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- Sen. Elizabeth Warren: Trade deal must not undercut Wall Street reforms
Sen. Elizabeth Warren: Trade deal must not undercut Wall Street reforms
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Ambassador Michael Froman is the current U.S. Trade Representative and a former Citigroup executive and bundler of Wall Street and other contributions to the 2008 Obama presidential campaign. On December 17, Senator Elizabeth Warren (D-Mass.) and two colleagues wrote to Froman:
“We are concerned that the Trans Pacific Partnership (TPP) could make it harder for Congress and regulatory agencies to prevent future financial crises. With millions of families still struggling to recover from the last financial crisis and the Great Recession that followed, we cannot afford a trade deal that undermines the government’s ability to protect the American economy.”
The letter, co-signed by Senators Tammy Baldwin (D-Wis.) and Ed Markey (D-Mass.) focused on the threat of international investment tribunals:
“Past trade deals, they said, “have included terms that allowed foreign firms to use the investor-state dispute settlement process to challenge a wide range of government financial policy decisions.”
The senators conclude that, “…the TPP should not include an investor-state dispute resolution process… The consequence would be to strip our regulators of the tools they need to prevent the next crisis.”
It is not hard to see why the U.S. model for a TPP investment chapter is in the economic interest of financial services firms and polluting industries.
- An investment chapter on the U.S. model creates a separate “court” for foreign capital. Foreign investors can bypass domestic courts and bring suit before special international tribunals designed to encourage international investment.
- The tribunals are biased. An arbitrator serving on one of these tribunals is likely to be an international commercial lawyer who may alternately serve as “judge” one day and return as corporate counsel the next.
- Corporate and individual investors are granted property and due process rights that are more broadly defined than in U.S. constitutional law or the practice of nations, generally.
- Investors may seek awards of money damages, of unlimited size, in compensation for the cost of complying with financial, environmental and other public interest regulations. They may even seek compensation for lost future profits. Damage awards can run into the millions or billions of dollars. The fear of such ruinous judgments can force a country to settle unjust investor claims and to back away from protecting the public interest.
Saluka Investments v Czech Republic. The Czech Republic was forced to pay a Dutch subsidiary of the giant Japanese financial firm, Nomura, $236 million for not bailing out its Czech affiliate, as that country was undergoing a financial crisis and a run on banks in 2000. The tribunal ignored the fact that Nomura made its Czech investment as an indirect means of gaining control of two valuable Czech breweries.
Renco v Peru. According to the Blacksmith Institute, the children of La Oroya, Peru live in one of ten most polluted places on earth. A metallic smelter has contaminated the air, land, and water for decades. The La Oroya smelter was owned by the Renco Group, a holding company of Ira Rennert, one of the wealthiest men in the United States. The children of La Oroya have been given a respite from new emissions, but only because the smelter was shut down and seized by the government of Peru after the company repeatedly failed to meet its contractual and legal deadlines to clean up the site. Renco has retaliated, and sued Peru before an international investment tribunal that has been convened under the terms of the U.S.-Peru free trade agreement. Renco is seeking $800 million in damages for the cost of complying with Peru’s environmental and mining laws.
Lone Pine Resources v. Canada. Lone Pine has filed a “notice of intent” to sue Canada under NAFTA’s investment chapter for a reported $250 million in compensation for action by the Quebec National Assembly to place a moratorium on hydraulic fracking for shale gas and allegedly for revoking permits for oil and gas drilling under the St. Laurence River.
Chevron v Ecuador. In the 1960s, Texaco, before it was bought out by Chevron, discovered oil under the rain forest of eastern Ecuador. The indigenous people who live in the Amazon region say that over a more than 20-year period, the oil giant intentionally dumped billions of gallons of poisonous waste onto the soil and surface waters and abandoned hundreds of unlined waste pits that leaked chemical toxins and heavy metals into the groundwater. The oil spill was almost twice as large of the 1989 Exxon Valdez incident in Alaska. The indigenous people and poor settlers of Oriente suffered an epidemic of cancer and other illness. An Ecuadorian court found Chevron financially responsible for the environmental and public health costs of the dumping and ordered the company to pay for a clean up and to attend to the people’s health care. Chevron responded by seeking the intervention of an international investment tribunal, claiming the Ecuadorian court decision violated the terms of the investment treaty between the United States and Ecuador. The next month, the tribunal accepted jurisdiction and ordered the government of Ecuador to suspend enforcement of the judgment against Chevron in any court in the world.
The number of suits brought before international investment tribunals under existing trade and investment agreements like NAFTA is skyrocketing. As of January 1, 2014, 98 countries had been sued in 568 cases brought before tribunals authorized by the World Bank’s International Center for Settlement of Investment Disputes, the United Nations Commission on International Trade Law, and similar bodies. As the UN Conference on Trade and Development has documented over 70 percent of new claims in 2013 involve services, an economic sector that includes banking, water, electricity or gas services, real estate services, and transportation among others. A majority of other new suits involve the so-called primary sector (oil, gas and mining). The evidence is clear: government regulations related to the environment and finance are being targeted.
Known International Investment Tribunal Cases (annual 1987-2013)
Source: United Nations Conference on Trade and Development, April 2014
With its push for the Trans Pacific Partnership and Transatlantic Trade and Investment Partnership trade deals, the Obama Administration is now seeking to dramatically expand the investment tribunal attack on sensible government regulations related to environmental and financial services and to the oil, gas and mining sector. But President Obama and Ambassador Froman know that the only way they can complete the TPP and TTIP negotiations and gain the approval of Congress for these controversial agreements is to first enact Fast Track trade promotion legislation. Fast Track legislation would force the TPP and TTIP deals through on a quick up or down vote, with no amendments.
We need your help to stop these trade deals from being rushed through Congress.
Click on this linkhttp://www.stopfasttrack.com/
Call your representatives.Tell them not to Fast Track the Pacific and Atlantic trade deals.