From Legal Scholars to Labor Unions to Environmentalists, the TTP Trade Treaty Is Under Attack
May 10, 2015
Judith Resnik, Cruz Reynoso, Honorable H. Lee Sarokin, Joseph E. Stiglitz and Laurence H. Tribe / Reader Supported News & Edward-Isaac Dovere / Politico & Ralph Scharnau / Double Take, The Clinton Herald
"We write out of grave concern about a document we have not been able to see." Although it has not been made available publicly, we understand that the TPP trade agreement includes provisions that allow foreign investors -- and only foreign investors -- to avoid US courts and appeal to a private tribunal if they believe government laws threaten their profits.
Five Leading Legal Scholars on TPP
Write 'Out of Grave Concern'
Judith Resnik, Cruz Reynoso, Honorable H. Lee Sarokin, Joseph E. Stiglitz and Laurence H. Tribe / Reader Supported News
(April 30, 2015)
Dear Majority Leader McConnell, Minority Leader Reid, Speaker Boehner, and Minority Leader Pelosi:
We write out of grave concern about a document we have not been able to see. Although it has not been made available publicly, we understand that the Trans-Pacific Partnership (TPP) trade agreement currently being negotiated includes Investor-State Dispute Settlement (ISDS) provisions.
ISDS allows foreign investors -- and only foreign investors -- to avoid the courts and instead to argue to a special, private tribunal that they believe certain government actions diminish the value of their investments.
Courts are central institutions in the rule of law. Americans have much to be proud of in the evolution of our court system, which has evolved over the centuries and now provides equal access for all persons.
Courts enable the public to observe the processes of development of law and to watch impartial and accountable decision-makers render judgments.
We write because of our concern that what we know about ISDS does not match what courts can provide. Those advocating using this alternative in lieu of our court system bear the burden of demonstrating why such an exit is necessary, and how the alternate system will safeguard the ideals enshrined in our courts. Thus far, the proponents of ISDS have failed to meet that burden.
Therefore, before any ISDS provisions are included in the TPP or any future agreements, including the Transatlantic Trade and Investment Partnership (TTIP), their content should be disclosed and their purposes vetted in public so that debate can be had about whether and if such provisions should be part of proposed treaties.
Below, we detail the ways in which ISDS departs from the justice opportunities that US courts provide.
Our legal system rests on the conviction that every individual, regardless of wealth or power, has an equal right to bring a case to court. To protect and uphold the rule of law, our ideals of fairness and justice must apply in all situations and equally to everyone.
ISDS, in contrast, is a system built on differential access. ISDS provides a separate legal system available only to certain investors who are authorized to exit the American legal system.
Only foreign investors may bring claims under ISDS provisions. This option is not offered to nations, domestic investors, or civil society groups alleging violations of treaty obligations.
Under ISDS regimes, foreign investors alone are granted legal rights unavailable to others – freed from the rulings and procedures of domestic courts.
ISDS also risks undermining democratic norms because laws and regulations enacted by democratically-elected officials are put at risk in a process insulated from democratic input.
Equal application of the law is another critically important hallmark of our legal system -- one that is secured through the orderly development of law. Court decisions are subject to appeal, ensuring that conflicting lower court decisions are resolved by a higher authority.
Judges also must follow legal precedent. The goal is uniform application of the law regardless of which judge or court hears a case. This law development allows people, entities, and nations alike to order their behavior according to well-established legal principles.
In contrast, ISDS does not build in the development of the law. An ISDS arbitral panel's decision cannot be appealed to a court. The ISDS provisions of which we are aware provide only limited -- private -- review through a process called annulment that does not permit decisions to be set aside based even on a "manifest error of law." (1)
Moreover, ISDS arbitrators, like other arbitrators, do not make law because their decisions have no precedential value, and ISDS arbitrators in turn are not obliged to follow precedent in reaching their own decisions.
None of the hallmarks of our court system would be possible without a fair and independent judiciary. Federal judges take an oath to uphold the Constitution and are nominated and confirmed by our democratically elected representatives.
State judges likewise commit themselves to upholding the constitutional order. In contrast, ISDS arbitrators are not public servants but private arbitrators.
In many cases, there is a revolving door between serving on ISDS arbitration panels and representing corporations bringing ISDS claims. Yet, although such a situation would seem to call for more -- not less -- oversight and accountability, ISDS arbitrators' decisions are functionally unreviewable.
As noted at the outset, we have not been able to read the terms of the proposed ISDS chapters for the upcoming TPP and TTIP treaties. But what we know from the past gives us many grounds for concern.
