Through the looking glass

by John Quiggin on May 10, 2015

The New York Times has a piece about Obama’s push to gain “fast-track” authority for the proposed Trans-Pacific Partnership, which would preclude any amendments by Congress after the deal (still secret, except for what Wikileaks has revealed) is announced. The key para, buried a fair way down

To the president, the Trans-Pacific Partnership would counter the economic weight of China and set rules on labor, the environment, intellectual property and investor protections for the growing economies of the Pacific Rim. For members of Congress, it’s about jobs.

shows how differently the debate is playing out in the US compared to other countries involved, such as Australia, and how much leading papers like the New York Times are missing the point

In the Australian debate, it’s generally understood (based on both economic modelling and past experience) that there won’t be much effect on jobs either way, at least not through the direct effects on trade. For the critics (just about everyone on the left), it’s precisely the “rules on labor, the environment, intellectual property and investor protections” that represent the big concerns. All of these rules benefit corporations at the expense of workers, the environment, the free flow of information and national sovereignty. It’s the general strengthening of corporate power, and not the flow of goods, that will harm jobs, wages and working conditions Investor-State Dispute Settlement provisions, for example, have been used to challenge minimum wage laws.

Leading US critics like Elizabeth Warren and the AFL-CIO have raised some of these points, noting (for the benefit of Republicans in particular) that the ISDS provisions will enable unaccountable arbitrators to override US federal and state laws.

The use of trade deals as an instrument of geopolitics is also unwelcome for a country like Australia that needs to balance itself between the US and China. Despite its enthusiastic support for the US and the TPP deal, the conservative government here signed up to join China’s regional infrastructure bank, developed largely in response to China’s exclusion from the TPP.

But US news coverage can’t seem to get out of a frame set by the trade deals of last century, such as NAFTA.

{ 60 comments }

1

Ebenezer Scrooge 05.10.15 at 10:08 pm

I’m worried about the dispute resolution procedures, but I’m beginning to get more worried about the rhetoric of opposition to them.

Yes, the arbitrators will be “unaccountable,” as John says. Just like judges. Accountable judges are not impartial. That’s pretty much what accountability entails–rightly so for electoral politics; improperly so for neutral dispute resolution.

My real problem with TPP is the IP provisions.

2

ifthethunderdontgetya™³²®© 05.10.15 at 10:58 pm

The TPP is more proof that Obama’s critics on the left have been right all along about him. He’s a sleazy corporatist sellout.
~

3

The Raven 05.10.15 at 11:34 pm

I wonder that the hold that big money has on Obama.

NAFTA, BTW, was not good for US employment, and an utter disaster for most Mexicans. Feh.

4

BruceJ 05.10.15 at 11:57 pm

Given that the “media” in the US is part and parcel of the Corporate State, and determined to establish the Thousand Year Gilded Age, it’s not surprising that they’re focusing on the things that the Corporate State doesn’t much care about and not emphasizing the things they don’t want the proles to notice.

5

Brett Dunbar 05.11.15 at 12:28 am

To the USA they have little direct relevance. ISDS provisions have been included in literally hundreds of trade treaties the USA has signed, the number of cases that the USA has lost is zero. The number of cases the UK has lost is zero. They mostly ban things that rich well run states don’t do anyway. The main practical value is that it acts as a commitment gesture on the part of poor historically badly run countries that they won’t behave in an arbitrary manner towards investors and will agree to be bound by the terms of a contract and not change the the existing legal environment in an arbitrary or discriminatory manner.

It seems that the biggest beneficiary of TPP will be Vietnam as its exports are chiefly in areas where the few remaining high tariffs and non-tariff barriers are concentrated.

Fast track is probably essential as congress attempting to alter some terms means that every other party has to reconsider the revised treaty so really the treaty as negotiated has to be dealt with on an all or nothing basis. The other thing is a lot of businesses will support provisions to de regulate everyone else but lobby heavily to protect their specific privileges if it’s a package then they may decide that the benefits to them of a general reduction in protectionism is worth more than the loss of their specific privileges cost them.

6

Roger Gathmann 05.11.15 at 1:00 am

5. This is quite comic: “They mostly ban things that rich well run states don’t do anyway. The main practical value is that it acts as a commitment gesture on the part of poor historically badly run countries that they won’t behave in an arbitrary manner towards investors.” If “investors” want guarantees in poor badly run states, why don’t they make separate deals with those countries? No, that is smoke and mirrors, and not even good smoke and mirrors. If the US, for instance, after the oil well disaster in the Gulf of Mexico had nationalized BP assets, or held them in abeyance – which in fact is not something the rich, well run country of the USA has never done – they could be forced by a foreign court to pay BP damages. In fact, such a court would influence any decision about the government’s policy towards multinationals.
Usually, the problem with investors and poor countries are just the opposite, really, of the way you put it – the investors run roughshod over local labor and environmental rules and the officials are too bribed or too weak to do anything about it. It would be different if we could have an international court that allowed, say, US workers to sue those companies that maintain substandard working conditions and slave wages in Bangladesh, or a government, like Ecuador, that could find justice for the environmental disaster caused by oil drilling in that country from a high court. But this is not going to happen. The TPP is a disaster, stacking the deck in an incredible way against any country that decides to depart from the very narrow neo-liberal consensus, extending Intellectual monopolies that should, instead, be seriously curtailed, and making certain that the environment will be even further damaged.

