’s supreme court, the High Court. (This case is still pending.)

That case is shocking enough in itself, but there is an extra twist — the lawyer for Philip Morris, David A.R. Williams, is one of the judges appointed by New Zealand to the arbitration body hearing the case, ICSID. That is far from an isolated case as many ICSID judges are lawyers who specialize in representing multi-national corporations in front of these arbitration bodies. In another example, a judge ruled in favor of Vivendi Universal against Argentina in a failed water-privatization scheme, and her ruling was allowed to stand even though the judge served on the board of a bank that was a major investor in Vivendi. The TPP is completely silent on conflicts of interest. The leaked TPP chapter reveals for the first time that ICSID would hear disputes brought under TPP.

You won’t be able to buy local anymore

Those corporate lawyers, and especially the multi-national capital they represent, have had their wish lists brought to life in the leaked TPP text. No capital controls of any kind are allowed, “buy local” rules would be prohibited, “investors” can sue for large damages even when their claim has been covered by insurance, and the arbitration body hearing a case should apply “customary international law.”

That last item may sound bland, but in practice it means that rulings declaring reasonable laws and regulations to be illegal impediments to corporate profits are precedents that must be followed. Consider, for example, a London Court of International Arbitration panel, ruling in July 2005 for a unit of the Occidental Petroleum Corp. in a case heard under the U.S.-Ecuador bilateral investment treaty, which declared that any change in business conditions constitutes a violation of “investor rights.” If such a ruling is accepted as precedent, any attempt at regulation is at risk of being ruled an illegal “expropriation” of future profits.

The TPP, along with the Transatlantic Trade and Investment Partnership and the Trade In Services Agreement, are not done deals. The TPP is much closer to the conclusion of negotiations than the others, but can be stopped. Grassroots opposition across the 12 countries currently engaged in TPP talks continues. Militant opposition is critical in all countries, but perhaps the single most important factor at the moment is what the U.S. Congress will do.

Reports consistently say that several governments will not commit themselves to passing TPP until the U.S. Congress passes what it is commonly called “fast-track authority.” Officially known as “trade promotion authority,” fast-track is a method of sneaking unpopular bills into law. Under fast-track, Congress has a limited time to debate a bill and can not make amendments or change so much as a comma, only vote yes or no. The Obama administration is pushing hard for Congress to re-authorize fast-track because that is the only way the TPP, which can not stand the light of day, can be passed into law.

Because of opposition from most Democrats and some tea party Republicans, fast-track passage is not assured. The introduction of fast-track into the Senate depends on a Democrat from Oregon, Ron Wyden, who is being heavily pressured by his constituents not to introduce a fast-track bill he has been negotiating with a conservative Republican from Utah, Orrin Hatch. One of several groups pressuring Senator Wyden, the Oregon Fair Trade Campaign, has rented a recreational vehicle to shadow him across the state.

Where ever you are, voicing your opposition to the TPP to your elected officials, and joining a local or national group in opposition, is critical. The U.S. government is pushing the hardest, and attempting to insert the most draconian rules, to cement the control of U.S.-based multi-national corporations over the world’s resources and markets, and the other governments are willing to throw overboard what sovereignty remains to them so that their multi-national corporations get a slice of the pie.

Allowing the TPP to pass means nothing less than an end to democracy and a world where corporate power and money becomes more dominant than ever, where corporate profits are codified in law to be above all other human concerns.

8 comments on “Trans-Pacific Partnership says if a corporation claims it’s true, it must be true

  1. […] Trans-Pacific Partnership says if a corporation claims its true, it must be true […]

  2. Popular Resistance, which was instrumental in the recent campaign to preserve Net Neutrality, has set up an ap (complete with script) on the website that automatically assists people in phoning their Congress people.

    • Defeating the TPP is a fight that we can win, but we have not won it yet, in any of the 12 TPP countries. Everybody concerned about this should contact their political representatives as a first step, and then get more involved. There are groups organizing this fight around the Pacific.

  3. Jeff Nguyen says:

    I know that mandatory arbitration clauses, which are found in many consumer transactions and employee hiring practices, are widely used to push consumers and/or employees into hearings that always benefit the company and/or employer. The right for corporations to sue governments with a built-in arbitration body is absurd. It’s like stacking a deck with all Aces. We are all fortunate to have this information disseminated in a manner that is both informative and accessible.