During the past few years, foreign investors have used ISDS to challenge a broad range of policies aimed at protecting the environment, improving public health and safety, and regulating industry.
These challenges have been around the world, including under trade agreements to which the United States is a party. The publicly available information about these challenges raises serious questions as to whether the United States should be entering into more ISDS agreements with a broad array of nations.
Pharmaceutical giant Eli Lilly's pending ISDS proceedings against Canada provide an example of how corporations have used ISDS to challenge a nation's laws outside the courtroom.
After a Canadian court invalidated one of Lilly's patents, the company initiated ISDS proceedings against Canada under Chapter 11 of the North American Free Trade Agreement (NAFTA). (2)
In seeking $500 million (Canadian), Lilly has challenged as violative of NAFTA the standard the nation uses for granting patents.
Although ISDS tribunals are not empowered to order injunctive relief, the threat and expense of ISDS proceedings have forced nations to abandon important public policies. In the third ISDS proceeding brought under NAFTA, Ethyl Corporation brought an ISDS proceeding against Canada for $251 million for implementing a ban on a toxic gasoline additive.
The proceeding took place not in a court, but before an arbitration panel of the International Centre for the Settlement of Investment Disputes (ICSID).
After the arbitration panel rejected Canada's argument that Ethyl lacked standing to bring the challenge, Canada settled the suit for $13 million. Moreover, Canada lifted the ban on the toxic additive as part of the settlement. (3)
It is particularly noteworthy that the three NAFTA countries are each in the top 11 most-challenged countries under the ISDS system.
This high rate of challenge in our view has little to do with a rule of law deficit in the US and Canada. Instead, it represents investors taking advantage of easy access to a special legal right available only to them in an alternate legal system.
ISDS weakens the rule of law by removing the procedural protections of the legal system and using a system of adjudication with limited accountability and review. It is antithetical to the fair, public, and effective legal system that all Americans expect and deserve.
Proponents of ISDS have failed to explain why our legal system is inadequate to the task. For the reasons cited above, we urge you to uphold the best ideals of our legal system and ensure ISDS is excluded from upcoming trade agreements.
Judith Resnik, Arthur Liman Professor of Law, Yale Law School
Cruz Reynoso, Professor of Law Emeritus, University of California, Davis School of Law Former Associate Justice of the California Supreme Court
Honorable H. Lee Sarokin, Former United States Circuit Judge of the United States Court of Appeals for the Third Circuit
Joseph E. Stiglitz, University Professor, Columbia University
Laurence H. Tribe, Carl M. Loeb University Professor, Harvard Law School
cc: Ambassador Froman and Chairs & Ranking Members of Finance & Ways & Means Committees
Please note: Organizational affiliation for all signatories is included for identification purposes only; individuals represent only themselves, not the institutions where they are teaching or other organizations in which they are active.
(1) Impregilo SPA v Argentine Republic, ICSID Case No. ARB/07/17 (Annulment Proceeding), Jan. 24, 2014, at ¶ 132. A href="http://www.italaw.com/sites/default/files/case-documents/italaw3044.pdf">http://www.italaw.com/sites/default/files/case-documents/italaw3044.pdf ("[T]here is a difference between a failure to apply the proper law and the misapplication of the applicable law, and that the latter does not constitute grounds for annulment, even if it is a 'manifest error of law' ...") (emphasis added).
(2) Eli Lilly and Company v. The Government of Canada, Notice of Intent to Submit a Claim to Arbitration under NAFTA (Nov. 7, 2012). Available at: http://italaw.com/sites/default/files/case-documents/italaw1172.pdf.
(3) Michelle Sforza & Mark Vallianatos, "Ethyl Corporation vs. Government of Canada: Now Investors Can Use NAFTA to Challenge Environmental Safeguards," available at http://www.citizen.org/trade/article_redirect.cfm?ID=6221.
Extreme Secrecy Eroding Support for Obama's Trade Pact
Classified briefings and bill-readings in basement rooms are making members queasy.
Edward-Isaac Dovere / Politico
(May 4, 2015) -- If you want to hear the details of the Trans-Pacific Partnership trade deal the Obama administration is hoping to pass, you've got to be a member of Congress, and you've got to go to classified briefings and leave your staff and cellphone at the door.
If you're a member who wants to read the text, you've got to go to a room in the basement of the Capitol Visitor Center and be handed it one section at a time, watched over as you read, and forced to hand over any notes you make before leaving.
And no matter what, you can't discuss the details of what you've read.
