Leading Economists Oppose TPP Provision Giving Corporations Upper Hand in Investor-State Disputes

September 08, 2016


Lori Wallach

director of Public Citizen’s Global Trade Watch and author of The Rise and Fall of Fast Track Trade Authority.

As the Obama administration begins a new push to approve the Trans-Pacific Partnership, known as the TPP, more than 200 of the country’s leading economists and legal scholars have written a letter urging Congress to reject the 12-nation trade pact, citing its controversial investor-state dispute settlement. Critics say the so-called ISDS regime creates a parallel legal system granting multinational corporations undue power. We speak with Lori Wallach, director of Public Citizen’s Global Trade Watch. "This is an agreement so repugnant that members of Congress do not want to vote for it," says Lori Wallach.


This is a rush transcript. Copy may not be in its final form.

NERMEEN SHAIKH: We turn now to the Obama administration’s new push to approve the Trans-Pacific Partnership, known as the TPP. This comes as more than 200 of the country’s leading economic and legal scholars have written a letter to Congress urging them to reject the trade pact, citing its controversial investor-state dispute settlement, the so-called ISDS regime. Critics say the provision creates a parallel legal system granting multinational corporations undue power.

The letter states, quote, "[F]oreign corporations can succeed in lawsuits before ISDS tribunals even when domestic law would have clearly led to the rejection of those companies’ claims." Among the letter’s signatories is Obama’s Harvard Law School mentor, professor Laurence Tribe. Senator Elizabeth Warren, an early opponent of the deal, said of ISDS, quote, "This provision empowers companies to challenge laws and regulations they don’t like, with friendly corporate lawyers instead of judges deciding their disputes. Congress should not approve a TPP agreement that includes ISDS."

Speaking in Laos on Wednesday, President Obama said the deal should be approved.

PRESIDENT BARACK OBAMA: On the merits, it is smart for America to do it. And I have yet to hear a persuasive argument from the left or the right as to why we wouldn’t want to create a trade framework that raises labor standards, raises environmental standards, protects intellectual property, levels the playing field for U.S. businesses, brings down tariffs. It is indisputable that it would create a better deal for us than the status quo.

AMY GOODMAN: That statement, that he made in China, before going to Laos, where he made a similar one. The Trans-Pacific Partnership is a massive proposed trade deal that would encompass 12 Pacific Rim nations, including the U.S., and 40 percent of the global economy. U.S. presidential nominees Hillary Clinton, Donald Trump and Dr. Jill Stein have all said they oppose the TPP. The deal has faced years of public protest by those who say it benefits corporations at the expense of health and environmental regulations.

To talk more about the TPP, we’re joined by Lori Wallach, director of Public Citizen’s Global Trade Watch, author of The Rise and Fall of Fast Track Trade Authority.

Lori, welcome back to Democracy Now! So here you have President Obama in China saying neither the left nor the right has ever convinced me, made a good argument for why this should not be approved. Your response?

LORI WALLACH: Elizabeth Warren and over 200 of our leading—our nation’s leading economics and law professors made a very compelling argument. With the—were the TPP to go into place, literally thousands of multinational corporations would be newly empowered to be able to sue the U.S. government, in front of panels of three corporate attorneys, who could order the government to pay unlimited sums, including for those corporations’ expected future profits, paid by us taxpayers, and all the corporations would have to do is convince those lawyers that some U.S. federal, state, local law, regulation, court ruling, government action undermines the new rights and privileges that the TPP would grant them. And there is no appeal from these panels; these lawyers decide. And there’s no limit on how much they can order taxpayers to pay.

And if the TPP were to go into effect, literally overnight the U.S. liability to face those attacks by multinational corporations would double. There would be 9,000 new companies, who currently have no ability to do this, from the big Japanese manufacturing and financial firms to the Australian financial and mining companies and timber companies, that are all over the U.S. If you go to, we have a map with all of those companies, and you can click and see, look, here’s a company that would newly be empowered. So that is the answer to President Obama. Nine thousand multinational corporations that newly could attack our laws, raid our treasury, undermine our health and safety.

AMY GOODMAN: Lori, can you talk about Harvard law professor Laurence Tribe—he’s one of the signatories to the letter—and his relationship with President Obama?

LORI WALLACH: Well, often, President Obama describes Larry Tribe, who I also had for constitutional law at Harvard Law School, as his mentor. And Professor Tribe was one of the eminent signatories of this letter. And he was—he was joined by other very prominent legal scholars in basically saying—many of them, by the way, including the economics professors, who are supporters of free trade—and they’re all saying, whatever you think of trade, the fact that the TPP includes this outrageous system that would empower multinational corporations to skirt our domestic law system, second-guess even our Supreme Court, raid our treasury, over policies that our courts, our Congress have said are totally fine, this alone makes the TPP unacceptable, whatever else you think about the other arguments made in its favor. And so, the fact that Professor Tribe, who obviously President Obama respects, is part of this demand to Congress to oppose the TPP is important.

