In his 2016 State of the Union address, President Barack Obama urged Congress to pass a 12-nation trade agreement called the Trans-Pacific Partnership (TPP).1
The text of the TPP, which member nations began crafting in 20092, became available in November, 2015. The contents should trouble taxpayers.
A provision that's arguably one the worst for taxpayers is that which protects the profits of foreign investors.
Under the TPP, a foreign corporation's investors can sue state and local governments in the U.S. for any circumstances—such as, say, pollution limits—that interfere with the corporation's profits.
Moreover, the corporation can do this outside of our judicial system: Our courts have no jurisdiction, thanks to a TPP scheme called investor-state dispute settlement (ISDS).
Imagine, if you will, that a Japan-based company sets up manufacturing in Chicago. The company's manufacturing process produces toxic waste, which the company dumps into the city's sewer system—at a level exceeding limits set by Illinois and Chicago's environmental regulations.
Then, say that local government moves to stop the company's illegal dumping. Under TPP, the company's investors may sue to block the government's enforcement—claiming that the enforcement adversely affects their profits.
In such a suit, the TPP trumps our constitutionally guaranteed right of due process in a court of law. Instead, according to investor-state dispute settlement rules, the suit is adjudicated by an ISDS "tribunal" composed of several private "arbitrators" appointed under the TPP. The arbitrators, unlike U.S. judges, aren't bound by precedent or judicial ethics.3 The tribunal may award damages to the investors, paid for by U.S. taxpayers.
At the very least, awards in such cases would make citizens, not polluters, pay. At the worst, the threat of damage awards would choke off new or more stringent environmental safeguards.
And even if investors sue a local government unsuccessfully, we taxpayers still must pay for our government's lawyers. So we always lose.
Think this scenario is just hypothetical? It's already happened. The existing North American Free Trade Agreement (NAFTA) contains an ISDS provision—and Canadian energy company TransCanada has used it.
In January of this year, TransCanada announced that it would sue the U.S. government for halting construction of the Keystone XL oil pipeline. The company argued that it's been "unjustly deprived of the value of its multibillion-dollar investment by the U.S. administration's action" that blocked an important piece of its pipeline network. TransCanada seeks $15 billion in compensation—an amount that includes the profits that the company expects it would've gotten in future years.4
And that's just the tip of the iceberg. Existing trade agreements that the U.S. has with other countries have resulted in governments paying investors almost $4 billion in ISDS awards, according to Lori Wallach, Global Trade Watch director for Public Citizen.5 The TPP will boost the number of foreign investors that can use ISDS to extract payments from U.S. taxpayers.
Concerned citizens, though, have a vehicle for stopping the TPP: Congress.
After President Obama formally signs off on the TPP for the United States (which he's expected to do in February), Congress must then approve the deal. In the meantime, members of the public can weigh in with representatives and senators—many of whom have already signaled their opposition to the TPP.
1. The 12 proposed nation signatories (the TPP calls them "Parties") are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam.
2. "Timeline of the Trans-Pacific Partnership," Public Knowledge, June 27, 2012.
3. In fact, President Obama signaled his administration's contempt of courts years ago: In a March, 2012 speech at Northwestern University law school, then-U.S. Attorney General Eric Holder said "'Due process' and 'judicial process' are not one and the same . . . The Constitution guarantees due process, not judicial process."
4. "TransCanada’s $15 Billion Lawsuit Against U.S. on Keystone XL Presents Strong Case," Eric Zuesse, Global Research, January 8, 2016.
5. "Lame White House Response to Sen. Warren's Warning about TPP Investor Privileges," Lori Wallach, Huffington Post, May 2, 2015.
