Does The Fast Track Authority Bill Guarantee That Corporate Sovereignty Will Be One-Sided And Unfair?

from the important-questions dept

Yesterday, Mike reported on the introduction of the "fast track authority" bill in the Senate, and pointed out some of its most troubling aspects. But it's a long document -- over 100 pages -- and hidden away within it are some other areas that raise important questions. Take, for example, Section 8, which concerns sovereignty:

No provision of any trade agreement entered into under section 3(b), nor the application of any such provision to any person or circumstance, that is inconsistent with any law of the United States, any State of the United States, or any locality of the United States shall have effect.
Writing on the International Economic Law and Policy Blog, Simon Lester, a trade-policy analyst at the Cato Institute, asks:
Is this an assertion that no provision will be included in a trade agreement if such provision conflicts with U.S. law? Or does it mean that if there is a provision in a trade agreement that conflicts with U.S. law, that provision has no effect? Or something else entirely?
In the same section of the bill, there's another passage whose meaning is by no means clear:
Reports, including findings and recommendations, issued by dispute settlement panels convened pursuant to any trade agreement entered into under section 3(b) shall have no binding effect on the law of the United States, the Government of the United States, or the law or government of any State or locality of the United States.
Again, does that mean the rulings of corporate sovereignty (ISDS) tribunals won't be enforceable in the US, or simply that they don't create legal precedents? It's a crucially-important point, because the terms of this fast track authority will apply not only to TPP, but also to TAFTA/TTIP. And there, the European Commission has been making the following argument about the necessity of including ISDS in the transatlantic agreement (as reported by Australia's Inside Story):
The problem with scrapping ISDSs, according to the Commission, is that the US legal system is not set up to deal with international investment agreements. "Quite simply, TTIP cannot be enforced in US domestic courts," [European Commission spokesperson] Clancy says. "So, this is about ensuring [that] investors have the right to a certain amount of protection."
If the fast track authority clause quoted above does, indeed, undercut the entire ISDS mechanism, then foreign investors would be unable to enforce TTIP's investment measures according to the European Commission's analysis. However, assuming that's not the meaning of the bill, there's another problem. Among the "principal trade objectives" listed at the start of in the fast track authority bill, is "foreign investment", where we read:
Recognizing that United States law on the whole provides a high level of protection for investment, consistent with or greater than the level required by international law, the principal negotiating objectives of the United States regarding foreign investment are to reduce or eliminate artificial or trade distorting barriers to foreign investment, while ensuring that foreign investors in the United States are not accorded greater substantive rights with respect to investment protections than United States investors in the United States, and to secure for investors important rights comparable to those that would be available under United States legal principles and practice
It's interesting to note that the bill explicitly recognizes that US law provides "a high level of protection for investment", which naturally calls into question the supposed "need" for any extra corporate sovereignty in the form of ISDS. But more importantly, the fast track authority bill states that trade agreements must ensure that:
foreign investors in the United States are not accorded greater substantive rights with respect to investment
And yet that is precisely what ISDS in TAFTA/TTIP or TPP would do: in addition to the use of domestic courts in the US, foreign investors would have the option to take the US to independent corporate sovereignty tribunals. However, that would not possible for US investors in the US, since ISDS only applies to foreign investment.

So we are left with two possibilities. Either the fast track authority aims to nullify the ISDS chapter in TPP and TAFTA/TTIP by rendering tribunal rulings impossible to enforce, or it will allow foreign investors to use ISDS tribunals to obtain enforceable decisions, in which case they will have greater substantive rights than US investors. Either way, one side of the negotiations is going to get a really bad deal from the inclusion of corporate sovereignty provisions. That's yet another powerful reason to drop them entirely from both TPP and TAFTA/TTIP.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+



Reader Comments (rss)

(Flattened / Threaded)

  •  
    icon
    That One Guy (profile), Jan 10th, 2014 @ 6:53pm

    One law for me, another for thee

    So unless my reading of those sections is very off, it almost seems like the US is trying to set up a 'high-court/low-court' system on an international level, where the US would be immune to any of the downsides, like being forced between changing or repealing a law or regulation, or facing a massive penalty for 'lost potential profits', while at the same time fully enjoying all of the upsides provided by such 'free trade' provisions.

