NAFTA 2, electric bogaloo: TTIP and TPP

The Something Awful Forums > Discussion > Debate & Discussion > NAFTA 2, electric bogaloo: TTIP and TPP

V. Illych L.: Apr 11, 2008; ASK ME ABOUT LUMBER

So there be free-trade in the air, centered, as free trade generally is, on the United States. There are two major pacts being negotiated (secretly, of course, so details are scarce), one involving Europe and the other the Pacific Rim. No, not the action flick, the actual countries around the pacific.

I know very little about the TPP (the Kaiju one), personally, but I have been given to understand that it's shaping up to be a sort of a model for the TTIP. George Monbiot of The Guardian had this to say about the latter:

Monbiot, 2013 posted:

http://www.theguardian.com/commentisfree/2013/nov/04/us-trade-deal-full-frontal-assault-on-democracy

Remember that referendum about whether we should create a single market with the United States? You know, the one that asked whether corporations should have the power to strike down our laws? No, I don't either. Mind you, I spent 10 minutes looking for my watch the other day before I realised I was wearing it. Forgetting about the referendum is another sign of ageing. Because there must have been one, mustn't there? After all that agonising over whether or not we should stay in the European Union, the government wouldn't cede our sovereignty to some shadowy, undemocratic body without consulting us. Would it?

The purpose of the Transatlantic Trade and Investment Partnership is to remove the regulatory differences between the US and European nations. I mentioned it a couple of weeks ago. But I left out the most important issue: the remarkable ability it would grant big business to sue the living daylights out of governments which try to defend their citizens. It would allow a secretive panel of corporate lawyers to overrule the will of parliament and destroy our legal protections. Yet the defenders of our sovereignty say nothing.

The mechanism through which this is achieved is known as investor-state dispute settlement. It's already being used in many parts of the world to kill regulations protecting people and the living planet.

The Australian government, after massive debates in and out of parliament, decided that cigarettes should be sold in plain packets, marked only with shocking health warnings. The decision was validated by the Australian supreme court. But, using a trade agreement Australia struck with Hong Kong, the tobacco company Philip Morris has asked an offshore tribunal to award it a vast sum in compensation for the loss of what it calls its intellectual property.

During its financial crisis, and in response to public anger over rocketing charges, Argentina imposed a freeze on people's energy and water bills (does this sound familiar?). It was sued by the international utility companies whose vast bills had prompted the government to act. For this and other such crimes, it has been forced to pay out over a billion dollars in compensation. In El Salvador, local communities managed at great cost (three campaigners were murdered) to persuade the government to refuse permission for a vast gold mine which threatened to contaminate their water supplies. A victory for democracy? Not for long, perhaps. The Canadian company which sought to dig the mine is now suing El Salvador for $315m � for the loss of its anticipated future profits.

In Canada, the courts revoked two patents owned by the American drugs firm Eli Lilly, on the grounds that the company had not produced enough evidence that they had the beneficial effects it claimed. Eli Lilly is now suing the Canadian government for $500m, and demanding that Canada's patent laws are changed.

These companies (along with hundreds of others) are using the investor-state dispute rules embedded in trade treaties signed by the countries they are suing. The rules are enforced by panels which have none of the safeguards we expect in our own courts. The hearings are held in secret. The judges are corporate lawyers, many of whom work for companies of the kind whose cases they hear. Citizens and communities affected by their decisions have no legal standing. There is no right of appeal on the merits of the case. Yet they can overthrow the sovereignty of parliaments and the rulings of supreme courts.

You don't believe it? Here's what one of the judges on these tribunals says about his work. "When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all ... Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament."

There are no corresponding rights for citizens. We can't use these tribunals to demand better protections from corporate greed. As the Democracy Centre says, this is "a privatised justice system for global corporations".

Even if these suits don't succeed, they can exert a powerful chilling effect on legislation. One Canadian government official, speaking about the rules introduced by the North American Free Trade Agreement, remarked: "I've seen the letters from the New York and DC law firms coming up to the Canadian government on virtually every new environmental regulation and proposition in the last five years. They involved dry-cleaning chemicals, pharmaceuticals, pesticides, patent law. Virtually all of the new initiatives were targeted and most of them never saw the light of day." Democracy, as a meaningful proposition, is impossible under these circumstances.

