“Trade” Agreements Or “Corporate Rights” Agreements?

Dave Johnson

The public is finally “getting it” about these one-way trade agreements. They were sold to us as “job creators,” but the record is the reverse. They have cost jobs and increased the trade deficit (which is a metric for jobs) in every instance. This is because these agreements were not really about trade at all, they were about placing corporations above governments.

The Wall Street Journal on Thursday complained that people are “getting it,” in “Politics, Not Economics, Impede U.S. Trade Deals, Former Officials Say.”

Six years after the financial crisis arrived in earnest, much of the public and its elected representatives remain suspicious about opening up barriers to trade and investment out of fear American jobs will leak to low-wage countries. Those concerns have complicated the job of President Barack Obama and his economic team, who are seeking to negotiate deep trade agreements with Asia-Pacific countries and the European Union and sell them to a divided Congress.

Getting Around Democracy’s Borders

That’s right, “politics” – in other words, democracy – is what is getting in the way of new trade agreements. This is because more and more people “get it” that these agreements are really about corporations getting around democracy’s borders to evade rules about wages, safety and environmental protections, and people’s ability to reign in the wealthiest and most powerful.

The most obvious way these trade deals are getting around democracy is by getting around democracy’s wages, benefits, workplace safety and environmental standards. In democracies people have a say and people always say they want good wages, good benefits, safe workplaces and a clean environment. So we get these trade agreements that let companies move jobs and factories to places that don’t require those things.

Again and again things that democracies say corporations can’t do are showing up in (leaked) trade agreements that will overrule those democracies if enacted. An obvious example is tobacco. Democracies, for obvious reasons, are trying to restrict the tobacco companies. Governments just aren’t powerful enough to just ban this people-killing product, so they pass restrictions such as bans on advertising to children.

Another example was the Stop Online Piracy Act (SOPA). Congress decided to reject SOPA. Then provisions of SOPA showed up in the Trans-Pacific Partnership (TPP) negotiations.

One more example is the Dodd-Frank law that regulates Wall Street. We find out that trade negotiators are putting provisions into Transatlantic Trade and Investment Partnership (TTIP) that override our Dodd-Frank law and deregulates the financial industry in the US and Europe.

We – and other countries – try to reign in the giant multinational corporations. So then along come trade agreements that say countries can’t do that. The agreements are slipped past the country’s lawmakers using various strategies, and then once signed the countries are trapped. Here the strategy is called “fast track.”

Investor-State Dispute Settlement (ISDS) – “Corporate Courts”

This is possible because “NAFTA-style” trade agreements include something called Investor-State Dispute Settlement (ISDS) provisions. These provisions place corporations above governments when it comes to profits – i.e. a government isn’t allowed to do things that might hurt profits.

Harold Meyerson explains in The Washington Post article, “The trade clause that overrules governments“:

Under ISDS, foreign investors can sue a nation with which their own country has such treaty arrangements over any rules, regulations or changes in policy that they say harm their financial interests.

These suits aren’t heard in the courts, however. If a U.S. company wants to sue, say, California or the Environmental Protection Agency, it must pursue its claim in a California or federal court. Under ISDS, however, a foreign-owned company suing California or the EPA gets to plead its case to an extra-governmental tribunal of three extra-governmental judges engaged just for that case — and the judges’ ruling can’t be appealed to a higher court. Under ISDS, there are no higher courts.

Europe Isn’t Buying It

TTIP is a big trade treaty that is being negotiated with Europe (also known as TAFTA). The big corporations and Wall Street types are trying to sneak ISDS into this one, too, but Europe isn’t buying it. Europe still has some fairly strong democracies, and they are balking at this restriction on their ability to pass laws that help their people. And those democracies appear to still be strong enough to resist the big corporations.


Now, at long last, one of those center-left governments has come to its senses. In a speech last week to the Bundestag, German Economy Minister Sigmar Gabriel — a leader of the Social Democrats in Chancellor Angela Merkel’s coalition government — announced the government’s opposition to including the ISDS procedure in a pending trade agreement with Canada and, by extension, in the proposed Transatlantic Trade and Investment Partnership between the European Union and the United States. There would be no transatlantic trade deal, said Gabriel, unless negotiators scrapped the ISDS provision and the special treatment for foreign investors that it affords.

