The Trans-Pacific Partnership (TPP) has provisions that allow corporations to sue governments for laws and regulations that limit profits. The cases bypass national court systems and are heard by "corporate courts" with the governments allowed no appeal. These investor-state dispute settlement (ISDS) provisions are also in trade agreements like the North American Free Trade Agreement.
When fast-track trade promotion authority was being debated, people like Sen. Elizabeth Warren raised warning flags about the ISDS provisions in TPP.
[. . .] In her letter, Warren raises concerns that the deal could include provisions that would allow foreign companies to challenge U.S. policies before a judicial panel outside the domestic legal system, increasing exposure of American taxpayers to potential damages.
In May, President Obama said that concerns over TPP's "corporate court" provisions were "absolutely wrong."
But two recent cases demonstrate the danger to democratic government from ISDS provisions in trade agreements. It looks like it is President Obama who was "absolutely wrong" about the dangers of TPP.
TransCanada Sues U.S. Government Over Keystone Rejection Profit Loss
TransCanada, a Canadian oil corporation, is using NAFTA provisions to sue the U.S. government for $15 billion after President Obama decided not to allow the pipeline to be built. The pipeline would have brought Canadian oil across our country to a U.S. port, so it could be transported to places like China. The pipeline company would use "eminent domain" to seize the property it needed from farmers, ranchers and other property owners for right-of-way. Because the president decided not to allow this, the company is suing for loss of profits.
Reuters reports in "TransCanada sues U.S. over Keystone XL pipeline rejection":
TransCanada Corp sued the U.S government on Wednesday to reverse President Barack Obama's rejection of the Keystone XL pipeline, and also plans to seek $15 billion in damages from a trade tribunal.
TranCanada's lawsuit in a federal court in Houston, Texas, called rejection of its permit to build the pipeline unconstitutional. In a separate action under the North American Free Trade Agreement (NAFTA), the company said the pipeline permit denial was "arbitrary and unjustified."
Sierra Club Executive Director Michael Brune issued a statement saying,
"[. . .] TransCanada is exploiting provisions of so-called free trade deals that permit foreign corporations to undermine American policy meant to protect the health of our families and the safety of our communities. These destructive provisions that wrongly empower corporations to attack our safeguards show exactly why NAFTA was wrong and why the dangerous and far-reaching Trans-Pacific Partnership is worse and must be stopped in its tracks.”
The Toronto Globe and Mail reports that TransCanada "appears to have a strong case." But even if the U.S. eventually wins this case, the costs of litigation will be very large.
COOL Meat Labels
Before that, Mexican and Canadian meat corporations won a suit against the U.S. government for requiring "country of origin labels" (COOL) on meat, telling consumers where their meat was born, raised and slaughtered. These corporations felt that allowing consumers to make choices based on where their meat came from cost them profits. They sued in a "corporate court" set up by NAFTA's provisions and won. There is no appeal and no U.S. court can override that decision. Congress was forced to repeal the law in December.
Talking Points Memo explains this in "U.S. Repeals Meat Labeling Law After Trade Rulings Against It":
After more than a decade of wrangling, Congress repealed a labeling law last month that required retailers to include the animal's country of origin on packages of red meat. ...
Lawmakers said they had no choice but to get rid of the labels after the World Trade Organization repeatedly ruled against them. The WTO recently authorized Canada and Mexico, which had challenged the law, to begin more than $1 billion in economic retaliation against the United States.
... Consumer groups say the repeal is a disappointment just as consumers are asking for more information on their food packages. Advocates say the labels help people make more informed buying decisions and encourage purchases of American meat.
Do you want to know where meat you buy comes from? Too bad; the U.S. signed a trade agreement that says you don't get this information because you might choose to do something that would lower a foreign corporation's profits.
More Suits Coming
It doesn't end there. For example, Canadian financial corporations have threatened to invoke NAFTA to derail the Dodd-Frank financial reform legislation. It seems that regulating banks to stop them from actions including defrauding customers and investors is costing profits and that's a no-no because we signed a "trade" agreement that says so. And there is no appeal.
TPP, if passed, would greatly expand the number of corporations empowered to sue the U.S. government for loss of profits and take away our country's ability to do anything about this. TPP would empower corporations from Japan, Australia and all the other TPP countries – including subsidiaries of U.S. corporations – to sue the U.S. government for laws and regulations they feel interfere with profits.
Most frighteningly, with the climate crisis only beginning, TPP would empower more fossil-fuel corporations to challenge U.S. environmental protections that cost them profits. And there is no appeal.