This is the system to which we will be subject if the transatlantic treaty goes ahead. The US and the European commission, both of which have been captured by the corporations they are supposed to regulate, are pressing for investor-state dispute resolution to be included in the agreement.

The commission justifies this policy by claiming that domestic courts don't offer corporations sufficient protection because they "might be biased or lack independence". Which courts is it talking about? Those of the US? Its own member states? It doesn't say. In fact it fails to produce a single concrete example demonstrating the need for a new, extrajudicial system. It is precisely because our courts are generally not biased or lacking independence that the corporations want to bypass them. The EC seeks to replace open, accountable, sovereign courts with a closed, corrupt system riddled with conflicts of interest and arbitrary powers.

Investor-state rules could be used to smash any attempt to save the NHS from corporate control, to re-regulate the banks, to curb the greed of the energy companies, to renationalise the railways, to leave fossil fuels in the ground. These rules shut down democratic alternatives. They outlaw leftwing politics.

This is why there has been no attempt by the UK government to inform us about this monstrous assault on democracy, let alone consult us. This is why the Conservatives who huff and puff about sovereignty are silent. Wake up, people we're being shafted.

There are some citations on that guardian piece, and he's got a more fully cited version on his own homepage/blog/wha'evz

See also http://mondediplo.com/2013/12/02tafta

Now, his style is fairly polemical, but from what I've been able to read up on it's not generally *wrong*. Basically, it seems to fit fairly snugly in the ongoing process of supernational bodies more or less superceding the relatively accountable forces at individual state or nation level, further institutionalising a basically neoliberal mode of operations which is impossible for any given population to break. This is, as far as I can see, a Very Big Deal, but it is difficult to find good information about it. Americans, Mexicans, Canadians, what have been the lessons of NAFTA? I am reading up on it right now, and it seems very mixed, particularly for Mexico, but this is honestly not a field where I'm really competent to judge. What have been the impact of NAFTA on unions and organisations, and should we fear a similar development in Europe if this is mandated? The lack of detail, again, confounds debate, but there was a major push in the nineties to essentially dismantle unionisation in Europe through a similar trade scheme. It doesn't seem overly far-fetched to me, at least.

Am I being a reactionary leftie? If so, why? If not, what are our options for organising against it? why am i asking so many silly questions god

# ? Sep 6, 2014 16:49

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# ? May 4, 2024 14:14

ronya: Nov 8, 2010; I'm the normal one.

You hate ridden fucks will regret your words when you eventually grow up.

Peace.

tribunal decisions are nonbinding, what they end is the generalized and pointless "no u" that happens after trade disputes, in particular dredging up increasingly old and unrelated disputes. Same broad purpose as the ICJ or UN arbitration - they can rule that an island belongs to whoever, but they can't actually send a battleship to make it so. It just becomes vaguely embarrassing to your country's nominally cosmopolitan intellectual elite.

Alt-globalization types are unhappy because of the principles enshrined in the TTIP, namely not accepting as legitimate expropriation for the principle of expropriation and likewise not legitimizing home nation privileges. The TTIP enshrines a right to regulate but not expropriating the means of production, if you will.

the Australia case is particularly interesting because Phillip Morris pounced on an odd element of Australian jurisprudence, namely:

quote:

It may also be observed that the negative character of the plaintiffs' property rights leaves something of a logical gap between the restrictions on their enjoyment and the accrual of any benefit to the Commonwealth or any other person. Unlike the Newcrest case, there is no expansion in rights, interests, or benefits accruing to the Commonwealth that corresponds to or bears any relationship to the restrictions imposed on the use of the plaintiffs' intellectual property rights. The fact that the restrictions and prohibitions imposed by the TPP Act create the "space" for the application of Commonwealth regulatory requirements as to the textual and graphical content of tobacco product packages does not constitute such an accrual. Rather, it reflects a serious judgment that the public purposes to be advanced and the public benefits to be derived from the regulatory scheme outweigh those public purposes and public benefits which underpin the statutory intellectual property rights and the common law rights enjoyed by the plaintiffs. The scheme does that without effecting an acquisition.

