Getting “left behind” on the TPP is fine by me – we shouldn’t buy into this race to the bottom

Hello friends and patient readers!

I’m on vacation with my partner for the next few days. Much as I’d love to be reacting to the latest news on the TPP, you (and I) are gonna have to wait until later in the week.

In the meanwhile, I thought I’d re-run this post from July which explores the deal in broad outlines – feel free to share it widely on social media as a primer for folks who are new to this issue!

In terms of more up-to-date commentary on this Frankenstein deal, I’m gonna pass the mic to Joseph Stiglitz, who’s been a vocal critic of the new trade regime, analyzing just how the Investor-State Dispute Settlement (ISDS) mechanism could wind up biting TPP member nations in the ass:

International corporate interests tout ISDS as necessary to protect property rights where the rule of law and credible courts are lacking. But that argument is nonsense. The US is seeking the same mechanism in a similar mega-deal with the European Union, the Transatlantic Trade and Investment Partnership, even though there is little question about the quality of Europe’s legal and judicial systems.

To be sure, investors – wherever they call home – deserve protection from expropriation or discriminatory regulations. But ISDS goes much further: The obligation to compensate investors for losses of expected profits can and has been applied even where rules are nondiscriminatory and profits are made from causing public harm.

Philip Morris International is currently prosecuting such cases against Australia and Uruguay (not a TPP partner) for requiring cigarettes to carry warning labels. Canada, under threat of a similar suit, backed down from introducing a similarly effective warning label a few years back.

Given the veil of secrecy surrounding the TPP negotiations, it is not clear whether tobacco will be excluded from some aspects of ISDS. Either way, the broader issue remains: Such provisions make it hard for governments to conduct their basic functions – protecting their citizens’ health and safety, ensuring economic stability, and safeguarding the environment.

Imagine what would have happened if these provisions had been in place when the lethal effects of asbestos were discovered. Rather than shutting down manufacturers and forcing them to compensate those who had been harmed, under ISDS, governments would have had to pay the manufacturers not to kill their citizens. Taxpayers would have been hit twice – first to pay for the health damage caused by asbestos, and then to compensate manufacturers for their lost profits when the government stepped in to regulate a dangerous product.

Here’s the main post; thanks for reading and check back later this week for more up-to-date reactions!

July 24, 2015

It’s been called the sleeper issue of this fall’s federal election campaign, but my riding’s Liberal candidate sure seemed surprised that I brought it up when he came knocking on my door earlier this week.

I got home from work just in time to catch Arif Virani in the hallway of my building. I gotta admit, I was pretty impressed to see him out canvassing on a weekday afternoon three months before the election – and I was excited to give him a piece of my mind.

I saw a certain look of resignation in his eyes when I mentioned Bill C-51 – and indeed, he had a well-thought-out reply to the oft-made criticisms of that bill. (It was an argument that I didn’t particularly buy into, but it was a thorough and well-prepared one, and one I imagine he’d had to make pretty frequently.)

But he had quite clearly not heard about the Trans Pacific Partnership from nearly as many people in his door-knocking.

I made it clear to him that the TPP is for me one of the biggest issues of this year’s election, and that any party that can endorse that sovereignty-destroying nightmare of a “trade” agreement won’t get my vote. (I didn’t mention that I’m not entirely certain I’m going to vote anyway – didn’t want to undercut my argument!)

To his credit, he didn’t pretend to be an expert on the subject, but instead frankly acknowledged that he didn’t know much about the issue, beyond the squabbling oversupply management which has dominated recent coverage of the mysterious deal:

On TPP, the Americans have already made it clear that they want Canada to put supply management in dairy and poultry on the table. They are not alone. They’re joined by the Australians and New Zealanders, who have themselves transitioned out of protectionist supply management regimes and become major exporters of dairy products. New Zealand Trade Minister Tim Groser said in Washington a couple of months ago that Canada has a protected dairy industry “which looks like it belongs in the former Soviet Union.”[…]

Quebec politics dictate that every Canadian political leader ends up giving in to the pressures of supply management. Unanimous motions to that effect have routinely passed the House of Commons. Half the country’s dairy farms are in Quebec, most of them in ridings held by the NDP, which is very much on side with dairy farmers.

But dairy farmers could pose a huge problem for the Conservatives in their rural Ontario strongholds, particularly eastern Ontario.

In other words, the TPP is getting talked about by political leaders because it’s becoming an election issue, one that could easily wind up swinging key rural ridings.

What politicians aren’t talking about is the actual content of the deal, as revealed over the past year by Wikileaks. One of the most frightening revelations from the leaked drafts of the deal is its Investor-State Dispute Settlement (ISDS) mechanism, which is the way that member nations and corporations resolve disagreements over interpreting the text. As I wrote earlier this month:

ISDS basically signs away our ability to pass regulations. If, for instance, some future government wants to change the laws so that climate change is a factor that regulators must consider before approving or rejecting a proposed pipeline (amazingly, this isn’t already required), and a major pipeline project is rejected on this basis, some major company, like Enbridge or TransCanada, can sue the Canadian government for all of the profits they would have made if the pipeline had been approved. They would say that the laws unfairly violate the treaty, and they would demand compensation in a court composed entirely of corporate lawyers, presided over by a corporate lawyer. If the court ruled in their favour (which, duh, it would), the Canadian government wouldn’t be able to appeal to a higher court…This is a deal which unequivocally puts corporate profits ahead of literally every other priority. This is a massive power grab by the transnational elite.