"It's like being in kindergarten," said Rep. Rosa DeLauro (D-Conn.), who's become the leader of the opposition to President Barack Obama's trade agenda. "You give back the toys at the end."
For those out to sink Obama's free trade push, highlighting the lack of public information is becoming central to their opposition strategy: The White House isn't even telling Congress what it's asking for, they say, or what it's already promised foreign governments.
The White House has been coordinating an administration-wide lobbying effort that's included phone calls and briefings from Secretary of State John Kerry, Labor Secretary Tom Perez, Treasury Secretary Jack Lew, Agriculture Secretary Tom Vilsack, Commerce Secretary Penny Pritzker and others.
Energy Secretary Ernest Moniz has been working members of the House Energy and Commerce Committee. Housing and Urban Development Secretary Julian Castro has been talking to members of his home state Texas delegation.
Officials from the White House and the United States trade representative's office say they've gone farther than ever before to provide Congress the information it needs and that the transparency complaints are just the latest excuse for people who were never going to vote for a new trade deal anyway.
"We've worked closely with congressional leaders on both sides of the aisle to balance unprecedented access to classified documents with the appropriate level of discretion that's needed to ensure Americans get the best deal possible in an ongoing, high-stakes international negotiation," said USTR spokesman Matt McAlvanah.
Obama's seeking a renewal of fast-track authority, which would empower him to negotiate trade deals that then go to Congress for up-or-down votes but not amendments. He says he needs that authority to complete the Trans-Pacific Partnership, a 12-country free trade agreement that he calls essential to stopping China from setting trade, labor and environmental standards in the Asia-Pacific region.
Administration aides say they can't make the details public because the negotiations are still going on with multiple countries at once; if for example, Vietnam knew what the American bottom line was with Japan, that might drive them to change their own terms.
Trade might not seem like a national security issue, they say, but it is (and foreign governments regularly try to hack their way in to American trade deliberations).
Moreover, many of the leaders of the opposition, administration aides argue, are people who aren't used to dealing with classified information and don't realize how standard this secrecy is.
And by the way, they note, neither congressional conference committees nor labor contract talks allow even this level of access to negotiations while in process.
But those arguments aren't making much headway among trade skeptics, who feel they are being treated with disrespect and condescension. And they increasingly are pinning the blame directly on United States Trade Representative Mike Froman, who's been headlining the classified briefings, in addition to smaller meetings with members.
"The access to information is totally at the whim of Ambassador Froman," said Rep. Lloyd Doggett (D-Texas), who's a hard no on fast track but says he'd like to see other ways of promoting international trade. "He likes to make available information that he thinks helps his case, and if it conflicts, then he doesn't make the information available," Doggett said.
Doggett, like other critics, pointed out that the cover sheets of the trade documents in that basement room are marked only "confidential document" and note they're able to be transmitted over unsecured email and fax -- but for some reason are still restricted to members of Congress.
"My chief of staff who has a top secret security clearance can learn more about ISIS or Yemen than about this trade agreement," Doggett said.
"He's incredibly condescending. It's like, 'You'd be all for this if only you hadn't gotten an F in economics,'" said Rep. Brad Sherman (D-Calif.), who said he's opposed to what he's seen because it lacks labor standards and measures to address currency manipulation.
"We know when we're being suckered," said Rep. Alan Grayson (D-Fla.), who said he believes that the USTR quotes percentages instead of absolute values on trade statistics that give an overly positive impression. "It's not only condescending, it's misleading."
Asked about those criticisms, Froman responded by praising his adversaries.
"I have great respect for the critics, many of whom have shown great leadership on progressive causes, and I look forward to a continued dialogue with members of Congress based on facts and substance," Froman told POLITICO.
Rep. Ron Kind (D-Wis.), who supports giving Obama fast-track authority, says the division among Democrats is between members who are looking for a reason to say no and those that are actually trying to work on the deal.
"They've been very engaging with Congress and to members who want to be in the room and engaging them on the text . . . so we can ask questions but, more importantly, so we can provide input," Kind said.
As for Froman, Kind said, "he's very cordial, he's very respectful and listening to other people's opinion. . . . I don't get a sense of condescension and arrogance."
Kind says he expects several more Democrats to announce their support for the president's efforts in the coming days, some of them because of what they've heard from Froman.
Doggett insisted that the outreach is costing the White House support.
"The more people hear Ambassador Froman but feel they get less than candid and accurate answers, I think it loses votes for them," Doggett said.
Administration officials point to other members who've publicly praised Froman for his responsiveness and his accessibility. Those include House Minority Leader Nancy Pelosi (D-Calif.), who at a late April news conference called Froman a "remarkable, remarkable trade rep" who's "just fabulous, and he's been just boundless in his willingness to spend time with members to go through this."
