TPP: It’s Not a Deal, It’s Not a Trade Deal, and It’s Not a Done Deal

By Lambert Strether of .

“These people, dressed as they are, come from all over the United States to make deals here in the Market Place of America …  LET’S MAKE A DEAL!”–Jay Stewart, Let’s Make a Deal

Press coverage of the climax of the Atlanta ministerial meeting on TPP was as  herd-like as  the Corbyn 5 minutes of hate in the UK. Here are just a few of the headlines; you can see how very much alike they are, in tone and content:

AP

AFP

New York Times

Financial Times (sigh)

BBC

International Business Times

Of course, nothing has been “signed,” and the deal has neither been “reached”, “sealed,” “struck,” or “agreed.” At best, what we have is a deal to try to make a deal; these headlines, and the mentality of the writers and editors, are all profoundly anti-democratic. As the BBC sheepishly :

Despite the success of the negotiations, the deal still has to be ratified by lawmakers in each country.

contradicts its own headline:

[T]he TPP must still be signed formally by the leaders of each country and ratified by their legislatures, where support for the deal is not universal. In the US, Mr Obama will face a tough fight to push it through Congress next year, especially as presidential candidates such as the Republican frontrunner Donald Trump have argued against it.

Nice spin on “formally.” And what are the lawmakers? Chopped liver? (For grins, here are the official texts that we do have: The from the trade ministers after the Atlanta meeting; ; and at the White House site. Needless to say, these should all be regarded as propaganda, just as much as the memes that the White House Internet operation has been assiduously pumping out since Monday morning.)

In this post, I want to first look at the exact status of the deal we do not yet have; that is, the text that will, at some point, be presented to lawmakers. Then I want to look at what the deal, or at least the dealings, are really about; and it’s not trade. NC readers already know this, of course; but it’s good to have more confirmation come out of the negotiation process. (In this post, I’m not going to look at the sausage-making[1] or who said what[2]; frankly, I’m not certain that’s the only method to examine — or, more importantly, disrupt — the TPP process, though it is necessary to be informed if only to refute or recontextualize in conversation.[3]) In conclusion, there’s hope: Deals like TPP have been defeated before.

TPP is Not (Yet) a Deal

As almost everybody knows, the text of the TPP has not been finalized. :

Once negotiators have finalized the text of this partnership, Congress and the American people will have months [remember that] to read every word before I sign it. I look forward to working with lawmakers from both parties as they consider this agreement.

Now, to be fair (really), presumably the Atlanta negotiators had the bracketed draft in front of them, and staffers were able to record additions and deletions in the course of the meetings. So, finalizing the text ought to be a relatively mechanical editorial process, which describes:

[N]egotiators will continue technical work to prepare a complete text for public release, including the legal review, translation, and drafting and verification of the text.

However, this is the administration where and jockeying ObamaCare through two houses and three branches of government is far less complex than negotiating and passing TPP between twelve sovereign states.  So, watch for squabbles about the text.

More centrally, there are side deals. Not everything in “TPP the deal” is in “TPP the text.” For example, :

With a wary eye on a weak yen and competition from Toyota and others, the US automobile industry and its supporters in Congress have been pushing for the TPP to include an enforceable ban on currency manipulation.

That is not likely to happen as a formal part of the TPP. But according to people close to the discussions finance ministers and central bank governors from the TPP countries have agreed to a parallel agreement that would commit them not to engage in competitive devaluations to benefit their own exporters.

Ah, a “parallel agreement,” part of “the deal,” but not in the text of the deal. How reassuring. Will this agreement be ready by the time Congress needs to give consideration to TPP legislation? And how many other such side deals will there be? . On currency manipulation:

“We are pleased to announce today that we are working to strengthen macroeconomic cooperation, including on exchange rate issues, in appropriate fora,” the macroeconomic policy authorities of the 12 Trans-Pacific Partnership nations said in a statement.

Oh. “Appropriate fora.” How reassuring.

And already we’re seeing how side deals lead to differing interpretations. :

“The lack of access to details in the text means governments can put a positive spin on the deal, but the devil is in the detail, and we won’t have the detail for at least another month. This secret and undemocratic process was slammed by a recent Senate Inquiry report aptly titled Blind Agreement,” said Dr Ranald.

“We note the assurances of Trade Minister Andrew Robb that Australia has not agreed to immediate extension of monopolies on costly life-saving biologic medicines beyond the current Australian standard of five years. … 

“However, we note these assurances are weakened by the fact that the US is claiming that 5 years is a minimum standard and there is a “voluntary” agreement using administrative means [that is, a side deal] for an additional three years of monopoly on biologics, referred to as ‘5 years+3 years’. Without the detail of the text it is difficult to know exactly what impact this will have,” said Dr Ranald.

Finally, it’s highly likely there are secret side deals, and not just because the TPP process so far has been marked by a total lack of transparency. Now, I know I shouldn’t ask a TPP proponent to prove the negative by saying “Show me there are no secret deals!” but the administration is certainly acting as if there are such deals. :

Yet, in recent months, the administration has declined to respond to for communications between Froman — a former Citigroup executive — and financial services companies with in the deal’s structure.

So, no text, a complex process to prepare it, side deals, secret side deals, and already there are differing interpretations. There is (as yet) no deal, because there is no deal to see.

