The United States shall guarantee to every State in this Union a Republican Form of Government. — Article IV, Section 4, US Constitution
A republican form of government is one in which power resides in elected officials representing the citizens, and government leaders exercise power according to the rule of law. In The Federalist Papers, James Madison defined a republic as “a government which derives all its powers directly or indirectly from the great body of the people… .”
On April 22, 2015, the Senate Finance Committee approved a bill to fast-track the Trans-Pacific Partnership (TPP), a massive trade agreement that would override our republican form of government and hand judicial and legislative authority to a foreign three-person panel of corporate lawyers.
The secretive TPP is an agreement with Mexico, Canada, Japan, Singapore and seven other countries that affects 40% of global markets. Fast-track authority could now go to the full Senate for a vote as early as next week. Fast-track means Congress will be prohibited from amending the trade deal, which will be put to a simple up or down majority vote. Negotiating the TPP in secret and fast-tracking it through Congress is considered necessary to secure its passage, since if the public had time to review its onerous provisions, opposition would mount and defeat it.
Abdicating the Judicial Function to Corporate Lawyers
James Madison wrote in The Federalist Papers:
The accumulation of all powers, legislative, executive, and judiciary, in the same hands, … may justly be pronounced the very definition of tyranny… . “Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator… .”
And that, from what we now know of the TPP’s secret provisions, will be its dire effect.
The most controversial provision of the TPP is the Investor-State Dispute Settlement (ISDS) section, which strengthens existing ISDS procedures. ISDS first appeared in a bilateral trade agreement in 1959. According to The Economist, ISDS gives foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever the government passes a law to do things that hurt corporate profits — such things as discouraging smoking, protecting the environment or preventing a nuclear catastrophe.
Arbitrators are paid $600-700 an hour, giving them little incentive to dismiss cases; and the secretive nature of the arbitration process and the lack of any requirement to consider precedent gives wide scope for creative judgments.
To date, the highest ISDS award has been for $2.3 billion to Occidental Oil Company against the government of Ecuador over its termination of an oil-concession contract, this although the termination was apparently legal. Still in arbitration is a demand by Vattenfall, a Swedish utility that operates two nuclear plants in Germany, for compensation of €3.7 billion ($4.7 billion) under the ISDS clause of a treaty on energy investments, after the German government decided to shut down its nuclear power industry following the Fukushima disaster in Japan in 2011.
Under the TPP, however, even larger judgments can be anticipated, since the sort of “investment” it protects includes not just “the commitment of capital or other resources” but “the expectation of gain or profit.” That means the rights of corporations in other countries extend not just to their factories and other “capital” but to the profits they expect to receive there.
In an article posted by Yves Smith, Joe Firestone poses some interesting hypotheticals:
Under the TPP, could the US government be sued and be held liable if it decided to stop issuing Treasury debt and financed deficit spending in some other way (perhaps by quantitative easing or by issuing trillion dollar coins)? Why not, since some private companies would lose profits as a result?
Under the TPP or the TTIP (the Transatlantic Trade and Investment Partnership under negotiation with the European Union), would the Federal Reserve be sued if it failed to bail out banks that were too big to fail?
Firestone notes that under the Netherlands-Czech trade agreement, the Czech Republic was sued in an investor-state dispute for failing to bail out an insolvent bank in which the complainant had an interest. The investor company was awarded $236 million in the dispute settlement. What might the damages be, asks Firestone, if the Fed decided to let the Bank of America fail, and a Saudi-based investment company decided to sue?
Abdicating the Legislative Function to Multinational Corporations
Just the threat of this sort of massive damage award could be enough to block prospective legislation. But the TPP goes further and takes on the legislative function directly, by forbidding specific forms of regulation.
Public Citizen observes that the TPP would provide big banks with a backdoor means of watering down efforts to re-regulate Wall Street, after deregulation triggered the worst financial crisis since the Great Depression:
The TPP would forbid countries from banning particularly risky financial products, such as the toxic derivatives that led to the $183 billion government bailout of AIG. It would prohibit policies to prevent banks from becoming “too big to fail,” and threaten the use of “firewalls” to prevent banks that keep our savings accounts from taking hedge-fund-style bets.