7

Brett 05.11.15 at 2:00 am

@Roger Gathmann

If “investors” want guarantees in poor badly run states, why don’t they make separate deals with those countries?

Because it would be no different than the status quo already without ISDS. It’s just the same legal proceedings as there would be with no treaty at all.

Other Brett isn’t talking out of his ass – as this points out, the US is already in 41 ISDS agreements, and their use as a trade policy mechanism dates back decades. So if you’re going to claim it’s this immensely dire, dangerous thing that will lead to the demise of US labor and environmental policy improvements, you’re drawing from a very thin historical well.

It would be different if we could have an international court that allowed, say, US workers to sue those companies that maintain substandard working conditions and slave wages in Bangladesh, or a government, like Ecuador, that could find justice for the environmental disaster caused by oil drilling in that country from a high court.

I don’t see why the ISDS panels couldn’t be expanded to include enforcement of the labor and environmental standards of the treaty.

8

Anarcissie 05.11.15 at 2:09 am

I don’t see why the ISDS panels couldn’t be expanded to include enforcement of the labor and environmental standards of the treaty.

You don’t? Really?

9

Consumatopia 05.11.15 at 2:11 am

“Fast track is probably essential as congress attempting to alter some terms means that every other party has to reconsider the revised treaty so really the treaty as negotiated has to be dealt with on an all or nothing basis. ”

Note that when it wants to, Congress is perfectly capable of avoiding poison pill amendments, either by consensus or by procedural tricks by the leaders. See the recent compromise bill on nuclear talks with Iran–McConnell just pushed it through, ignoring Rubio and Cotton’s amendments. There is no reason trade couldn’t work the same way, especially if all the countries agreed that any changes to deal nullified it.

Fast track is really about avoiding the filibuster. Lots of countries are about to agree to politically inconvenient concessions, but if the deal gets filibustered in the Senate after it’s made public, they bear the domestic political costs of making the concessions, but don’t get whatever benefits they imagine they’ll get from the deal being completed successfully. They want to be assured that once the deal is made public, the Senate can no longer filibuster it.

“My real problem with TPP is the IP provisions.”

Mine too, but I think those IP provisions are a major part of the the reasons Obama and his trade allies want the deal. This might be part of why the debate in the U.S. is so strange–IP protection, pro-or-con, isn’t something that’s going to resonate with American voters, if only because TPP is mostly about making other countries closer to already existing U.S. law.

Then again, I’m not so sure this argument isn’t about jobs after all. It’s not so much the actual labor market impacts, as the vision that seems to underlie Obama’s position in these negotiations. It’s like he’s simply given up on the idea of manufacturing jobs, and is now focused on making the world safe for American IP and finance. (Heck, the only way I can see that it makes sense for Obama to go to Nike and crow about a mere ten thousand jobs is that he wants to pick a fight with liberals so that the Republican House will be on his side.) Take ISDS. The point of it seems to be to make it safer for American investors to send capital overseas. That’s not likely to make life better for American workers.

I have a suspicion that U.S. labor groups might be opposing this not so much because they fear it will kill jobs, as that it would signal that we’ve given up on the idea of doing anything to bring those jobs back.

10

Peter T 05.11.15 at 2:17 am

That the US is largely immune to international action is not news. That ISDS will mostly be used to extort money from the weak is also not news. What should be concerning to the saner US policymaker (if any survive) is how ISDS furthers the predatory actions abroad of US corporations, thereby undermining US soft power to longer-term US detriment.

And presumably Brett’s “rich, well-run states” do not include Germany (being sued by a Swedish company) and Australia (sued by Philip Morris)?

11

ifthethunderdontgetya™³²®© 05.11.15 at 2:42 am

and is now focused on making the world safe for American IP and finance

Now? He outsourced his DOJ to Covington and Burling right from the start.
~

12

Kyle 05.11.15 at 4:49 am

I think it has to do with seeing America as a civilized nation that has to “tame” the barbarian nations of China.

The liberal establishment side of US politics such as the Times swallow this idea very uncritically.

13

Sancho 05.11.15 at 5:53 am

Also note that the Australian parliament, with bipartisan support, recently passed communications spying legislation that would make a Stasi director slow-clap.

They sold it with lots claims about stopping peadophiles and terrorists, but to look at it separately from the coming copyright lawsuit apocalypse is naive indeed.