In summary, the TPP Act is part of a legislative scheme which places controls on the way in which tobacco products can be marketed. While the imposition of those controls may be said to constitute a taking in the sense that the plaintiffs' enjoyment of their intellectual property rights and related rights is restricted, the corresponding imposition of controls on the packaging and presentation of tobacco products does not involve the accrual of a benefit of a proprietary character to the Commonwealth which would constitute an acquisition. That conclusion is fatal to the case of both JTI and BAT.

That is, instead of brightlining what does or does not constituted a public policy purpose for which a removal of property is not an acquisition under 51(xxxi), the decision said that (1) it is an acquisition, but (2) not to the Commonwealth, and therefore (3) the Commonwealth owes PMI nothing. This is obviously constructed with compatibility with Newcrest in mind, but it's also problematic in the sense that otherwise identical legislative schemes (e.g., requiring all cigarette manufacturers to sell through packaging sold by the Department of Health) would create such a proprietary character. Likewise, Newcrest might not have had a proprietary character if the land and minerals acquired from Newcrest was instead 'released' to the public in some nebulous sense, e.g., if it were more similar to offshore petroleum. So this isn't really a good test.

As noted by another judge:

quote:

On closer analysis, the Commonwealth's argument appears to rely simply upon the nature of the purpose pursued by the Packaging Act � the protection of public health � as justifying an infringement of s 51 (xxxi) or setting the Packaging Act apart from it. This is borne out in part by the Commonwealth's reliance upon authority on the "takings clause" of the Fifth Amendment to the United States Constitution, which holds that a prohibition on the use of property which is declared by legislation to be injurious to the health, morals or safety of the community cannot be deemed a taking. A more recent approach has been to examine the purposes and the magnitude or character of the burden imposed upon property rights, which looks more like a test of (strict) proportionality.

More directly, the Commonwealth's argument brings to mind an article of the Treaty Establishing the European Economic Community, by which prohibitions or restrictions on a freedom (relating to the movement of goods) may be justified, inter alia, on the ground of the protection of health. The article is strictly interpreted by the European Court of Justice so that a legislative measure may be justified only where the prohibition or restriction is reasonably necessary. There is of course no similar provision in our Constitution.

What the Commonwealth's argument may really come down to is a proposition that some legislative purposes might justify infringement of, or the treatment of a law as standing apart from and not subject to the requirements of, s 51(xxxi). This is a large proposition, but one that it is not necessary to consider further. The fundamental question which arises from the Commonwealth's argument is whether the Packaging Act is to be characterised as one for the acquisition of property. Logically, the first question to be considered in that regard is whether it would have the effect of acquiring property. The answer to that question is determinative of these proceedings.

which shows why neither the US nor the EU feel particularly terrified of Phillip Morris and British American Tobacco pulling the same trick.

I go into all that because the EU wants to hammer this into the TTIP:

quote:

All of the EU�s Free Trade agreements clearly confirm, as a standing principle, the Parties'
right to regulate and to pursue legitimate public policy objectives such as social, environmental, security, public health and safety, and the promotion and protection of cultural diversity. This principle will apply to investment protection provisions included in EU agreements as well...

[...] 'indirect expropriation' is one of the most controversial provisions in the investment protection system. Indirect expropriation is when government measures, while not directly taking property away, have the effect of doing so (e.g. the removal of a license required to operate a factory). This provision has been used by some investors to challenge public authorities� bans for health reasons of chemical products or the introduction of new stricter environmental legislation. Future EU agreements will provide a detailed set of provisions giving guidance to arbitrators on how to decide whether or not a government measure constitutes indirect expropriation, thus aiming at preventing abuse of the system.