    Hopefully the negotiators from other countries give this bill a good look-through, as it makes it pretty clear just how interested the US negotiators are in 'equal' treatment between countries, despite what they may claim to the contrary.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jan 11th, 2014 @ 11:40am

      Re: One law for me, another for thee

      "enjoying all of the upsides provided by such 'free trade' provisions"

      These upsides you speak of - might that be in reference to third world slave labor utilized in the manufacture of haughty items marketed to the rich and famous for ridiculous markups?

      Perhaps these slaves need sovereignty too, they would be due compensation for things like being trapped in burning buildings.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Clownius, Jan 13th, 2014 @ 1:20am

      Re: One law for me, another for thee

      Does this idea shock you?

      Look at how many things are subsidized in the USA and part of a FTA. Its only the other countries that cant subsidize. Free trade only works one way for the USA.

      I cant see Corporate sovereignty being any different. Its purely so US companies can run roughshod over other countries it wont work the other way.

       

      reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
     
    identicon
    out_of_the_blue, Jan 10th, 2014 @ 7:08pm

    You're over-weenie-ing again.

    And you're factually wrong at 3rd word: "Mike reported". -- No, he didn't: re-wrote at best.

    Whatever. I'll just skip to your last two sentences:

    "Either way, one side of the negotiations is going to get a really bad deal from the inclusion of corporate sovereignty provisions." -- Okay, having acknowledged it'll definitely be "bad", how can you possibly not be totally against it? You next imply that think it just needs some fine-tuning: "That's yet another powerful reason to drop them entirely from both TPP and TAFTA/TTIP."

    And yet again we have the ongoing ambiguity of Techdirt's postion on TPP. It's clearly a corporatized globalist plan to steal national sovereignty, but you guys don't come out clearly against it, just go into confusing weenie-ing.

    Here's the way a real writer who's against TPP handles it:
    What's left of our jobs, food safety, Internet freedom, natural medicine, small farming, choice in medicine, financial regulation, privacy and more. Basically, all your rights. It permeates every area of your life, it's been ramrodded through the Senate, and the media is not saying anything. It grants the likes of Monsanto, Wall Street and other huge entities full reign with immunity.

    Kiss any last American sovereignty goodbye and say hello to your new global crypto-corpocracy complete with international tribunals and the end of domestic law - from your newly refurbished prison cell, of course.

    http://www.activistpost.com/2014/01/no-brainer-course-in-derailing-tpp.html

    See the difference between your limp prolixity and her vigorous polemic? It's impossible to regard you as doing anything less than easing TPP onto us; and since after many pieces you don't even say that you oppose it, so it's clear that you support TPP.

    Libertarians are sneaky traitors in the class war who coax the poor into giving up all their weapons until like taking on helicopter gunships with bare hands, defeat is certain.

    15:07:26[q-50-8]

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jan 12th, 2014 @ 6:26pm

      Re: You're over-weenie-ing again.

      I hope you paid the author you hypocritical theiving grifter.

      You did not create those 2 paragraphs, yet you feel that you can just steal it.

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Jeff Woods (profile), Jan 10th, 2014 @ 7:15pm

    short answer

    In the "tl;dr" category, you could replace everything after the third letter of the article with a period.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    beltorak (profile), Jan 10th, 2014 @ 11:21pm

    I suspect that they will just argue that not abiding by an ISDS settlement is equivalent to withdrawing from the trade agreement - something they say any country is free to do at any time.

    If you believe there will be no negative repercussions from withdrawing - i.e. if you believe there will be no negative repercussions from asserting the laws of a country take precedence over the judgement of the ISDS tribunals - IOOW if you think withdrawing from a trade agreement will be "easy" or even "feasible" - then I want to also bring to your attention this great bridge you can buy....