14

Roger Gathmann 05.11.15 at 5:55 am

The stats on ISDS clearly show that as they are becoming normalized, they are becoming used. This is from the Cato Institute:
“Investor-State Dispute Settlement dates back to the era following World War II, when previous European colonies were achieving independence and seeking to attract Western investment. It was borne as an expedient to overcome concerns about expropriation by new governments lacking experience with property rights and the rule of law.3 But ISDS procedures were rarely used. In fact, from the inception of ISDS in 1959 through 2002, the number of known ISDS claims worldwide stood at fewer than 100.4 However, during the 10 years between 2003 and 2012, the cumulative total increased to 514 cases.5 In 2012, claimants initiated 58 ISDS cases worldwide, which was the greatest number of initiations in any year, surpassing the previous record set in 2011.”
The propaganda about the harmlessness of ISDS shouldn’t be allowed to pass unanswered. The ISDS provision should be killed. And since the Obama administration wants all or nothing, kill the TPP. It is pernicious and serves only the interests of the corporations.

15

John Quiggin 05.11.15 at 6:21 am

It seems bizarre that such a violently controversial clause is being defended mainly on the basis that “it will never be used”.

As regards poor and rich sovereign defendants, the main difference is that the poor are more likely to fold in the face of expensive litigation.

16

bob 05.11.15 at 2:05 pm

Paul Ryan and Ted Cruz tells us why TPP needs to be fast tracked, but for some reason, neglect to mention what is in it.—http://www.wsj.com/articles/putting-congress-in-charge-on-trade-1429659409

17

Pat 05.11.15 at 4:04 pm

“But US news coverage can’t seem to get out of a frame set by the trade deals of last century, such as NAFTA.”

American news coverage can’t get out of any frame it was set in last century, or at least middle of last decade. Democratic party politics is still viewed through the Clinton frame, while Republicans will jockey for a label really surprisingly similar to George W. Bush’s “compassionate conservative” mantle.

No link at the moment, but during the Arab Spring breakout in Egypt, I was struck by how exhausted American reporters were by having to explain the strange political culture that didn’t map onto American valences, and then how relieved they were when they got to recycle the “power of social media” pieces they had originally had published when Justin Bieber first got famous.

18

TM 05.11.15 at 5:25 pm

What is beyond bizarre is that right-wing republicans, who wouldn’t agree with anything Obama has ever done, are dying to give him fast track authority over one of the most controversial policy issues around. Oh, now they suspect him of wanting to invade Texas but allowing foreign entities to sue the US government in foreign trade courts is a no-brainer? Wow. And as always (sigh), all that would be unthinkable if our corrupt mainstream media were even remotely doing their job.

19

Brett Dunbar 05.11.15 at 8:05 pm

Being sued and being successfully sued are rather different things.

Generally rich countries have robust and independent legal systems and a tradition of not appropriating property without adequate compensation. There are normally adequate remedies available under domestic law without ISDS. Poor badly governed countries without such a tradition can find the lack of a trustworthy independent dispute resolution procedure a major barrier to attracting investment. ISDS provides a method of committing to be subject to an impartial tribunal if your domestic legal system isn’t adequate. For broadly similar reasons a lot of countries issue bonds either under English law or New York law rather than using domestic law.

20

Collin Street 05.11.15 at 8:48 pm

Bit selfish, though, innit. I mean, you could make part of the trade deals mandate that the parties maintain proper reliable courts available to locals as well as multi-nationals that are empowered to rule against government decisions. “Free trade” properly-so-called cuts both ways.

21

gianni 05.11.15 at 9:16 pm

Brett Dunbar:

As I read your position, it sounds to me like: ‘trust that the multi-national corporations will not abuse this system’

Please explain either how your position differs substantively from the above, or how the above is not pure foolishness.

22

Roger Gathmann 05.11.15 at 9:28 pm

19 – sinister and more sinister. There is a rich country – the US – that recently made it very difficult to bring class action suits to court. Would you like to see an international court overrule this?
Of course not. You are speaking the language of corporate rule. We have good evidence that this rich country – by, for instance, the populousness and composition of its jailed population – can’t really be trusted to preserve the rights of its minorities and low earners. But I don’t see corporations fighting to reverse that iniquity.
In the meantime, to entrap more poor countries in an international system outrageously weighted towards corporations seems like not the thing any liberal should support. Obama doesn’t use this kind of wording because that would make it impossible for the progressive Dems to pretend, after being bribed by their contributors, that they didn’t know what they were voting for.
The fact that the number of suits has risen by one hundred percent shows exactly why the system should be taken down, and any treaty obligation involving ISDS should be renegotiated. Just say no to corporation dominated unrepresentative international tribunals.

23

Matt 05.11.15 at 10:06 pm

Then again, I’m not so sure this argument isn’t about jobs after all. It’s not so much the actual labor market impacts, as the vision that seems to underlie Obama’s position in these negotiations. It’s like he’s simply given up on the idea of manufacturing jobs, and is now focused on making the world safe for American IP and finance.

