TPP trade negotiations in San Diego: a dagger through the heart

“The trade ministers get together to set the rules of trade. They don’t worry about the environment; that’s somebody else’s agenda. Trade above all — that’s the way they approach it. And as a result of that, we get a trade agenda that puts environmental and other concerns below.”–Joseph Stiglitz, winner of the Nobel Prize, Economics, 2001, interview PBS The Ascent of Money

A roadmap to a giant trade deal

Today, in San Diego, trade negotiators from around the Pacific are heading into the final stretch in the latest round of talks in the Trans Pacific Partnership trade agreement. Within the negotiations, which are expected to wrap up tomorrow, the United States is pushing for a TPP deal that not only integrates the trade policies of Pacific nations, but also deregulates their economies in many areas.  The U.S. negotiating agenda, with its laissez-faire approach, will have the general effect of subordinating the role of governments in environmental protection to corporate profits.

Currently, Singapore, Malaysia, Chile, New Zealand, Brunei, Australia, Peru, Vietnam and the United States are participating in the talks. In late May, Canada and Mexico were welcomed into the TPP negotiating process, and will participate at some point in later negotiations.  Japan, the Philippines, and others may seek to join in the future. In fact, U.S. Trade Ambassador Ron Kirk has said he looks forward to the day when China can join the TPP.  As Professor Robert Stumberg, of Georgetown University Law Center told state policymakers in Maine on June 15, “It’s part of the roadmap to coming up with a bigger trading bloc that is not the World Trade Organization.”

As a consequence, the TPP has the potential to be the most expansive regional trade agreement ever entered into by the United States and its trading partners, in terms of its geographic and economic reach. That could be a good thing in theory. But as Friends of the Earth’s Michelle Chan, who attended in the first day of the talks last week, said in a presentation to negotiators, “It also has the potential to be dangerous for workers and the environment. That is unacceptable.”

“The Trans-Pacific Partnership could end up hurting the broader economic interests of both the U.S. and smaller Asian nations,” writes Kevin Gallagher, an economist who teaches at Boston University in a story for the American Prospect. “In exchange for the small portions of trade and growth that will go to some big exporters and foreign investors, each TPP nation,” he explains, “will have to give up many of the policies they use to make trade and foreign investment work for employment, growth, and financial stability.”

Given that the TPP could be one of the world’s biggest trade deals, one would think it would be subject of intense public debate. But instead, the talks are being held behind closed doors at the 4-star Hilton Bayside Hotel. The TPP negotiating text is kept secret from the public and even Congress, although a few chapters have been leaked.  Two-thirds of the Democrats in the House of Representatives have written to Ron Kirk, the U.S. Trade Representative, complaining that they have been denied access to the negotiating text.  Even Ron Wyden, the chair the U.S. Senate Trade Subcommittee, has been left out of the loop on the substance of the negotiations.

TPP chapters on environment, investment and regulatory coherence

With respect to environmental policy, Michelle Chan says, “The TPP endangers environmental priorities, such as climate change measures and regulation of mining, land use, and bio-technology.”  The environment chapter, she also says, must include enforceable obligations to implement domestic environmental laws and abide by global environmental agreements. On that point, the U.S. delegation agrees with environmentalists, while other negotiating parties strongly resist. If the U.S. position on enforceable environmental obligations prevails, it would help mitigate the environmental damage caused by the TPP, in ways that are more than negligible.

However, several other elements of the TPP must be rejected altogether given the language in leaked negotiating documents, Chan argues, including an investment chapter that would authorize foreign investors to seek awards of money damages from international tribunals in compensation for the cost of complying with environmental and other public interest regulations. One hundred thirty state legislators from 50 states and Puerto Rico agree.  In a letter sent to U.S. trade negotiators in San Diego, the legislators said that the leaked TPP investment chapter is based on a U.S. model that “has proven to be extremely problematic, undermining legislative, administrative, and judicial decisions and threatening the system of federalism established by the U.S. Constitution.”

As another example of a totally unacceptable TPP provision, Chan cites the leaked text of the chapter on “regulatory coherence,” that would encourage business-friendly, cost-benefit analysis before environmental or other regulations are promulgated. Cost-benefit analysis, when used in a reductionist manner, essentially prevents regulators from implementing the “precautionary principle” in environmental policymaking.

TPP chapters on procurement, services, technical barriers, and sanitary measures

Most of the chapters have not been leaked.  But Friends of the Earth is concerned that within the secret texts on government procurement, services, technical barriers to trade, and sanitary measures lurk serious environmental concerns.

The TPP government procurement chapter raises concern because governments are beginning to build environmental and other social criteria into their purchasing decisions that might run afoul of international trade rules. International rules on government procurement often seek to confine public purchasing decisions to economic and engineering criteria such as price and performance, thus precluding green purchasing policies by government.