TPP is Not a Trade Deal

Besides describing the outcome of the Atlanta meeting as a “deal,” the press described it as a “trade deal.” That’s not true either. NC readers are already familiar with the perspective that the Investor-State Dispute Settlement (ISDS) process is a surrender of state sovereignty to corporations (see here, here, and here), so I won’t repeat that material here. But I will look at how the Atlanta negotiators addresses ISDS criticisms, after reviewing additional material, thrown up in the course of this round of negotations, that shows why TPP is not a trade deal.

First, TPP will have minimal economic impact. :

Peter Petri, a professor of international finance at Brandeis University, says he doesn’t expect the deal to lead to any U.S. job gains. But he forecasts it will boost U.S. incomes by $77 billion a year, or 0.4 percent, by 2025, mostly by creating export-oriented jobs that will pay more, even as other jobs are lost.

“Most likely.” And an 0.4% income boost is the outcome of five years of negotiation between twelve countries? What kind of a trade deal is that?

Second, many TPP proponents don’t act like it’s a trade deal. The ‘s coverage gives five ways to “sell the TPP,” and only #3 has anything to do with trade whatever. Listing the headings only:

1. It’s all about China; 2. Bush, not Obama; 3. A tax cut for American products; 4. Obama, not Bush; 5. It’s all about U.S. leadership.

And now to ISDS. Yves summarized the problems with ISDS:

What may have torched the latest Administration salvo is a well-timed joint publication by Wikileaks and the New York Times of a recent version of the so-called investment chapter. That section sets forth one of the worst features of the agreement, the investor-state dispute settlement process (ISDS). As we’ve described at length in earlier posts, the ISDS mechanism strengthens the existing ISDS process. It allows for secret arbitration panels to effectively overrule national regulations by allowing foreign investors to sue governments over lost potential future profits in secret arbitration panels. Those panels have been proved to be conflict-ridden and arbitrary. And the grounds for appeal are limited and technical.

The first thing to remember here is that ISDS is not needed for investor protection, as :

Perhaps the most invidious – and most dishonest – part of such agreements concerns investor protection. Of course, investors have to be protected against the risk that rogue governments will seize their property. But that is not what these provisions are about. There have been very few expropriations in recent decades, and investors who want to protect themselves can buy insurance from the Multilateral Investment Guarantee Agency, a World Bank affiliate (the US and other governments provide similar insurance). Nonetheless, the US is demanding such provisions in the TPP, even though many of its “partners” have property protections and judicial systems that are as good as its own.

So, “overrule national regulations” and consequent “surrender of state sovereignty to corporations” based on the noxious “lost profits” doctrine is what ISDS is all about. So how did the Atlanta negotiators address these issues?  :

The chapter also provides for neutral [snort] and transparent international arbitration of investment disputes, with strong safeguards to prevent abusive and frivolous claims and ensure the right of governments to regulate in the public interest, including on health, safety, and environmental protection.  The procedural safeguards include:  transparent arbitral proceedings, amicus curiae submissions, non-disputing Party submissions; expedited review of frivolous claims and possible award of attorneys’ fees; review procedure for an interim award; binding joint interpretations by TPP Parties; time limits on bringing a claim; and rules to prevent a claimant pursuing the same claim in parallel proceedings.

Bafflegab and minor tweaks. First, the USTR says nothing about abolishing the “lost profits” doctrine. Second, that means that even the threat of an expensive, country-busting ISDS lawsuit could cow an entire nation. Third, “neutral” is just embarassingly false; the so-called judges (“arbitrators”) are and will be corporate lawyers, not subject to any form of accountability, let alone democratic accountability, and can also serve as advocates to the same court (!), so the potential for back-scratching, logrolling, and general conflict of interest is obviously present. Finally, I’m seeing a lot of verbiage about “strong safeguards,” “procedural safeguards,” and “rules,” but who does the enforcing? Prince Grigory Potemkin? Here, however, we seem to get an answer from : 

The changes also would establish a new arbitrator code of conduct. The latter builds on existing rules to address concerns about potential conflicts of interests among lawyers who hear [and advocate] the cases.

Oh, a “code of conduct.” So all the safeguards and rules depend on a self-regulating guild? How reassuring.

Finally, on ISDS and our loss of national sovereignty, :

Another reform would make clear that companies cannot challenge a country’s laws or regulations simply by arguing that they have hurt the company’s expectation of earning a profit on its investment. Additional ‘preamble’ language would underscore that countries retain the right to regulate in the public interest, including on health, safety and environmental protection.

Some problems. First, in the international standards I’m familar with, preambles are informative, not normative; preambles are in no sense rules and do not affect procedures, and not even the interpretation of procedures. So “underscore” means nothing. (I’d welcome clarification on this point from a trade lawyer). Second, without the text, it’s impossible to tell what, exactly, TPP now “makes clear.” However, here’s my comment on the TPP draft of the investment chapter from WikiLeaks: 

Of course, government — at least hitherto — has re-ordered prices, income steams, claims on future income streams, and capitalization generally since forever; one might even say that’s the purpose of government, its raison d’etre, at least in a capitalist society.[4] However, TPP’s jurisprudential innovation is to reframe  such re-ordering as “expropriation,” and to set up the ISDS to compensate the capitalists for it. Cfdtrade again, with images of the text of TPP’s “Investor Clause”:

2_investment

Note that the expectation of profit is one of the characteristics of an investment. And what better judge of those expectations could there be than the investor?