IP and finance employment don’t seem sustainable drivers of employment. Manufacturing isn’t either. Manufacturing and mining are going the way of agriculture in the 20th century: output per worker rising faster than total consumption, sectoral employment on track for an absolute global decline as consumption growth flattens.

I don’t see any believable path to sustained high employment participation rates. There actually comes a point, contrary to pro-growth dogma, where people suffer rather than benefit by more-of-the-same consumption: from starvation to overeating, from walking in the cold to sitting in traffic jams, from expensive, slow international communications to being bombarded constantly with social media updates from thousands of kilometers away. True, there are ways to get people to consume more-of-the-same even after they’ve reached satiety, but that is not actually a desirable outcome even if it has a small silver lining of blunting jobs crises.

The laws of nature are not undergoing rapid, technologically exploitable revisions of understanding the way they did between 1890 and 1950. The remaining deep sources of building more-of-the-different, like increased understanding of biology, are not particularly likely to generate mass employment numbers like building trucks or driving them did. As production and employment decouple, consumption and employment need to do the same. Right now this decoupling is too often interpreted as a moral failing of working age people to obtain employment or as a moral failing of society to invent enough chores to occupy the waking hours of working age people.

None of this is to endorse the TPP which I don’t trust at all.

24

Brett Dunbar 05.12.15 at 1:26 am

@21

The system without an independent tribunal is heavily weighted in favour of the states, they control the legal system and if they choose to unilaterally seize the property of the foreign owned corporation, or impose arbitrary and discriminatory regulatory or taxation changes there’s essentially nothing that a corporation can do to stop them. Not surprisingly if a country has a reputation for doing that it finds it very difficult to attract outside investment. It can take a considerable amount of time to establish a reputation as trustworthy. The ISDS provides a mechanism for a state with a weak reputation for rule of law to make a credible commitment to rule of law.

It’s not trust the corporations as much as:

Some states can’t attract investment as potential investors fear that the investment will be seized, and the domestic legal system is not trusted to be impartial. So the treaty sets up an international tribunal that isn’t under the control of any one government and signatories commit to abide by its rulings.

25

Consumatopia 05.12.15 at 1:56 am

“The ISDS provides a mechanism for a state with a weak reputation for rule of law to make a credible commitment to rule of law.”

Under this logic, it should be these countries with weak reputations that seek ISDS clauses, while those with strong reputations would prefer to do without them. Maybe I’m misreading what’s happening, but that doesn’t seem to be the case–the US government seems very interested in pushing ISDS.

And, indeed, if ISDS was something that countries wanted to have imposed on them so they would have the credibility to acquire capital, then there would be no reason for TPP to impose it uniformly–it could instead only apply to those governments that felt, at the time the deal is signed, that they needed it imposed on themselves.

26

js. 05.12.15 at 2:07 am

[States] control the legal system and if they choose to unilaterally seize the property of the foreign owned corporation, or impose arbitrary and discriminatory regulatory or taxation changes there’s essentially nothing that a corporation can do to stop them.

I’m not even seeing why this is a bad thing. If some state does this, then by the magic of the market™, multinationals simply won’t invest in that state anymore. (Ok, in the proposed scenario, a given corporation loses some, but they’ve got enough to go around, frankly, and we’ve already established that this would only happen in a poorer nation. Hardly anything to lose one’s sleep over.)

27

TM 05.12.15 at 3:16 am

It is pretty amazing that somebody actually shows up on CT to defend ISDS. It is a heroic effort but unfortunately fails the reality test. ISDS wouldn’t be so outrageous if they were just about interpreting the narrow terms of the trade agreement itself. Instead they are written so broadly that corporations can attack any national law or regulation they don’t like. Expropriation or discrimination are not remotely at issue when tobacco regulation or the environmental laws governing resource extraction are being attacked by transnational vampire conglomerates. ISDS is a justice system exclusively for the vampires, based on laws rules written by the vampires and the tribunals stacked with vampires (*). Future historians will no doubt be debating endlessly why on earth anybody ever thought this a good idea.

(*) You are aware of course that the TPP is so top secret not even law-makers supposed to vote on fast track can see the drafts – but the representatives of the vampires – and nobody else – have been involved in every step of the drafting process. All that secrecy for the sole purpose of of creating trust in governments!

28

The Temporary Name 05.12.15 at 3:29 am

It’d be pretty nice if immigrants could sue a country if things didn’t turn out.

29

A H 05.12.15 at 3:39 am

The AIIB wasn’t really developed as an alternative to TPP.

They started it for two main reasons. 1. A response to the failure to expand the role of China at the IMF and world bank, which China is justifiably angry about. 2. Most importantly China has massive overcapacity in the heavy industrial sector a lot of it could be used up in a Binge of Asian Infrastructure construction.

I suspect that they are actually a bit pissed that the AIIB became such a big political deal because now there is a lot of pressure on them not to mess things up. China actually has an atrocious record of succesfully completing overseas development projects.

