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How The Trans-Pacific Partnership Gives Corporations Special Legal Rights

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How The Trans-Pacific Partnership Gives Corporations Special Legal Rights


In promoting a proposed trade pact covering 12 Pacific Rim nations, President Obama has cast the initiative as an instrument of equity. The Trans-Pacific Partnership would, in his words, “level the playing field” and “give our workers a fair shot.” But critics argue that within the hundreds of pages of esoteric provisions, the deal — like similar ones before it — includes a glaring double standard: It provides legal rights to corporations and investors that it does not extend to unions, public interest groups, and individuals.

Recently leaked drafts of the agreement show the pact includes the kind of Investor-State Dispute Settlement (ISDS) provisions written into most major trade deals passed since the North American Free Trade Agreement. Those provisions allow companies to use secretive international tribunals to sue sovereign governments for damages when those governments pass public-interest policies that threaten to cut into a corporation’s profits or seize a company’s property.

But also like past trade deals, the TPP is not expected to allow unions and public-interest groups to bring their own suits in the same tribunals to compel governments to enforce labor, environmental, and human rights laws.

The discrepancy is a deliberate effort to make sure trade policy includes a “tilt toward giant corporations,” Sen. Elizabeth Warren (D-MA) said.

“If a Vietnamese company with U.S. operations wanted to challenge an increase in the U.S. minimum wage, it could use ISDS,” Warren wrote in a Washington Post op-ed in February. “But if an American labor union believed Vietnam was allowing Vietnamese companies to pay slave wages in violation of trade commitments, the union would have to make its case in the Vietnamese courts.”

The Obama administration argues that concerns from TPP opponents are exaggerated because to date the federal government has “never once lost an ISDS case.”

But those opponents counter by noting that those cases are on the rise across the globe. As the United Nations reported recently, ISDS cases “have proliferated in the past 10-15 years, with the overall number of known treaty-based arbitrations reaching 514.”

While trade deals include rhetoric saying the international tribunal process is not designed to undermine public interest policies, some of the cases brought by corporations have directly targeted those laws.

Philip Morris, for example, has filed suits against Australia and Uruguay, which require health warnings on tobacco products. In the ISDS process, Philip Morris is arguing that the requirements expropriate its property, deny the company fair treatment and unduly cut into its profits.

Similarly, a Swedish energy firm has used ISDS to target Germany’s restrictions on coal-fired and nuclear power plants, and Eli Lilly and Company is using the process to try to fight Canada’s efforts to limit drug patents and reduce the price of medicine. Most recently, Canadian Finance Minister Joe Oliver said bank regulations passed in the wake of the 2008 financial crisis could be a violation of trade provisions under NAFTA, raising the prospect of banks using the tribunal process to try to get the federal government to eliminate those regulations.

“Corporations under ISDS can bring cases without their national government’s permission, while unions and environmental groups in order to enforce the labor rights and environmental rights in these agreement have to get their government to bring the case,” said Damon Silvers, the AFL-CIO’s associate general counsel.

Government action has been rare. In 2014, the Government Accountability Office criticized “limited monitoring and enforcement” of trade deals’ protections for labor rights.

Opponents of the TPP say the new deal would do little to increase enforcement, and much to give companies special rights.

Sure, corporations may still be considered people under U.S. domestic law — but under American trade policy, they get far more rights than almost everyone else.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising, and Back to Our Future. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

Photo: GlobalTradeWatch via Flickr

David Sirota

David Sirota is International Business Times' senior editor for investigations. He is also a nationally syndicated newspaper columnist and a bestselling author. He lives in Denver, Colorado and covers the intersection of money, politics and finance. He appears periodically on national television shows and is a "real guy represented by the character on ABC's The Goldbergs," according to Twitter.

In 2014, he was the winner of the Society of American Business Editors and Writers' investigative journalism award, and the winner of the Izzy Award for Journalism from Ithaca College's Park Center for Independent Media.

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  1. Dominick Vila June 26, 2015

    When we consider trade agreements, such as the TPP and the TTIP, we must keep in mind that the focus of these agreements is not to create jobs in the USA, but to help U.S. corporations and enhance, or at least preserve, our privileged position in the global economy. Judging by the percentage of revenues of most U.S. corporations, and how critical foreign investment and sales are to their profit margins, corporate support to trade agreements like these is not surprising.
    The idea is that stronger U.S. corporations and a larger role in the global economy means prosperity for the USA, which may ultimately result in greater investment at home, and the subsequent job creation. In a nutshell, trickle down economics with a different name.
    When it comes to job creation, the key involves public and private sectors investment at home, investment in infrastructure and modernization, investment in education, low business taxes to encourage investment, rewarding companies that invest in the USA, and raising the tax rates of those that invest abroad and hide their revenues in foreign tax shelters to avoid paying Uncle Sam.

    1. The lucky one June 26, 2015

      “we must keep in mind that the focus of these agreements is not to create jobs in the USA, but to help U.S. corporations and enhance, or at least preserve, our privileged position in the global economy.” That would be accurate if you substituted “help U.S. corporations and enhance, or at least preserve, THEIR privileged position” for “our” privileged position. We the people will SEE NO BENEFIT and your so-called trickle down economics has never worked on any level.
      I do give you credit though for your astute observation that Obama’s economic policies bear a striking resemblance to Reagan’s “Trickle down” con.

      1. greghilbert June 26, 2015

        You’re giving commenter Dominick credit that is not due. He did not mention that Obama is the champion of “NAFTA on steroids”. He chose his words carefully, so as to present the case that global corporate bloodsuckers make for TPP. He did not condemn TPP for the fact that it will send still more USA jobs to Mexico, and to Malaysia and Vietnam, nor for the fact it will subject USA taxpayers to awards granted by a corporate tribunal to global corporations claiming USA laws reduced their profits.
        Dominick regularly shills for Obama and corporatist Dems. It was you who named Obama as pursuing economic policies like those of Reagan’s trickle down, not Dominick. Thank you for doing so.

        1. The lucky one June 27, 2015

          Yes Dominick is a staunch my party right or wrong democrat. He probably started back when there was actually a significant difference between the parties. Now there are very few like Sanders and Warren that differ from the republican whorehouse.
          I drew attention to his mention of trickle down hoping that he might start to understand that it is the same con used by the Reaganites. I won’t hold my breath.

    2. davecjohnson June 26, 2015

      Note that these corporations also dodge US taxes, a dodge that is helped along by the “trade” agreement. The ONLY US prosperity that results is for a few wealthy executives and investors.

  2. Allan Richardson June 28, 2015

    Would it not be possible for a public interest group or labor union to form a shell corporation (or better yet, a GROUP of them to form one) which would then be able to file, or defend, an ISDS claim against another country?


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