3_expropriation_12.12

Can “expropriation” include state actions that damage an investors expectation of profit? You betcha! Here’s how that “direct or indirect” wording gets teased out:

4_indirect_expropriation

Get a load of those loopholes! “Intangible property rights” and “indirect expropriation” are to be determined on a “case-by-case, fact-based inquiry” as to whether “distinct” (sez who) and “reasonable” (sez who) “expectations” (sea who) were “interfered with.” But don’t worry, little governments! Only in “rare circumstances” will your “legitimate” (sez who) “public welfare objectives” be considered expropriations.

Of course, the text may have changed between this Wikileaks draft and Atlanta (although potential changes to a draft are typically placed between square brackets). That said, if you look at this version, can see how “simply by arguing that they have hurt the company’s expectation of earning a profit” is weasel wording; in fact, it’s entirely compatible with the draft you see above! What, after all, is “simply”? Well, presumably that’s to be determined by a “‘case-by-case, fact-based inquiry.” How reassuring. :

Imagine what would have happened if these provisions had been in place when the lethal effects of asbestos were discovered. Rather than shutting down manufacturers and forcing them to compensate those who had been harmed, under ISDS, governments would have had to pay the manufacturers not to kill their citizens. Taxpayers would have been hit twice — first to pay for the health damage caused by asbestos, and then to compensate manufacturers for their lost profits when the government stepped in to regulate a dangerous product.

sums up the changes to ISDS in Atlanta:

While these changes are important, they’re more or less along the lines of what trade watchers expected and aren’t nearly as comprehensive as critics would’ve liked, said one trade expert who preferred to remain on background since the final text of the agreement has yet to be unveiled. “Based on early reports of the TPP [investor-state] language, the changes from past agreements appear to be more like tinkering around the edges, rather than a comprehensive reform,” he wrote in an email.

In other words, a nothingburger. ISDS remains what it was: A surrender of state sovereignty to corporations based on the lost profits doctrine. Nothing to do with trade; everything to do with shifting power away from the state to corporations.

Conclusion

I’ve said before that Maui and Atlanta were battles, TPP is a campaign, and TTP/TTIP/TiSA are a war. Michael Froman, the USTR, seems to agree:

Froman: Now we are done with the , we can finally focus on .

— Burcu Kilic (@burcuno)

(Bonus quote: “[Disgraced and hopefully prosecuted and jailed] Volkswagen CEO Martin Winterkorn called TTIP a ‘historic opportunity’ that would allow Europe and the US to set joint standards, ‘which will shape our world in the coming decades’ (, thanks to NC’s alert readers. And I bet Winterkorn has *** cough *** had his own ideas for the shape of things to come!)

Thing is, there’s hope! The elite doesn’t always win these wars. :

[A]ctivists have dogged the TPP process, showing up uninvited, publishing and analyzing leaked TPP drafts, making sure that politicians who supported TPP (sight unseen!) were held to account at each election cycle.

It was inevitable that eventually, negotiators would call it a day and declare the TPP “finalized” and send a secret draft back to all the member-states’ legislatures to be passed without public review. Today, that happened..

If this sounds familiar, it’s because it happened once before, with ACTA, another secret treaty that was TPP 1.0. Like TPP, ACTA eventually went back to member-states. But then a funny thing happened: the people rose up. Across the US and Europe, people took to the streets, worked the phones, wrote letters. The normally boring business of the technicalities of law — a death-sentence for any kind of public interest — was overruled by the easiest-to-understand of points: if ACTA is so great, why did they have to keep it a secret?

So TPP really is not a done deal. Here’s

Congress is expected to receive the legal documents to start the 90-day clock later this week. Lawmakers will then have 30 days to review the deal before it is made public.

The next step will be for the U.S. International Trade Commission to conduct a full economic review of the deal. The agency has up to 105 days to complete that work.

Capitol Hill staffers said votes in the House and Senate are not likely to take place before mid-April, at the earliest, and a reshuffling in the House Republican leadership after the announced resignation of Speaker John A. Boehner (R-Ohio) could produce even more uncertainty. While the GOP has been more supportive of Obama’s trade agenda, some conservatives have opposed a pact negotiated by a Democratic White House.

Those are the “months” — “months!!” — Obama talked about (and remember we won’t necessarily know about the side deals (or the secret side deals (or differing interpretations))).

Oh, and here’s one good litmus test for [snort] good faith on USTR Froman’s part: : 

The Trade Promotion Authority bill requires that the USTR submit a notice of agreement to Congress 90 days before ratification, and include a 60 day public notice period. If he takes full advantage of that timeline, he could release the text 30 days from now – on November 5 – for a 60 day period that will include the Thanksgiving and Christmas recesses in Congress. Not exactly planned to maximize public debate.

So, something to look forward to, during the Holiday season!

NOTES

[1] :  “Paul Ryan is concerned about dairy products. Sander Levin is concerned about cars. In Louisiana they’re concerned about sugar. The whole deal is oozing with parochial local concerns.” Not that there’s anything wrong with that; the sausage-making process is important. But NC is about critical thinking skills, and not reverse-engineering the collective thought processes of local oligarchies and their legislative representives.

[2] For starters, Trump might weigh in. again: “He’s opposed to the deal—there’s no telling why, really—and he’s shown a genius in the past for picking out specific details about various issues and then flogging them to death.” .