30

Roger Gathmann 05.12.15 at 4:20 am

In 1996, the Labour party platform promised to renationalize the railroads. In the event, this wasn’t done, but under a TPP like treaty, the government would be penalized for it in the event that the transportation companies had foreign investors, which they did.
That’s outrageous. I think the IP provisions of the TPP are already enough reason to reject it, but the ISDS is overkill, and should lead to its unilateral rejection. It says a lot about the spirit of a treaty that will no doubt run to five hundred pages when it is finally released to the public. The idea that this is some wonderful way of assuring “investors” that they can invest in poor countries, making it a win win all the way around, can only be believed by people who still set out stockings hoping that Santa will fill them.

31

Brett Dunbar 05.12.15 at 12:53 pm

@26

It’s a problem as in order to develop economically and stop being poor, poor countries need outside investment. The poor countries want the investment but currently lack the credibility to get it, due to past behaviour. By binding their hands in this way they hope to reassure investors that they are trustworthy. The largest single beneficiary of TPP looks to Vietnam, as footwear and clothing are major exports and are one of the few industries still subject to high tariffs, and Vietnam has rather weak rule of law.

@30

One of the reasons for not re-nationalising the railways is that the Government would have had to compensate the rail companies or face being sued by the shareholders, such as pension fund and other institutional investors.

32

TM 05.12.15 at 2:30 pm

If the reason for TPP is to help Vietnam attract investment, why don’t TPP supporters make the case for it. Let’s hear Ted Cruz explain that the US should be bound by ISDS in order to help make Vietnam more attractive for foreign investment.

BS.

33

Brett Dunbar 05.12.15 at 5:13 pm

@ 32

Tyler Cowen made the argument on for TPP based on the substantial benefit to Vietnam.

http://marginalrevolution.com/marginalrevolution/2015/04/why-the-tpp-is-a-better-trade-agreement-than-you-think.html

On accession to the WTO in 2007 Vietnam substantially liberalised trade rules, there has been some backsliding more recently, which ultimately hurts Vietnam. The ISDS procedure under TPP is easier to access than the similar procedure under the WTO, where only states can sue. Rights are a lot more effective when there is a mechanism to enforce them.

34

Roger Gathmann 05.12.15 at 7:58 pm

It ultimately hurts Vietnam that its government has sovereignty over its economy?
Vietnam at the moment is experiencing growth that is both robust and stable.
http://www.reuters.com/article/2015/02/02/vietnam-economy-gdp-idUSL4N0VC36J20150202

The only threat to the economy is not through anything the never used ISDS mechanism can offer. It is though sluggishness in the world economy.

“Vietnam’s economy this year is expected to face risks such as subdued demand, deflation and debt, Hong Kong-based HSBC economist Trinh Nguyen said in a report on Monday.

“Excess supply of oil and other commodities, sluggish global demand, rapid currency devaluation, and a fragile domestic recovery make nominal growth a complicated business in Vietnam, especially for an increasingly trade-oriented economy,” she said.”

In fact, Vietnam’s current government might well be trying to employ international agreements to trap any future government – say, a shift to the left of the Party – from the kind of economic policies it is currently pursuing.

Anti-democratic, corporate centered trade agreements should be rejected for exactly what they are: threats to every economy posed by a cadre of global technocrats and corporations. Surely the enthusiasm of the Tyler Cowens and Greg Mankiws tells us all we need to know about the politics of this agreement. The Obama administration’s full court press is as alarming as it is disgusting. Luckily, it is forcing Clinton to come out on the issue, one she really can’t afford to give to the GOP.

35

TM 05.12.15 at 9:15 pm

It does sound exactly like Tyler Cowen to applaud the prospect that any shell company with a letter box in Bermuda can sue sovereign governments to force them to gut their environmental and health protection laws.

36

Consumatopia 05.12.15 at 9:41 pm

I get that Vietnam wants lower tariffs and independence from China, but I’m still skeptical that they’re the ones who are pushing for ISDS. And even if they are asking for it, why does giving it to them require the rest of us to live with it?

37

ZM 05.12.15 at 11:44 pm

“For the critics (just about everyone on the left), it’s precisely the “rules on labor, the environment, intellectual property and investor protections” that represent the big concerns. ”

I’m not sure about the other elements but with regard to the environment I wouldn’t think that a trade deal overrides existing government obligations to protect the environment for the benefit of the heirs of the kingdom/commonwealth/state.

I unfortunately missed John Quiggin’s talk at uni recently due to prior commitments in town, but Chief Justice Robert French is talking next week on the interaction of trusts and statutes. Trade deals are even lower down than statutes I think in having weight in court.

This is of great interest to me due to my abiding assertion that the government is obliged to act on climate change and is not allowed to just decide it’s okay to ruin the climate.