The TPP would also restrict capital controls, an essential policy tool to counter destabilizing flows of speculative money…. And the deal would prohibit taxes on Wall Street speculation, such as the proposed Robin Hood Tax that would generate billions of dollars’ worth of revenue for social, health, or environmental causes.
Clauses on dispute settlement in earlier free trade agreements have been invoked to challenge efforts to regulate big business. The fossil fuel industry is seeking to overturn Quebec’s ban on the ecologically destructive practice of fracking. Veolia, the French behemoth known for building a tram network to serve Israeli settlements in occupied East Jerusalem, is contesting increases in Egypt’s minimum wage. The tobacco maker Philip Morris is suing against anti-smoking initiatives in Uruguay and Australia.
The TPP would empower not just foreign manufacturers but foreign financial firms to attack financial policies in foreign tribunals, demanding taxpayer compensation for regulations that they claim frustrate their expectations and inhibit their profits.
Preempting Government Sovereignty
What is the justification for this encroachment on the sovereign rights of government? Allegedly, ISDS is necessary in order to increase foreign investment. But as noted in The Economist, investors can protect themselves by purchasing political-risk insurance. Moreover, Brazil continues to receive sizable foreign investment despite its long-standing refusal to sign any treaty with an ISDS mechanism. Other countries are beginning to follow Brazil’s lead.
In an April 22nd report from the Center for Economic and Policy Research, gains from multilateral trade liberalization were shown to be very small, equal to only about 0.014% of consumption, or about $.43 per person per month. And that assumes that any benefits are distributed uniformly across the economic spectrum. In fact, transnational corporations get the bulk of the benefits, at the expense of most of the world’s population.
Something else besides attracting investment money and encouraging foreign trade seems to be going on. The TPP would destroy our republican form of government under the rule of law, by elevating the rights of investors – also called the rights of “capital” – above the rights of the citizens.
That means that TPP is blatantly unconstitutional. But as Joe Firestone observes, neo-liberalism and corporate contributions seem to have blinded the deal’s proponents so much that they cannot see they are selling out the sovereignty of the United States to foreign and multinational corporations.
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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.
Obama, Corporate “Free Traitors” and You!
The pro-big business President Barack Obama and his corporate allies are starting their campaign to manipulate and pressure Congress to ram through the “pull-down-on-America” Trans-Pacific Partnership (TPP), a trade and foreign investment treaty between twelve nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam).
The first skirmish is a fast track bill to have Congress formally strip itself of its constitutional authority to regulate trade and surrender this historic responsibility to the White House and its corporate lobbies.
Lest you think the TPP is too commercially complex to bother about, think again. This mega-treaty is the latest corporate coup-d’état that sacrifices the American consumer, labor and environmental standards – inventively called “non-tariff trade barriers” – and much U.S. sovereignty to the supremacy of corporate commercial trade.
No single column can adequately describe this colossal betrayal – camouflaged by phrases like “free trade” and “win-win agreements.” For comprehensive analysis of the TPP you can go to Global Trade Watch (http://www.citizen.org/trade/).
Trade treaties, like NAFTA and GATT, which created the World Trade Organization (WTO), already have proven records of harming our country through huge job-exporting trade deficits, unemployment, freezing or jeopardizing our consumer and environmental rules, holding down regulations on giant banks and weakening labor protections.
How does the corporate state and its “free traitors” construct a transnational form of autocratic governance that bypasses the powers of our branches of government and accepts decisions that greatly affect American livelihoods issued by secret tribunals run by corporate lawyers-turned-judges? Well, first they establish autocratic procedures, such as fast track legislation that facilitate the creation of an absentee autocratic government, which betrays the American people by going far beyond reducing tariffs and quotas.
Imagine, when the TPP treaty finally gets negotiated with other nations in secret, the White House cynically classifies it as an “agreement” requiring a simple majority vote, not a treaty requiring two-thirds of the Congress for passage. Fast track legislation then limits debate on the TPP to a total of 20 hours in each chamber. Then, Congress lets the White House tie Congress’ hands by prohibiting any amendments and requesting just an up or down vote.
Meanwhile the campaign cash flows into the abdicating law-makers’ coffers from the likes of Boeing, General Electric, Pfizer, Citigroup, Exxon Mobil and other multinational corporations that show a lack loyalty to the United States (no corporate patriotism) due to their ties to communist and fascist regimes abroad who let them get away with horrible abuses and repression in the name of greater profits.
