Recently signed TPP undermines democracy in municipalities, finance, environment

February 8, 2016
Matt Stannard
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I apologize for "de-democratizes" in the title. I wrestled with "un-democratizes," "hurts every good cause," and "cuts a swath down the sail of American democracy like Errol Flynn," and none of them seemed to work. I decided to go with a word that represents curtailment, undermining, moving away from. American political and economic life certainly isn't democratic enough, but the Trans-Pacific Partnership makes it all less so, because it undermines an entire category of democratic policymaking. As we'll see straight away, the TPP is not the only trade agreement that does this, but as others have noted, it's wider and deeper than its predecessors. 

TransCanada, the company who lost out in the Keystone XL fight, is using a provision of NAFTA, the North American Free Trade Agreement, to sue the United States government. Independently of the NAFTA complaint, TransCanada also alleges that Obama's rejection of the pipeline is unconstitutional--an (in my opinion) weak argument that will stand or fall independent of trade agreement provisions. The suit asks for $15 billion in damages, naming Secretary of State Kerry, Attorney General Lynch, Homeland Security Secretary Johnson, and Interior Secretary Jewell.

The challenge is under Chapter 11 of the North American Free Trade Agreement, allowing "corporations to sue the national government of a NAFTA country in secret arbitration tribunals if they feel that a regulation or government decision affects their investment in conflict with these new NAFTA rights." "In the Loewen funeral home case," Public Citizen reports, referring to Loewen v. United States, "the NAFTA tribunal indicated that potentially all U.S. domestic court decisions, including those of the U.S. Supreme Court, could be subject to NAFTA review." In Loewen, a plaintiff essentially re-litigated a settled Mississippi court case before a NAFTA tribunal. 

TransCanada, which stood to benefit from a decision in its favor by the State Department, and was denied its pot of gold by popular protest resulting in a procedurally legitimate rejection of the Keystone XL deal, gets similar standing. They can sue the United States not only for the money they spent in pursuit of the project, but also for "expected future profits," a category of damages that seem to me to be both epistemically and morally absurd. 

Some analysts believe this heavy-handed approach by TransCanada will outrage the public and serve as proof that we ought to take more care on trade deals, encouraging a second look at the TPP. But the secretive processes, the political weight of Obama's constant TPP cheerleading, and the current power of private capital all collude to make that kind of mobilization difficult (although those raising their voices over the agreement haven't quieted down yet). Lori Wallach, director of Public Citizen's Global Trade Watch, says the TPP will massively increase the number of companies allowed to bring these kinds of complaints--any time any ratifying government passes a law that affects commerce. 

. . . what it boils down to is a foreign corporation deciding that the US taxpayers ought to give them $15 billion because they don't like the outcome of our government decision that this pipeline was bad for our country and bad for the environment. And where they're going to get this money extracted from us is an extrajudicial - not US court, not US law - forum: the investor-state tribunal allowed under NAFTA.

Overnight, the TPP would give 9,500 more companies - big multinationals from Japan, in banking, in manufacturing, mining firms from Australia - the right to do this.

Moreover, plaintiffs/petitioners will likely be given a boost, possibly financially, by groups like the American Legislative Exchange Council, which supports both the TPP and Keystone XL. Corporations suing governments in fora that escape the jurisdictional limits of their own courts: Salon's Ben Norton shudders at this:

Imagine a dystopian world in which secretive and corrupt corporate courts circumvent the justice system and unaccountable private companies have more power than governments, holding democracy hostage. Consumer advocacy and environmental organizations warn this is the path the world is taking.

All this, plus an increase in global unemployment and inequality, according to a former United Nations economist.

The contentious Trans-Pacific Partnership Agreement (TPPA) will lead to greater inequality and net job losses over a 10-year period among member countries, said former senior United Nations official and renown economist professor Jomo K.S. Economic gains from the United States-driven supra-trade pact would also be negligible at 3% over the span of 10 years for developing countries in the TPPA while developed countries would only see gains of less than 1% in the same period, he said. Jomo said these findings were from a yet-to-be released UN study on the impacts of the TPPA which he had led. The full study uses the UN’s own global policy economic model (GPM) to anticipate the TPPA’s impact on its 12-member countries.

Poverty, decreased national sovereignty, and an eroded judiciary all undermine democracy. Whatever the quality of member nations' democratic processes now, the TPP makes them more difficult to maintain. And those highly- (hourly) paid international trade arbitrators, making up to $700 an hour, won't have much incentive to resolve such challenges quickly. 

It's not just democratic processes that the TPP goes after, though. It's also democratic institutions, structures, and forms of organization. As Ellen Brown reported last year in relation to the Trade in Services Agreement (TiSA)

Communities worldwide are reevaluating the privatization approach and "re-municipalizing" these services, following negative experiences with profit-driven models. These reversals typically occur at the municipal level, but they can also occur at the national level.
One cited example is water remunicipalization in Argentina, Canada, France, Tanzania and Malaysia, where an increasing frustration with broken promises, service cutoffs to the poor, and a lack of integrated planning by private water companies led to a public takeover of the service.
Another example is the remunicipalization of electrical services in Germany. Hundreds of German municipalities have remunicipalized private electricity providers or have created new public energy utilities, following dissatisfaction with private providers' inflated prices and poor record in shifting to renewable energy. Remunicipalization has brought electricity prices down. Other sectors involved in remunicipalization projects include public transit, waste management, and housing.

Other writers have similarly noted the municipal and provincial pushback against water privatization, one of the most lethal targets of privatizers, as the experiences in Detroit and Flint, Michigan attest. But, in what amounts to over 40% of the world economy, the TPP will allow corporations to stop efforts by municipalities to push back against privatization. The privatization of public serviceswill expand, threatening the postal service, puting up barriers to the public distribution of life-saving drugs, and may very well threaten the emergence of public banks in the United States--gutting financial regulations along the way. Privatization also undermines democracy, because when the public owns a service, the service is subject to oversight by public mandate, based on elected officials and transparency. The public doesn't get to examine the communications, financial records, and internal minutes of corporate water companies, though, at least not until after they're under investigation for poisoning or parching their customers. 

"No trade agreement is going to force us to change our laws," Barack Obama claimed when answering critics of the TPP last year. That statement is probably untrue.