Friday, August 17, 2012

Secret Trade Agreement Subjects Taxpayers to Foreign Corporations

After Two Years of Closed-Door Negotiations, Trans-Pacific Partnership Leak Replicates Alarming Bush Trade Pact Terms That Obama Opposed as Candidate

A leak of one of the most controversial chapters of the Trans-Pacific Partnership (TPP) reveals that extreme provisions have been agreed to by U.S. officials, providing a stark warning about the dangers of “trade” negotiations occurring under conditions of extreme secrecy without press, public or policymaker oversight.

Via closed-door negotiations, U.S. officials are rewriting swaths of U.S. law that have nothing to do with trade and in a move that will submit the U.S. government to the jurisdiction of foreign tribunals that can order unlimited payments of our tax dollars to foreign corporations that don’t want to comply with the same laws our domestic firms do.

Lori Wallach, director of Public Citizen’s Global Trade Watch, says that although the TPP has been branded a “trade” agreement, the leaked text of the pact’s Investment Chapter shows that the TPP would:

  • Limit how U.S. federal and state officials could regulate foreign firms operating within U.S. boundaries, with requirements to provide them greater rights than domestic firms;
  • Extend the incentives for U.S. firms to offshore investment and jobs to lower-wage countries;
  • Establish a two-track legal system that gives foreign firms new rights to skirt U.S. courts and laws, directly sue the U.S. government before foreign tribunals and demand compensation for financial, health, environmental, land use and other laws they claim undermine their TPP privileges.

Allow foreign firms to demand compensation for the costs of complying with U.S. financial or environmental regulations that apply equally to domestic and foreign firms.

While about 600 official U.S. corporate advisors have access to TPP texts, and have a special role in advising U.S. negotiators for the public, press and policymakers, this leak (on June 13, 2012) provides the first access to one of the prospective TPP’s most controversial chapters.

Last May, U.S. Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee’s Subcommittee on International Trade, Customs and Global Competitiveness (the committee with jurisdiction over the TPP) filed legislation to open the process after he and his staff were denied access to the U.S. proposals for the TPP negotiations.

The U.S. Trade Representative Ron Kirk defended the unprecedented secrecy of TPP negotiations by noting that when the draft of a major regional trade pact was released previously, it became impossible to finish the deal as then proposed.

“The top U.S. trade official effectively has said that the administration must keep TPP agreement secret because otherwise they wouldn't be able to shove this deal past the public and Congress,” said Wallach. “The airing of this one TPP chapter, which greatly favors foreign corporations over domestic businesses and the public interest, and exposes us to significant financial liabilities, shows that the whole draft text must be released immediately so it can be reviewed and debated. Absent that, these negotiations must be ended now.”

The TPP is the first trade pact that the Obama administration is negotiating. The leak last June further complicates the administration’s goal of completing TPP negotiations this fall. Already the TPP timeline was generating political headaches for the Obama re-election campaign, as repeated U.S polling shows that majorities of Democrats, Independents and Republicans oppose more NAFTA-style trade deals.

The TPP may well be the last trade agreement that the U.S. negotiates. This is because TPP, if completed, would have a new feature relative to past U.S. trade pacts: It would remain open for any other country to join later. USTR Kirk said that he "would love nothing more” than to have China join TPP.

The TPP offered an opportunity to develop a new model of trade agreement that could deliver the benefits of expanded trade without unduly undermining signatory nations’ domestic public interest policies or establishing special privileges for foreign corporations.

President Barack Obama and countless members of Congress have campaigned on fixing these investment rules to better protect the public interest, but Public Citizen’s analysis of this text shows that the U.S. positions do not reflect any of the changes that candidate Obama pledged when he recognized the threats posed by the NAFTA-style investment provisions in trade agreements.

The leak also reveals that:

  • Australia has refused to submit to the jurisdiction of the “investor-state” private corporate enforcement foreign tribunal system.
  • U.S. negotiators are alone in seeking to expand this extra-judicial enforcement system to allow the use of foreign tribunals to enforce contracts that foreign investors may have with a government for government procurement, or to operate utilities contracts related to concessions for natural resources on federal lands.
  • Other countries are proposing safeguards for financial regulation and limits to the corporate tribunals that the U.S. has not supported.

Trade advisers for the notorious secret trade agreement are being negotiated by the Obama administration. The TransPacific Partnership will meet in Leesburg, Virginia from September 6th to 15th.

Advocacy groups are working together to put a spotlight on this agreement which will set the rules for international business dealings for the foreseeable future and gives transnational corporations more power than governments.

There will be events outside of the meeting to educate the public about this trade agreement and actions to let the trade advisers know that the public opposes the TPP. For more info, contact

Public Citizen’s analysis of the leaked text and guided tour through its provisions can be found here. Public Citizen is a national, nonprofit public interest organization based in Washington, D.C. For more information, please visit

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