As people might know I started thinking this is because it is the duty of the Crown, then I found a group in the US that use public trust law. I happily found an article a few decades old that says public trust law arises from the rights to commons vested in the crown but there are trust obligations attending these rights dating back to Roman Law, Common Law, and in the Magna Carta.

So since this duty of trust over environmental commons is so ancient, I doubt the trade deal can take away the government’s duties to look after the environment to pass down for future generations.

38

TM 05.13.15 at 4:05 am

“I wouldn’t think that a trade deal overrides existing government obligations to protect the environment”

Why on earth not? This is precisely what the corporate vampires are saying: Anything that diminishes corporate profits is a violation of their divine rights. Governments’ obligations to investors have priority over everything else including public health and environmental protection.
E.g. http://action.sierraclub.org/site/DocServer/Investor-State-Climate-FINAL.pdf?docID=16661, http://www.abc.net.au/environment/articles/2014/10/24/4113321.htm

39

ZM 05.13.15 at 5:28 am

I do not think trade deals override public trust in law, but after I go to the talk about trusts and statutes maybe I will know more about the hierarchy of and interactions between laws.

Governments come and go — the institution of the parliament and its offices are more permanent fixtures albeit not immortal. Public trust is a very old law with roots in roman law so I think a trade deal could not override it. In England this trust was vested in the sovereign which is the Crown. In the U.S.A. I am not sure where it is vested — maybe in the People since it is a republic.

Unless you are in agreement with the corporate vampires, you are probably better off agreeing with me that long time public trusts can not be overridden by short sighted trade deals. You can mix this with indigenous law too if you live in a colonised country.

You might recall dsquared’s recent travelogue about New Zealand and the Treaty of Waitangi.

At a talk I went to about how the environment is represented in government called “Who Speaks For The Earth” some one said there was a case about a river in New Zealand where the legal arguments involved public trust law and the Treaty of Waitangi dsquared wrote about.

I did not catch the name of the river, if it was mentioned at the talk, so I am not sure but this case might be the Waikato River case which found

“The repeal of s261 of the Coal Mines Act 1979 has not resolved the issue of ownership of river beds. Furthermore, we consider the conflict between Maori rights, the Crown and the public interest in general, over the ownership and use of rivers has implications far beyond the scope of the claims before this tribunal. We therefore recommend that the Crown give urgent attention to addressing these matters in the national interest.”

40

TM 05.13.15 at 1:33 pm

“Unless you are in agreement with the corporate vampires, you are probably better off agreeing with me that long time public trusts can not be overridden by short sighted trade deals.”

If this is meant as a normative statement, I agree with you. If it’s meant as a factual statement, I’d have to say you’d have to be deluded to believe that.

41

TM 05.13.15 at 1:43 pm

To be more clear on the legal front, of course ISDS tribunals don’t have the power to nullify national laws but they do have the power to punish states for enforcing laws that prioritize public health or the environment over corporate profits. Needless to say this is most threatening to poorer, less powerful countries although it is delusional to think that rich countries are safe from the depredations of the vampires. What is really amazing about ISDS is that it creates a whole mock justice system just for the service of corporations. They can sue any state but can’t be sued in turn. They get unprecedented privileges (come to think of it, maybe not unprecedented – think of the East India Company) with no responsibilities whatsoever. That this doesn’t create more outrage is a sign of our times. We have gotten used to corporations having only privileges and no responsibilities.

42

Brett Dunbar 05.13.15 at 2:44 pm

@ 34

Yes. Rich countries have a reputation for not using their powers in a harmful manner, and if they don’t can be successfully sued under domestic law. Poor countries with weak non-independent legal systems can benefit from putting certain matters in the hands of an independent international tribunal.

If Vietnam cannot convince investors it is a safe place to invest they won’t invest there.

43

TM 05.13.15 at 5:13 pm

Brett, your perseverance is awfully cute, especially considering that you are not making any sense!

44

ZM 05.13.15 at 5:28 pm

TM

“If this is meant as a normative statement, I agree with you. If its meant as a factual statement, I’d have to say you’d have to be deluded to believe that.”

Law is normative I think, I have only studied planning law though.

The Chief Justice’s talk on the interactions between trusts in equity law and statutes is blurbed as :

“What may broadly be described as the law of trusts covers the relevant doctrines of equity and statutes which provide for the supervision of trust relationships, qualify equitable principles, and which may give rise to new categories of trust relationships or things called ‘trusts’. The interaction of statute law and equitable doctrine as in many areas of interaction between statute law and the unwritten law raises questions about ‘coherence’ which direct attention to Atiyah’s question:

“All lawyers of course know that large areas of both the common law and the statute law are a shambles but is it one shambles or are there two?””

45

TM 05.13.15 at 5:47 pm

ZM, I take it you are saying that the law ought to prioritize environmental protection over trade agreements. That is a normative statement. (Hint: “ought”). I am pretty sure that there is nothing whatsoever in actually existing law (or at least in how it is interpreted) that makes it so factually. For example, there are a bunch of international environmental treaties but none of them have enforcement mechanisms. But trade treaties, like WTO, do have enforcement mechanisms and WTO has repeatedly ruled that conflicting environmental obligations are entirely irrelevant in the context of trade disputes.

