As production is moved to ever more distant locales, with ever lower labor and environmental standards, the corporations behind these moves want all barriers to the movement of raw materials and finished products removed. Thus the era of so-called “free trade” agreements. These agreements, which are written to elevate corporations to the level of national governments (and in practice, actually above governments), have become so unpopular thanks to the efforts of grassroots activists to expose them to public scrutiny that governments have become cautious about embracing new ones.
How to get around this impasse? The U.S. government has evidently believed it has found a solution: Claim a “free trade” agreement is not a “free trade” agreement. Not only as an attempt to avoid public scrutiny but to totally bypass Congress.
This latest offensive on behalf of multi-national corporations is the Indo-Pacific Economic Framework. Haven’t heard of it? That’s because the Biden administration, which has cooked up this scheme, would much prefer you didn’t. So far, the 13 other governments that have entered negotiations, including Australia, India, Japan and New Zealand, aren’t eager for their own citizens to know about it, either, and have agreed, whether explicitly or tacitly, to keeping quiet.
The countries negotiating the Indo-Pacific Economic Framework (graphic by JohnEditor132)
Make no mistake, however. The Indo-Pacific Economic Framework (IPEF) is a straightforward initiative to deepen U.S. domination in the Asia-Pacific and Indian Ocean regions. Activists across those regions have taken notice and have already spoken out against the IPEF. Interestingly, some of the governments of those countries, in particular Australia and New Zealand, are quite open in acknowledging the IPEF is a U.S. initiative designed to keep them firmly under the U.S. umbrella and away from China — and are supporting this in their limited public statements. So those social-movement groups sounding alarms are on firm ground, to which we will return below.
So what is this “free trade” deal that is allegedly not a “free trade” deal? A White House “fact sheet” issued by the Biden administration in May 2022, upon the announcement of the IPEF at the Quadrilateral Security Dialogue meeting in Tokyo, declared that the “IPEF will enable the United States and our allies to decide on rules of the road that ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific.” And how might this stated goal be achieved? Negotiations are to focus on “four key pillars to establish high-standard commitments that will deepen our economic engagement in the region.”
Those four pillars announced by the Biden administration are a “connected economy” that will harmonize standards on cross-border data flows and data localization; a “resilient economy” that seeks to “better anticipate and prevent disruptions in supply chains … [and] guard against price spikes that increase costs for American families”; a “clean economy” that “will seek first-of-their-kind commitments on clean energy, decarbonization, and infrastructure that promote good-paying jobs”; and a “fair economy” under which “tax, anti-money laundering, and anti-bribery” standards are used “to promote a fair economy. “
The same lies packaged for new consumption
Does this list sound familiar? Perhaps it does, as these are the sort of goals repeatedly promised in “free trade” agreements of the past, goals that never materialize because the draconian rules designed to unilaterally overturn health, safety, labor and environmental regulations always have words like “must” and “shall” attached to them in trade agreement texts, but any language purporting to safeguard such standards use words like “may” and “can.” And as disputes are settled in secret tribunals in which the lawyers who represent corporations against governments in these tribunals on one day switch hats and sit as judges on another day, the interpretation of what appears to be dry, technical, neutral-sounding language almost invariably is adjudicated in favor of the complaining corporation, without any appeal being possible.
Attempting to sidestep this history, the U.S. government is trying to claim the IPEF is not a trade deal at all, and thus can be approved by the White House unilaterally with no input by Congress. The Biden administration asserts that IPEF talks do not cover tariff liberalization or provisions that would require changes to key U.S. laws that Congress would have to approve and therefore has no intention of submitting the agreement for approval. Senators disagree, with 21 members of the Senate’s Finance Committee, including its Democratic (Ron Wyden of Oregon) and Republican (Mike Crapo of Idaho) leaders, sending the White House a letter telling the administration it must submit IPEF to Congress for approval.
Discussions during Indo-Pacific Economic Framework negotiations (photo via Prime Minister’s Office of Japan)
Washington is far from the only seat of government slapping happy faces on this subterfuge. Let’s start our survey with Australia and New Zealand, where the governments seem quite pleased at this opportunity to be sidekicks to U.S. imperial designs. And perhaps believe a sub-imperialist slice of the action could come their way given there are several developing countries taking part in negotiations. The full list of countries taking part in IPEF talks are Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the United States and Vietnam, although India is taking part in only some of the “pillars.”
The Australia Department of Foreign Affairs and Trade claims that the IPEF “Supports the promotion of clean energy technologies and renewables to help address climate change impacts and the region’s energy transition” and will “accelerate growth in the digital economy, unlock green trade and investment opportunities, and improve labour and environment standards across the region.” The department also said the IPEF “Improves regional trade and investment conditions.” Unfortunately, Canberra does not specify how the IPEF will miraculously bring about those results, and any text circulating or positions taken in negotiations are unknown because the entire process is being kept secret from the public and legislators.
That the IPEF is a back-door attempt to resurrect the Trans-Pacific Partnership was broadly hinted in December 2022, when Foreign Minister Penny Wong “praised Washington’s commitment to Indo-Pacific security but said its departure from a regional trade pact was still being felt and that enhanced U.S. economic engagement with the region should be a priority,” according to a Reuters report.
Corporate interests already lining up in support
A clue to who will benefit comes courtesy of the Australian Strategic Policy Institute, which claims to be an “independent, non-partisan think tank” despite being established by the government, receiving some of its funding from the Australian military and says it reflects the opinions of Australian government officials and industry leaders. A report the Institute published is, like corporate interests in general, favorable toward the proposed pact. “The IPEF is viewed as a potentially innovative way to boost regional investment rather than as a mechanism to strengthen the usual substance of trade agreements, such as market access into the US,” the report said. This corporate vision appears to be to position Australia as a regional assistant to U.S. corporations. The report’s first recommendation: “The US, as the convener of the IPEF, should lean into Australia’s capacity-building expertise in the region” because “Australia has a long history of organising capacity building and training exercises in Southeast Asia and the South Pacific.” In other words, Australia should position itself firmer as a junior imperialist country.
Canberra has been a good pupil, if you want to look at it that way, as symbolized in its decision earlier this year to spend up to $368 billion to buy nuclear submarines from the United States after the U.S. strong-armed the Australian government to cancel a previous cheaper deal to buy conventional submarines from France. The deal also will have U.S. and British submarines stationed on Australia’s Indian Ocean coast.
Much the same comes from Wellington. The New Zealand Foreign Affairs & Trade Ministry has declared, “The Indo-Pacific Economic Framework for Prosperity is an opportunity to strengthen economic cooperation with the United States and across our wider home region. The IPEF will provide an open and inclusive platform for the US to engage more deeply in the economic architecture of the Indo-Pacific, which we think is valuable for both New Zealand and the wider region.” Considering that when the Trans-Pacific Partnership was being negotiated, a key initiative for the United States was to weaken New Zealand’s health care system, it is reasonable to wonder why again negotiating a surrender to U.S. corporate interests would be a good idea.
The architecture of Melbourne (photo by Diliff)
U.S. government negotiators, on behalf of the pharmaceutical industry and its obscene profits, took direct aim at New Zealand’s Pharmaceutical Management Agency program that makes thousands of medicines, medical devices and related products available at subsidized costs in Trans-Pacific talks. The agency’s cutting down the industry’s exorbitant profit-gouging was openly called by the U.S. corporate lobby group Pharmaceutical Research and Manufacturers of America an “egregious example” to be eliminated because of its “focus on driving down costs.” Can New Zealand expect anything better this time?