[3] For example, :

“The most important objective is to get the strongest agreement that benefits American workers and the U.S. economy for generations. The role of Congress now is as important as ever.”

No. The most important objective is no TPP at all. The Obama administration didn’t even pass card check. Can Levin seriously believe that the administration is going to expend a single penny of political capital for Vietnamese workers? After they threw the workers Malauysia enslaved under the bus? Levin writes a good memo, for sure, but in the end his memo is all about “Let’s make a deal.” No, let’s not.

Appendix

Here’s a useful video from the Young Turks that covers “the deal,” and some of the sausage-making detail that I didn’t want to go into. 

Enjoy!

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

54 comments

  1. ChrisFromGeorgia

    Thanks for the detailed summary. A couple things I haven’t seen covered anywhere else:

    1. How sure are we that every country really signed off on the thing? I read on Sunday that Chile and Peru were balking at the pharmaceutical language. Is it possible they’re still not on board and this was just papered over to create “momentum?”

    2. As for the actual details of the language on pharmaceuticals, I haven’t seen it though I didn’t dig very deep. It sounded like on Sunday there was a big push back from Japan and Australia and they may have prevented the US from extending patent protections beyond the current 5 year period (I might be off a little but that is why I ask.) If so expect some very unhappy bought-and-paid for stooges in Congress to whine and perhaps this could be critical to stopping it next year.

    1. nippersdad

      IIRC, the ambassador from Malaysia left Atlanta last week, so unless they robosigned his paperwork I don’t see how he could have signed off on it. Further, I thought that Malaysia, which controls the Straits of Malacca, was the centerpiece of the entire thing from the global defense perspective; that that was why they were ignoring its’ record (or changing our rules) on the slave trade. How could they make a deal without Malaysia?

      1. participant-observer-observed

        Straits are important, but Malaysia is no where near as important as the US-Japan nexus.

        The Chinese and neighbors are freaking out at the prospect of Japan over-riding its pacifistic status to bring its military back. If that doesn’t happen, it means the Americans have to keep all of its bases in Japan fully manned by Americans (and/or Cheney’s latest war-for-profit venture: Halliburton/Blackwater/Xi or however he’s rolling his grim reaper empire as these days), and somebody then has to PAY for Japan’s out-sourced military. It is a similar story in Taiwan, and the Taiwanese appear more clear that the TPP sell-out is more a mechanism of keeping USA sugar-daddy on board militarily.

        None of these dynamics seem to be ever mentioned even in the alt-press. Maybe Yves could team up with someone at Sic Semper Tyrannis to flesh out higher food chains pulling the strings of these “secret side deals.” You can be sure they were in the back (or front) of Pres Xi’s mind during his USA visit! Singapore too would not antagonize Beijing.

      2. susan the other

        Up until now the policy of big pharma has been to sell pills to poor countries very cheap and make the US pay the bill with the most outrageous prices… so much so that people go without their medications… so can the TPP bring prices down for us too? Can we import back our exported drugs? If the answer to that is No, then again, we should nationalize the pharmaceutical industry.

  2. abynormal

    (iii)the character of the government action…?, clawing scalp bloody scabs again

    TiSA as of June 2015: participants in the TiSA (WW3) include Australia, Canada, Chile, Chinese Taipei (Taiwan), Colombia, Costa Rica, European Union, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, Republic of Korea, Switzerland, Turkey, the United States, and Uruguay.

    and we’re off: Bloomberg reports, “the future may already be here”, a future in which Norway’s gargantuan $830 billion sovereign wealth fund, the product of two decades of capital accumulation courtesy of Norway’s vast petroleum reserves and oil trade, is forced to begin liquidating its vast assets.”

    Lambert, your workups rank with histories Greatest Artist (thank you!)

  3. wbgonne

    Nice job, Lambert.

    As for this trenchant observation:

    even the threat of an expensive, country-busting ISDS lawsuit could cow an entire nation.

    I think that is the real point of this — to steal and mangle Taibbi’s famous phrase — global vampire squid: intimidating states into not regulating at all. I suspect the corporatists have been holding back on ISDS assaults, waiting until the apparatus is fully established on a worldwide scale. Once TPP and TTIP go into effect, if they do, pretty much the entire world will be subject to the ISDS regime. Then we might expect to see a few blockbuster ISDS claims, with the targets carefully chosen for maximum effect. All it will take, IMO, is one or two devastating ISDS awards and then every ISDS state will be on notice that any proposed regulation could lead to economic devastation.

    Now, as a University of Chicago acolyte who had Cass Sunstein spend four years shredding the Code of Federal Regulations based upon cost-effectiveness analysis, Obama is plainly aware of how this will impact the regulatory calculus. Instead of simply thinking about the costs of a proposed regulation (job-killing regulations!) versus the cost of non-regulation (people-killing corporate “freedom”), now states must also factor in the possibilty of a nuclear ISDS damage award. That puts a huge thumb on the scale in favor of non-regulation. And how long before our job-killing-regulation-haters-and-corporate-freedom-loving politicians, corrupt to their marrow, use this unbalanced scale to frighten people into abandoning the regulatory state altogether? Instead of having to fight one regulation at a time, the corporatists will have instituted a regime that pre-squelches the regulatory idea and strangles it in its crib. Who will want regulations to ban fracking, or limit guns, or label GMO food, or anything really, when those regulations could cost the American taxpayers billions in ISDS damages? As you might say, Lambert, this is a self-licking ice cream for the neoliberals.