In particular, when the state is protecting the public interest in a non-discriminatory way, the right of the state to regulate should prevail over the economic impact of those measures on the investor. These much needed clarifications will make sure that companies cannot be compensated just because their profits have been reduced through the effects of regulations enacted for a public policy objective. The Commission has negotiated provisions with Canada and Singapore which makes this clear, and the language will also be included in future agreements.

that is, the EU as an entity defines itself defines its internal market by:

quote:

CHAPTER 3 - PROHIBITION OF QUANTITATIVE RESTRICTIONS BETWEEN MEMBER STATES
Article 34

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.

Article 35

Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.

Article 36

The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

which is more or less consistent with its attitude toward trade in the TTIP

# ? Sep 8, 2014 03:31

ronya: Nov 8, 2010; I'm the normal one.

You hate ridden fucks will regret your words when you eventually grow up.

Peace.

anyway, from a fairly mainstream perspective (seriously, read the whole thing):

Pick two of three of the corners. So, yes, this sort of thing does incapacitate either the nation-state or democratic politics. If you have aspirations for a global left-wing consciousness then it should be very pleasing to you, actually; much better the MFN status quo than imperial preference. The problem is hitching this cosmopolitan horse onto a localist activism cart.

ronya fucked around with this message at 14:50 on Sep 8, 2014

# ? Sep 8, 2014 14:44

ReV VAdAUL: Oct 3, 2004; I'm WILD about
WILDMAN

Thanks for all the information Ronya, do you have any thoughts on fears it'll be used to privatise the NHS?

# ? Sep 8, 2014 15:09

Hermano: Oct 23, 2008

What an interesting perspective. Dani Rodrik brings up ethnic networks and their importance in building trade. I wonder if TPP will get pushback from the "Asian Godfathers." Increased integration could only hurt their state granted monopolies.

# ? Sep 8, 2014 15:39

Pope Guilty: Nov 6, 2006; The human animal is a beautiful and terrible creature, capable of limitless compassion and unfathomable cruelty.

Isn't this more like GATT 2?

# ? Sep 8, 2014 15:55

ronya: Nov 8, 2010; I'm the normal one.

You hate ridden fucks will regret your words when you eventually grow up.

Peace.

ReV VAdAUL posted:

Thanks for all the information Ronya, do you have any thoughts on fears it'll be used to privatise the NHS?

a bit complicated. Let me make a few points -

First, a politician who wants to privatize the NHS anyway will find it convenient to blame ~~the federal gubmint~~ ~~Brussels~~ nebulous foreign tribunals, even if those entities don't actually exercise jurisdiction. Conversely, another politician who wants to defend the NHS will seek to find explicit declarations by said entities that they expressly exempt free-at-the-point-of-use healthcare provision and all necessary legislation thereof, just so that the former politician cannot blame those entities when privatizing the NHS. So regardless of whether the TIPP has actually straightened any bananas, there is certainly a degree of movement of politics upward and downward anyway. There can be some dysfunction if public perception of who actually wields power is consistently divergent from who actually wields power - think of the United States and misconceptions over what, exactly, the President does - but whether this dysfunction leans in favour of NHS-like programs or against them is not obvious, at least to me; consider the evolution of Social Security and Medicare despite a general sentiment of tax revolt in the US.

Second, Slovakia is frequently mentioned in this context. It's handy because it is an excellent illustration. Slovakia was not obliged to privatize its healthcare insurance system by committing to investor compensation during expropriation directly. Rather, it committed to opening the healthcare insurance system to private competition, accepted for-profit foreign investors, and then the government changed - the new government sought to first ban profits by the new insurers and, when this was ruled out by its own courts on the basis of the ECHR (right to property!), sought to renationalize the new insurers. The relevant tribunal was then invoked in the ensuing dispute over how much compensation the investors were owed. So the question is (1) whether an entrenched human/constitutional right for full compensation during compulsory purchase already exists in your country of interest, which it theoretically does in the UK because of ECHR jurisprudence and for that matter English jurisprudence, and (2) thus presumably whether your personal politics tolerates such a notion, and (3) whether the country is prepared to nominally commit to have the level of compensation adjudicated by an international tribunal in return for having slightly more credibility in the face of, e.g., investor suspicions of the corruption of the judiciary, and (4) whether the country is actually willing to listen to those adjudications in the event of an undesirable judgment. Tribunals don't have aircraft carriers. The ECHR is rather more tricky to defy though.