Other participating governments have issued similar statements, with South Korea Trade Minister Ahn Duk-geun stating that “creating practical outcomes in areas like supply chain and clean energy is imperative.” Malaysian Trade Minister Mohamed Azmin Ali, discussing the supply chain talks, said “Malaysia believes that it is crucial to outline the tangible benefits of this trade and multilateral economic framework.”
With eyes open, grassroots opposition has already begun
Activist groups across the region and around the Pacific Ocean have already begun organizing opposition. This is a drill, after all, that groups organizing in opposition to always one-sided “free trade” agreements have had to repeatedly conduct.
A strong voice of opposition is that of Jane Kelsey, the University of Auckland law professor who long sounded the alarm on the Trans-Pacific Partnership from New Zealand.
Once again taking up the challenge, Professor Kelsey, in a May 2022 article in The Conversation, wrote, “[D]espite the high-profile launch, the IPEF remains an enigma, a high-level idea in search of substance.” She questions why the Australia and New Zealand governments are in these talks at all. “Realistically, the IPEF is a ‘pig in a poke’. Aotearoa New Zealand and Australia need to take a deep breath and realistically assess the opportunities and threats from such an arrangement. … Then they must weigh up the options: stand aside from the negotiations, pursue alternative arrangements, or establish a clear, public negotiating mandate that would truly maximise the nations’ interests for the century ahead.”
That commentary was written at the time of the IPEF’s creation. More recently, in December 2022, Professor Kelsey wrote more forcefully on the imperial nature of this trade deal, intended to reinforce U.S. dominance. Note that, in the U.S. government’s “fact sheet” quoted above that the purpose is to “ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific.” Not even a pretense that working people in the other 13 negotiating countries might benefit. Writing in Bilaterals.org, Professor Kelsey said:
Lupin field, New Zealand (photo by Michael Button)
“It is extraordinary how quickly states across ‘the region’ (whatever we name it) have fallen into line. Old imperial powers have embraced the US’s re-assertion of its regional presence: Australia, with its increasingly strident anti-China stance; Canada, welcoming a new hybridised North-South version of the old Western hegemony; France, wary of its remaining colonies being seduced by China. … Predictably, New Zealand has also fallen into line.”
What we have here is a replay of the Trans-Pacific Partnership, and the TPP agenda of dismantling national protections against the depredations of U.S. multi-national capital. Professor Kelsey wrote:
“Barack Obama famously and unsuccessfully tried to sell the TPPA to the American people, and the US Congress, as the vehicle for America to write the rules and call the shots in the 21st century, not China. Those power politics remain the same. As with the TPPA, the US initiated the negotiation and will set the agenda, dictate the script and approve the outcome, with other states attempting to influence at margins. Even when Trump withdrew the US from the TPPA, many of the US-driven texts were retained by the remaining eleven countries. We also expect parts of the TPPA to form the starting point for US demands. …
‘The prosperity’ promised by IPEF is principally for the US on terms it can manage politically. The Biden administration is determined to bypass the messy problem of securing approval in the Congress. An ‘executive agreement’ that does not contain market access commitments and does not require the US to change any of its laws avoids that problem. So, unlike the TPPA, IPEF will not include negotiations for other parties to access the US market, removing the most obvious means for other countries to point to any commercial gains. The pro-corporate regulatory settings will reflect the status quo in the US. Add to that the penchant for the US to invoke ‘national security’ exceptions to justify breaching its trade obligations, which makes a mockery of an ‘open rules-based system’ and any pretence that IPEF will be a reciprocal exchange of benefits by all the participating countries.”
Opposing a policy of total subservience
Such goals have not gone unnoticed in Australia. Writing in Green Left Weekly, William Briggs noted how fast the new Labor government of Anthony Albanese fell in line. “The first action of a new government is always steeped in symbolism,” he wrote. “The Anthony Albanese Labor government’s reaffirmation of Australia’s unswerving loyalty to the United States at the Quadrilateral Security Dialogue (Quad) meeting was just so. … The new Labor government is facing almost impossible tasks. No capitalist economy can hope to overcome global crises. Any reform, any tinkering at the edges, is to be supported and welcomed, but a policy of total subservience to the interests of the US is hardly the way forward.”
The Indo-Pacific Economic Framework will be detrimental to the developing countries as well. The president of the Malaysian civil society organization Consumers’ Association of Penang, Mohideen Abdul Kader, said:
“US multinational companies are openly pushing for provisions that would prevent the Malaysian government from preferentially purchasing from our local companies. This undermines domestic manufacturing especially in current times. It also adversely affects the need for small and medium sized firms to recover from the effects of Covid-19. The US industry is also demanding stronger intellectual property protection that would, among others, make medicines, textbooks, agricultural and manufacturing inputs and climate change technology more expensive. The digital economy provisions sought by US big tech companies would undermine Malaysia’s privacy, consumer protection, health, environmental, financial, tax and other crucial regulations, while the privately held global food company Cargill wants provisions that allow foreign investors to sue the government in international tribunals.”
Tokyo at night (photo by Basile Morin)
And from the Philippines, Joms Salvador of Gabriela Philippines, in a statement issued through the Asia Pacific Forum on Women, Law and Development, a network of feminist organizations, sees through the attempt to promote the IPEF as benefiting women:
“The IPEF is not, and never will be, just about economic trade, but a link in the chain of US hegemonic dominance in Asia-Pacific, where it has maintained strategic military presence and client relations with its neocolonies in the region, often to the detriment of national sovereignty and the human rights of Asian women and peoples. Women must resist the IPEF and stand our ground in the face of intensifying US-China rivalry and its encroachment on our lives as sovereign peoples.”
Helping women? No, women have seen this movie before
Filipino women are far from alone in rejecting an attempt at whitewashing the corporate-oriented nature of the IPEF. In a statement titled “Statement Rejecting Pinkwashing in the Indo-Pacific Economic Framework,” more than 60 women’s rights organizations, labor unions and civil society organizations firmly rejected an “upskilling” program that is promoted as a way for young women to gain employment in technical fields but it seen as another initiative actually designed to deepen the dominance of U.S.-based Big Tech companies. The coalition of groups, in their statement, said:
“The Upskilling Initiative for Women and Girls promises training by fourteen US Big Tech companies to women in IPEF countries. However, it appears that much of the promise is simply re-packaged training that is already available, and primarily designed as a tool to increase market presence and profits. The initiative is designed to encourage developing countries to agree to ‘high-standard commitments’ on the ‘promotion of cross-border data flows’ which translates to the adoption of rules that have been included in other trade agreements at the behest of Big Tech. Rules that a) restrict governments being able to effectively regulate Big Tech, b) inhibit governments from implementing rights-enhancing data policies for political sovereignty and economic self-determination, c) enable algorithms to be kept secret, d) constrain governments from requiring tech companies to have a local presence, and e) stop governments from pro-actively developing digital industrial policies, including autonomous digital public infrastructure. All of these can be extremely harmful to women’s human rights.
The initiative involves companies that have undermined labour rights, refused to recognise workers as employees, have used tax havens to avoid making tax contributions to public services essential for gender equality. Previous trade agreements have included commitments to gender equality, but those agreements have instead harmed women’s human rights by liberalising services, promoting the privatisation of public services essential in addressing discrimination and exclusion, deregulating the labour market, and promoting a race to the bottom in wages and conditions, and denying governments the policy space required for people to progressively realise their economic rights.”
Opposition also arises in the imperial center
Opposition has begun to be organized across the Pacific, in the United States itself. A letter initiated by Citizens Trade Campaign, a national coalition including unions, community groups and other organizations, released on March 2023 a petition signed by more than 400 labor, environmental, community and religious groups calling for the Biden administration to include strong labor rights based on International Labour Organization standards, binding commitments to combat global warming and digital standards to protect consumer rights and privacy while reining in Big Tech abuses. The letter also asks for transparency during IPEF negotiations: “A more transparent and participatory negotiating process for IPEF would allow for a wider set of interests to provide informed input and ensure equitable treatment of communities which are not part of the official U.S. trade advisor system most representing corporations who now have access to U.S. proposals and other confidential IPEF texts.”
A separate U.S. effort, by a group of consumer advocates, calls on the Biden administration to eliminate IPEF language that they say could undermine efforts to hold Big Tech accountable for their privacy practices. The consumer advocates have not seen any IPEF text because it remains secret from the public, but in their letter they said they “understand from policymakers and others who have reviewed the draft” that its digital trade section could help let U.S. tech companies off the hook when it comes to privacy safeguards, The Washington Post reports. The letter adds that the IPEF contains “problematic terms” giving “Big Tech firms control of our personal data” while limiting other countries from applying regulations.
A third negotiating round is scheduled for May in Singapore. The first round of talks, in Brisbane in December 2022, ended without a status report by participants but reportedly negotiators set aside more challenging issues. The second round, in Bali, Indonesia, ended with a commitment “to an aggressive negotiating schedule throughout 2023,” with nothing of substance revealed.
Activists on both sides of the Pacific had to organize a years-long campaign to defeat the Trans-Pacific Partnership, an effort that can only be said, at best, to be partially successful because most of the countries involved did eventually sign it, albeit with somewhat less draconian rules because the most hard-line government, that of the United States, dropped out due to intense domestic pressure. As with the TPP, and the many other “free trade” agreements that have been implemented, the purported benefits for working people are illusions. Fanaticism and fantasy have long driven government propaganda in promoting these deals. Once the TPP text was released, it could readily be seen why it had been secret throughout the negotiations.
“Free trade” agreements — even when falsely advertised as something else — have very little to do with trade and much to do with imposing corporate wish lists, including sweeping away health, safety, labor and environmental standards that can’t be eliminated through democratic means. As with all “free trade” agreements, the fault lines are along class, not national, interests. Industrialists and financiers around the world understand their class interests and are united to promote their interests. Working people uniting across borders, in a broad movement, is the only path toward reversing corporate agendas that accelerate races to the bottom.
The Regional Comprehensive Economic Partnership is being called a new model of trade agreements. Such paeans appear to be premature, and we might better hold off on uncorking the champagne.
It is best to remember that so-called “free trade” agreements are products of neoliberal assaults on any and all efforts to protect people and the environment from the rapacious effort of corporations to profit to the maximum extent and without regard to external cost. “Free trade” agreements are not the cause of neoliberalism; they are a product of neoliberalism.
It is true that the RCEP is less draconian than recent trade deals, and less one-sided in advancing corporate profiteering above all other human concerns than the Trans-Pacific Partnership was when the United States was involved and pushing for the harshest rules. But is that the standard we wish to uphold? “It’s not as bad as the worst agreements out there” really shouldn’t be a cause for celebration.
Much of the same language commonly found in “free trade” agreements is in the RCEP, and what appears to be the most promising development, the lack of the usual “investor-state dispute settlement” process that uses corporate-dominated tribunals that consistently overturn health, safety and environmental regulations, is much less than it appears once we look into the details. And there are no labor or environmental provisions. What we have here is more capitalism as usual, including a dispute process still weighted toward corporate interests.
Tokyo at night (photo by Basile Morin)
For readers not familiar with the RCEP, it is a trade deal reached by 15 countries across East Asia and Oceania. Although some commentators believe that China has been the impetus behind the RCEP, in fact it is the 10 countries of the Association of Southeast Asian Nations (ASEAN) that were the driving force. Australia, New Zealand, Japan and South Korea join China and the ASEAN countries — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — in a deal that encompasses nearly one-third of the world’s economy. India was originally a negotiating country, but dropped out, expressing concerns that the RCEP would be dominated by China.
As would be expected, mainstream economists, who as a group act as cheerleaders for capitalism rather than seriously analyze capitalist economies, are cheering the agreement. The Financial Times, for example, breathlessly reported that the RCEP “could add almost $200bn annually to the global economy by 2030,” a number repeated by signatory governments. That despite the fact that Australia, China, New Zealand, Japan and South Korea each already has a trade agreement in place with ASEAN.
Signatory countries were also enthusiastic. China’s prime minister, Li Keqiang, said the agreement is “a victory of multilateralism and free trade.” The New Zealand Ministry of Foreign Affairs and Trade said, “The agreement will help ensure New Zealand is in the best possible position to recover from the impacts of COVID-19 and seize new opportunities for exports and investment.” The Australia Department of Foreign Affairs and Trade said, “Australian farmers and businesses are set to benefit from better export opportunities.”
Unions fear working people face a race to the bottom
Once we turn our attention to those not highly placed, a rather different picture emerges. A bloc of seven trade union federations strongly condemned the RCEP after its signing. Those federations, covering workers in construction, manufacturing, agriculture, transportation, services and education, said, “Instead of furthering a free trade project, countries should be collaborating on reviving their economies and expanding public goods. … RCEP and other trade agreements that protect intellectual property rights threaten the ability to secure a globally accessible [Covid-19] vaccine. … [W]hile [corporate executives] traveling for business will benefit from facilitation of procedures for entry and temporary stay, workers face deteriorating working conditions in a race to the bottom under heightened competition in which migrant workers are facing the worse consequences. Regional cooperation based on a collective intent to promote decent work, quality public services and sustainable and inclusive development are a better solution.”
The seven trade union federations also pointed out that RCEP was shrouded in secrecy throughout its eight years of negotiations, with the text released to the public only after the agreement was signed. (All 15 countries must still formally ratify it.) The intellectual property chapter was leaked in 2015, prompting the Electronic Frontier Foundation to characterize the IP text as “a carbon copy” of the Trans-Pacific Partnership then also in negotiation. “South Korea is channeling the [U.S. trade representative] at its worst here,” the Foundation said in its commentary, speculating that Seoul was pushing draconian IP rules because accepting unfavorable rules in its bilateral trade agreement with the U.S. would put it at a disadvantage otherwise. We’ll return to the intellectual property text, always a key chapter in any trade pact, below.
There are also fears that trade deficits for less developed countries will increase and pressures for privatizations will increase.
The skyline of Bangkok (photo by kallerna)
A senior economist with the United Nations Conference on Trade and Development, Rashmi Banga, expects that, assuming tariffs are removed on all products trading among RCEP countries, most ASEAN countries will see their imports rise faster than their exports, believing that those countries won’t be able to compete with China.
Kate Lappin, the Asia Pacific regional secretary of Public Services International, a federation of more than 700 trade unions representing 30 million workers in 154 countries, said “free trade” deals such as RCEP “also increase the pressure on governments to privatise, as public services need to be traded and compete on the market. This will have negative impacts on equality, including corrosive impacts on gender equality.” Noting that some measures governments are taking to combat the Covid-19 pandemic would be in violation of the RCEP or other trade agreements, Ms. Lappin said “RCEP will bind the hands of governments in taking measures in the public interest in crises to come, be it health or environmental.”
There could also be problems for manufacturers in small countries because “rules of origin” rules mandate that parts from any signatory country must be treated the same as domestic production.
Bad news for farmers, good news for agricultural multi-nationals
The ability of farmers to maintain control of their seeds is in peril, according to GRAIN, which describes itself as an “international non-profit organisation that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems.” GRAIN, in analyzing a separate leak of RCEP chapters, said the agreement was in danger of requiring all signatory governments to adopt a seed law designed to provide private property rights over new crop varieties, giving corporations like Monsanto or Syngenta a legal monopoly over seeds, including farm-saved seeds, for at least 20 years; require adherence to the Budapest Treaty, which enforces patents on microorganisms; and make violations of these corporate-friendly rules criminal violations. Australia, Japan and South Korea were described as the “hard-line camp” on these issues.