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ZM 05.13.15 at 6:21 pm

TM,

I just told you what the actually existing law is. It’s the public trust legal doctrine.

An Oregon legal scholar Mary Christina Wood wrote a book called Nature’s Trust relating public trust to climate change, and in the USA a group called Our Children’s Trust is trying to litigate the matter in the courts. It could do with more support as the courts seem to be politicised there.

Mary Christina Wood appeared on the last episode of the Bill Moyers show talking about it

http://youtu.be/ktyq3vK6Ppg

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TM 05.13.15 at 7:59 pm

Well I do wish the judges knew that that is the “actually existing law”.

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ZM 05.13.15 at 8:07 pm

You should watch the clip. She talks about the law in the US going back to the founding of the USA and precedents in old case law.

She also says the climate is not just an environmental issue but an issue about the viability of our civilisation so it is the biggest case a court could ever hear.

She also says that you need popular support as well as the legal doctrine – so that is why all the activism like 350.org’s climate march is so important

Also in Australia we have a former right wing politician (ex- leader of the liberal party) a John Hewson active on the issue of companies like superannuation companies having a duty of fiduciary trust so they should divest from investments causing dangerous climate change as this breaks the fiduciary trust

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TM 05.14.15 at 1:54 pm

ZM, I don’t know what you are trying to argue here. This subthread started when you in 37 took issue with JQ’s statement that TPP will “benefit corporations at the expense of workers, the environment, the free flow of information and national sovereignty”. Now JQ is obviously right as a matter of fact – trade agreements do by design benefit corporations at the expense of workers and the environment. If you are trying to deny that, you are wrong. If you are working to change this state of affairs, more power to you. Your vision of a legally enshrined fiduciary duty toward future generations is clearly utopian, a vision that I obviously share but to pretend that it is not utopian is outright delusional.

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Brett Dunbar 05.14.15 at 9:23 pm

@ TM

The argument I am making is extremely straightforward, you are being remarkably obtuse in failing to understand it.

The point is analogous to the reason being able to be sued is the main benefit of incorporation.

By being subject to an independent court system you give the other party to a contract the ability to take action to enforce the contract if you breach it. This allows both parties to reach a binding agreement that that know the other will actually abide by, even if they don’t really trust each other. If I cannot enforce the terms on you if you breach the contract then either I have to trust that you won’t do so or If I don’t trust you then I won’t make a contract.

Rich countries mostly have independent impartial legal systems which their governments tend to obey and a reputation for not acting in an arbitrary or discriminatory manner. Some poor countries either lack an independent legal system or have extensive sovereign immunity making it effectively impossible to use domestic remedies. They also have poor reputations for their behaviour. By making themselves subject to ISDS they agree to forgo certain possible future actions which would be damaging to a prospective investor. Shortening the process of developing the kind of reputation for rule of law which is needed to attract investment.

Ukraine has had serious difficulty attracting investment due to a weak legal system and arbitrary and corrupt bureaucratic behaviour. One of the main reasons it wanted the EU agreement is to make itself subject to EU market regulation and improve the legal environment for outside investors.

Incidently TPP includes language requiring Vietnam to liberalise trade union law, and permit independent trade unions. As a communist dictatorship it has only a state controlled yellow union. Vietnam’s government is fairly horrible with a dreadful human rights record. TPP has various provisions to improve this, to which the dictatorship is reluctant to agree. The economic benefits seem to be enough to convince the dictatorship to make concessions.

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ZM 05.14.15 at 9:46 pm

” If you are working to change this state of affairs, more power to you. Your vision of a legally enshrined fiduciary duty toward future generations is clearly utopian, a vision that I obviously share but to pretend that it is not utopian is outright delusional”

I think it is conservative not utopian. As we are in Asia there still exists ties between ancestors and present generations in our region, so also between present generations and future generations.

It is an actually existing law – the thing is to try to get more support for it. Precedents in Australia are from the 19thC so the thing is to try to build on them.

I just mentioned it in this thread because it is a hopeful counter force to the TPP .

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TM 05.14.15 at 10:03 pm

Brett, nothing you are saying makes any sense. In ISDS, corporations can sue states – in tribunals staffed with corporate lawyers as judges – but not vice versa. There is no reciprocity, as you claim. You are making this up as you go. There are no mechanisms of holding corporations accountable in any of these treaties. They are not even party to the trade agreement and have no obligations whatsoever under the treaty. None, zilch. All they get are special privileges to the detriment of ordinary people, especially those in poorer countries without the means to fight back.