Third, whilst I am not an international trade law lawyer, I should emphasize that the primary concerning effect of 'fairness' elements of the TTIP, insofar as public provision of services goes, is not via rendering it difficult to subsidize services, but by rendering it difficult to formulate a local coalition of lobbyists that will be confident of exclusively receiving the subsidy. That is, presuming a functional politics (i.e., putting aside the first point above), the scenario is not where a trade agreement rules out the NHS, but where a trade agreement rules out giving NHS subsidies to domestically-owned but not foreign-owned providers, thus letting domestic providers become less protective of the subsidies. What would happen if, e.g., the political viability of free-at-the-point-of-use subsidies became dependent upon small GPs for mass political support, but foreign providers specializing in private chain polyclinics (offering NHS services and thus receiving those same subsidies) sought to contest the market? That is to say, to what extent is one's favoured public policies dependent on these policies empowering particular lobby groups with monopolies on the domestic market? If very much so, then one should be more concerned. On the other hand, if your sworn enemy is the petite bourgeoisie (i.e., if the relevant policies derive their support from mostly big companies, or big unions of big companies), then this may be unambiguously appealing. You may need to sue other countries a lot. The UK does a lot of 'big finance', as a note - especially susceptible to expropriation. Nobody likes moneylenders, especially after the fact.

Fourth, whilst (again) I am not a lawyer, the 'arbitrariness' elements of TTIP means that health/safety/etc. claims that have an incidental effect of reducing profits or increasing protectionism may be subject to scrutiny by a tribunal. This means that such measures would have to be more careful in making public interest claims - if a country legislates licensing something in the name of safety, and the court finds that (by whatever standard of scrutiny in the treaty) that there is no actual increase in safety despite an adverse impact on investors, then the tribunal might strike down the law (subject to aircraftcarrierlessness caveats, as noted previously).

And lastly, let me point out that given the generally neoliberal character of status quo EU and its existing treaties, the aim of entrenching dispute resolution procedures not really for the first world nations to use it on each other, but for the EU to use it on other countries, as indicated in the EU TTIP fact sheet itself. Countries with weaker rule of law generally have more to gain from being able to precommit towards non-expropriation, certainly, but the aim is really baldly self-interested.

ronya fucked around with this message at 17:01 on Sep 8, 2014

# ? Sep 8, 2014 16:58

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# ? May 4, 2024 14:14

ronya: Nov 8, 2010; I'm the normal one.

You hate ridden fucks will regret your words when you eventually grow up.

Peace.

Hermano posted:

What an interesting perspective. Dani Rodrik brings up ethnic networks and their importance in building trade. I wonder if TPP will get pushback from the "Asian Godfathers." Increased integration could only hurt their state granted monopolies.

They'll love it. They're especially susceptible to foreign expropriation, whilst not really fearing domestic competition at present.

Pope Guilty posted:

Isn't this more like GATT 2?

No, this one really enshrines neoliberalism. The MFN system of the GATT favoured minimization of tariffs but both domestic and foreign entities could be subject to the same non-tariff conditions. There is no minimizing it here because the takings clauses involve defining the scope legitimate public purposes for which a compulsory purchase may be issued, and public interest is generally defined in an Article36esque manner. Notice that it rules out many non-neoliberal notions, e.g., a member state cannot have quantity restrictions on the explicit and straightforward basis of protecting the livelihoods of domestic producers in that product. Such welfare measures, or bundled welfare measures, are expected to be offered separately by the state or by treaty exemption - the member state cannot claim "but bundling welfare/taxes via protection was what was necessary to make it politically viable!" or "we don't believe in providing livelihood support by any other means!"

ronya fucked around with this message at 17:36 on Sep 8, 2014

# ? Sep 8, 2014 17:16

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