Pelosi herself remains undecided on the trade pact, though she says she's trying to find a path to yes. She's telling members what she's told them from the start: They're going to be able to influence the deal only if they actually engage with Froman and the White House.
In February, it was Pelosi who urged the administration to begin the briefings, warning that Democratic support was nowhere near what the White House would need for fast-track to pass the House.
Obama has started to get more personally engaged trying to shore up support for the deal. The president hosted a White House meeting Thursday with members of the New Democrat Coalition, who are generally inclined to support him on trade but still pressed him to make more information available.
"He emphasized that under the trade promotion bills, this is going to be the most transparent bill ever," said Kind, who attended.
Two days earlier, speaking at the news conference he held in the Rose Garden with Japanese Prime Minister Shinzo Abe, Obama dismissed "this whole notion that it's all secret."
"They're going to have 60 days before I even sign it to look at the text, and then a number of months after that before they have to take a final vote," Obama said forcefully.
"He's indignant when we say it's secret," said Rep. Keith Ellison (D-Minn.). "Maybe there's some definition of secrecy he knows that I don't know."
It's Time to Flush Away the TPP
Ralph Scharnau / Double Take, The Clinton Herald
(May 7, 2015) -- This opinion piece is not about the newest bathroom tissue!
Rather, TPP refers to the Trans-Pacific Partnership, a free-trade agreement among 12 countries: the U.S., Canada, Mexico, Australia, Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam.
The TPP sets rules governing more than 40 percent of the world's economy.
Negotiations on the new trade agreement have been going on in secret since 2005. Negotiations occur under the supervision of some 600 unelected and mostly corporate "trade advisers" while access to meetings and text drafts have been hidden from members of Congress, the press and the public. What has been learned about the pact has come through leaked texts, and now the real debate has begun.
The TPP has little to do with trade. Of 29 draft chapters, only five deal with traditional trade issues. The pact fails to deliver on the Obama administration's assurances of broad gains for consumers and the economy while protecting workers' rights and the environment. Much of the pact focuses instead on outsized "investor rights."
The TPP would grant foreign corporations extraordinary new powers to challenge the laws we rely on for a clean environment, essential services and healthy communities. Foreign corporations would be empowered to bypass domestic courts and directly "sue" the US government before an extrajudicial tribunal of private corporate lawyers sitting outside any domestic legal system and not accountable to any electorate, system of legal precedent or meaningful conflict-of-interest rules.
These tribunals would be authorized to order the U.S. government to hand over millions of our taxpayer dollars to corporations for laws that would reduce their profits.
In past free-trade agreements, tribunals have ordered more than $3.6 billion in compensation to foreign investors attacking our land-use rules; water, energy, and timber policies; health, safety, and environmental protections; financial-stability policies, and more.
Under TPP, large pharmaceutical firms would acquire new rights and powers to increase medicine prices and limit consumers' access to cheaper generic drugs. Any US food safety rules on pesticides, labeling or additives higher than international standards could be subject to challenge as "illegal trade barriers." And Buy American procurement provisions could be waived.
President Barack Obama wants fast-track authority to conclude negotiation of the TPP. Under fast track, Congress essentially gives up much of its constitutional duty to deliberate and debate terms of the agreement and, instead, pre-approves the pact. If Congress approves fast-track authority, the pact can only be voted up or down with minimal debate and no amendments.
Supporters of TPP include businesses and business lobbying groups and many Republicans in Congress. Opposition to TPP has come from a few congressional Republicans and a broad coalition of Democrats, unions, environmental and consumer protection groups, community and faith organizations and human rights and trade alliances.
The TPP primarily protects the assets and profits of multinational corporations and financial institutions. The previous fast-track trade agreements amount to wins for big corporations and Wall Street, along with their executives and major shareholders, with no corresponding gains for labor.
Over the past 20 years, the North American, Korean, and Chinese free trade agreements have resulted in large job losses, downward pressure on wages, and increased trade deficits. Yet, even as wages stagnate, worker productivity records impressive gains.
The TPP constitutes an international agreement that undermines domestic and international policies on food safety, medicine costs, financial regulations and the environment. It will increase income inequality, offshore American jobs, drive down wages, explode the deficit and hurt small businesses.
Congress should reject fast-track authority and reassert its exclusive constitutional authority "to regulate commerce with foreign nations."
Scharnau teaches US history at Northeast Iowa Community College, Peosta. His email address is LiberaLRalph@gmail.com.