Those fears remain in place. Article 11.9 of the final text indeed mandates that RCEP governments not already signed onto the Budapest Treaty do so. Adherence to several other international treaties are also mandated. Language concerning adoption of the seed law described in the preceding paragraph (the Act of International Convention for the Protection of New Varieties of Plants, amended in Geneva in 1991) is at Article 11.9, but the language is ambiguous, encouraging governments to sign the Convention and “cooperate” with other signatory governments “to support its ratification.” Also worrisome is Article 11.36, which mandates patents on plants: “[E]ach Party shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof.”
There is also concern about the availability of medicines. A key goal of the United States when it was negotiating the Trans-Pacific Partnership was to undermine government procurement of medicines that reduced the cost of health care and to extend patents and data exclusivity periods for brand-name drugs, impede trade in generic medicines, and place new limits on how drug prices are set or regulated, all in the service of pharmaceutical company profits.
Canberra at night (photo by Ryan Wick)
Croakey Health Media, an Australian “not-for-profit public interest journalism organisation,” in a commentary on the RCEP’s potential impact on medicines, feared some of those goals could find their way into the final text. “Early in the negotiations, leaked texts indicated that Japan and South Korea had proposed rules for the RCEP intellectual property chapter that would extend and expand monopolies on new medicines in countries like Cambodia, Indonesia and Thailand,” Croakey said. “These types of rules can delay the availability of generic medicines.”
It appears there is at least some backing off of the worst provisions that had been under discussion. Article 11.8 of the final RCEP text says “The Parties reaffirm the Doha Declaration on the TRIPS Agreement and Public Health” adopted in 2001. The Doha Declaration is an ambiguous document that “affirms” intellectual property rights but also “should not prevent members from taking measures to protect public health.” How the text will be interpreted will likely determine how far it will be possible to go in attacking government health care systems.
It should be stressed that grassroots organizations had no chance to affect any aspect of the RCEP text as the negotiations were secret throughout.
Lots of language customarily found in trade agreements
The text of “free trade” agreements is always dry and technical, even neutral-sounding. It is in the interpretation, and what certain phrases actually mean, that determine their outcome. So let’s take a very brief look at some of the text, and what it might mean.
Chapter 10, covering investments, is crucial to understanding the similarities to existing deals. Article 10.1 on “covered investments” contains the standard list of what is covered typically found in “free trade” agreements, including “claims to money or to any contractual performance related to a business and having financial value” and “intellectual property rights and goodwill.” There is an important exception, however — the chapter does not apply to government procurement, “subsidies or grants provided by a Party” or “services supplied in the exercise of governmental authority.” What that means is that the RCEP theoretically reduces the ability to attack or force privatization of government-owned enterprises, a consistent goal of U.S. trade negotiators in agreements the U.S. is involved in, and a goal generally shared by multi-national corporations seeking new markets. But this clause could potentially be negated by the heavier market pressures that could lead to privatizations, as discussed above, and once a government enterprise is privatized, the clause is no longer relevant.
The investment chapter contains the standard clause that “Each Party shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to investors of any other Party or non-Party.” Article 10.5 follows up with language that is also typical: “Each Party shall accord to covered investments fair and equitable treatment and full protection and security, in accordance with the customary international law minimum standard of treatment of aliens.” Although these passages are bland, neutral-sounding phrases, this language has often been used as key points of attack for multi-national corporations seeking to eliminate government health, safety, labor or environmental regulations. As always, “customary international law” has been established by a series of rulings by the corporate-dominated secret tribunals that hand down unappealable decisions, decisions that are used as precedent for further such decisions. The expectation of profits by a corporation as a “right” superseding health and environmental regulations has been repeatedly handed down.
The skyline of Beijing (photo by Picrazy2)
Further language routinely found in “free trade” agreements stipulate that capital controls are prohibited, and, in Article 10.13 of the RCEP, “No Party shall expropriate or nationalise a covered investment either directly or through measures equivalent to expropriation or nationalisation.” What will constitute an illegal “expropriation”? How this clause will be interpreted is crucial. In existing “free trade” agreements, government regulations protecting health or the environment are frequently overturned because complying with such regulations would reduce profits, and thus constitute “expropriation” because corporate profits are presumed to be an entitlement by the tribunals sitting in judgment. Will the repeated examples of such rulings in, inter alia, the North American Free Trade Agreement, be replicated here?
In Chapter 11, covering intellectual property rights, there is no mandatory schedule for when those rights expire; this constitutes a small victory. The chapter also states that signatory governments “may establish appropriate measures to protect genetic resources, traditional knowledge, and folklore,” a right not ordinarily granted in “free trade” agreements.
But in the Financial Services Annex of Chapter 8, language similar to that found in other trade pacts requires that foreign financial services firms be given free reign to operate, even to take over a country’s banking system. Specifically, “Each host Party shall endeavour to permit financial institutions of another Party established in the territory of the host Party to supply a new financial service in the territory of the host Party that the host Party would permit its own financial institutions, in like circumstances.” Again, what seems neutral-sounding on the surface has specific meanings when interpreted by a tribunal in the context of “customary international law.”
Corporations will continue to be elevated above governments
And that brings us to Chapter 19, covering dispute settlement. Article 19.4 leaves us little doubt, reiterating that “This Agreement shall be interpreted in accordance with the customary rules of interpretation of public international law” and that adjudicators “shall also consider relevant interpretations in reports of WTO [World Trade Organization] panels and the WTO Appellate Body, adopted by the WTO Dispute Settlement Body.” No specific tribunal for the settlement of disputes is mandated, and the intent appears to be to have ad hoc panels rather than panels seated by one of the tribunals ordinarily used in trade disputes in existing trade agreements. Nonetheless, Article 19.5 gives right of forum selection to the complaining party — i.e., the corporations that will be suing governments — so the use of the tribunals can’t necessarily be ruled out. When seating an ad hoc panel, the complaining corporation and the respondent government are supposed to mutually agree on the three members of a panel but if they can’t agree, the WTO director-general will complete the panel — given the role of the WTO in imposing draconian pro-corporate rules, this clause can hardly be considered neutral.
And so who will sit on the panel and adjudicate the case? Article 19.11 designates those who “have expertise or experience in law, international trade, other matters covered by this Agreement, or the resolution of disputes arising under international trade agreements.” In other words, the same corporate lawyers who sit as judges on the tribunals that adjudicate cases brought under existing “free trade” agreements. If the WTO director-general seats panelists, those must not only meet the requirements stated above but additionally “be a well-qualified governmental or non-governmental individual including an individual who has served on a WTO panel or the WTO Appellate Body or in the WTO Secretariat, taught or published on international trade law or policy, or served as a senior trade policy official of a WTO Member.”
Under most existing “free trade” agreements, one of three tribunals is used, most commonly the International Centre for Settlement of Investment Disputes (ICSID), an arm of the World Bank. ICSID is the forum that was used in NAFTA and is used to adjudicate disputes under dozens of bilateral trade agreements, and is responsible for a long list of outrages declaring environmental and health regulations illegal. Conflicts of interest are blatant in these tribunals — corporate lawyers who specialize in defending multinational corporations in trade disputes alternate between appearing as counsel for corporations and as judges handing down the decisions.
