The Case Against the Trans-Pacific
Partnership Agreement
NAFTA on Steroids
The United States recently announced that Canada and Mexico will
join negotiations for the Trans-Pacific Partnership (TPP)—a secretive
U.S.-led multinational trade and investment agreement currently being negotiated with eight other countries in the Pacific Rim region.
On the other side of the Pacific, Japanese legislators are defecting in droves
to try to stop the country’s entry into the negotiations. But the
situation is much different in Canada and Mexico, which were admitted to
the table with much fanfare during the G20 summit in June. The Japanese
response is justifiable, and a recent statement of solidarity against
the TPP by North American unions offers a good building block for
resisting an agreement that for Mexicans and Canadians amounts to a
neoliberal expansion of NAFTA on U.S. President Barack Obama’s terms.
Mexico and Canada had been trying to secure a spot at the TPP
table for months prior to the G20, and it became a leading story in
both countries. Their anxiety played nicely into Obama’s hands, allowing
the U.S. trade representative to put humiliating entry conditions on both countries — essentially giving these NAFTA neighbors a second-rate status, or what in Spanish is called convidados de palo
(to be invited but without a say). Neither Canada nor Mexico will be
able to see any TPP text until they finally join the negotiations in
December, following the required 90-day U.S. congressional approval
process. Once at the table, they will not be able to make any changes to
the finished text or propose any new text in the finished chapters.
There is a very real possibility that the existing TPP countries, the
United States in particular, will use the following months to fashion a
trap for the TPP latecomers.
North American Labor Solidarity
While most media outlets welcomed the NAFTA partners to the TPP
table, national labor federations from the United States, Mexico, and
Canada were cautious for very good reasons, and it wasn’t just the
obviously imbalanced negotiating dynamic. On July 11, the AFL-CIO, the
Canadian Labour Congress, and the National Union of Workers (UNT) of
Mexico outlined some of those reasons in an important statement of solidarity, which included a vision of what they believe a 21st-centry trade agreement should look like.
The labor unions state that although they “would welcome a TPP that
creates good jobs, strengthens protection for fundamental labor
rights—such as freedom of association and authentic collective
bargaining—protects the environment, and boosts global economic growth
and development for all, American, Canadian, and Mexican workers cannot
afford another corporate-directed trade agreement.” The joint statement
explains that to have any positive effect on the region, “the TPP must
break from NAFTA, which imposed a destructive economic model that
expands the rights and privileges of multinational corporations at the
expense of working families, communities, and the environment.”
The unions conclude that if “the TPP follows the neoliberal model and
substitutes corporate interests for national interests, workers in all
three countries will continue to pay a high price in the form of
suppressed wages, a more difficult organizing environment, and general
regulatory erosion, even as large corporations will continue to
benefit.” Unfortunately, by all accounts, including leaked TPP chapters and statements from the U.S. trade representative, this is exactly what the Obama administration hopes to achieve through these negotiations.
Expanding Investor Rights
Instead of breaking with NAFTA, the TPP expands it in almost every
chapter, from intellectual property rights to “regulatory coherence,”
and from rules for increased “competition” in state-owned enterprises to
opening government purchases to foreign bidders.
Particularly worrying to Canadians and Mexicans, and not mentioned in
the joint statement from North American unions, are the extreme
investors’ rights foreseen in the TPP. Under NAFTA, Mexico and Canada
continue to be pummelled by investor-state lawsuits from U.S. and
Canadian companies, or international firms using their U.S. registration
to challenge government measures that can be shown to interfere with
profits, even if that interference is not intended. These investment
disputes, launched under NAFTA’s Chapter 11 protections, have resulted
in hundreds of millions of dollars in fines or settlements to be paid
out from public funds. Two recent cases against Mexico and Canada help
describe the problem.
In 2009, two separate NAFTA investment panels established through the
International Center for Settlement of Investment Disputes (ICSID)
ruled in favour of U.S. companies Cargill and Corn Products
International in their nearly identical cases against a Mexican tax on
drinks containing high fructose corn syrup (HFCS), a sugar alternative.
The tax was a means of levelling the playing field for Mexican cane
sugar producers, who were having no luck accessing the U.S. market on
equal terms to U.S. sugar producers despite NAFTA’s promises of open
borders.
Cargill and CPI argued in part
that the Mexican tax made soft drinks sweetened with HFCS less
competitive on the Mexican market, depriving them of their national
treatment rights in NAFTA. The ICSID panels did not agree that the HFCS
tax amounted to a form of regulatory expropriation or performance
requirement as the firms had also argued, but did agree on the national
treatment claim. Cargill was awarded more than $77 million and CPI more
than $58 million in damages. In the CPI case, the ICSID panel deprived
Mexico of any countermeasures to defend against a one-way inflow of
cheap sugar supplements from the United States.