    1. hemeantwell

      Agreed. It’s not hard to imagine corporate coalitions forming to promote select punitive settlements to create a discouraging/scary climate for regulators. How interconnected could their interests be? It’s not just that corporation x can’t sell their poison, but also that hedge fund investors in X will be denied their profits, etc. With little reason for corporations to favor regulation, the collective incentive to unite to oppose regulation would be tremendous. A multinational Business Roundtable.

      1. smedley

        yes, and I think it’s also constructive to note how quickly our congresskids rushed back to their seats to repeal our meat labeling law only a few months ago when threatened with a relatively non-blockbuster claim from Canada and Mexico on behalf of their meat industries. Governments will be cowed indeed.

    2. Danb

      The “Gaia principle … proposes that organisms interact with their inorganic surroundings on Earth to form a self-regulating, complex system that contributes to maintaining the conditions for life on the planet.” I’d quip Gaia bats last but that’s -as Lambert is fond of saying- a category error. No doubt these “treaties” can destroy millions of lives, but neoliberals cannot legislate away the Gaia principle.

      1. JTMcPhee

        Can’t yet, until things are a lot more locked down — got to give the peasants a show of putative “democracy” and Rule of Law so they will continue to grant legitimacy to the Beast…

  4. oho

    If readers truly hate this deal, you gotta send a postcard or call (cuz that soaks up the most manpower) your local senator.

    and you gotta make clear that TPP is your litmus test—-you’ll remember the TPP vote and if it’s a pro-TPP vote, you’ll vote for the primary opponent or the guy from the other party next election.

    The Powers That Be view trade deal votes as harmless cuz generally ‘the little people’ don’t get excited over boring, legalese trade deals. you gotta prove them wrong.

    1. nycTerrierist

      Agreed. Online, I’ve signed dozens of anti-TPP petitions so far.
      Always add in the comments:

      “In the next election, I will make sure to vote against any legislator who supports this travesty.”

    2. jrs

      I appreciate the call to write congress, I really do, as it is doing something and I may just remind my House person. But I’m still supposed to be convincing Diane Fienstein to change her mind? Ridiculous. Sorry but I have no power to do that, she’s never going to change her mind, I’d be better off making a voodoo Feinstein and sticking needles in it (will she please just go to that great trade agreement in the sky already?). She’s almost dead, it’s near entirely a one party state, my threats would be meaningless without a massive grass roots movement.

      Boxer didn’t vote for Fast Track and I may remind her to keep up the good work, but they’ll have enough sell outs just with the existing sell outs probably. It doesn’t need any more people to pass than Fast Track did does it? The breaking California up into many states so we could finally get decent representation wasn’t a bad idea, just the way it was proposed was completely stupid.

      1. oho

        Ah yes, culture wars >> one party rule >>> neolibera club to bludgeon middle class…

        Ok, cali residents should give $20 to bernie instead

        1. Oregoncharles

          Even if he gets elected, Bernie would be pretty lonely facing a mostly neo-liberal Congress.

          Where’s the movement to change Congress? Is either of Cali’s Senators running next year? Reps?

  5. Nick

    The apparent aversion to the TPP deal is indicative of a continued mass misunderstanding of the process of globalization. Like it or not, the world is a big place and we’ll continue to grow closer every day in every way. It is perhaps understandable these changes terrify many. Change is scary. Over the next 25 years we will add (at least) another 2 billion people to this planet. The only chance we have of ensuring the continued success and progress of our democratic and capitalistic systems (not least making our collective civilization more sustainable) is by increasing trade and technology/knowledge transfer. There is no other solution. Welcome to the 21st century.

  6. Ulysses

    Thanks so much for this excellent post! I fear that the TPP/TTIP/TISA power grab is so breathtakingly audacious, that people are simply unable to fully recognize its implications.

    Among the many offensive aspects of the proposed new regime, the total unaccountability of the corporate lawyers on ISDS panels may be the most alarming.
    Here’s what we know from what was published by WikiLeaks:

    “TPP ISDS tribunals would be staffed by highly paid corporate lawyers unaccountable to any electorate or system of legal precedent. They still would be allowed to rotate between acting as “judges” and advocates for the investors launching cases against governments. Corporations launching cases would still directly select one of the “judges.” The text includes no requirements for tribunal members to be impartial, reveal conflicts of interest or recuse themselves in instances of direct conflict. There is no internal or external mechanism to appeal the tribunal members’ decisions on the merits, and claims of procedural errors would be decided by another tribunal of corporate lawyers. The leaked text provides tribunals with discretion to determine the amount of compensation governments must pay investors and the allocation of costs, such as the tribunal members’ fees. A proposal that appeared in the 2012 leak of the text to standardize hourly fees for tribunal members at the lower end of the range of fees currently paid (about $375 per hour, compared to the $700 per hour that some tribunal members receive) has been eliminated.”

    This is a new Star Chamber, which essentially hands the highest power over to the supra-national minions of kleptocratic interests. This is an irrevocable surrender of sovereignty on the part of nations who agree to live under this new regime.