Jeffrey Sachs On Globalization Through These Trade Agreements

Speaking of people “getting it,” some of those people are the very people who once helped usher in our current wave of globalization, thinking that the negotiations were about trade, not corporate rights. Roger Hickey writes about Jeffrey Sachs, the Columbia University economist and Professor of Sustainable Development who also directs the Earth Institute, in “Economist Jeffrey Sachs Says NO to the TPP and the TAFTA Trade Treaties“:

… Without touching on the unpopular Fast-Track mechanism necessary to pass these two treaties, Sachs laid out five reasons why, on the substance, they should not be passed or ratified:

1. They are not trade treaties, but agreements aimed at protecting investors.

2. They ignore great challenges of sustainable development: the environment and growing inequality.

3. Their investor-state dispute settlement clauses give absolutely unjustified and dangerous powers to investors vis-à-vis the state.

4. The entire process is not transparent, and this secrecy alone in reason enough to reject the two treaties.

5. Finally, he warned that the Obama administration has not presented one analysis of the cost and benefits with regard to jobs, different industries, income distribution, economic growth and trade.

Please click through and spend the time reading all of the remarks.

Meanwhile, Roger Hickey got some comments in response to a question he asked Sachs. “When I asked him at the end of his presentation whether either treaty would have any positive impact on U.S. growth, Sachs replied with an important and very personal statement,”

“On general principles, I would say, that these treaties will continue to underpin and amplify the kind of globalization process that is underway right now.

I’m not against all aspects of the globalization, I have to say, I do believe, by the way, in foreign direct investment, international production systems, cross-border investment and so forth. But I am completely against the kind of arrangement we have now. In fact it’s my great disappointment because I helped to bring globalization, through my own efforts and advisory work over the years, and I always envisioned that when we moved to a global system, we would move to a humane, decent global system that would recognize losers as well as winners, that would maintain standards of redistribution, that would focus on the poor, that would address market failures like environmental crises and financial crises.

But our general mode of globalization has been to ignore all of the downsides and to plow ahead on emphasizing investor rights. And this is not surprising, because we’re a lobby-led government structure, and so you see what you get when you put the pharmaceutical industry or the financial sector or the other sectors as heads of the negotiations. You get narrow interests and you don’t face the broader challenge.

So while I can’t give a number on the trade deficit, I would say that the kind of globalization that we have right now, which in some ways expands the pie, but does so at high costs to the poor, to many poor, to rising inequality, to more frequent financial crises, and to a growing environmental catastrophe.

Nothing that I know of these two treaties would do anything but continue us along that course, perhaps accelerated. These are not 21st century treaties that start out with our goals; these are 20th century treaties continuing to build the flawed globalization that we have underway.”

Sachs talks about a “lobby-led” government structure that leads to these rigged trade agreements. In last month’s “Corporate Courts — A Big Red Flag On “Trade” Agreements” I wrote about the “rigged process”:

That is what our one-sided, big-corporation-dominated trade process has brought us. Giant corporations are working with our own government to secretly negotiate the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and the Trade in Services Agreement (TISA). This last agreement was so secret that we didn’t even know it negotiations were underway, until Wikileaks revealed this in June.

A rigged process has ushered in “trade” agreements that place the profits of giant corporations over governments’ ability to protect public health. The rigging starts with secret negotiations with only corporate representatives (and negotiators who want to collect a fat check from corporations later) at the table. Then a “fast track” process pushed these agreements past legislators before the implications are fully considered.

It doesn’t have to be this way. Celeste Drake writes at the AFL-CIO Now blog, in “If TTIP Trade Deal Puts People Before Profits, It Can Work, Say AFL-CIO and ETUC,”

The TTIP (the Trans-Atlantic Trade and Investment Partnership, a proposed trade agreement between the United States and the European Union) is an opportunity to get trade and globalization policy right, say theAFL-CIO and the European Trade Union Confederation (ETUC), the trade union federations that together represent tens of millions of workers. But this will only happen if the agreement is negotiated in an open manner, ensures that corporations cannot override governments and threaten the public good, promotes workers’ rights and social justice and in all other ways puts people before profits.

The AFL-CIO and the ETUC have published a set of guidelines that they hope will put negotiators on the path toward creating shared prosperity for workers worldwide. If the TTIP meets these principles, the federations are committed to campaigning for its ultimate adoption. But ignore these principles, the federations warn, and negotiators risk a trans-Atlantic campaign to defeat it.

Click through to read the rest.

You may also want to click through to Public Citizen’s “Say “no” to corporate courts, “no” to ISDS and “no” to Fast Tracking TAFTA!

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