The way they become more powerful is by tangling sovereign states in a web of trade agreements
No 768 Posted by fw, June 6, 2013
“What is the biggest threat to the ability of corporations to go into a country and suck out the natural resources without any regard for the environment or labor standards? The threat is democracy. The threat is that citizens will be annoying and get in the way and demand that their governments take action. So what corporations need is to become more powerful than sovereign states. And the way they become more powerful is by tangling sovereign states in a web of these trade agreements.”—Jim Schultz, Executive Director, The Democracy Center
The secretive plot by TPP member states, including the United States, Canada, Australia, Japan, New Zealand, Mexico, Chile, appears to be to strengthen the legal power of corporations over sovereign states. Thanks to Democracy Now for its interview of two experts who shed light on the terrifying implications of the Trans-Pacific Partnership for the rest of us. Unless the TPP is stopped we will be one giant step closer to living in a Corporatocracy. The multi-billion dollar question is how can citizens stop TPP? As Ralph Nader put it: “We’ve got to show the American people it’s easier than they think to turn the country around in many ways”
Click on the following linked title to watch the interview with Celeste Drake, a trade policy specialist with the AFL-CIO, and Jim Shultz, executive director of The Democracy Center, which has just released a new report on how corporations use trade rules to seize resources and undermine democracy. A complete transcript is also available at this website. Or scroll down to watch an embedded copy of the 16:14-minute interview and read an abridged version of the transcript with its added subheadings and text highlighting.
Obama-Backed Trans-Pacific Partnership Expands Corporate Lawsuits against Nations for Lost Profits, Democracy Now, June 6, 2013
The Obama administration is facing increasing scrutiny for the extreme secrecy surrounding negotiations around a sweeping new trade deal that could rewrite the nation’s laws on everything from healthcare and Internet freedom to food safety and the financial markets. The latest negotiations over the Trans-Pacific Partnership (TPP) were recently held behind closed doors in Lima, Peru, but the Obama administration has rejected calls to release the current text. Even members of Congress have complained about being shut out of the negotiation process. Last year, a leaked chapter from the draft agreement outlined how the TPP would allow foreign corporations operating in the United States to appeal key regulations to an international tribunal. The body would have the power to override U.S. law and issue penalties for failure to comply with its rulings.
The latest negotiations over the Trans-Pacific Partnership, or TPP, were recently held behind closed doors in Lima, Peru, but the Obama administration has rejected calls to release the current text. Even members of Congress have complained about being shut out of the negotiation process.
Last year, a leaked chapter from the draft agreement outlined how the TPP would allow foreign corporations operating in the United States to appeal key regulations to an international tribunal. The body would have the power to override U.S. law and issue penalties for failure to comply with its rulings. Earlier leaks from the draft agreement exposed how it included rules that could increase the cost of medication and make participating countries adopt restrictive copyright measures.
Our democracy is what’s really at stake with the Trans-Pacific Partnership (TPP)
Jim Shultz, executive director of the Democracy Center – [The] Trans-Pacific Partnership…. is part of this global web of trade agreements that are being negotiated, that have been negotiated over the last 30 years, that, you know, from the outsider, it could seem like it’s a bunch of legal mumbo jumbo, but really what’s at stake is democracy. The report that we just put out looked at a very troubling part of what these agreements involve, which are these special trade tribunals that are used by corporations to directly undermine the ability of citizen movements to influence their government.
Case in point – Bechtel has sued Bolivia $50 million after being kicked out by a popular rebellion
You know, the famous case, of course, is the one from Bolivia, where Bechtel from San Francisco came in, privatized—took over the privatized water system, raised people’s rates up by more than 50 percent, was kicked out by a popular rebellion, and turned around on a $1 million investment and sued Bolivia for $50 million. These cases—there’s almost 500 a year now of these cases being filed all over the world. Philip Morris, the tobacco giant, is suing Uruguay for the sin of putting health warnings on their cigarettes. In El Salvador—
Case in point – Philip Morris is suing Uruguay for hundreds of million because it put stricter health warnings on cigarette packages
Jim Shultz – Uruguay decided to put stiffer health warnings on cigarette packages. And Philip Morris doesn’t like that, so Philip Morris uses a bilateral investment treaty between Uruguay and Switzerland—so, Philip Morris somehow puts on a Swiss hat and pretends it’s a Swiss company—and is suing Uruguay for hundreds of millions of dollars. This is—this is everywhere.
Case in point – Canadian mining firm is suing El Salvador for $315 million for protesting dumping of poisonous chemicals into drinking water
I mean, one of the most egregious of the current cases is in El Salvador, where here’s the community of Las Cabañas that discovers that this Canadian mining firm is going to dump poisonous chemicals into their drinking water to suck gold out of the ground. And they do what citizens are supposed to do: They hammer on their government until they get the government to agree not to let the mining go forward. So what does the company do? The company turns around, under one of these trade agreements, and sues for $315 million.
TPP is a win-win for companies and lose-lose for people
So what you have—it’s a win-win for the companies, because they either win huge amounts of money—I mean, this is 1 percent of GDP in El Salvador, the amounts of money are enormous—or, just as important, they have a chilling effect on the ability and the willingness of governments to protect their people.