“In effect, ISDS creates a parallel business-friendly judicial system exclusively for transnational corporations. The power rests upon for-profit arbitrators who come from the corporate sector and face unverifiable conflicts of interest. They have no sovereign legitimacy and are not accountable to the public. The decisions they make can be inconsistent between one another and cannot be appealed. Plus, the arbitrators effectively serve as judge and party, because the same appointed arbitrators who plead the case for the parties make the decision. Imagine a football match where the referee plays for one of the teams! With ISDS, this becomes a possible scenario. So much for justice.”
RCEP rules not mandating ICSID or one of the other tribunals is a cosmetic change. Governments continue to tie themselves to rules and precedents that elevate multi-national corporations above national governments, and thus elevate corporate profiteering above all other human considerations. There will still be panels seated to adjudicate disputes, but instead of using ICSID or another permanent forum, there will be ad hoc panels, which will, as noted above, have the exact same criteria for seating judges. The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union pioneered this cosmetic change, intended to make the one-sidedness of ISDS appear somewhat less blatant, and will also be used in some disputes covered by NAFTA 2, the U.S.-Mexico-Canada agreement.
Thus the “investor-state dispute settlement” (ISDS) process is very much in place in the RCEP. That should not come as a surprise. “Free trade” agreements arise because multi-national corporations scour the globe searching for the places with the lowest wages and least regulations in order to maximize their profits over all other considerations. As capitalist competition intensifies, corporations must match the moves their competitors make in order to remain in business, and adopt still more harsh policies to stay ahead. Once production is moved overseas, and supply chains are spread into ever more locales, tariffs and rules protecting domestic production are barriers to be removed. Trade deals at first mainly dealt with technical issues or tariffs, but as the relentless grasping for profits becomes ever more intense, regulations safeguarding health, labor, the environment or safety are seen as barriers to profit-making, and corporations seek to sweep them away, too.
Later trade agreements had much more to do with erasing regulations than with actual trade rules, which was reflected in the draconian rules the U.S., often assisted by Japan, sought to impose in the Trans-Pacific Partnership. That the RCEP has less draconian rules is not a cause for celebration — the rules are still plenty tilted in favor of multi-national capital and will inevitably be wielded as a cudgel by those beneficiaries. A rational trading system requires a rational, democratic economic system, not the dictatorship of capital.
Health care will take a large step toward becoming a privilege for those who can afford it rather than a human right under the Trans-Pacific Partnership. Government programs to hold down the cost of medications are targeted for elimination in the TPP, which, if adopted, would grant pharmaceutical companies new powers over health care.
This has implications around the globe, as such rules could become precedents for the Transatlantic Trade and Investment Partnership and Trade In Services Agreement, two other deals being negotiated in secret.
The U.S. Congress’ difficulties in passing “fast-track” authority has thrown a roadblock in the path of the Trans-Pacific Partnership, but by no means has this most audacious corporate power grab been defeated. The latest leak of TPP text, the annex on pharmaceutical products and medical devices published by WikiLeaks earlier this month, makes clear that the U.S. pharmaceutical industry is taking aim at health care systems that put accessibility above corporate profiteering.
Craters of the Moon Geothermal Area, New Zealand (photo by Pseudopanax)
People in other countries should be extremely wary of any attempt to make their health care systems more like that of the United States. The U.S. health care system is designed to produce profits for pharmaceutical, insurance and other health care industry corporations, not to provide health care. Because of this, health care in the U.S. is by far the world’s most expensive while delivering mediocre results. How expensive? During the decade of 2001 to 2010, U.S. health care spending was $1.15 trillion higher per year than it would have been otherwise.
As always with the TPP, bland-sounding text written in stilted, bureaucratic language contains more danger than initially meets the eye. New Zealand’s Pharmaceutical Management Agency, which makes thousands of medicines, medical devices and related products available at subsidized costs, is a particular target of TPP and the U.S. pharmaceutical lobby because it is an example that drug companies do not wish to be emulated elsewhere. Agencies of other governments will also be under threat.
U.S. government targets New Zealand subsidies
A “Special 301 Report” issued in April 2015 by the U.S. government under the name of U.S. Trade Representative Michael Froman specifically names no less than 17 countries in which it seeks to undo health-system protections. Taking direct aim at New Zealand, the report said:
“With respect to New Zealand, U.S. industry has expressed serious concerns about the policies and operation of New Zealand’s Pharmaceutical Management Agency (PhARMAC), including, among other things, the lack of transparency, fairness, and predictability of the PhARMAC pricing and reimbursement regime, as well as the negative aspects of the overall climate for innovative medicines in New Zealand.” [page 25]
Note that the wishes of “U.S. industry” are presented as the only possible point of view. This is consistent with the fact that 605 corporate lobbyists have access to the TPP text as “advisers,” while the public is shut out. The real issue is that the New Zealand agency holds down the price of medicines, cutting down the industry’s exorbitant profit-gouging. A 2011 submission to the U.S. government by corporate lobby group Pharmaceutical Research and Manufacturers of America, called the New Zealand agency an “egregious example” because of its “focus on driving down costs.”
Professor Jane Kelsey of New Zealand’s University of Auckland, who has closely followed TPP issues for years, leaves little doubt that New Zealanders will pay more for medications if TPP comes into force. In an analysis of the leaked health care annex text, she writes:
“This leaked text shows the [TPP] will severely erode Pharmac’s ability to continue to deliver affordable medicines and medical devices as it has for the past two decades. That will mean fewer medicines are subsidised, or people will pay more as co-payments, or more of the health budget will go to pay for medicines instead of other activities, or the health budget will have to expand beyond the cap. Whatever the outcome, the big global pharmaceutical companies will win, and the poorest and most vulnerable New Zealanders will lose.” [page 2]
But other countries are in the cross hairs
The Pharmaceutical Management Agency estimates it has created savings of more than NZ$5 billion since 2000. The language of the TPP health care annex specifically targets “national health care programs” that make pricing decisions and not direct government procurement of medicines and medical devices. Professor Kelsey sees a nationalist agenda behind this specific wording, writing:
“ ‘National’ is presumably chosen to preclude such programmes that are run by states and provinces, which are politically sensitive in the US and Canada. In effect, the US has excluded almost all its own programmes, while targeting New Zealand, as it did with the [Australia-U.S. Free Trade Agreement].” [page 3]
But U.S. Medicare and Canadian provincial programs will certainly be targets as well. Medicare is prohibited under U.S. law from from negotiating prescription prices with drug makers, and the same language that would undermine New Zealand’s program would block any attempt to allow Medicare, or any other agency, from instituting a similar pricing program. Per-capita spending on drugs is far higher in the U.S. than elsewhere, in part thanks to this prohibition, which would become irreversible under the TPP.
“The fact that Medicare is forbidden in the law that created Medicare Part D to negotiate lower prices is no accident. The drug lobby worked hard to ensure Medicare wouldn’t be allowed to cut into the profits which would flow to big Pharma thanks to millions of new customers delivered to them by Part D.”
“Part D” is a program that shifted millions of people from Medicaid, which pays much less for drugs, to Medicare, a boon to pharmaceutical companies.
The TPP health care annex also contains language that the annex’s provisions are exempted from the “investor-state dispute mechanism,” the secret tribunals in which corporate lawyers sit as judges when corporations sue governments under so-called “free trade” agreements. The annex’s text is misleading, however. Language elsewhere in the TPP that requires “fair and equitable treatment” of foreign “investors” would still enable challenges to New Zealand’s program or any other. Thus, governments could be sued using provisions other than the annex, Professor Kelsey writes:
“The biggest risk is the obligation to provide ‘fair and equitable treatment’, which investors may claim includes a legitimate expectation that governments will comply with their obligations in making regulatory and administrative decisions. They could launch a claim for many millions of dollars compensation, including expected future profits, if they believed New Zealand’s process in general, or in specific cases, violated their expectations under the Transparency Annex and adversely affected the value or profitability of their investment.” [page 6]
Who gets to “consult”?