The TPP services chapter will undoubtedly cover a range of environmentally sensitive sectors including transportation, water, sanitation, energy, pipelines, and other public utilities. The uncertainty about how the TPP services chapter would affect water policy is particularly vexing, given that water is essential to human, animal and plant life – it’s not simply another commodity to be traded in the global marketplace.

Friends of the Earth has no confirmation that TPP provisions on technical barriers to trade will not mimic World Trade Organization standards that have been used to successfully challenge U.S. dolphin-safe tuna labeling law and other product labeling measures, as well as chilling legislative initiatives in U.S. states to protect children from toxic toys.

Similarly, the TPP chapter on sanitary measures, if not drafted carefully, could be used to challenge food safety laws based on the precautionary principle such as pesticide residue, chemical additives or genetic modification.

On the ground impacts: what’s potentially in store for the environment

Looked at another way, the TPP could impact a range of environmental issues:  For example:

Friends of the Earth has no assurance that clean air and water regulations will not be threatened by the TPP.  To the contrary, the U.S. – Korea trade agreement, for example requires that auto emissions standards be relaxed for U.S. auto exports to South Korea. And, challenges to water pollution measures are a frequent issue in international investment litigation, including suits brought under NAFTA and CAFTA.

Mining, oil drilling, and infrastructure construction are all frequent topics of litigation under international investment agreements and are almost certain to be covered by TPP provisions on trade in services. Land use regulations and smart growth policies also have been challenged under international investment agreements.

Agriculture and investment agreements of the TPP would likely encourage deforestation to make way for massive palm oil plantations and other forms of corporate farming. Climate measures also appear to be at risk.  A wide array of energy policies could be subject to challenge under the TPP investment chapter – even oil pipeline investments like Keystone XL could be covered.

Trade policies: it’s about so much more than trade

The root problem is that much of the TPP text has much less to do with trade policy per se and much more to do with limiting the role of government as it regulates global corporations. 

Prior to 1994, trade agreements dealt primarily with issues of discrimination against foreign imports in the form of tariffs, quotas, customs duties and other “at the border” measures. And, like most international agreements they were enforced primarily by diplomatic suasion.

The post-1994 agreements, starting with the NAFTA and WTO agreements up to and including the TPP, deal not only with “at the border” discrimination, but also impose rules related to government regulation, taxation, purchasing and economic development policies that are regarded as non-tariff barriers to trade by the drafters of the agreements.

These TPP rules related to non-tariff barriers to trade seek to encourage international commerce by promoting deregulation, expansion of property rights, and principles of what might be described as market fundamentalism. In other words, the agreements regulate governments – based on the assumption that government stands in the way of global prosperity that will result from relatively unfettered markets and capital accumulation.

For example, a leaked version of the TPP chapter on intellectual property provides international legal protections for patents on plants and animals, giving corporations monopolies over the use of parts of the genetic code that are part of our natural and human heritage.  What does that have to do with any common sense definition of trade policy?

In addition, the TPP and other post-1994 agreements can be effectively enforced through retaliatory trade sanctions or in the case of investment chapters by uncapped awards of money damages.

For example, La Oroya, Peru is one of ten most polluted places on earth.  Renco, a U.S. company, has repeatedly failed to meet its contractual and legal deadlines to clean up the pollution caused by its metallic smelter at La Oroya. Renco has sued Peru before an international investment tribunal, seeking $800 million in damages for the cost of complying with Peru’s environmental and mining laws.

In short, the TPP like other post-1994 trade agreements is intended to perform a function that is fundamentally constitutional in nature: it limits the powers of government in environmental and other policy areas.

A constitution for the world economy

On 16 January 1998 at Chatham House in London, the then-Director General of the WTO Renato Ruggiero famously quoted the most influential contemporary scholar of international trade law, now based at Georgetown University. “John Jackson has described the multilateral trading system as a ‘constitution’ for the world economy.”

Although perhaps taken out of context, Ruggiero’s allusion to a “constitution for the world economy” provoked a widely publicized outcry from civil society at a time when the Organization for Economic Cooperation and Development was trying to forge a Multilateral Agreement on Investment – a global version of the NAFTA or TPP investment chapter if you will. Brent Blackwelder, the President of Friends of the Earth at the time, declared that, “The MAI would give unprecedented power to directly challenge government environmental, health, labor, and other safeguards. The MAI would be a dagger through the heart of democracy.”  The proposed text of the MAI was not secret, and after the public and parliaments of OECD countries like France studied the provisions of this “constitution for the world economy,” the MAI was quickly shelved.

The TPP should meet a similar fate in a similar way.  As Lori Wallach, the director of Public Citizen’s Global Trade Watch, has written that: “citizen activism and publicity derailed the proposed Free Trade Area of the Americas in 2005, [and] the aborted Multilateral Agreement on Investment in 1998…”

We don’t need a constitution for the Asia Pacific economy of the kind contemplated by the TPP.  And, we have a good chance to “derail” it, if public opinion forces the release of the secret negotiating text – then the public and parliaments of the region will see that in Brent Blackwelder’s phrase it would be “a dagger through the heart of democracy.”