  7. Chauncey Gardiner

    Lambert, really appreciate your sober “morning after” assessment of the real state of play in this blatant effort by those who control large Transnational Corporations and Wall Street banks to transfer sovereign powers of our democratically elected government into their own hands. You’re right, these secretive so called “Trade” deals are really not about trade. This entire effort by those legislators, officials in government and political party leaders who support this very narrow constituency and have engineered these inaccurately termed “Agreements” lacks not only transparency, but political legitimacy.

    1. Steven D.

      But what would be a good shorthand term for this, Global Corporate Rule? Rule by International Finance?

  8. Ulysses

    While Ian Fletcher is nowhere near harsh enough in his treatment of the politicians who are trying to push TPP/TTIP/TISA, I like his summary of just how wrong this new regime would be:

    “This all ultimately amounts to the idea that the profitability of investments must be the supreme priority of state policy–overriding health, safety, human rights, labor law, fiscal policy, macroeconomic stability, industrial policy, national security, cultural autonomy, the environment, and everything else.

    While there is no justification for going to the opposite extreme and allowing governments to ride roughshod over legitimate property rights, these agreements thus rigidly mandate market-based, property-first solutions to questions where societies must strike a reasonable balance between public and private interests.”

  9. Left in Wisconsin

    Thank you for this post.

    On (currency manipulation):

    “We are pleased to announce today that we are working to strengthen (macroeconomic) cooperation, including on (exchange rate issues), in appropriate fora,” the (macroeconomic policy) authorities of the (12 Trans-Pacific Partnership nations) said in a statement.

    I’m pretty sure they have a style handbook somewhere where they can just fill in the blanks. Though it has the feel of a Mad-Lib.

  10. Eric Patton

    Obama is a war criminal. I’m opposed to the death penalty, but if the Nuremberg principles were applied fairly, he would be hanged.

    The TPP won’t be the biggest of Obama’s problems on the last day…

  11. David

    Finally, it’s highly likely there are secret side deals, and not just because the TPP process so far has been marked by a total lack of transparency.

    If there are secret side deals, they’ll need to see the light of day or they won’t be valid. From the :

    (4) Disclosure of commitments
    Any agreement or other understanding with a foreign government or governments (whether oral or in writing) that—
    (B) is not disclosed to the Congress before an implementing bill with respect to that agreement is introduced in either House of Congress, shall not be considered to be part of the agreement approved by the Congress and shall have no force and effect under United States law or in any dispute settlement body.

      1. David

        When one tries to enforce the secret side deal, it should be relatively simple to throw it out of court as the agreement would have no force of effect under US law.

          1. David

            That’s not what I’m saying. Please don’t put words in my mouth. I am saying that Congress has restricted the Administration’s ability to make secret deals (or conduct diplomacy, in your words) for this agreement. Based on this, IMO, it is not “highly likely” that any secret side deals will get through Congress.

  12. Daryl

    > 1. It’s all about China

    Another headline I saw this morning was “US Allies see TPP as a check on China”

    Personally, if I was in the Chinese gov’t, I’d be tickled pink that a bunch of economic rivals are signing their power away to the ISDS that will surely bleed them of money and sow unrest.

  13. ira

    Excerpts from Dave Dayen’s ’email conversation’ with Clyde Prestowitz, who is kind of an ’eminence grise’ of trade policy

    Prestowitz:

    The labor part of the deal is not enforceable. The currency side agreement is a joke. By not being part of the main deal, it inherently has second-class status, and the refusal of a succession of U.S. presidents to respond to blatant currency manipulation over the past 40 years suggests that this part of the deal is strictly aimed at getting the whole thing passed through Congress….

    Getting this thing past the Congress in a presidential election year was always going to be difficult. But given the disarray on the Republican side and the uncertainty about the new speaker and his priorities, it’s going to be uphill all the way….

    On the other hand, the public is demonstrating a lot of dissatisfaction with the traditional ways of doing things in Washington. This deal is not going to reduce economic inequality in the U.S. Rather it is going to add to it. If some of the presidential candidates pound away at that fact, it is possible to foresee a wave of public frustration and anger leading to defeat of the TPP in the Congress….

    I don’t think this [TPP] is a priority for industry. It really only adds Brunei, Vietnam, and Malaysia to the list of those countries that have a free trade deal with the U.S. It may marginally add some things for high-tech industries dealing with Japan, but it’s really not a big deal for any industry except maybe the auto industry and there Ford has already come out against it. So this won’t be like the situation was with NAFTA. There industry was really out in force. It won’t be that way for TPP.

  14. David

    A surrender of state sovereignty to corporations based on the lost profits doctrine.

    Regarding sovereignty, from the Congressional Research Service, via the (from July 2015):

    Can a trade agreement force the United States to change its laws?
    …The proposed TPA-2015 states that no provision of any trade agreement entered into under the TPA inconsistent with any law of the United States, of any state, or any locality of the United States could have any effect. Nor could any provision of a trade agreement prevent the government of the United States, of any state, or any U.S. locality from amending its laws. …Therefore, any potential agreement adopted through the TPA procedures would not displace any federal, state, or local law without further action being taken by the appropriate legislature.

    What happens if a U.S. law violates a U.S. trade agreement?
    …If a federal, state, or local law is found to be in violation of the free trade agreement, then the United States could be subject to removal of some benefits under the agreement, such as an increase in tariffs on its products, through a potential dispute resolution with a challenging country. The federal, state, or local government potentially would have to amend the law that is inconsistent with the trade agreement in order for the United States to avoid removal of benefits under the international agreement, but is not required to do so.