Deborah Gleeson, a lecturer at La Trobe University in Australia, points out another danger. A “consultation” mechanism that requires governments to consider corporate objections in pricing decisions could be used to apply pressure to make changes to benefit pharmaceutical and medical-device corporations. She writes:
“The inclusion of the Healthcare Transparency Annex in the TPP serves no useful public interest purpose. It sets a terrible precedent for using regional trade deals to tamper with other countries’ health systems and could circumscribe the options available to developing countries seeking to introduce pharmaceutical coverage programs in future.” [page 2]
As elsewhere in the TPP, the U.S. government is taking the most hard-line approach, and has been opposing efforts to exempt the poorest countries from attacks on health care subsidies. Judit Rius Sanjuan of Médecins Sans Frontières/Doctors Without Borders said:
“If the US proposal is accepted, the poorest countries would be forced to limit access to affordable medicines long before their public health needs are under control. The fact remains that no country, rich or poor, should accept limitations on its sovereign ability to ensure medicine is accessible and affordable for all those who need it.”
It’s not as if pharmaceutical companies are not already hugely profitable. They like to whine that they have high research and development costs, and while that is true, the prices they charge are well beyond reasonable expenses. They enjoy one of the highest, if not the highest, profit margin of any industry — nearly 20 percent for 2013. The world’s 10 largest pharmaceutical corporations racked up a composite US$90 billion in profits for 2013, according to a BBC analysis. As to their expenses, these 10 firms spent far more on sales and marketing than they did on research and development.
“Free trade” agreements have very little to do with trade. The Trans-Pacific Partnership, and the similar Transatlantic Trade and Investment Partnership and the Trade In Services Agreement, are nothing more than initiatives to cement corporate control over all aspects of society, in which governments lock themselves into binding agreements that elevate corporate profits above all other human considerations. Don’t get sick.
The struggle to save the United States Postal Service is emblematic of the larger struggle against corporate plundering of public resources. Reversing the intentional bankrupting of the post office requires not only a movement of allies that a new union leadership has begun to assemble, it potentially also merges with creating a public banking option.
What does banking have to do with delivering the mail? Nothing, today. But in the future? A Postal Service bank — a model that is successful in several countries around the world — would not only provide the post office with a reliable source of income, it would provide badly needed basic, inexpensive banking services for under-served populations.
Such an idea is not necessarily controversial. Despite the management of the U.S. Postal Service supporting privatization measures for many years, its office of the inspector general quietly issued a paper a year ago in which it said offering financial services could provide almost US$9 billion per year in new revenue while providing badly needed services to tens of millions of under-served people who are currently at the mercy of predatory “pay-day lenders” and other high-interest usurers.
The basis for this estimate is that “people trying to make it paycheck to paycheck” spend an estimated $89 billion per year on interest and fees on alternative financial services; the paper’s revenue estimate is based on the Postal Service, by offering low-cost services, capturing 10 percent of what is currently spent on those businesses. But the Postal Service inspector general’s office went out of its way not to upset bankers, watering down its proposal to a “partner[ship] with banks and other [mainstream] financial institutions” to “create a ‘win-win’ situation.”
Lupin field, New Zealand (photo by Michael Button)
If big commercial banks are winning, the rest of us will be losing. Rather than floating fantasies of swimming with ever-hungry financial sharks who are never satiated, thereby disemboweling your own idea, why not set up an independent postal bank? Doing so is precisely what the new president of the American Postal Workers Union, Mark Dimondstein, proposes. He says:
“Services such as basic, non-profit banking would be a great and real benefit to the people of this country, and a good answer to what I call ‘the Wall Street Banksters,’ who devastated the economy and with it the lives of millions of people.”
More than one-third of U.S. post offices are located in ZIP codes where no bank is located; another 20 percent are located in areas with only one bank. Providing low-cost services would help tens of millions struggling to survive financially avoid the trap of “pay-day lenders” who charge an effective annual interest rate of 391 percent, according to the inspector general paper. A typical “pay-day” loan of $395 costs the borrower an average of $520 in interest and fees on top of the principal.
Postal banking already a success
Countries as varied as Germany, Japan and New Zealand have successful postal banking services. The Japan Post Bank is the country’s largest holder of personal savings.
For more than a century, what is now known as the Japan Post Bank accepted deposits but did not lend, instead handing deposits to the Ministry of Finance, which used the funds to finance public-works projects. In 2001, the bank began direct lending instead of sending its deposits to the ministry. But this was accompanied by a privatization scheme. That scheme was halted in 2009, and has not been re-instituted despite the return of the conservative Liberal Democratic Party that originally pushed for the privatization. The bank would be a huge prize for private bankers, as it reported net income of ¥355 billion (US$3.0 billion) for its fiscal year 2014.
Germany’s Postbank is also highly profitable, reporting fiscal-year 2014 earnings of €431 million (US$473 million). The bank specializes in providing “simple, low-cost products for day-to-day needs,” and says it has 14 million clients, including more than 300,000 small and mid-sized companies.
New Zealand’s Kiwibank was founded in 2002. Big Australian banks had controlled 80 percent of New Zealand’s retail banking, and those multi-nationals were quick to close less profitable branches. To provide financial services to underserved communities, and keep capital at home for local investment, the New Zealand government established Kiwibank as a subsidiary of New Zealand Post, putting its branches in post offices. The results were swift, reports public-banking advocate Ellen Brown:
“Suddenly, New Zealanders had a choice in banking. In an early ‘move your money’ campaign, they voted with their feet. In an island nation of only 4 million people, in its first five years Kiwibank attracted 500,000 customers away from the big banks. It consistently earns the nation’s highest customer satisfaction ratings, forcing the Australia-owned banks to improve their service in order to compete.”
Kiwibank reported net income of NZ$100 million (US$76 million) for its fiscal year 2014. The bank reports it now has 860,000 customers.
The Republican assault on the U.S. post office
Although offering basic banking services would boost revenue for the U.S. Postal Service, it would currently be on stable financial foundations were it not for a Republican plan signed into law in 2006 requiring the Postal Service to pre-fund its pension costs for the next 75 years in only 10 years. No private business could or would do such a thing. The results are what would be expected: In the last four years before the pre-funding requirement (2003 to 2006), the Postal Service had a composite profit of US$9.3 billion; it has had massive losses ever since.
It is true that the volume handled by the post office has declined in recent years with the rise of the Internet. Setting up a postal banking system would offset the resulting fall in revenue. But rather than expand services to provide a sounder foundation, corporate ideology, promoted by those with a vested interest, is instead causing a push for the dismantling of the Postal Service and the privatization of its delivery services.
For example, a study by a “think tank” calling itself the National Academy of Public Administration prepared a report that called for a near total privatization of the post office. Two of the four authors had direct interests in privatization and a third has worked for a series of Right-wing extremist “think tanks” that consistently demand the privatization of everything in the public domain. The major funder of the study was Pitney Bowes Inc., which stands to directly benefit; it already earns billions of dollars from its mail-processing facilities and would be in a good position to grab much of the Postal Service’s business.
FedEx Corp. and United Parcel Service Inc., the two largest U.S. private delivery services, also stand to benefit from the destruction of the Postal Service. Both companies employ large fleets of lobbyists and are heavy donors to members of Congress.
