Obama Scrambles To Pass TPP As Corporate Tribunals Face Scrutiny
With opposition mounting, President Barack Obama is scrambling to jam the Trans-Pacific Partnership (TPP) trade deal through Congress before his term ends in 2017. Both major party presidential nominees—former Secretary of State Hillary Clinton and businessman Donald Trump—have publicly stated they oppose TPP and will not sign the agreement if they become president.
Though opposition to TPP has typically focused on the threat of losing American jobs, another concern is coming front and center: loss of sovereignty through a byzantine process known as investor-state dispute settlement (ISDS).
ISDS allows companies to sue states using private, three-man corporate tribunals as judges. The corporate tribunal process was originally intended to protect corporations from having their property nationalized by foreign countries. By allowing companies to recover lost funds, it was thought, states would be less likely to nationalize foreign assets. As a result, foreign investment would increase into countries in desperate need of it.
Under current practice, however, ISDS has become a way for transnational corporations to pressure governments to change health and safety regulations and let corporate executives walk on criminal charges.
According to a recent study of the ISDS process by BuzzFeed, “The system was designed to deal primarily with theft by autocrats, but, in the majority of cases today, businesses are suing democracies for enacting regulations.”
BuzzFeed also found instances in Egypt, El Salvador, and Indonesia, where the threat of ISDS actions by a business led to criminal charges being dropped against company executives.
A report by the Huffington Post shows that not only is the ISDS process being abused by companies, but financial speculators are investing based on gaming the ISDS system. Hedge funds are investing in firms as a bet on the outcome of taking a case to a corporate tribunal:
ISDS has increasingly become a way for rich investors to make money by speculating on lawsuits, winning huge awards and forcing taxpayers to foot the bill.
Here’s how it works: Wealthy financiers with idle cash have purchased companies that are well placed to bring an ISDS claim, seemingly for the sole purpose of using that claim to make a buck. Sometimes, they set up shell corporations to create the plaintiffs to bring ISDS cases. And some hedge funds and private equity firms bankroll ISDS cases as third parties — just like billionaire Peter Thiel bankrolled Hulk Hogan in his lawsuit against Gawker Media.
Talk about a rigged game. Not only does the corporate sector get to drag sovereign governments to a Big Business star chamber to get their way, but they can profit off bets on the outcome. And, not surprisingly, companies win an estimated 60% of the cases that go before the tribunals, though governments are more inclined to settle.
OK, so TPP has a provision that will gut US sovereignty. But what about the good parts of TPP?
Sadly, the TPP is completely irredeemable. The economic case has already collapsed with the most optimistic estimate from the neoliberal Peterson Institute admitting that, at best, TPP would raise economic growth by 0.5% after 15 years. Even that claim has been heavily refuted, with the consensus among economists being TPP will have little effect on growth at all.
Given the collapse of the economic case, President Obama has been trying to reframe TPP as an issue of national security and geopolitics. While uttering the words national security has miraculous power in DC (it can make the Constitution disappear), few seem to be buying the argument.
Economist Jared Bernsetin, who previously served as the vice president’s chief economist, called bullshit on Obama’s national security case for TPP, noting that failure to pass TPP in Congress will not create a crisis for US global leadership, nor will China’s ascendance in Asia be linked to the fate of TPP.
The TPP is primarily about expanding corporate power. For those who believe corporate power has expanded far enough, TPP must be opposed.