There are as many as 500 lawsuits a year related to these kinds of trade infringements
Jim Shultz – Yeah, it’s grown like this. And it’s a new—it’s a new derivatives market. These companies that are bringing these cases will actually go to investors and say, “We will sell you, for a price, 30 percent of the cut if we win the case.” I mean, it’s a marketplace. But the bottom line is, what it means is, if you are looking for the protection of your environment, watch out to be sued.
Case in point – Swedish company has sued Germany for 700 million euro after citizens won a moratorium on nuclear power
And this is not just poor countries. Germany is getting sued, because after Fukushima, the citizen movements there were able to win a moratorium on nuclear power. And so, the Swedish company involved in their nuclear power industry is suing them for 700 million euro. And the TPP is just going to bring more of this.
The jaw-dropper is companies can sue for profits they expected to earn but didn’t
Jim Shultz – Well, I think that’s certainly true if you look across Latin America, where citizen movements and more progressive governments have been able to take these kinds of actions. And, look, if you talk to a lawyer who makes $1,000 an hour representing these corporations, they’ll say, “Look, we need legal security. Companies need foreign investment. We need legal security. We’re just trying to protect against the possibility that someone comes in with soldiers and takes away our mine.” But this is not just about them getting the $5 million they put in back. Under these bilateral investment treaties, and certainly it’s going to be the same under the TPP, these corporations can sue for the profits that they expected to earn and didn’t. That’s where you get these sums that are just off the charts.
Obama’s nominee for U.S. trade representative defended the TPP in a speech last year
[Video clip of Michael Froman] – I don’t think I have to tell this audience how important the Asia-Pacific market is to the United States, its manufactured goods, agricultural products or services. It represents 40 percent of global trade. In 2010, U.S. goods exports totaled $775 billion, comprising almost 60 percent of all of our goods exports. And goods exports to the region are up 25 percent over the last two years. For our farmers and ranchers, nearly three-quarters of our total exports go to Asia-Pacific customers. And for our service providers, nearly 40 percent of their total services exports go to the region. And these benefits are not just for the big multinational companies, but for Americans—America’s small- and medium-size enterprises, too, who export over $170 billion to the Asia-Pacific region.
With elected representatives locked out of the negotiations, TPP is not designed to benefit working people
Celeste Drake, trade policy specialist with the AFL-CIO – We question the wisdom of pursuing the TPP in the first place. We do have, for better or for worse, the World Trade Organization, which has lowered tariffs around the world and has allowed us to increase our exports, as Mr. Froman was explaining in the speech. So what the TPP is about is all of these other things around the tariffs. So it is about these investor state dispute tribunals, it’s about harmonizing rules for food safety, it’s about harmonizing rules for intellectual property—a lot of rules that if citizens aren’t really participating in the formation of those rules, they’re not necessarily going to work out and inure to the benefit of working people and America’s citizens. So we’re very active in following the negotiations, in advocating for better rules that will help workers, real farmers, small businesses, because our past trade agreements, starting with NAFTA and on down the line, have basically been big packages that benefit the 1 percent. And if anybody else benefits, it’s really only by accident and not really by design.
Globalization on a corporate model has led to a race to the bottom for workers – the winner is really the loser
Celeste Drake – Well, in trade agreements, and beginning with NAFTA, which was a really poor example, the United States has tried to put in so-called labor obligations. In NAFTA, it was a side agreement, largely unenforceable. They’ve gotten better through the years. But they’re really kind of a Band-Aid that tries to fix some of the really destructive patterns that have been caused by globalization. Globalization on a corporate model has led to this race to the bottom, where the world’s biggest corporations really play a game of arbitrage, and they’re pitting especially developing countries one against the other, who can provide the lowest wages, the weakest worker rights regime, the fewest unions. And, you know, the winner is really the loser, because they’ve got workers who are working really hard, putting in a hard day’s work, and very possibly putting their lives at risk, and definitely not raising their standards of living. And when workers in any one country are allowed to be abused like that and have their rights repressed, it actually lowers the wages and the rights for workers all around the world. So, when we can try to improve it slightly through these trade agreements, that’s never going to be the silver bullet to really, really fix the problem. We’ve got to address it globally, because it’s a global problem.
Democracy is the biggest threat to corporate power – TPP will allow corporations to undermine democracy and violate public interest on a global scale
Jim Shultz – You know, I don’t think there’s any question. It’s all about U.S. corporations and large corporations, because if you think about it, what is the biggest threat to the ability of corporations to go into a country, whether it’s El Salvador, Bolivia, anywhere, and suck out the natural resources without any regard for the environment or labor standards? The threat is democracy, right? The threat is that citizens will be annoying, get in the way, and demand that their governments take action. So, what corporations need is they need to become more powerful than sovereign states. And the way they become more powerful by sovereign states is by tangling sovereign states in a web of these trade agreements that allow them to go to tribunal systems like the one at the World Bank and force governments to take these kinds of actions. You know, I was at the U.N. yesterday, and there was a—I was talking about this, and there was a man from Kenya who was explaining, look, these bilateral investment treaties, these investor dispute resolutions, the corporate trade panels, they were imposed on his country, as they were in many countries, by the World Bank as conditions of lending. So, it’s a straightjacket that the U.S. supports, because it is pursuing the interests of U.S. corporations. This has nothing to do with protecting public interest. And it’s a violation of public interest and a blockade against democracy.
- Opponents call Trans-Pacific Partnership “a deadly weapon against democratic rule” posted on May 29, 2013
- Large-scale public protests in Japan against secretive Trans-Pacific Partnership posted on May 9, 2013