    • The rules of these arbitration bodies are such that only qualified “experts” are eligible to sit in judgment, and it is the corporate lawyers who specialize in representing companies that bring these cases who are deemed the “experts.” Most of the TPP countries have well-developed judicial systems, which are stacked in favor of corporations and the wealthy. But that isn’t enough for them; another advantage of the arbitration panels is that there are no juries and thus the uncertainty of a jury giving a fair hearing to the other side is removed.

      Maybe we’ll get to the point where a corporation can send a letter demanding you hand over your bank account, and if you don’t, the corporation can say you are violating its right to a profit because taking your money for nothing surely would be quite profitable.

  4. Joel Meyers says:

    It sounds like this was written by Mussolini lawyers focused on the fascist concept of the corporate state. It is curiously underplayed in all media, with a few honorable exceptions, perhaps…

    If you believe in the image of Democratic Party liberals representing the “little” people, it would seem to be a no-brainer for all candidates and the administration to oppose it and defeat it, but no, Obomber and all the kings horses and all the kings men (and women) are the driving force behind it. Hillary Rodham Clinton, and her husband, who betrayed their election promises by pushing NAFTA through Congress and signing it with great fanfare (after campaigning “against” it), are supporting TPP with their sneaky silence.

    This bill is so corporate elite and imperialistic that if a Republican were in the White House, it probably could not even be publicly broached. But leave it to the Democrats, to stoop lower and boldly go on to previously unimaginable treason. As I pointed out previously, even Barry Goldwater, who identified himself as an “extremist” Republican, was during the early 1960s lampooned because his philosophy would lead to privatization of he Post Office. Now it’s been done and not one prominent Democrat, however gliberal, calls for its restoration to public ownership, and most are going along with sabotaging it in preparation to selling it off as bankrupt, that is, for a song, to complete its total privatization. This, also, under a liberal democratic administration, replete with the cover of the first Black president.

    Finally, the point should be made that the TPP is aimed at consolidating a U.S. colonial satellite alliance against Russia and China, who are excluded for obvious reasons in the context of today’s return of the Cold War. With all their shortcomings and disappointments, the historic momentum of the fact that the state in both countries was born in working-class revolution, together with various geopolitical factors, enables them sometimes to say “NO”, for example exercising joint vetoes in the UN Security Council, by the threat of doing so, make certain U.S. proposals “unrealistic” enough to prevent them from being put on the table.

    • Joel, you’ve hit on a central point here:

      “This bill is so corporate elite and imperialistic that if a Republican were in the White House, it probably could not even be publicly broached. But leave it to the Democrats.”

      NAFTA was rammed through by a Democratic president, Bill Clinton, and a Liberal prime minster, Jean Chrétien. Clinton was the most effective Republican president the U.S. has had, able to deliver what Reagan and Bush I could not. And see the same elsewhere, with, for example, Tony Blair pushing through a Conservative agenda in Britain and Gerhard Schröder ramming through a plan to depress wages in Germany. When these characters are done, the formal right wing re-takes power and can go further because the political bar has been moved still more to the right.

      Your final point is also important. A main political reason for the Obama administration’s all-out push for the TPP is to lock up the Asia-Pacific region in an anti-China alliance under U.S. domination. This aspect not been spoken of before the past couple of months, when Barack Obama has started to argue openly that the TPP should be passed to block China’s rise, I presume due to the fact that opposition to TPP has become strong enough to seriously threaten its chances of passage. There is undoubtedly also a perceived need to “play the China card” as a way of rallying “patriotic” (nationalistic) fervor behind it, so cause and effect are somewhat fluid here.

      It is heartening to see the mushrooming of grassroots opposition to the TPP since I became active on the issue a couple of years ago, and the willingness of liberal groups to directly challenge Obama and Oregon Senator Ron Wyden, a consistent supporter of disastrous “free trade” deals despite his reputation as one of the more liberal members of the Senate. A start of a real pushback against neo-liberal Democrats, Liberals, Labourites, Social Democrats, etc.? We shall see.

  5. […] Protest at TPP negotiations in New York on January 26, 2015 Photo by Cindy Trinh; Puppet by Elliot Crown. Image from Systemic Disorder. […]

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