And this letter follows up on a letter last year, with fewer bigwigs signed onto it, but just the same, a letter that had a lot of law professors saying, "Listen, we are against the ISDS. Take it out of the TPP, so we don’t have a problem with your agreement." And, of course, the president, as you’ll recall, was extremely dismissive and scornful about that letter, said, "They’re making stuff up, and they’re absolutely wrong," and so left this horrible corporate regime in the agreement. It’s at the heart of the agreement. It is the key in the agreement. And now all these professors are against.

NERMEEN SHAIKH: Could you talk about, Lori Wallach, the timing of this letter and what you think the likely impact will be?

LORI WALLACH: So, what is extremely perverse, and as economics professor Sachs, who was on a press call yesterday with Senator Warren and other signatories, said, was right now you have the president and the Cabinet officials and Vice President Biden running around pushing TPP, in conflict with and to the peril of, some would argue, the election goals of Hillary Clinton. And her prospects for winning in certain states where these issues are very important, the lines are being blurred. But also, many congressional and Senate candidates are also running strongly against the TPP, and the president is right now prioritizing, trying to get a vote after the election, in the lame-duck period. And this should be a signal to almost every American what’s up here. This is an agreement so repugnant that members of Congress do not want to vote for it. Even the ones who support it, for the corporations, do not want it on their record before an election.

So, as Americans, we all have to think, "What does that mean for us? What does that mean is our duty?" Our duty is to get every member of Congress, before the election, to tell us what is their position on TPP. The only way there isn’t a vote in the lame-duck period, after the election, when the retired and the newly fired get to come back, unaccountable to you, the voter, and have a vote, is if we get them on the record publicly now, and particularly your House members. Find your House members. They will be back all of October up until the election, but every weekend in September they’re going to be there, and they’re going to be there for long weekends, because it’s election season, doing public events. We have to get them to eyeball us and say what their position is, get them to say they’re against the TPP. That is the only way there will not be a vote passing this agreement, slimy style, in the lame-duck.

AMY GOODMAN: Senator Tim Kaine’s position? Has he been asked specifically about this, whether he would vote in the lame-duck?

LORI WALLACH: Well, what’s fascinating is, of course, Senator Kaine voted for the authority, fast track, to have the TPP negotiated. And he was asked, shortly after being selected by Clinton, what’s his position on TPP, because he is a big free trader. And what he said is pretty much what the law professors said yesterday, which is, "There are some things in there I’m happy with. I think they’re good ideas about having this kind of agreement. But I cannot live with the investor-state corporate tribunals." The dispute system, as he called it, in there is not acceptable to him.

AMY GOODMAN: Can that be taken out?

LORI WALLACH: Well, that’s what’s interesting. So, Secretary Clinton has said that she doesn’t support the TPP, and there are five things she said would have to be altered. And the TPP’s investor-state system is really sort of its heart. So, yes, it could be taken out. And some of the other things that she had mentioned are the big goodies the corporations want. So, yes, there could be a real, honest-to-God trade agreement that’s about cutting border taxes, that hasn’t become hijacked by all this other corporate garbage. That’s an agreement I suspect wouldn’t face a lot of opposition.

AMY GOODMAN: What would that take?

LORI WALLACH: But that would be something very different. That would be a very different agreement than what is the TPP.

AMY GOODMAN: And finally, were you surprised by President Obama using, well, his trip to China for G20, Laos for the Southeast Asian Nations summit, to push so hard for TPP? Does this signify something to you?

LORI WALLACH: Well, on the one hand, it signifies what all the polling shows, which is the TPP is super-unpopular in the U.S., and majorities of Democrats and Republicans don’t like it, so I guess maybe he’s going to get a more welcome greeting pushing the TPP someplace in Asia. But—but it also shows to me how dead serious he is about pushing this thing.

So, we’ve seen some of the Republican congressional leaders who are negotiating to get Obama to make certain changes in the agreement for their different corporate donors, and they’ve been saying things like, "Oh, we’re not going to have a vote." Folks, don’t believe that for two seconds. That’s negotiating. That is negotiating. The fact that the Cabinet was fanned out during August recess across the country, crossing paths with Democrats who are trying to get elected, undermining their saying they’re against TPP by saying the top Democrat’s for TPP, and that all the corporations are starting to throw money into it—and today, this very day, there’s a meeting at the White House that they’ve called in all the corporate lobbies to gear up for a fight for TPP in the lame-duck. This fight is on.

And the only way we, the people, are going to stop TPP, which we’ve gotten very close to doing, against all odds, against all that power, is we must find every member of the House of Representatives—wherever you live, look in the blue pages, call their offices and find out when they have open houses. Ask where you can meet your member of Congress in your area. They are doing lots of public events. They’re all up for re-election. It’s House members that count. Go shake their hands in the parade. Don’t let go until you get them to eyeball you and say they will vote no on the TPP.

AMY GOODMAN: Lori Wallach—

LORI WALLACH: We have to do it before the election.

AMY GOODMAN: We’re going to have to leave it there, director of Public Citizen’s Global Trade Watch, author of The Rise and Fall of Fast Track Trade Authority.

This is Democracy Now! When we come back, the standoff at Standing Rock. Stay with us.

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