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jan 11th, 2014 @ 2:27am

      Re:

      That is exactly the issue: It is meaningless from a political leverage point of view, since breaking international obligations will give USA problems with upholding other agreements, which in turn compromise a lot more agreements and legalize punishing tarriffs on US products. The end result from ignoring "international obligations" completely would ultimately be isolation trade-wise.

      The exceptions provide for US courts to be able to act independent of international agreements, which is completely sensible. Fact of the matter is that international agreements provide for a deep source of intention interpretion since it is written in an environment where it is not meant to be possible to create new laws.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Brazenly Anonymous, Jan 11th, 2014 @ 12:41pm

    Actually quite clear

    Basically, there are certain provisions that Congress is setting up to be automatically stripped from any ratification they carry out under this bill. This is a compromise within the bill limiting the amount of authority that is transferred. If the USTR wants a treaty to include the mentioned provisions, they'll need to waive the fast-track process.

    What the bill should do is prohibit fast-track ratification on any such treaty containing the provisions, rather than having them silently dropped.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Kronomex, Jan 11th, 2014 @ 12:52pm

    All this means to me is that that American government has, or is trying to, exempt itself from the ISDS clauses while giving the finger to every other country.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      That One Guy (profile), Jan 11th, 2014 @ 6:32pm

      Re:

      Exactly so. It's actually rather instructive, reveals two things:

      1) Despite any claims to the contrary, this shows that even the negotiators and the ones trying to get FTA for the thing know how damaging such clauses can be to a country, and how toxic they are seen as by a growing number of people and governments.

      2) As far as they're concerned they shouldn't have to be bound by the same terms that they're demanding the other countries be bound by.

      If they were smart, the other countries would see the writing on the wall, namely that the US position during the negotiations has and continues to be 'US industries(or at least a select few of them) come first, the rest of you can have whatever scraps are left over', and at a minimum boot the US out of the negotiations(which wouldn't be that great of a loss, given the few leaks so far indicate that the US positions seem to be vastly different from just about every other country except one or two mini-me's trying to suck up to them), then carry on without them.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Jan 11th, 2014 @ 1:41pm

    sounds to me like another document with 'secret meanings' in it for 'secret interpretation' and they are so secret, that even if charged using them, you wont know what the charge is so you wont be able to defend against said charge!
    even if there were some legal procedure and it was explained correctly and used correctly, how will it apply to other countries or companies in other countries outside of the USA and it's jurisdiction? sounds to me like yet another go at the USA trying to instigate a world wide take over, using text that no one, including itself, has any understanding!!

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Jan 12th, 2014 @ 5:21pm

    And yet that is precisely what ISDS in TAFTA/TTIP or TPP would do: in addition to the use of domestic courts in the US, foreign investors would have the option to take the US to independent corporate sovereignty tribunals. However, that would not possible for US investors in the US, since ISDS only applies to foreign investment.

    So, let locals use the ISDS?

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Androgynous Cowherd, Jan 13th, 2014 @ 2:32am

    Minor spelling/grammar correction

    That's yet another powerful reason to drop them entirely from both TPP and TAFTA/TTIP.


    FTFY: "That's yet another powerful reason to drop both TPP and TAFTA/TTIP entirely".

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Daemon_ZOGG, Jan 13th, 2014 @ 12:36pm

    "..The Fast Track Authority Bill Guarantees That Corporate Sovereignty Will Be One-Sided And Unfair."

    To the big corps, were just little dollar signs running around like ants. Those with money, will always take advantage of those with very little of it. This especially includes Congress, whom gleefully went on there holiday vacation without giving a second thought to extending emergency unemployment benenfits for families trying to find work. WORST CONGRESS EVER. They were voted in on their campaign lies as usual. And they will continue to screw us until they're voted out.

     

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This