Canada also just lost an important investor-state dispute with Exxon Mobil,
which could cost the Canadian government as much as $65 million. At
issue were measures requiring offshore oil and gas producers in the
province of Newfoundland and Labrador to turn over a portion of their
profits to research and development or education and training programs.
A NAFTA investment panel ruled in favor of the company, which claimed
that the measures were an illegal performance requirement on the firm.
Three Canadian courts had previously upheld the legality of the
measures, and the Canadian government had excluded the legislation
enforcing the measures from national treatment and other investment
protections in NAFTA, making the investment panel ruling extremely
perplexing. The frustration is worsened by the fact that Exxon Mobil was
the richest company in the world in 2011. Under NAFTA and the TPP,
investors have rights but no enforceable responsibilities to the
countries in which they are operating.
These are just two local cases amid a myriad of investor lawsuits
against countries all over the world. Though the Obama administration
recently released a new model Bilateral Investment Treaty, it is almost
identical to NAFTA, with only modest safeguards for regulation in the
public interest — safeguards that closed-door tribunals are under little
obligation to take into account. In fact, the trend globally is for
these secret tribunals to rule expansively in the interest of corporations,
perhaps as a means of perpetuating the system by making it more
attractive to investors. There is simply no justification for
reproducing the investor-state dispute regime in the TPP. In fact, NAFTA
should be renegotiated to remove investor-state dispute settlement from
Chapter 11.
This outcome—removing extreme investment protections from the TPP—is
not out of the question. In June of this year, before a negotiating
round in San Diego, California, 130 state legislators from all 50
states and Puerto Rico signed a letter
to President Obama’s senior trade official warning that they will
oppose the deal unless the administration alters its current
approach. In the letter they say that “Our experience with NAFTA and
other trade deals shows that investor-state dispute settlement is used
by large corporations to undermine state and federal laws they don’t
like – laws that are fully constitutional, that do not discriminate, and
that are needed to protect public health and safety.”
There is also the question of Australia, the one TPP partner refusing
to abide by these investment rules. In April 2011, the Australian
government released a new trade policy
that discontinues the inclusion of investor-state dispute settlement in
bilateral or regional trade agreements. Despite their second-rate
status at the TPP table, Canada and Mexico could eventually help the
United States put pressure on Australia and others who doubt the value
of these extreme corporate rights. But public pressure might prove
strong enough to foil these efforts, as it did when the Multilateral
Agreement on Investment was ditched in 1999, followed by the Free Trade
Area of the Americas (FTAA) in 2005.
A New FTAA, A New Struggle
With Canada and Mexico joining the TPP, the agreement is looking more and more like a substitute for the FTAA.
So it is not surprising that opposition to the TPP is growing as
quickly as it did against that former attempt to expand the neoliberal
model throughout the Western hemisphere.
The intense secrecy of the TPP negotiations is not helping the Obama administration make its case. In
their statement, North American unions “call on our governments to work
with us to include in the TPP provisions to ensure strong worker
protections, a healthy environment, safe food and products, and the
ability to regulate financial and other markets to avoid future global
economic crises.” But the truth is that only big business is partaking
in consultations, with 600 lobbyists having exclusive passwords to online versions of the negotiating text.
A majority of Democratic representatives
(132 out of 191) have expressed that they are “troubled that important
policy decisions are being made without full input from Congress.” They
have written to U.S. Trade Representative Ron Kirk to urge him and his
staff to “engage in broader and deeper consultations with members of the
full range of committees of Congress whose jurisdiction touches on
the wide-ranging issues involved, and to ensure there is ample
opportunity for Congress to have input on critical policies that will
have broad ramifications for years to come.” In their letter, the
representatives also challenge “the lack of transparency of the treaty
negotiation process, and the failure of negotiators to meaningfully
consult with states on the far-reaching impact of trade agreements on
state and local laws, even when binding on our states, is of grave
concern to us.” U.S. Senators, for their part, have also sent a letter
complaining of the lack of congressional access to the negotiations.
What openness and transparency can we in Canada and Mexico expect when
the decision to join the TPP, under humiliating conditions, was made
without any public consultation?
NAFTA turns 20 years old in 2014. Instead of expanding it through the
TPP we must learn from NAFTA’s shortcomings, starting with the historic
lack of consultation with unions and producers in the three member
countries. It is necessary to correct the imbalances in NAFTA, which as
the North American union statement explains enhanced corporate power at
the expense of workers and the environment. In particular, we need to
categorically reject the investor-state dispute settlement process that
has proven so costly, in real terms and with respect to our democratic
options in Canada and Mexico. The unions’ statement of solidarity
provides a strong foundation for the growing trinational opposition to
the TPP in Leesburg, Virginia, and beyond.
Manuel Pérez-Rocha helps to coordinate the Networking for Justice on Global Investment project, as part of the IPS Global Economy Project.
Stuart Trew is the Trade campaigner for the Council of Canadians.
This article was distributed by Other Words.