    1. Lambert Strether Post author

      That is the pro-TPP argument, yes. As I argue: “Even the threat of an expensive, country-busting ISDS lawsuit could cow an entire nation.” Look at what happened to Greece, if you want to see how finance can be used as a weapon.

      1. David

        Is it a pro argument or just an analysis of the law?

        I don’t think you can compare what is happening in Greece to an ISDS arbitration. Greece’s problems have been built up over decades and mostly self inflicted. Argentina might be a better example, although I don’t think that Argentina was “cowed” by their rogue bondholders.

        How could a single investment dispute “bust” a country? Considering that the ISDS process has been in place for 40+ years, has a country been “cowed” by the ISDS?

        1. wbgonne

          How could a single investment dispute “bust” a country?

          An ISDS damage award that bankrupts a state. Why can’t that happen?

          Considering that the ISDS process has been in place for 40+ years, has a country been “cowed” by the ISDS?

          The ISDS regime will have a stranglehold on the world if TPP and its sisters are enacted. Then the corporatists will have no reason for restraint. Further, in case you haven’t noticed, here in the U.S. we have subject to an unrelenting 40-year stream of anti-regulation propaganda and policy. One of our two major parties is avowedly opposed to regulation and the other has effectively joined it under this neoliberal ideologue president. What do you think the anti-regulation cadres will do once armed with the ISDS weapon? More to the point, why in the world should the American people gamble their sovereignty to pad supranational corporate profits?

          1. David

            Why can’t that happen?

            A financially sovereign country can’t go bankrupt. Also, public debt in this agreement, is exempt from ISDS claims (according to Wikileaks).

            What do you think the anti-regulation cadres will do once armed with the ISDS weapon?

            They’ll do what they’ve always done, with or without ISDS.

            why in the world should the American people gamble their sovereignty to pad supranational corporate profits?

            As I understand it trade agreements approved under the current TPA, “would not displace any federal, state, or local law without further action being taken by the appropriate legislature.” If you lose your sovereignty, it’ll be done by the elected representatives and not the supranational corporations (assuming there is a difference between the two).

            we have subject to an unrelenting 40-year stream of anti-regulation propaganda and policy

            If this agreement would give the same protections to labor that it gives to capital and IP, then it’d be worth supporting.

            1. Steven D.

              Look up-thread for an example of Congress laying down and surrendering after an ISDS panel ruled against us on meat labeling. A feature, not a bug. And of course Obama, the neoliberal chameleon, signed that puppy without delay.

              Just a preview of what’s to come with TPP.

              1. David

                Except that the ISDS said that COOL labeling was okay, it just needed to be done in a more market friendly way.

                As some joker said in the comments at the time.

                The summary also states that, while COOL is a “legitimate objective”, it “needs to be assessed against any reasonably available less trade-restrictive alternative measures”. In response, Congress decided to repeal to labeling requirement.

                The tribunal saw COOL labeling as “causing a detrimental impact on the competitive opportunities of imported livestock”.

                So Congress sold you out (again), not the ISDS tribunal.

            2. wbgonne

              A financially sovereign country can’t go bankrupt. Also, public debt in this agreement, is exempt from ISDS claims (according to Wikileaks).

              Really, who is going to pay the ISDS damages the state incurs?

              What do you think the anti-regulation cadres will do once armed with the ISDS weapon?

              They’ll do what they’ve always done, with or without ISDS.

              Yes, so why give them this new weapon?

              why in the world should the American people gamble their sovereignty to pad supranational corporate profits?

              As I understand it trade agreements approved under the current TPA, “would not displace any federal, state, or local law without further action being taken by the appropriate legislature.” If you lose your sovereignty, it’ll be done by the elected representatives and not the supranational corporations (assuming there is a difference between the two).

              That is Obamaesque disingenuity. No, regulations won’t be displaced; they will be punished into obliteration.

              we have subject to an unrelenting 40-year stream of anti-regulation propaganda and policy

              If this agreement would give the same protections to labor that it gives to capital and IP, then it’d be worth supporting.

              If, indeed. Just one problem: only corporations can sue under ISDS. So good luck enforcing those TPP sales puffs. Or perhaps you’re counting on the good intentions of the sociopaths who are so greedy and arrogant that they think they should punish people who decide to change the catastrophic course upon which they have set the world. In America we used to question authority and recoil at oppression by the powerful. Now some of us appear to welcome it. I hope young people see how they are being hogtied by their elders.

    2. Ed Walker

      You are citing a federal statute. Treaties like TPP are entitled to equal status with federal statute. Both are subordinate to the US Constitution.

      If there is a conflict, who decides which controls the outcome? The Supreme Court, controlled by business interests? The arbitrators, controlled by the same corporate masters?

      As a side issue, how many of these countries have enforceable laws like the one you cite?

