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TPP Will Supersede Domestic Law in Favor of Corporations


Investment negotiators from Trans-Pacific Partnership (TPP) countries met secretly last week in Vancouver for their 18th round of talks regarding the expansive agreement. Frantic protestors, who caught wind of the conference through the Peruvian media, tried unsuccessfully to locate the talks and instead decided to hold a demonstration outside of the offices of Pacific Rim — a Canadian mining corporation.

It was a good example of how the private sphere is shutting out the public’s voice, even though TPP agreements affect everything from patents, to the web, to procurement, to financial services, to food safety and health care.

This year’s agreement, which so far twelve countries are a part of, would allow foreign corporations to appeal those countries’ laws and regulations to an international tribunal if they feel that they’ve been treated unfairly in their ability to practice free trade.

The TPP would be the latest and one of the largest trade agreements that has transformed legal systems around the world. But the reason that the TPP is especially frightening to many is because it includes a new measure that would keep the agreement open ended, meaning other countries could join later. 

These investor-state trade agreements are win-wins for corporations. Either corporations are approved for projects in companies abroad, or, if they are rejected, they can sue for lost potential profits. The only difference, in the end, is whether companies exploit a country’s natural resources or its treasury.

Take the case of Pacific Rim, which is suing the Salvadorian government for rejecting a mining deal after a public outcry from locals over the potential contamination of the country’s water supplies. Pacific Rim is using the Central American Free Trade Agreement to argue that it is being unfairly shut out from business in El Salvador, and is asking that the government cough up $315 million to make up for its potential and theoretical profits.

Companies will often inflate these theoretical numbers in an effort to extract as much money as they can. In the case of Bechtel vs. Bolivia, Bechtel Corporation sued for $50 million—their estimated loss of future earnings—having invested just $1 million in an effort to privatize Bolivia’s water system. 

“The fear of such cases,” writes Thomas McDonogh in a report he released through the Democracy Center earlier this year, “results in a chilling effect on the willingness of governments around the world to pursue sustainable development policy initiatives precisely at the time when they are so badly needed.”

These agreements, which number in the thousands now, are “little understood weapons” of the corporate state, says McDonogh. They are steadily replacing and rewriting every country’s domestic laws putting corporations in the seat of power. They will nullify regulations on health, the environment, food, the web and the financial sector.

The integrity of the system itself has also been called into question. There are 15 arbiters, almost all from Europe, the U.S. or Canada, for example, that have determined the outcome of 55 percent of the cases known to the public. Lawsuits themselves average $8 million in arbitration costs, with some exceeding $30 million. Arbiters often have close ties to the boards of these large corporations, sometimes using the revolving door for personal profits.

“It’s like a quiet, slow-moving coup d'état,” Lori Wallach, director of the Global Trade Watch at Public Citizen, said in May in a Bloomberg article on lead in Peru’s water sources.

Despite the implications this has for the public, the TPP negotiations are taking place behind closed doors, although corporations are allowed 600 lobbyists at these meetings who are allowed input on draft texts as they are being discussed.

One of these texts was leaked last year, prompting 100 lawyers from around the world to write an open letter denouncing the TPP and its potential for destroying the jurisdiction of domestic legal systems.

Public Citizen, which boiled the document down to a few key bullet points, said that the TPP would:

• “Limit how U.S. federal and state officials could regulate foreign firms operating within U.S. boundaries, with requirements to provide them greater rights than domestic firms;

• “Extend the incentives for U.S. firms to offshore investment and jobs to lower-wage countries;

• “Establish a two-track legal system that gives foreign firms new rights to skirt U.S. courts and laws, directly sue the U.S. government before foreign tribunals and demand compensation for financial, health, environmental, land use and other laws they claim undermine their TPP privileges; and

• “Allow foreign firms to demand compensation for the costs of complying with U.S. financial or environmental regulations that apply equally to domestic and foreign firms.”

“The overall impact of this system,” McDonogh says finally, “is to afford multinational corporations an effective ‘Bill of Rights’ that supersedes government policies.”