Services trade pact locks out democracy

The Obama administration is engaged in secret negotiations of new trade agreements that would limit the power of national governments to control international corporations.

The proposed Trans-Pacific Trade Agreement (TPP) is one; the proposed Trans-Atlantic Free Trade Agreement (TAFTA) is another.   Less well-known is the proposed Trade In Services Agreement (TISA), which is being negotiated among 50 countries, including the United States.

If the President were trying to negotiate agreements for control of global climate change, or nuclear disarmament, or standards for protecting labor and the environment, I would support him.  Even in these cases, though, I would not favor “fast track” procedures which force an up or down vote without full debate.

But, thanks to disclosures by Wikileaks of the financial services portion of the proposed agreement, we know that TISA would limit the powers of government concerning:

• limits on the size of financial institutions too big to fail;
• restrictions on activities, e.g., deposit taking banks that also trade on their own account;
• requiring foreign investment through subsidiaries regulated by the host rather than branches regulated from their parent state;
• requiring that financial data is held onshore;
• limits on funds transfers for cross-border transactions e-finance; authorisation of cross-border providers;
• state monopolies on pension funds or disaster insurance;
• disclosure requirements on offshore operations in tax havens;
• certain transactions must be conducted through public exchanges, rather than invisible over-the counter operations;
• approval for sale of ‘innovative’ potentially toxic financial products;
• regulation of credit rating agencies or financial advisers;
• controls on hot money inflows and outflows of capital;
• requirements that a majority of directors are locally domiciled;
• authorization and regulation of hedge funds; etc.

via Jane Kelsey, University of Auckland.

In other words, TISA would handcuff governments in doing precisely those things that are needed to prevent the next financial crash.

And that’s just the financial services part.  Among the other topics of negotiation are telecommunications and e-commerce, domestic regulation and transparency, professional services, maritime services and international movement of people, and this may not be a complete list.

The trouble with internationalism

I would like to see a world at peace, and I would like to see international institutions capable of settling disputes and addressing global problems such as climate change and nuclear arms.   Unfortunately these are not the kinds of international institutions that we the people are being asked to support.

The most powerful global organizations, with the possible exception of the Roman Catholic church, are international banks and corporations.  International institutions such as the World Trade Organization, the International Monetary Fund and the European Central Bank enforce rules that serve the interests of banks and corporations.

The proposed Trans Pacific Partnership Agreement and similar proposals would give the world’s corporate and financial elite new tools for enforcing their agendas.  While there is urgent need for international agreement and institutions to deal with climate change, TPP-type agreements actually would give corporations the right to appeal national laws and local rules aimed at limiting greenhouse gasses.

What makes the banks and corporations powerful is that money can go anywhere while most people are stuck where they are. Migrant money is treated with deference.  Migrant Mexicans in the United States, migrant Uzbeks and Kazakhs in Russia, and migrant Filipinos in the Persian are treated like dirt.

The European Union’s current austerity program is an example.  The well-being of Europe’s people is being sacrificed to ensure that Europe’s banks never suffer losses.   I’d guess this is the main reason for the success of Europe’s nationalist right-wing parties in the recent elections to the European Parliament.

Globalization and the world slave work force

About two-thirds of the world’s estimated 29.8 million slaves are forced laborers, working for private employers to supply materials and components for products sold in world markets.

Tim Fernholtz of the Atlantic gave some examples.

This summer, an Australian man imprisoned in China reported that prisoners were making headphones for global airlines like Qantas and British Airways. Some 300,000 sets of the disposable headphones were made by uncompensated prisoners who were forced to work without pay and regularly beaten. The index says that there are about 3 million slaves in China, in state-run forced labor camps, at private industrial firms making electronics and designer bags, and in the brick-making industry.

Companies like Apple, Boeing and Intel—among thousands of others—have been under pressure to document that the tin, tantalum, tungsten, and gold they use aren’t being mined by slaves in the Democratic Republic of Congo, where a civil war has led armed groups seeking funding to force civilians to work. The U.S. Securities and Exchange Commission adopted a rule forcing American firms to trace the minerals they use to their origins, and while business lobbies have sued to overturn it, industry leaders have begun planning to file the first required reports in May 2014.

In the Asian seafood industry, migrant workers may become forced laborers who harvest and prepare mackerel, shrimp and squid bound for markets around the world.

Côte d’Ivoire is the world’s leading supplier of cocoa—some 40 percent of the global supply—and much of it is grown and harvested by some children engaged in forced labor. In 2010, Côte d’Ivoire said 30,000 children worked on cocoa farms, although Walk Free’s index estimates as many as 600,000 to 800,000. While this has been widely reported on since 2000, and the global response has been strong, compared to that of other allegations of forced labor, the problem has not really been solved. As of 2012, 97 percent of the country’s farmers have not participated in industry-sponsored campaigns against forced child labor. Mondelēz International, the world’s largest chocolate producer, which owns brands such as Milka, Toblerone and Cadbury, has struggled for years to take forced labor out of its supply chain. It committed $400 million to a program aimed at creating a sustainable cocoa economy last year, but its efforts have been ineffective so far.

The best way for us Americans and citizens of other wealthy countries to promote freedom and democracy is to stop our corporations and governments from supporting slavery and autocracy.   This seems do-able to me.

TTP trade deal would override American law

Right-wing opponents of President Obama say that his policies are a threat to American democracy.  I think that’s true—but not in the way they think.   He claims the right to sign death warrants based on secret criteria.  He has brought government secrecy to unprecedented levels.  His administration protects wrongdoers and prosecutes whistle-blowers.   But all these things will be possible for a future President to roll back.

Not so the TransPacific Partnership agreement, a treaty now being negotiated in secret.  The TPP treaty will be submitted to the Senate under the Fast Track system under which it can be voted up or down but not modified.   It is very possible that it will be enacted before the majority of the American public has a chance to learn what it is all about.

The full extent of the TPP is not known, but some provisions have been leaked.  They are all favorable to global corporations and unfavorable to the public.  The worst provision is the agreement to submit to special courts with authority to overrule U.S. law and U.S. court decisions when they are deemed unfair to “investors.”

Investors will be the only class of people protected by the TPP.   They will be allowed to ask for damages not only loss of business due to labor, health or environmental laws, but for hypothetical losses of future profits.

One purpose of the TPP is to create an 11-nation Pacific bloc in which there are no national boundaries for global corporations, but China is locked out.  But there is no minimum number of nations that have to sign for the TPP to go into effect.  Even if only a handful of nations besides the United States sign on, it will have achieved another purpose, which is to create a body with power to override U.S. laws that are objectionable to corporations.

Under Article VI of the U.S. Constitution, treaties are the supreme law of the land.  That is a necessary provision.  If it were otherwise, treaties would not be binding.  Unfortunately, this opens the door to treaties such as the North American Free Trade Agreement, which set up courts superior to national courts, to which corporations can appeal to overturn national and local laws.  For example, a NAFTA court recently ordered the Province of Ontario to pay damages to a national gas company for future profits lost because of Ontario’s restrictions on hydraulic fracturing.  TPP is NAFTA on steroids.

There are many other pernicious provisions in the TPP.  Click on TransPacific Partnership Will Undermine Democracy, Empower Transnational Corporations for details.

Click on US secretly negotiating NAFTA-like TPP treaty for an earlier post of mine on TPP.

Click on Trans-Pacific Partnership: NAFTA on Steroids for another earlier post.

Click on Barack Obama’s economic legacy: His four must-have items for comment on how TPP fits in with Obama’s overall economic agenda.