Ellis Boal for Congress MI-01
TPP labels itself as a trade agreement among twelve Pacific Rim countries. The countries are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, Vietnam.
The finalized proposal was signed in February 2016, after seven years of secret negotiations. At this writing it awaits ratification to enter into force. It contains measures to lower tariff and non-tariff barriers to trade, and establish an "investor-state dispute settlement" mechanism.
The text of the agreement and the interpretive "annexes" can be downloaded here. Being it is of such length and complexity I have not tried to read it. I am quite sure the same is true for practically everyone -- whether critics or supporters. Non-experts like us have to rely on secondary sources.
In the US historically, most international agreements have been approved using "fast track" authorization, in which the House and Senate are required to vote it up or down without modification. Last year Congress agreed the TPP vote would be fast-tracked, but the actual vote hasn't come up yet. In September President Obama said he would like to "get it done" this year after the election.
The 12 signatories represent roughly 40% of global GDP, and one-third of world trade. The largest economy in the Pacific Rim not involved in the negotiations is China. China will have the option of joining TPP, as will other countries, but it is not expected to.
The Office of the US Trade Representative summarizes and advocates for the various TPP chapters here.
The controversial "investor-state dispute settlement" (ISDS) mechanism, in which an investor in a country other than its own who believes its property has been expropriated without compensation, or its right to transfer capital has been abridged, can force a monetary settlement though private arbitration. If the investor wins the suit, the objected regulation is not automatically set aside. Rather the country has to pay the investor money.
ISDS is similar to US "regulatory takings" law, in which certain regulatory restrictions or requirements that strip private property of some or all of its value, require compensation for the lost property. But ISDS extends the notion, by allowing the investor to recover not just for lost property, but also lost profits.
A typical example of a regulatory taking in the US would be a law or regulation which barred the construction of a resort hotel on coastal property, in order to create a buffer zone and thereby avoid the need for repetitive government aid after destructive storms and floods due to sea level rise.
Arbitration of investor-state disputes is increasingly common. In the 80s and 90s, there were only a few per year worldwide. Since 2003 there have been 30 to 45 each year.
TransCanada announced last January it would file a $15 billion arbitration claim under Nafta against the US for denial of a permit for the Keystone XL pipeline. The Keystone line would have run across the US from the Alberta to Port Arthur on the Texas Gulf Coast.
Nafta is a free-trade agreement among Canada, Mexico, and the US which went into effect in 1994. The suit claims denial of the permit was driven by politics, not concerns about rising greenhouse gas emissions in the oil sands or worries about pollution from spills. The suit is expected to take six years.
Similarly in 2012 Lone Pine Resources filed a Nafta claim against Canada, for the moratorium which Quebec imposed against shale gas exploration and production. Lone Pine seeks $118.9 million in compensation. Last January Canada filed a counter-memorial and evidence in support of its position. Resolution will be some time off.
TPP exempts antismoking measures from ISDS claims.
ISDS might be legitimate if a national government made promises to allow a foreign investor in, and then reneged on the promise. But after last year's Paris agreement on climate, as toothless as it is, it would be difficult for an investor today to claim it had a legitimate expectation that a country would maintain a low level of climate-change laws.
ISDS claims are expensive to defend, particularly for a small country with few resources. Just the threat of an ISDS claim could bring it to capitulate to a rich multinational.
I have been deeply involved in an ongoing statutory initiative to ban horizontal fracking and its waste in Michigan, and to reverse the state's 1939 policy requiring the DEQ to "foster" the gas-oil industry "favorably" and "maximize" gas-oil production. The initiative is now aiming to make the November 2018 ballot.
If voters approve the frack initiative, would it be subject to an ISDS claim by an investor from a TPP or Nafta country? I don't think so.
First, if there were a valid claim it would be against the United States, not the state of Michigan. The US has never lost an ISDS case. Officials in Washington have not contacted the frack campaign with warnings or recommendations based on ISDS that the initiative be withdrawn or re-worded. Second, the initiative would not ban all fracking. Vertical fracking of the type done in Michigan for decades could continue freely. Investors could plumb their resources that way, and that puts a big dent in any potential ISDS theory. Third, industry operators have followed the frack-ban campaign closely since it started up in 2012, and for years have made investment decisions discounting for the risk that voters might approve it. Fourth, the state of New York banned fracking in 2015 and despite fears, no operator has filed a Nafta claim.
One of the major arguments made against TPP is that it was negotiated in secret even while the giant multinationals had access to the negotiators' ears. That does give it a bad odor. But TPP provisions were unveiled last November, and critics have been free since then to examine and publicize it.
I am a union supporter, and typically contracts with employers are negotiated the same way, in secret particuarly in the days leading up to final agreement. Like TPP in Congress, union members are then given a chance to vote on it, up or down, without modification. If they reject, negotiators typically go back and try again. If TPP is rejected, negotiators would probably go back to the table, come up with a new deal, and try for another vote later. Or they might give up and go home.
Anyway the secrecy argument does not convince me.
A major argument usually put forward against TPP is that it would eliminate US tariffs but not immediately do the same in all other countries, and it would prohibit a country from using stimulus funds to create jobs exclusively within its borders.
This misses the point.
I have long been an internationalist. The solution for depression of wages and conditions due to relocation of jobs overseas is for the labor movement in those countries and around the world to organize and self-empower the overseas workers to bring wages and conditions up there. Cross-border solidarity is the reason many unions in the US, such as the UAW and Teamsters, have the word "international" as part of their formal names. Solidarity is the answer as well to most other world problems.
A tall order, I know.
TPP has been praised as a step forward for the progressive policy agenda on the global stage, because of its enforceable agreements against child labor and workplace discrimination, measures to punish illegal logging and trade in protected species, and protections against consumer fraud.
Even so, I oppose it, for several reasons: