by Mike Masnick
Thu, Aug 27th 2015 8:22am
by Glyn Moody
Tue, Aug 11th 2015 11:08pm
from the what's-plan-b,-again? dept
Back in May, we wrote about the European Commission's attempt to put lipstick on the corporate sovereignty pig. Its attempt to "reform" the investor-state dispute settlement (ISDS) system was largely driven by the massive rejection of the whole approach by respondents to the Commission's consultation on the subject last year. Of the 150,000 people who took the trouble to respond, 145,000 said they did not want corporate sovereignty provisions of any kind. Even the European Commission could not spin that as a mandate for business as usual, and so it came up with what it called a "path for reform" (pdf). By promising to solve the all-too evident "problems" of corporate sovereignty by coming up with something it claimed was better, its evident plan was to include this re-branded ISDS as part of the TAFTA/TTIP negotiations with the US.
The "path for reform" starts from some tinkering with a few elements of the basic ISDS approach that leaves the basic idea untouched, and moves towards something slightly more radical -- a permanent court for settling investor-state disputes:
The EU should pursue the creation of one permanent court. This court would apply to multiple agreements and between different trading partners, also on the basis of an opt-in system. The objective would be to multilateralise the court either as a self-standing international body or by embedding it into an existing multilateral organization. Work has already begun on how to start this process, in particular on aspects such as architecture, organisation, costs and participation of other partners.
The European Commission probably thought this was a pretty clever move: head off objections to ISDS and its ad-hoc tribunals by recasting it as a permanent court of a more traditional kind. There's just one slight problem with this idea: according to the respected German newspaper Die Welt, the US rejects it completely (original in German):
There's no question of such a [judicial] authority. The US will not tolerate interference in its national sovereignty.
That's a rather ironic viewpoint, given that ISDS already interferes with national sovereignty. Assuming that Die Welt's source is trustworthy, the US attitude may well arise from the fact that it has never lost an ISDS case, and perhaps believes, somewhat naively, that it never will. That seems unlikely: if TAFTA/TTIP includes corporate sovereignty, more than 3,400 parent corporations in EU nations, owning more than 24,200 subsidiaries in the US, will suddenly gain the right to sue the US government using the mechanism, in connection with any of their past, present or future investments there.
Whatever its reasoning, a refusal by the US to countenance the creation of a new permanent court dealing with investment disputes leaves the European Commission's TTIP strategy on this point in tatters. It will be interesting to see whether it now begins to row back from the idea of creating a completely new court, and starts extolling the virtues of a slightly "reformed" ISDS instead.
by Mike Masnick
Wed, Jun 17th 2015 2:46pm
As TPP Supporters Whine About Failure Of Fast Track, Why Is No One Suggesting Increased Transparency?
from the time-to-get-it-right dept
Meanwhile, the NY Times presents the argument that with the failure of fast track, and very likely TPP with it, it could greatly diminish the US's influence in Asia. This argument has been made for a long time, and it's... questionable at best. The article dutifully quotes the "40% of the global economy" line that supporters of the TPP throw out every other hour or so, but that's really overstating the impact of the TPP. Still, there is a legitimate argument that stronger trade relations between the US and these Asian countries is good for the global economy. But -- and this is the important part that isn't mentioned -- you don't need the TPP to do that.
Furthermore, this ignores the real reasons why the TPP failed. Rather than being about further opening up trading relations, the USTR ramped up the process that has been popular among lobbyists over the past couple of decades: using supposedly "free trade" deals to sneak in all sorts of regulatory schemes that will strongly pressure countries (including the US) to either change laws in certain ways, or block changing laws in other ways. That is, rather than free trade, these deals are actually the opposite. They're backdoor protectionism in the name of lobbyist-driven regulation.
And here's the thing that's amazing. In all of this, no one is talking about how to actually fix this. Pelosi talks about getting a "better deal" for the American middle class. And, sure, that would be great. But the real problem here is that these trade agreements became the playthings of giant corporate lobbyists, rather than democratically driven ideas.
If the TPP and other agreements like TTIP and TISA are really so vital to America's interests, and the interests of the "global economy," then let's have the negotiations and the debate out in public. Other international bodies, like WIPO, have long allowed such negotiations to happen publicly. It may not be how the USTR and its counterparts have negotiated such agreements in the past, but there's no reason they can't change now. Rather than continuing down this path of loading a ton of crap on the TPP tree, just to force through a few simpler free trading principles, why not conduct the negotiations openly, so that the public in all of those countries know what's going on and can see the reasoning behind these deals?
The only reason not to do this is to argue that the public is simply too dumb to understand why these deals are supposedly so important. And if that's your argument, then you're arguing against democracy. If the USTR believes it's representing democracy, then, at the very least, it should lead the way in saying that these trade negotiations will be conducted publicly and in a much more transparent way.
by Mike Masnick
Tue, Jun 16th 2015 2:43pm
from the still-waiting dept
There is no deal in place, and the House knows it, so it's not even going to try the vote. There was a procedural move to basically delay things through the end of July, so that it could come back, but it does seem clear that the President had no plan B, and really thought that House Democrats -- who have been squawking for months over this -- would eventually come around to back his position.
Meanwhile, on the Republican side, while they're publicly blaming the Democrats for this, they're punishing dissenters in the ranks who threatened some of the procedural shenanigans. And, at the same time, it appears that they're trying to craft a new plan that would separate fast track from the TAA and still move forward with fast track by itself, but that creates a whole host of other problems -- the biggest one being that those who voted against TAA in order to block fast track obviously know what's going on -- and this new move would likely be met with enough resistance to stop it as well.
Everyone agrees that fast track authority for the TPP (and those other trade agreements) is not necessarily dead, but it is on significant life support.
Fri, Jun 12th 2015 3:28am
House Votes To Change Law Due To Trade Agreement, While Insisting That Trade Agreements Don't Change Laws
from the do-they-even-understand dept
The bill's prompting and passage came after the World Trade Organisation ruled in favor of Canadian farmers, who sued claiming it was "discriminatory" and thus in violation of Free Trade Agreements. The problem? Cattle bought from abroad would have to be segregated from domestic cattle, increasing costs and making imports less desirable.
With Fast Track coming up for a vote -- perhaps even today -- it's curious to see this snippet in the Associated Press report on the vote by the Speaker of the House:
House Speaker John Boehner, R-Ohio, said after the vote that the last thing American farmers need "is for Congress to sit idly by as international bureaucrats seek to punish them through retaliatory trade policies that could devastate agriculture as well as other industries."That is, of course, the same John Boehner that has been encouraging the President to get more support for Fast Track, in order to pass more of these "Free Trade" deals that impose more international bureaucrats and will almost certainly lead to more disputes that "require" Congress to "not sit idly by."
Meanwhile, remember what President Obama said at the Nike Plant just a few weeks ago:
[TPP] critics warn that parts of this deal would undermine American regulation -- food safety, worker safety, even financial regulations. They're making this stuff up. (Applause.) This is just not true. No trade agreement is going to force us to change our laws.Less than one month on, and we have exactly what he claimed 'is not true' happening. A trade agreement forcing a law change, and having what some would claim is an impact on food safety. And it's happening a day or so before the House is voting to create even more such situations while claiming that it won't do this. Do they not even recognize what it is they're voting on?
by Glyn Moody
Wed, Jun 10th 2015 11:10pm
Analysis Shows European Commission's 'Improved' Corporate Sovereignty Model Would Actually Make Things Much Worse
from the institutionalized-regulatory-chill dept
Last year, the controversy around corporate sovereignty was such that the European Commission felt obliged to slam the brakes on this particular part of the TAFTA/TTIP negotiations in order to try to defuse the situation. The ostensible reason for that unexpected pause was to hold a public consultation on the "investor-state dispute settlement" (ISDS) mechanism. It turned out to be of a very limited kind. Rather than asking whether people wanted corporate tribunals passing judgment on their laws and regulations, the European Commission instead presented the ISDS chapter of another agreement, that with Canada, and posed some rather technical questions about the subtle changes it incorporated.
The Comprehensive Economic and Trade Agreement (CETA) is nominally finished, and is currently undergoing what is known as "legal scrubbing", during which it is checked and polished for final ratification by Canada and the EU, although that's looking much more problematic now than it did a year ago. In the consultation, CETA's ISDS chapter was offered as a kind of template for TAFTA/TTIP. The Commission's argument was that it incorporated many improvements over traditional corporate sovereignty chapters -- which even the EU admitted were flawed -- and could be tweaked further to produce an even better solution for the US-EU negotiations.