ISDS is easily a greater threat to the Canadian people than ISIS.

It’s nothing new, either – a version of ISDS has been with us since NAFTA got approved back in ’93. Canada is the most-sued nation under that “trade” treaty’s dispute settlement provision, known as Chapter 11. Here are some examples of successful challenges:

In 1997, the Ethyl Corporation, a U.S. chemical company, used chapter 11 to challenge a Canadian ban on the import of MMT, a gasoline additive that is a suspected neurotoxin and which automakers have said interferes with cars’ diagnostic systems. The company won damages of $15 million and the government was forced to remove the policy.

A year later, U.S.-based S.D. Myers challenged Canada’s temporary ban on the export of toxic PCP waste, which was applied equally to all companies. Canada argued it was obliged to dispose of the waste within its own borders under another international treaty. However, the tribunal ruled the ban was discriminatory and violated NAFTA’s standards for fair treatment…

In one case, a Calgary headquartered company that is registered in the U.S., Lone Pine Resources Inc., is suing the Canadian government for $250 million over Quebec’s moratorium on natural gas fracking, which applies equally to foreign and domestic companies. Lone Pine argues it was not consulted before the ban nor compensated for its wasted investment or loss of potential revenue.

In other words, when laws are passed or policies are implemented which impair corporations’ ability to push their toxic and harmful products on people, those corporations are empowered to not only extract their lost profits from the very people they were victimizing, but also strike down those laws and regulations.

The TPP would vastly expand the pool of corporations who would be able to challenge Canadian laws…The result will be terrible for labour, for the environment, for consumer safety, for pretty much most people you know. But it will be intensely lucrative for transnational corporations, the treaty’s most ardent advocates and sponsors.

All of which I tried to convey to Virani as succinctly as I could. How successful I was, I couldn’t really say.

His reaction was basically this: (a) He’d never heard about any of that, but he’d definitely look into it; (b) All of the major parties are supportive of the TPP (which, to varying degrees, is true, although the NDP are trying to play both sides of the issue for as long as possible); and (c) It’s important that Canada doesn’t get left out of major trade deals, because it would be a big blow to our economy, and give other countries greater access to our main trading partners, including the US.

Which is, basically, the Liberal case for the deal – if we don’t do it we’ll be left behind!

To which I have a few responses that I didn’t make at the time. (I had, after all, taken up quite a bit of the guy’s time, and I’m pretty sure my prospects of convincing him were low.)

First of all, however intuitive such claims may seem, it’s important to look at the data and see what the actual facts are. And as even the hardline pro-business Globe and Mail notes, the effects of the TPP on Canada’s economic output just wouldn’t be that significant:

Recent research by Dan Ciuriak, former deputy chief economist at Foreign Affairs, Trade and Development Canada, attempts to predict more realistic outcomes, including a longer phase-out of tariffs and less than “full” free trade in key sectors, such as agriculture.

And the net gain? The TPP would add a mere 0.1 per cent to gross domestic product, or $2.7-billion, by 2035 for Canada…That’s barely a hiccup in a $2-trillion economy.

Which leads me to my second objection. The main purpose of recent “trade” agreements, as the example of the TPP shows, has not been so much to increase trade or economic growth as it is to normalize regulatory structures across borders, giving multinational corporations some element of predictability in their operations. That exact aspect of contemporary trade negotiations has been a major sticking point, for instance, in the still-up-in-the-air Canada-EU agreement, CETA, as well as in the ongoing US-EU free trade negotiations for TTIP, as this video from the European Green Party illustrates (albeit a little simplistically):

When we look at the argument that we risk getting left behind if we don’t sign onto these deals while acknowledging that regulatory erosion and the breakdown of environmental and labour protections is a major purpose of these deals, the case for “free trade agreements” starts to look more and more fallacious. All this talk of liberalizing trade and harmonizing regulations sounds ok, in a soporific sort of way, but a cursory look at the actual results is horrifying.

And so, for instance, in the two-plus decades since we signed onto NAFTA, wages have been pretty much stagnant for most workers, and only the top 20% have seen real gains in their wealth (see here for those and more great charts). Meanwhile, Canada has been the most-sued nation under NAFTA’s ISDS provisions, and as I mentioned above, has repeatedly been compelled to allow products containing extremely harmful chemicals to be sold. As many predicted at the time, despite all the talk of benefits for everybody concerned, “free trade” turned out to pretty much only benefit the upper class.

In the face of these facts, it’s just not reasonable to say that we have to sign the TPP or we’ll be left behind. If the effects of the TPP are likely to be reduced control over our labour, environmental, and public safety regulations, loss of sovereignty to international corporations via an unaccountable dispute mechanism court, stagnating wages for the vast majority, and a further increasing of Canada’s already horrendous income inequality, then I say let’s get left behind. That’s not a deal that we should want any part of, and I’m firm in my commitment to not vote for any party that endorses it.

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