Many of these Pacific Rim countries, for example, have bad labor laws and practices, few, if any, consumer or environmental protections that can be enforced in courts of law and precious little freedom of speech.
A recent treaty with South Korea was pushed through Congress on false predictions of jobs and win-win solutions. In fact, the Korean agreement resulted in a ballooning of the trade deficit that the U.S. has with that country, costing an estimated nearly 60,000 American jobs.
The majority of these corporate-managed trade agreements come from the demands of global corporations. They exploit developing countries that have cheap labor and lax laws, unlike more developed countries, such as the U.S., that have greater protections for consumers, workers and the environment. Under this trade agreement, countries that seek better protections for their workers and consumers can be sued by corporations and other nations. Remarkably, better treatment, such as safer motor vehicles, is seen as an obstructive trade barrier against inferior imports.
For one example of many, under the WTO, the U.S. cannot keep out products made by brutal child labor abroad, even though U.S. law prohibits child labor in this country. This is how our sovereignty is shredded.
Under the WTO, the U.S. has lost 100 percent of the cases brought before the secret tribunals in Geneva, Switzerland against our public interest laws –like consumer and environmental protections. The TPP will produce similar autocratic outcomes.
Cong. Lloyd Doggett (D-TX), former Texas Supreme Court Justice, told POLITICO: “I do not believe that Congress should relinquish its trade oversight authority. This really is a fast track — seeking to railroad the Trans-Pacific Partnership through while the United States Trade Representative (USTR) hides from Congress the most important details.”
Proponents of the TPP want to limit debate and prevent any amendments to this treaty that might deal with issues such as currency manipulation, child labor, bad workplace conditions, etc. by such countries as Mexico and Vietnam. What is enforceable, with penalties, are sanctions and lawsuits against our country (and others), which corporate power demands. U.S. taxpayers will ultimately pay that price.
This is why Senator Elizabeth Warren is opposing the TPP. She wrote in the Washington Post that the TPP, “would allow foreign companies to challenge U.S. laws — and potentially to pick up huge payouts from taxpayers — without ever stepping foot in a U.S. court.”
For example, if a company doesn’t like our controls over cancer-causing chemicals, it could skip the U.S. courts and sue the U.S. before a secret tribunal that can hand down decisions, which can’t be challenged in U.S. courts. If it won before this secret kangaroo court, it could be given millions or hundreds of millions of dollars in damages, charged to you, the taxpayer. Again, the big business “free traitors” are shredding our sovereignty under the Constitution.
Scores of such cases already have been brought under the WTO. Senator Warren explained that “recent cases include a French company that sued Egypt because Egypt raised its minimum wage, a Swedish company that sued Germany because Germany decided to phase out nuclear power after Japan’s Fukushima disaster, and a Dutch company that sued the Czech Republic because the Czechs didn’t bail out a bank that the company partially owned… Philip Morris is trying to use ISDS to stop Uruguay from implementing new tobacco regulations intended to cut smoking rates.”
Senator Warren upset President Obama who, before a business audience (he wouldn’t talk TPP before a labor or consumer gathering), called Warren “wrong on the facts.” Really? Well why doesn’t he debate her, as Al Gore debated Ross Perot on NAFTA? She has read the fine print; I doubt whether he has read more than the corporate power tea leaves. He seems to have forgotten his severe criticism of NAFTA from when he ran for president in 2008.
Right now, President Obama probably has the Republican votes in the Senate, but not yet a majority of votes in the House. The vast majority of the Democrats are opposed to the TPP. Tea Party Republicans are reducing Speaker Boehner’s vote count among Republicans. Using history as an example, President Bill Clinton easily peeled off votes during his push for NAFTA. What we need now are a couple of million voters around America to put serious heat on their faltering members of the House and Senate – not that arduous of an effort – over the next few months. That is fewer Americans than watch big league games on television.
In addition, these civic-minded and active Americans would be backed by 75 percent of Americans who think that the TPP should be rejected or delayed, according to a bipartisan poll from the Wall Street Journal. People know what these “pull–down” trade agreements have done to them in their own communities.
from the archives:
Tell Congress to Oppose the Ryan-Hatch Fast Track Bill (Take Action)