Techdirt has already written about one detailed analysis of the claimed improvements in CETA's ISDS that found them seriously wanting. Confirming that view is a new paper from Gus Van Harten, who is Associate Professor of Law at York University in Toronto, Canada. He has taken advantage of the fact that we now have two recent EU free trade agreements with corporate sovereignty chapters: the one with Canada, plus a less well-known deal with Singapore. Van Harten's paper looks at both of them in order to explore to what extent the European Commission's new model for ISDS represents an advance over previous versions, and is therefore something that might usefully form the basis for a possible corporate sovereignty chapter in TTIP. Here's his concluding summary:
The CETA and [EU-Singapore] FTA demonstrate the Commission's willingness to accept ISDS -- based on the model long pushed by Western European countries for developing and transition countries -- that is flawed due to its lack of independence, fairness, and balance. The Commission's approach to ISDS, as represented by the CETA and FTA, does not ensure basic safeguards of judicial independence and procedural fairness. It does not affirm clearly the state's right to regulate. It does not introduce actionable responsibilities for foreign investors or even require foreign investors to resort to domestic courts unless they have been shown not to offer justice. The only notable improvement in the CETA and FTA approach to ISDS, compared to the historical Western European model, is its greater provision for openness.
Although that is pretty unequivocal, it's worth reading the whole paper to understand why Van Harten is so dismissive. It contains many insights along the way, including the following astonishing fact:
By including ISDS in the CETA and FTA, as forerunners of a TTIP, the Commission would make the problems of ISDS much worse. The Commission aims to expand and lock in a deeply flawed system of dispute resolution -- premised on the special privileging and subsidizing of large companies and very wealthy individuals, with lucrative returns also for ISDS lawyers and arbitrators -- so that it covers most of the world economy.
The CETA's provision on the arbitrators' power to award damages to foreign investors includes a clause that I have not seen in any investment treaty. The clause says that, in calculating monetary damages, the arbitrators shall reduce the damages to account for "any... repeal or modification of the measure". Thus, the CETA appears to establish an incentive for states to change their decisions in order to appease a foreign investor (who has brought an ISDS claim) as a means to limit the state's exposure to potentially massive liability at the hands of the arbitrators. Put differently, this clause in the CETA appears to institutionalize the ISDS dynamic of "regulatory chill".
So much for the idea that corporate sovereignty "does not and cannot require countries to change any law or regulation": not only does the CETA text admit it can happen, it even provides a strong incentive to do so.
by Glyn Moody
Thu, May 28th 2015 1:03am
from the not-so-cool dept
Recently, we looked at how corporate sovereignty provisions undermine democracy by irrevocably binding future governments. The analysis was framed in terms of the UK's situation, but applied more generally to any country that signs up to investor-state dispute (ISDS) mechanisms in trade agreements. In particular, it applies to the US. And yet in President Obama's (in)famous TPP speech at Nike a few weeks ago -- the one where he claimed some of his "dearest friends" were wrong -- he said the following:
[TPP] critics warn that parts of this deal would undermine American regulation -- food safety, worker safety, even financial regulations. They're making this stuff up. (Applause.) This is just not true. No trade agreement is going to force us to change our laws.
But as a post on the Institute for Agriculture and Trade Policy site points out, just 12 days after Obama made that speech, this happened:
The House Agriculture Committee voted 38-6 to repeal in its entirety country-of-origin-labeling (COOL) for beef, pork and poultry. The House vote came in response to a May 18 ruling by the World Trade Organization (WTO) that the U.S. had violated global trade rules by requiring supermarket labels on beef and pork to indicate where livestock was born, raised and slaughtered.
As that makes clear, alongside the fact that it is quite possible that the US will indeed modify its laws here because of a trade agreement, this would be happening even though the laws in question enjoy huge support among the US public. Which shows that trade agreements can not only force laws to be changed, but can do so with absolutely no regard to what the people in whose name they are supposedly negotiated, actually want.
Congress has not repealed it because of overwhelming public support for COOL -- 90% of Americans support such a measure, according to Consumer Reports. Needless to say, civil society including farm, ranch, consumer, labor and other groups, won't sit quietly. But the fact is that the U.S. has to change COOL or face trade sanctions (though how significant is unclear). The USTR has already indicated it will encourage Congress to revise COOL.
by Glyn Moody
Wed, May 27th 2015 1:15am
from the how-is-that-even-possible? dept
Techdirt has been at the forefront of pointing out the dangers of including investor-state dispute settlement (ISDS) in so-called trade agreements. Indeed, we even helped come up with a new term -- corporate sovereignty -- to make clear that ISDS is really about placing corporations on the same level as entire nations, and giving them a unique power to sue a country for alleged harms before special tribunals. But there's an additional aspect to this, which is explored in an insightful article by Sam Fowles on The Conversation.
He points out that although we don't know in detail what the US-EU TAFTA/TTIP agreement will contain, we do have the text for the one between Canada and the EU, the Comprehensive Economic and Trade Agreement (pdf), known as CETA. The European Commission has said many times that it aims to build on the corporate sovereignty chapter in CETA when it comes to negotiating TTIP. One feature of ISDS in CETA is the following:
In the event that the present Agreement is terminated, the provisions of [Chapter X Investment] shall continue to be effective for a further period of 20 years from that date in respect of investments made before the date of termination of the present Agreement.
