The Trans-Pacific Partnership and the Democratic Party

Since Obama conned enough Democrats in the Senate to work with the capitalists for fast track authority on the Trans-Pacific Partnership, the debate over the TPP within the Democratic Party has been interesting because other than Obama and senators who are not particularly influential to the public debate like Ron Wyden, there has been almost no support for it. Of course there are very good reasons why most Democrats oppose fast track. Eric Schneiderman, attorney general of New York, discusses one of them in detail, which is the TPP’s potential to undermine state and national laws through the Investor State Dispute Settlement provision.

One provision of TPP would create an entirely separate system of justice: special tribunals to hear and decide claims by foreign investors that their corporate interests are being harmed by a nation that is part of the agreement. This Investor-State Dispute Settlement provision would allow large multinational corporations to sue a signatory country for actions taken by its federal, state or local elected or appointed officials that the foreign corporation claims hurt its bottom line.

This should give pause to all members of Congress, who will soon be asked to vote on fast-track negotiating authority to close the agreement. But it is particularly worrisome to those of us in states, such as New York, with robust laws that protect the public welfare — laws that could be undermined by the TPP and its dispute settlement provision.

To put this in real terms, consider a foreign corporation, located in a country that has signed on to TPP, and which has an investment interest in the Indian Point nuclear power facility in New York’s Westchester County. Under TPP, that corporate investor could seek damages from the United States, perhaps hundreds of millions of dollars or more, for actions by the Nuclear Regulatory Commission, the New York State Department of Environmental Conservation, the Westchester Country Board of Legislators or even the local Village Board that lead to a delay in the relicensing or an increase in the operating costs of the facility.

The very threat of having to face such a suit in the uncharted waters of an international tribunal could have a chilling effect on government policymakers and regulators.

This simply cannot stand. Given how aggressive corporations are increasingly becoming in going after nations who restrict their profits, it’s very much something to worry about. Elizabeth Warren:

Those justifications don’t make sense anymore, if they ever did. Countries in the TPP are hardly emerging economies with weak legal systems. Australia and Japan have well-developed, well-respected legal systems, and multinational corporations navigate those systems every day, but ISDS would preempt their courts too. And to the extent there are countries that are riskier politically, market competition can solve the problem. Countries that respect property rights and the rule of law — such as the United States — should be more competitive, and if a company wants to invest in a country with a weak legal system, then it should buy political-risk insurance.

The use of ISDS is on the rise around the globe. From 1959 to 2002, there were fewer than 100 ISDS claims worldwide. But in 2012 alone, there were 58 cases. Recent cases include a French company that sued Egypt because Egypt raised its minimum wage, a Swedish company that sued Germany because Germany decided to phase out nuclear power after Japan’s Fukushima disaster, and a Dutch company that sued the Czech Republic because the Czechs didn’t bail out a bank that the company partially owned. U.S. corporations have also gotten in on the action: Philip Morris is trying to use ISDS to stop Uruguay from implementing new tobacco regulations intended to cut smoking rates.

ISDS advocates point out that, so far, this process hasn’t harmed the United States. And our negotiators, who refuse to share the text of the TPP publicly, assure us that it will include a bigger, better version of ISDS that will protect our ability to regulate in the public interest. But with the number of ISDS cases exploding and more and more multinational corporations headquartered abroad, it is only a matter of time before such a challenge does serious damage here. Replacing the U.S. legal system with a complex and unnecessary alternative — on the assumption that nothing could possibly go wrong — seems like a really bad idea

If you like corporate control over the world, you’ll LOVE the Trans-Pacific Partnership. The pushback among the Democratic base has some really interesting facets to it because of the question of what Hillary Clinton is going to do here. There is no realistic wedge issue in the primary because there is no meaningful primary regardless of how much Martin O’Malley hopes this can be a wedge issue. But there really could be a real battle within the party over the TPP. Even people such as Matthew Yglesias are noting that all the arguments the administration is making for the agreement don’t really make sense (as for the unions’ opposition which he also says doesn’t make sense, it’s certainly true that there’s nothing keeping the remnant industrial jobs in the U.S. at this point anyway, but unions have to try and stop the bleeding somehow. What else are they going to do? Plus the ISDS provisions could theoretically be used against labor agreements nationally and internationally). So one question worth asking is whether it makes political sense for Hillary Clinton to come out against the deal instead of trying not to provide any meaningful answers about her positions? Certainly doing so would enamor her to the base and really put a stake in any potential primary difficulties. On the other hand, she almost certainly supports the deal and doesn’t want to make Wall Street mad. So I think she’ll probably keep doing what she’s doing. But there is a real risk here because leading senators with national consistencies like Warren and Sanders are going to keep the attack going.

So just from a political perspective this is going to be interesting. As for Obama, he is now engaging in a full attack on his own party over the TPP. The White House blog has been nothing but hatchet jobs in favor of the TPP for a long time, but who really reads that anyway. Obama is now calling up favored reporters to attack Elizabeth Warren and other leading Democrats who oppose the bill. To no small extent, he is wrapping a major part of his legacy up in this bill and he is simply out of touch with working class Americans and the people who elected him president. Obama hasn’t done anything in this agreement to protect everyday Americans. And he deserves the criticism he is getting.

I borrowed the image above from the 350.org petition against the TPP which you can sign here.