Heavy pressure to close post offices and mail-sorting facilities is part of the privatization drive. But the limited research done on closings indicates that closings actually cost more than the savings generated. A study conducted by University of Wisconsin students examined what would happen if one of the seven post offices in a rural Wisconsin county were closed. The study found that the Postal Service would save $560,000 over seven years by closing a post office but the added costs from residents forced to drive further to access a post office would be $1.3 million over seven years. Thus, the overall cost to the community would be more than $700,000.
Another example of the costs to small communities can be found in the small community of Prairie City, South Dakota. Closing the post office there saved $19,000. The nearest hospital and pharmacy is 40 miles away, and when medicine was needed in Prairie City, the pharmacist 40 miles away would hand it to the mail carrier for same-day delivery. Now medicine deliveries take two to three days, an article in Naked Capitalism reports. What is the price of a life that might be compromised because of this delay?
Vowing a new militancy
A slate of local officials pledged to mount much more militant tactics swept into the leadership of the American Postal Workers Union last fall, winning seven of nine contested seats. Union President Dimondstein, elected with this group, said he seeks a “cultural shift” to an organizing model of unionism from a service model. In an interview with Socialist Worker, he said:
“People are disengaged not because they don’t care but because they see their union dues as a premium to an insurance company or as lawyer’s fees. We need to retool, to retrain people to see the union as themselves. We need to encourage workers to take their grievances directly to the boss, in groups, not just file paperwork and wait for union officials to service them. We need more of a movement, a sense of connection to the larger community which will give postal workers hope and confidence.”
That postal workers are in a position to negotiate is because they defied their union leadership in 1970 to engage in an illegal strike that spread across the country to more than 30 major cities — an example praised by the new American Postal Workers Union leadership. The union, one of four that represent postal workers, began talks on a new contract in February, vowing to end a disastrous three-tiered contact negotiated by previous union leaders. That contract calls for reduced pay for new hires and allows people working only 30 hours a week to be considered “full time.”
At the opening session of the contract talks, the American Postal Workers Union leadership was joined by the president of the National Association of Letter Carriers, Fredic Rolando, in a signal that the postal workers won’t be divided by job description. (The APWU represents clerks, drivers and maintenance workers.) The APWU said it would not only negotiate better pay, but “will be putting forth proposals for maintaining overnight delivery standards, halting plant closings, expanding hours of service and staffing for the customers, and providing financial services such as postal banking.”
To back their new militancy, postal unions have formed an alliance with several dozen labor and advocacy groups called A Grand Alliance to Save Our Public Postal Service. The alliance vows that “The public good must not be sacrificed for the sake of private investment and profit.”
No one group or organization can turn the tide against neoliberalism, but an organized fightback must begin somewhere by someone. If there is going to be serious follow-through on all these initiatives, a dramatic departure from the methodologies of U.S. unions of recent decades would be a welcome start — although this can’t be effective without broad popular support and activity capable of solidarity work and overturning anti-union laws such as Taft-Hartley.
Reforms, however welcome, can only achieve so much and are always temporary. Struggles for reform will be fought again and again, becoming more difficult to sustain, as long as economic systems stress private profit rather than public good.
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.
The 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.”
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.
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.
Imagine a world in which which labor safeguards, safety rules and environmental regulations will be struck down because a multi-national corporation’s profits might be affected. A world in which measures to reign in financial speculation are illegal. A world in which the task of governments, codified in law, is to maximize corporate profits.
Imagine a world in which corporations can 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.
Unfortunately, the above is not dystopian science fiction; it is the reality of the top-secret Trans-Pacific Partnership. If you like NAFTA, you will love the TPP.
Haven’t heard of the Trans-Pacific Partnership? There is good reason. It is a proposed trade agreement being secretly negotiated that would not only codify the one-sided rules heavily favoring corporate interests exemplified in the North American Free Trade Agreement, it would go beyond them. And many of the harshest rules proposed to be included in the TPP are being pushed by the Obama administration.
Ottawa from the McKenzie Bridge (photo by Siqbal)
Nine countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the United States — have negotiated for four years. No text has ever been released to the public, and even the U.S. Congress has been left in the dark as to the TPP’s contents. That we know anything at all about it is due to leaks. A portion of the text, the chapter covering investment rules, is posted at http://tinyurl.com/tppinvestment.
What the TPP represents is multi-national corporations going beyond lobbying for deregulation, bending rules and decisively influencing government policy to having their interests in profit maximization regardless of impact written into international law and controlling the tribunals that will adjudicate corporation/government disputes. “Free trade” agreements have become a favored route toward this corporate goal. In the nearly two decades that NAFTA has been in force among Canada, Mexico and the United States, there has been a steady procession of corporations filing complaints alleging that regulations “harm” them.
Thus we have had the spectacle of a U.S. corporate parcel-delivery service suing Canada in an attempt to have the Canadian postal system dismantled and chemical companies suing because a chemical they produce has been banned because it is poisoning water supplies. 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 act that might prevent the corporation from earning the maximum possible profit.
The usual result is either the complaining corporation wins its case or the defendant government settles on terms advantageous to the corporation to avoid a worse result. Multi-national corporations don’t win every time — for instance, Canada was graciously allowed to retain its postal service. The TPP is designed to tilt the scales still more heavily in favor of “investors” — not only via rules granting more “rights” to multi-national corporations, but further expanding the definition of “investor.” There are extensive rules governing the “right” to an near guarantee of profits, but no rules concerning labor, environment, public health or safety.
NAFTA, as draconian as it is, is a starting point. The TPP’s extraordinarily one-sided rules, which go beyond NAFTA in several ways, are intended to be a new floor in the ongoing effort to lock in the domination of industrialists and financiers through the multi-national corporations that they control. The TPP is intended to be “scalable” — that is, other countries can join but are forbidden to oppose any measure already agreed upon. Just two months ago, Canada and Mexico accepted invitations to join, so it is quite conceivable that TPP may supplant NAFTA.
The U.S. watchdog group Public Citizen issued an analysis of the leaked TPP investor chapter earlier this summer. Sounding the alarm, Public Citizen said:
“Over $350 million has been paid to investors by governments under the investor-state provisions in NAFTA alone over toxic waste dump permits, logging rules, bans of toxic substances and more. Currently, there are over $13 billion in pending corporate “investor-state” trade pact attacks on domestic environmental, public health and transportation policy. And, mere threats of such cases have repeatedly resulted in countries dropping important public interest initiatives, exposing their populations to harm that could have been avoided. Yet the leaked text shows that while TPP countries have agreed to impose binding obligations on themselves to provide foreign investors an array of extraordinary new privileges, the TPP countries have not agreed to health, labor or environmental obligations to be required of investors.”
The Public Citizen report notes that the use of international tribunals to overturn regulations has increased dramatically in the past decade:
“Over $719 million has been paid out under U.S. Free Trade Agreements and Bilateral Investment Treaties alone — 70 percent which are from challenges to natural resource and environmental policies, not traditional expropriations. Tobacco firms are using the regime to challenge tobacco control policies, including a case by Phillip Morris against Australia. Absent substantial changes to the leaked text, TPP would greatly increase the number of investor-state attacks on public interest policies and would expose governments to massive new financial liabilities.”
The use of international tribunals is an aspect of bi-lateral and multi-lateral trade agreements often overlooked. The TPP would require the use of the International Centre for Settlement of Investor Disputes (ICSID) — an arbitration board that is an arm of, and controlled by, the World Bank. Cases that go before one of the Centre’s tribunals are decided by a panel of three judges that are selected from a roster. The judges are appointed by the national governments that have signed on to ICSID, which are most of the world’s countries.
