Terrible trade agreements.

The Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) agreements are unfathomably awful in innumerable ways for everyone except America’s Owners. To the extent that we still live in a democracy—and I am certainly not averring that we do—we can all say buh-bye!

Like everything meaningful the U.S. government does, these trade agreements are being negotiated in total secrecy, so we only have snippets and rough outlines from leaked portions of the drafts and the usual doublespeak from stakeholders. Nonetheless, from everything we know do about them, the coup d’état will be complete upon ratification: corporate control of governments around the world will be a done deal.

I know, I know. I sound like a lunatic. Just hear me out.

Last year, two powerful business lobbies—the U.S. Chamber of Commerce and BusinessEurope, its counterpart across the pond—published a document purporting to explain TTIP’s aims. The agreement’s stated purpose is to create a single transatlantic market in which all regulatory differences between the U.S. and the E.U. are gradually removed. “Removed,” of course, means deregulated, or alternatively, regulated to favor big business. These agreements have a binding “proactive requirement” directing participating governments to change their laws in accordance with corporations’ wishes, putting “stakeholders at the table with regulators to essentially co-write regulation” to suit themselves. When you read “stakeholders,” think the Koch Brothers, Monsanto, Rupert Murdoch and Goldman Sachs. The trade deals apply to everything from industrial pollution and intellectual property to banking.

Obviously all of this is bad enough for the environment, the planet and the citizenry. But it’s the mechanism for enforcement that poses the greatest threat by far to democracy and humanity: investor-state dispute settlement. In a nutshell, the provision grants big business the right to sue the living shit out of governments which, through normal democratic processes, enact laws they don’t like. Worst of all, such suits are not brought in a court of law, but before a secret panel of corporate lawyers. There are no appeals, citizens have no standing, and the proceedings are completely secret (well, until a new Manning or Snowden lets us all know).

To give you an idea how this actually plays out, consider the similarly disastrous NAFTA, signed into law by Democratic President Bill Clinton (NAFTA is the framework on which these agreements are largely based):

In Canada, the courts revoked two patents owned by the American drugs firm Eli Lilly, on the grounds that the company had not produced enough evidence that they had the beneficial effects it claimed. Eli Lilly is now suing the Canadian government for $500m, and demanding that Canada’s patent laws are changed.

Poor Canada! Oh, wait:

In El Salvador, local communities managed at great cost (three campaigners were murdered) to persuade the government to refuse permission for a vast gold mine which threatened to contaminate their water supplies. A victory for democracy? Not for long, perhaps. The Canadian company which sought to dig the mine is now suing El Salvador for $315m – for the loss of its anticipated future profits.

During its financial crisis, and in response to public anger over rocketing charges, Argentina imposed a freeze on people’s energy and water bills (does this sound familiar?). It was sued by the international utility companies whose vast bills had prompted the government to act. For this and other such crimes, it has been forced to pay out over a billion dollars in compensation.

These companies (along with hundreds of others) are using the investor-state dispute rules embedded in trade treaties signed by the countries they are suing. The rules are enforced by panels which have none of the safeguards we expect in our own courts. The hearings are held in secret. The judges are corporate lawyers, many of whom work for companies of the kind whose cases they hear. Citizens and communities affected by their decisions have no legal standing. There is no right of appeal on the merits of the case. Yet they can overthrow the sovereignty of parliaments and the rulings of supreme courts.

You don’t believe it? Here’s what one of the judges on these tribunals says about his work. “When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all … Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament.”

There are no corresponding rights for citizens. We can’t use these tribunals to demand better protections from corporate greed. As the Democracy Centre says, this is “a privatised justice system for global corporations”.

…One Canadian government official, speaking about the rules introduced by the North American Free Trade Agreement, remarked: “I’ve seen the letters from the New York and DC law firms coming up to the Canadian government on virtually every new environmental regulation and proposition in the last five years. They involved dry-cleaning chemicals, pharmaceuticals, pesticides, patent law. Virtually all of the new initiatives were targeted and most of them never saw the light of day.” Democracy, as a meaningful proposition, is impossible under these circumstances.

…[Conservatives] do not oppose the TTIP because their allegiance lies not with the nation but with the offshored corporate elite.

British writer George Monbiot also notes some applications that easily come to mind:

Investor-state rules could [sic] be used to smash any attempt to save the NHS from corporate control, to re-regulate the banks, to curb the greed of the energy companies, to renationalise the railways, to leave fossil fuels in the ground. These rules shut down democratic alternatives. They outlaw leftwing politics.

True. But what’s most interesting to me is that this should be one area where some strange bedfellows could effectively converge: rabid right-wing nationalists and leftists (not Democrats, like Barack Obama whose administration is of course aggressively pressing for these trade deals on behalf of his masters).

I am (still) haunted by former IMF chief economist Simon Johnson’s excellent 2009 piece in The Atlantic. Johnson likened the 2008 financial crisis, and the U.S. government’s response thereto, to those typical of emerging markets (e.g. Ukraine, Russia, Thailand, Indonesia, Argentina and elsewhere)—and only emerging markets:

Every crisis is different, of course…But I must tell you, to IMF officials, all of these crises looked depressingly similar…the economic solution is seldom very hard to work out.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders.

But inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt…The downward spiral that follows is remarkably steep…and conditions just get worse and worse…The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.

Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.

See you in the streets.

One thought on “Terrible trade agreements.

  1. I’m telling you, I said to a friend last night, before I die (I’m about the halfway point for my family’s general lifespan, let’s call it “in the next 40 years”), I expect to see at least one popular revolt in what had been seen as one of the Western dems. People are angry, and talking about their anger.

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