That is, even if a party pulls out of CETA, it will still be bound by the corporate sovereignty provisions for another 20 years, whether it likes it or not. Since we know that the US model investment treaty (pdf) also requires parties to continue allowing ISDS claims for ten years, it seems likely that TAFTA/TTIP, if it includes corporate sovereignty, will also have such a clause, for at least ten years, maybe more. Fowles explains why that is a problem -- he talks about the UK Parliament, but it applies equally to the US:
Parliament represents the will of the people. Therefore it can make or unmake any law it wants. But there’s a caveat: parliament can’t make a law that would bind future parliaments. To do so would be undemocratic. The laws of one generation are often inappropriate for the next. Parliament must embody the will of the people at the time. When two ordinary laws conflict, the courts will always apply the one passed most recently.
But the 10/20-year extension of ISDS interferes with that. It says that whatever the views of government in power, it must still respect the ISDS chapter signed by one of its predecessors. One implication is that for a decade or two, any major policy changes could be subject to billion-dollar cases before corporate sovereignty tribunals -- a strong disincentive to bring them in, whatever the public might want. The implication is clear. As Fowles writes:
If democracy is to remain the fundamental tenet of our constitution then TTIP must not be ratified. At the very least we must derogate from the 20-year clause. Living under a government you don’t like is the risk you take in a democracy, but being forced to live by rules agreed 20 years ago is fundamentally undemocratic.
As Techdirt explained last year, Canada has already signed a trade agreement with China that will take precedence over Canada's constitution for 31 years. Let's hope the US and EU aren't foolish enough to follow suit by allowing corporate sovereignty to reign over them even after TAFTA/TTIP is terminated.
by Mike Masnick
Fri, May 22nd 2015 6:16pm
from the but-of-course dept
Also as expected, all attempts to add amendments to the TPP -- including Elizabeth Warrens' plan to strip corporate sovereignty ISDS provisions -- failed. Any of the amendments almost certainly would have sunk the fast track bill in the House, so they were all basically poison pills designed to kill fast track. Still, it's disappointing that Congress is favoring corporate sovereignty, when it's pretty clear that it's a provision that is going to come back and bite us badly.
Either way, the fight will now move on to the House, where it's not yet clear if there are enough votes. But, don't be surprised to see a full court press to convince another dozen or so Democrats to join with Republicans in coughing up Congress' Constitutional authority over international trade.
by Glyn Moody
Thu, May 21st 2015 1:00am
Certification: How The US Demands Even More Concessions After Trade Agreements Have Been Signed And Ratified
from the enough-is-never-enough dept
The battle raging over the fast track bill is essentially one about control: who gets the final say over so-called trade agreements like TPP and TAFTA/TTIP. If the US President is not given trade promotion authority, it is possible that Congress will demand changes to the negotiated text; with fast track, it will be a simple up or down vote. That's also the situation in other countries participating in the negotiations: once the text is agreed upon, they can essentially accept it or reject it. However, a group of senior politicians in five of the TPP nations point out that after those votes, the US can still demand further concessions from its partners thanks to a process known as certification:
Senior parliamentarians from five countries negotiating the Trans-Pacific Partnership (TPP) agreement have signed an open letter urging their political leaders to protect their nations’ sovereignty from the United States' process of certification.
Here's how that works:
The US withholds the final steps that are necessary to bring a trade and investment treaty into force until the other party has changed its relevant domestic laws and regulations to meet US expectations of its obligations under the agreement. In the past, US 'expectations' have gone beyond what is in the actual text, and even included matters that were rejected in negotiations.
In other words, even though other nations might think that after their agreement and ratification of the text, everything is fixed, the US reserves the right to come back and demand changes to domestic laws and regulations so as to ensure that the implementation is as it wishes. That's no mere theoretical option: it has been used against both Peru and Australia recently. In the latter case, the US was unhappy with the legislation enacting the Australia-US free trade agreement (AUSFTA), and demanded that Australia bring in a supplementary law that actually went beyond the terms of AUSFTA. Even then, the US reserved its right to take legal action if it felt that Australia had still not gone far enough.
US officials can define another country's obligations; become directly involved in drafting that country's relevant law and regulations; demand to review and approve proposed laws before they are presented to the other country's legislature; and delay certification until the US is satisfied the new laws meet its requirements.
The publication of the open letter (pdf) to the political leaders of the TPP nations is a timely reminder that however much sovereignty they might be willing to give up during the negotiations for the sake of supposed gains, the US may want even more concessions -- without, of course, granting other countries the same prerogative.