Eight of the judges have been appointed by the United States. Each is a lawyer whose career has been spent in the service of large corporations. Six are currently partners in some of the world’s most formidable corporate law firms, one is an academic who formerly was a corporate lawyer and one is a lobbyist for a business group that seeks to codify pro-corporate trade rules under law. Five of the eight U.S.-named lawyers have been counsel to various Republican Party administrations and several of the eight specialize in representing corporations before international arbitration boards.
These are the U.S. panelists who are among those judging the merits of corporate claims against government regulations:
Fred Fielding: An attorney who bounces back and forth between Republican administrations and corporate law firms; among his clients has been the mercenary military contractor Blackwater.
William Park: Currently a law school professor but has practiced with three corporate law firms and has been an arbitrator on many business-arbitration boards.
Daniel Price: A corporate lawyer who represents companies in international arbitration and a former economic adviser to George W. Bush.
John M. Townsend: A corporate lawyer who represents pharmaceutical companies and specializes in representing companies in arbitrations against governments; he is also a trustee of a business lobbying group.
J. Caleb Boggs III: A corporate lawyer who specializes in representing financial institutions and other clients before regulators and helped write a law deregulating banks while a Senate aide.
William A. Burck: A corporate lawyer who specializes in representing companies and corporate officers in disputes with U.S. and other governments; he is a former legal adviser to George W. Bush.
Ronald A. Cass: The chair of a lobbying group that seeks to tilt international trade law further in favor of business; he was a trade representative for two Republican administrations.
Emmet Flood: A corporate lawyer who represents companies in disputes against government regulations and a former counsel to George W. Bush; among his past clients are the Koch brothers.
The rules that panelists will adjudicate would supersede national laws. Article 12.7 of the TPP, for instance, provides a long list of prohibitions against government actions; under it, laws imposing capital controls (even to ameliorate a crisis), rules governing domestic content of products or any protections of any domestic industry would be illegal. It then provides a generic exception allowing environmental or other measures “that are not inconsistent with the Agreement; necessary to protect human, animal, or plant life or health; or related to the conservation of living or non-living exhaustible natural resources.”
That exception, however, is meaningless. It specifically requires that excepted rules must be “not inconsistent with the Agreement” — and that is the towering thorn sticking out of the minuscule rose. 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 arbitration bodies concerning disputes under NAFTA and other trade agreements. Those decisions skew heavily toward corporate complainants.
Venezuela recently became the third South American country to withdraw from ICSID; in doing so, the country’s foreign ministry said ICSID “has ruled 232 times in favor of transnational interests out of 234 lawsuits received throughout its history.” A 2007 report issued by the Institute for Policy Studies and Food and Water Watch, “Challenging Corporate Investor Rule,” said multi-national corporations have won 70 percent of the cases (it did not specify how many of the remainder were a loss for the corporation nor how many were not decided or withdrawn). These tribunals are conducted in secret; only two ICSID cases have been conducted with public attendance in its history.
The World Bank is one of the principal bodies imposing austerity on countries around the world; it routinely conditions loans to governments of developing countries on the swift privatization of state-owned enterprises and public utilities, typically conducted at fire-sale prices as salivating corporate executives are aware of the hammer being held over the selling government. When the buying corporation decides it has not made the profits it expected, it can file a claim heard by ICSID, which is controlled by the very same World Bank.
In one notorious case, the World Bank forced the privatization of the water system in the Bolivian city of Cochabamba. Bechtel, the company that was handed the water system as the sole bidder in a secret process, charged a sum equal to one-quarter of city residents’ average household income and imposed a contract provision banning the collection of rainwater. After massive local protests backed by a global campaign forced it to leave the city, Bechtel sued Bolivia for US$50 million in damages and lost profits although its investment is believed to have been less than $1 million and Bechtel’s revenues are six times the size of Bolivia’s gross domestic product.
Bechtel settled without receiving a payment only because of massive international pressure and because Bolivians continued to resist in large numbers despite being repeatedly fired upon. That pressure was necessary as, according to Earthjustice, World Bank officials refused to disclose when or where the first hearing in the case would take place.
That is a very rare ending. Although developing countries are most often the targets of ICSID actions, regulations anywhere can be overturned. For instance, Canada was sued under the provisions of NAFTA by a U.S.-based chemical company after it banned the use of a gasoline additive already banned in the U.S. because it is a known toxic agent. Thanks to ICSID, Canada had to reverse its ban, pay millions of dollars to cover the company’s “lost profits” and issue an apology to the chemical company.
Among the features of NAFTA to be replicated in the TPP are that:
Governments pay attorney costs, win or lose, in addition to paying judgments.
Taxation and regulation constitute “indirect expropriation” mandating compensation (a reduction in the value of an asset is sufficient to establish expropriation rather than a physical taking of property as required under U.S. law).
Older decisions become precedents for further expansions of investor “rights” and will be read as the “evolving standard of investor rights” required under the TPP.
No mention of labor rights, nor any standards for environmental, health or safety that must be met.
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 bi-lateral investment treaty, 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 potentially illegal.
Among the features of the TPP that go beyond NAFTA are:
An expansion of who or what constitutes an “investor” — extending those eligible to file a claim to anyone who applies for a permit or license, or who “channels” resources or capital to set up a business, without placing any limits on what qualifies for such a status.
No language to block frivolous claims.
The U.S. is seeking to include government bonds as a covered investment; if that stands, speculators would have the right to recover the full value of government bonds bought at discounted prices.
Requiring new intellectual property laws that would criminalize many acts not currently classified as such.
Significantly tighten corporate control of the Internet and force service providers to hand over personal data.
A separately leaked section of the TPP, covering pharmaceutical products, contains this interesting item on its cover page: “Declassify on: Four years from entry into force of the TPP agreement or, if no agreement enters into force, four years from the close of the negotiations.” What is being hidden? New monopoly rights for pharmaceutical companies and the ability to overturn the policies of countries such as Australia and New Zealand that force much lower prices on drugs, policies that U.S.-based pharmaceutical companies wish to overturn. In addition, Citizens Trade Campaign reports:
“This U.S. intellectual property proposal, which rolls back initial reforms made in a trade pact that the Bush administration signed with Peru only four years ago, would lengthen pharmaceutical monopolies, eliminate safeguards against patent abuse, grant additional exclusive controls over clinical trial data and favor the giant pharmaceutical companies’ monopoly interests at every stage.”
Médecins Sans Frontières/Doctors Without Borders similarly reports that:
“The Obama administration is walking away from previous efforts to ensure that developing countries can access affordable medicines, setting a dangerous new standard that will likely be replicated in future trade agreements with developing nations. The administration is touting a so-called ‘access window’ as a mechanism to boost access to medicines. In fact, the administration is confusing access with affordability. The ‘access window’ is all about getting brand-name drugs to market faster, and giving their producers longer monopoly rights that prevent price-lowering competition and keeping medicines out of the hands of the millions of people who need them.”
The White House claims that “The Obama Administration has been working in partnership with Congress and consulting closely with stakeholders around the country to ensure TPP addresses the issues that American businesses and workers are facing today, and may confront in the future.” That clearly is not true, as senators and representatives are demanding disclosure. Nor does any of the agreement’s text appear on the Web page dedicated to the TPP.
Executives and lobbyists from some of the largest corporations on the planet — commanding revenues much larger than the gross domestic products of the smaller TPP countries — are meeting in secret with government officials to give themselves yet more power and control.
Corporate-written rules for self-benefit are intimately connected with financiers manipulating markets and benefiting from the austerity they insist governments impose. Industrialists extract the surplus value from their from their workers that becomes profit and financiers provide the whip that intensifies the process and create the speculative instruments that profits are poured into. We can have corporate dictatorship, or democracy. But not both.
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Systemic Disorder 