  15. Russell Scott Day/Transcendia

    It came to my notice that Uruguay withdrew from messing with this entirely. Like in: “Forget it we don’t want anything to do with this.”
    So I have taken a little look at Uruguay. It did not suffer from the Financial Engineers looting on Wall Street which made all US citizens the reinsurers for the reinsurer, AIG.
    US citizens have not grasped that “Too Big To Fail” means the US is not a Nation but a Corporation. So it evolved that Corporation China, and Corporation USA are the Bi Polar Powers.
    Meantime “Free Traders” have been around. “Free Trade” ideology and Finance as the main thing done with a nation’s money turned the British Empire into a beggar over 60 years from 1840, to the turn of the Century. Newly rich of the Industrial Revolution didn’t want their children to get their hands dirty working, so they were put to “Finance”.
    Len Deighton, the wonderful spy writer tells the story nicely in his history: Blood Tears and Folly. Between A Distant Mirror by Barbara Tuchman (The Proud Tower) and some actual notice of the contemporary scramble to make something work using bad ideas those who just go, “To hell with this.” Win.

  16. Reader

    When I checked yesterday, a discussion of TPP was on the schedule for today’s Diane Rehm show. I just checked the schedule again, which goes through Monday, and it’s gone. So much for open discussion.

  17. marym

    An official New Zealand government bulletin on yesterday’s conclusion of the still-secret Trans Pacific Partnership Agreement negotiations accidentally confirmed something we all believed was in there all along: an extension of copyright terms to match the USA’s bizarre, evidence-free, century- terms.

    According to the bulletin, the TPP signatories will have to retroactively extend their copyright terms, giving longer copyrights to works that were created before the agreement was struck, and taking works out of the public domain and putting them back into copyright’s restrictions.”

    1. allan

      ” …taking works out of the public domain and putting them back into copyright’s restrictions.”

      Completely unbelievable. By which I mean, completely believable that USTR wanted this.

  18. grayslady

    One of my questions about the Investor State Dispute is how it will work for countries that have separate states with states rights (Australia has separate states, such as New South Wales, Victoria, etc., but whether Australia has a states rights provision, I don’t know…). The point being, what if a corporation wants to sue Alabama for enacting laws that ostensibly deprive the corporation of future profits: Will the US govt. backstop Alabama for its legal costs? If not, the surest way to decimate the US is to attack at the state level, where no state can afford the costs of a protracted lawsuit. Additionally, if the agreement provides that any lawsuit against a state will be considered a lawsuit against the US, who is going to defend the lawsuit? With a few exceptions among states attorneys, public attorneys are notoriously inferior, regardless of which dept. they work for, as evidenced by how David Boies made mincemeat out of the government case in the Hank Greenberg lawsuit.

    Of course, we shouldn’t even have to be talking about this at all, but I bring up the issue of individual states possibly having to defend themselves at huge financial cost as possibly being another way of killing the deal. Maybe the place to put on the pressure is state officials, asking them if they want their state to be bankrupted by a New Zealand or Japanese company who wants to override their state laws in the name of profits.

    1. Oregoncharles

      ISDS suits are against the federal government, states and localities not involved, regardless of which laws are the subject. And it’s the federal government that faces the penalties. On the one hand, that means the states don’t get to defend themselves.

      On the other, if federalism still exists, it offers a way for states and localities to practice civil disobedience: pass the law and the let the feds go hang – and pay the judgment. As far as I know, there’s no provision for the federal government to enforce ISDS judgments on states – not in US law.

      The likely resort would be to withhold federal funds that presently go to the states. Imagine the furor that would cause.

      As far as I know, this aspect isn’t being widely discussed. It’s possible the trade negotiators simply haven’t thought about it. But the ISDS mechanism’s been around for a while; have any state or local laws been challenged?

      It fits well into the new “civil disobedience” via the law concept of CELDF (). It calls for outright defiance of federal or state pre-emption of local environmental regulation. It’s a very active movement in Oregon, presently working on a state-wide initiative to end corporate rights in Oregon. There’ve been county-level initiatives, too.

      Ultimately, it means local or state government practicing civil disobedience, “civil” in this case meaning the city government! Should be interesting. I’m looking at a pamphlet called “On Community Civil Disobedience in the Name of Sustainability,” by the director of CELDF, Thomas Linzey (just discovered his name isn’t on it!) Should be on their website

  19. susan the other

    Since we like to export the means of production and leave profit to the merchants, it might be a good idea for us to instead become wholesalers to the rest of the world and import back at highly reduced prices. Then subsidize any remaining US industries with robots whose productivity can be taxed to pay the rest of us a living wage. But we will be obligated to do our civic contributions. And environmental ones.

    1. susan the other

      Sounds like the TPP wants at least 12 years of windfall retail profits out of this travesty.

  20. BBraun

    Not sure if I got this link through your site or not (if so I apologize) but seems to already be happening
    so we don’t even have to wait till the TPP comes into effect.
    There is also an interesting article in German at referring to the regulation of VAT. If you have no means to translate it let me know as the google translation is horrible. Also USA wants to eliminate VAT on their exports to EU but local EU sellers have to charge VAT internally and so will be at a disadvantage. Also mention of the TTIP being a ‘living agreement’ so that future changes and additions within the framework of the negotiated agreement can be made at any time without any parliamentary say by a kind of transatlantic authority and with advice of the representatives of multinational corporations. Has anybody heard of this?

    1. John Zelnicker

      BBraun – The “living agreement” provisions are in both the TTP and the TTIP as I understand it. IIRC, a commission or authority will be established to handle any of these kinds of changes that are proposed, and, as you say, they will not require the approval of any of the participating governments’ legislatures.

  21. rjs

    so we’ll have at least 90 days to pass petitions to stop it back and forth among ourselves, pretending democracy, while the corporate interests will be quietly buying off the Senators and Congresscritters they need to get it passed…

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