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Brett Dunbar 05.15.15 at 9:51 am

Governments are already able to sue corporations under domestic law. That doesn’t need to be in the dispute resolution mechanisms of the treaty as it already exists. They already have utterly unlimited access to a court system which either is independent or biased in the state’s favour. That was I would have thought obvious. The TPPs terms discuss changes to the status quo not where it is left unchanged. Specifically the terms require that states give up a special legal privilege, sovereign immunity, in certain cases. Corporations don’t have any such immunity and will continue to have no such immunity, so there is no need to state that in the terms.

You could argue that the corporation should have to exhaust domestic remedies first before resorting to ISDS. However there may either be no resolution possible under domestic law if for example, it has not been incorporated into domestic law. Or the domestic legal system may be notoriously slow, like in India, along with situations where the state has de jure or de facto immunity, making a suit under domestic law pointless. State’s either already have a fully adequate set of remedies or have entirely adequate powers to fix problems in their own legal system.

The main criticism of the ISDS I have is that it doesn’t go far enough at the moment enforcement of the human rights and trade union provisions of the treaty require the case to be brought by a government so if Vietnam continues to obstruct the establishment of real trade unions the oppressed Vietnamese have to hope that one of the other states party to the agreement takes action. EU and CoE law allow for an individual right of appeal, which makes the protections a lot more effective.

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ZM 05.15.15 at 11:15 am

Brett Dunbar,

“Specifically the terms require that states give up a special legal privilege, sovereign immunity, in certain cases. ”

Is that what the TPP is about? Then I doubt it is legal for the government to agree to it in Australia because we inherit an unwritten constitutional law from England but in 1901 we got ourselves an additional written constituion and since everyone was fed up with the parliaments always changing the constitution in England without the 70 per cent of common people’s consent our 1901 constitution specifies that no constitutional law can be changed without referendums and a complicated way of counting the votes because it has to be a majority in the commonwealth and a majority in most or all of the state’s (I forget which).

So this parliament can not give up our sovereign immunity in any case without a referendum.

Since you have mentioned this alarming issue of the parliament altering our constitution without a referendum (like it did in the Australua Sct so now we can’t get heard by the Privy Council after the high court) I will bring the matter to the Governor General’s attention in a letter.

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TM 05.15.15 at 12:25 pm

Brett, I called BS on you last time, you just continue. Trade agreements like TPP are not there to protect human rights or worker rights. Their sole purpose is to protect corporate vampires. Good for the vampires, bad for the rest of us.
Nothing you say makes any sense. We need an offshore Kangaroo court with the power to overrule domestic courts on behalf of corporate vampires like we need a hole in the head.

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Brett Dunbar 05.15.15 at 12:33 pm

Australia, as it happens, has opted out of the ISDS provisions. Sovereign immunity tends to be waived by rich well governed countries. The ISDS provisions require that a government consent to be sued in a broad range of circumstances, which gives investors in poor badly governed countries some assurance that they are protected from government misbehaviour.

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Brett Dunbar 05.15.15 at 12:48 pm

TM You are full of crap. Attracting investment is an important part of economic development, establishing a legal framework which protects the assets of investors is rather important for this. An example of what happens when this is absent
is Gaza. After the Israeli withdrawal there was a pretty good crop from the greenhouses. Israel than abruptly closed the border just as the crop ripened until it had rotted. Israel destroyed one of Gaza’s few exports severely impoverishing Gaza. ISDS would have allowed the exporters and the European customers to sue the Israeli government for damages. The potential cost might have prevented the Israeli action.

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ZM 05.15.15 at 12:59 pm

Brett Dunbar,

Well that is good to know so I needn’t write to the Governor General.

I can see your point in regards the situation in Gaza – but what about if the company was trading in fossil fuels and the government made laws to restrict this to meet international agreements to limit warming to 2 degrees C – would the company be able to sue the government in that case? Because that would be bad.

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Brett Dunbar 05.15.15 at 2:07 pm

Generally if the law is enforced in an even handed and impartial manner then probably wouldn’t succeed, they obviously could try. If however the were to cancel only the concessions held by BP while leaving similar concessions held by Exxon unaffected then they might have a serious case to answer. Discrimination is a lot more likely to succeed than a claim that the regulations are excessive.

Primary resource extraction industries are more likely to be in a position where they issue challenges. They have to operate where the resources are, and often the rentier states are staggeringly corrupt and oppressive, so are more likely to misbehave. Improved governance in those states might lead them to establish their processing operations in those states rather than export the unprocessed ore and unrefined oil to rich politically reliable countries. The lack of trust overrides the higher transport costs.

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Brett Dunbar 05.16.15 at 3:37 pm

Australia has signed up to earlier treaties with ISDS provisions; hence Philip Morris suing over packaging regulations (unlikely to succeed due there being a legitimate health justification and the regulation is applied evenly). It doesn’t appear that there is any great constitutional problem with them. Losing a case doesn’t invalidate the law. In the event that Australia loses they would have to compensate Philip Morris (and other manufacturers) for the value of the trademarks they are no longer permitted to use. They don’t have to permit the trademarks; just compensate for the IP seized.

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