The leaked investment chapter of the Trans-Pacific Partnership Agreement – the mega-trade and investment deal currently being negotiated in secret between the United States and eleven Pacific Rim countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) – fully confirms the views of the IUF and the many other critics of this and similar agreements. It is a corporate power grab seeking to expand the reach and the enforcement muscle of transnational investors, deliberately and misleadingly packaged as a ‘trade agreement’.
The investment chapter, published by WikiLeaksÂ March 25 together with a detailed analysis by Public Citizen, expands the capacity of corporate investors to enforce claims through closed tribunals which can directly challenge laws, regulations and decisions of courts and government licensing and patent authorities of signatory countries at national and sub-national level.
A parallel corporate legal system allows transnational investors to sue governments for ‘compensation’ for any legal or regulatory measure which would impact on current or anticipated future profits. The investor to state dispute resolution mechanism (ISDS), established in regional and bilateral agreements modeled on the 1996 North American Free Trade Agreement (NAFTA), has been used to devastating effect to challenge governments’ ability to protect the environment, worker and consumer health and safety, affordable medicines, public health care and public land and resources, to promote clean energy and local food systems and to regulate capital flows in the interest of financial stability (examples can be found in the IUF’s Trade Deals that Threaten Democracy)
The leaked text, which incorporates the most toxic elements of earlier, similar treaties, empowers corporations to demand compensation for “indirect expropriation” resulting from any new government regulatory measures or action which might potentially impact profitability, and demand compensation based on “expected” future profit. The corporate claim to “minimum standards of treatment” extracts a binding commitment “not to alter the legal and business environment in which the investment has been made.” Corporations can therefore not only challenge existing laws and regulations; with ISDS they can sue for compensation for “expected losses” resulting from any future government regulatory action. Investment protection, once limited to real property, is expanded to include intellectual property claims, financial assets and regulatory permits.
Despite extensive opposition to TPPA and the related TTIP simultaneously being negotiated between the US and the EU, and unprecedented public debate over ISDS in particular, Public Citizen’s analysis shows that the leaked investment chapter actually offers even more power to investors than the earlier version leaked in 2012. Investment is still under negotiation in the TTIP and the draft has not yet been revealed, but the TPPA chapter offers more than a preview of what to expect.
Corporate investment “rights” are the essence of both these deals. They are not about trade, and they are not about the decentÂ jobs we need.
ISDS offers investors a formidable weapon for further enrichment and for subverting democratic governance. However it is not the only vehicle for enforcing this agenda. Trade and investment agreements also include additional state-to-state investment dispute mechanisms, and investor claims can also be enforced through contracts. The right-wing US Cato Institute has advised corporate lobbyists to quietly abandon ISDS, because it has aroused so much public opposition, and pursue their objectives within the treaty negotiations through these other means. Opponents of these agreements should conclude from this that the treatiesÂ as a wholeÂ need to be defeated for what they are: a corporate assault on democracy.