Monthly Archives: October 2016

How the TPP threatens our climate

In January 2016, TransCanada, the corporation behind the dangerous Keystone XL tar sands pipeline, laid bare the threats that two pending trade agreements pose to the movement to protect our climate and keep fossil fuels in the ground.

roadblockJust two months after the Obama administration rejected the pipeline, TransCanada announced it would retaliate by using rules in the North American Free Trade Agreement (NAFTA) that empower foreign corporations to challenge domestic policies in private tribunals.

TransCanada now plans to ask three tribunal lawyers to order the U.S. government to pay more than $15 billion as “compensation” for the Keystone XL decision that avoided increased climate disruption. But if two even larger trade deals were to take effect, TransCanada’s case may be just the beginning of a swell of such challenges to hard-fought climate protections. Those deals are the Trans-Pacific Partnership (TPP)—a controversial pact between the U.S. and 11 Pacific Rim countries that Congress may consider this year—and the Transatlantic Trade and Investment Partnership (TTIP)—a broad pact under negotiation between the U.S. and the European Union. Both deals would dramatically expand the number of corporations that could follow TransCanada’s example and use private tribunals as a backdoor way to challenge and potentially undermine U.S. policies that keep fossil fuels in the ground.

Like NAFTA, the TPP and TTIP would give foreign corporations broad rights, including the right to challenge new fossil fuel restrictions that thwart their “expectations” for a stable business environment. The trade deals would empower the corporations to bypass U.S. courts and take such challenges to tribunals of three private lawyers, unaccountable to any domestic legal system, under a process known as “investor-state dispute settlement” (ISDS). The lawyers—over half of whom also represent corporations in cases against governments—could order the U.S. government to pay the corporations the profits they hypothetically would have earned without the new climate protections. Law firms specializing in ISDS are now explicitly advising corporations, including fossil fuel firms, to see ISDS as a “tool” to “prevent” unwanted policies, as threats of costly ISDS cases can chill policy proposals.

Policies targeted in recent ISDS cases include a fracking moratorium in Quebec, a court order to pay for oil pollution in Ecuador, and new restrictions on a coal-fired power plant in Germany. Shell, BP, Chevron, and ExxonMobil are among the fossil fuel corporations that have already used ISDS, helping to spur a rapid rise in ISDS cases. Indeed, half of the new cases launched in 2014 targeted policies affecting oil or gas extraction, mining, or power generation. For the first time, the TPP and TTIP would enable some of the world’s largest fossil fuel firms to use ISDS to challenge U.S. policies to keep fossil fuels in the ground, including restrictions on fracking, offshore drilling, federal fossil fuel leasing, and dirty pipelines. Indeed, such firms have investments in these four fossil fuel sectors across at least 36 U.S. states, see a map here.

Read the full report’s  findings here

 

Advertisements

The TPP And Free Trade: Time To Retake The English Languauage

The proponents of the Trans-Pacific Partnership (TPP) are planning to do a full court press in the lame duck session of Congress following the election. We will be bombarded with speeches and columns from President Obama and other illustrious figures telling us how it is important to approve the TPP for a variety of reasons.

We can be certain that one of the reasons will be the inherent virtues of free trade.

They will not be telling the truth.

Alternate delegates hold up signs during the first sesssion at the Democratic National Convention in Philadelphia

The TPP is not about free trade. It does little to reduce tariffs and quotas for the simple reason that these barriers are already very low. In fact, the United States already has trade deals with six of the other eleven countries in the TPP. This is why the non-partisan United States International Trade Commission (ITC) estimated that when the full gains from the TPP are realized in 2032, they will come to just 0.23 percent of GDP. This is a bit more than a normal month’s growth.

In fact, the TPP goes far in the opposite direction, increasing protectionism in the form of stronger and longer patent and copyright protection. These forms of protection for prescription drugs, software, and other products, often raise the price by a factor of a hundred or more above the free market price. This makes them equivalent to tariffs of several thousand percent.

These forms of protection do serve a purpose in promoting innovation and creative work, but we have other more efficient mechanisms to accomplish this goal. Furthermore, the fact that they serve a purpose doesn’t mean they are not protectionist. After all, protectionism always serves some purpose. A quota to protect the U.S. sugar industry doesn’t stop being protectionism because it ensures the survival of a domestic sugar industry.

It is likely the case that the strengthening of patent and copyright related protections in the TPP does more to impede free trade than the modest reductions in tariffs do to promote free trade. Unfortunately, neither the ITC nor anyone else has attempted to quantify the cost of the protectionist measures in the TPP so we don’t have a good basis for comparison at this point.

The other point to be made about free trade and protectionism is that our push for free trade has always been very selective. NAFTA and other trade deals were explicitly designed to make it as easy as possible for U.S. corporations to manufacture goods in the developing world and ship them back to the United States.

This pattern of trade had the predicted and actual effect of reducing jobs and lowering pay for manufacturing workers. This pattern of trade has been an important factor in the wage stagnation seen by workers without college degrees over the last four decades.


Read the full story on the Huffington Post

Corporate Bias Threatens Environment

We now know who will decide TransCanada’s $15 billion claim against the U.S. for rejecting the dangerous Keystone XL tar sands pipeline, that would carry oil from Alberta to Texas.
canada

His name is David R. Haigh, Q.C.,a lawyer with a long history of representing the oil and gas industry. His previous clients include Alberta-based oil and gas producers, an Alberta-based oilfield materials supplier, and an Alberta-based oil and gas pipeline company. Mr Haigh works as a senior partner in a law firm working onCanadian tar sands.

The case, which TransCanada is bringing under the North American Free Trade Agreement (NAFTA), is just one of a growing number of suits in which multinational corporations and other investors use sweeping rights in trade deals to challenge environmental protections in private tribunals. This raises a critical question about such tribunals, known as investor-state dispute settlement (ISDS) tribunals: are they biased in favor of corporations and other investors.  The answer is yes, according to a growing body of independent empirical research.

So why does bias plague ISDS tribunals? How does this affect environmental protection, and where does this leave deals like the Trans-Pacific Partnership (TPP) with ISDS at their heart?

Read the full article from the Sierra Club 

With Europe-Canada Deal Near Collapse, Globalization’s Latest Chapter Is History

Even in this moment of fierce reassessment of the merits of free trade, the deal promoting commerce between the European Union and Canada seemed like a safe bet to secure political blessing on both sides of the Atlantic.

images-2

So as the agreement appeared dead on Friday — collapsing in the face of unrelenting opposition from Wallonia, the French-speaking portion of Belgium, where dairy cows have run of the land — it underscored the extent to which trade has become politically radioactive around much of the globe. Liberalized trade has amplified economic growth, but the spoils have been largely monopolized by wealthy and corporate interests. Recriminations over the resulting economic inequalities are now so ferocious that modern history has been altered: The phase of globalization that began with the ending of World War II is essentially over.

In the seven decades since that conflagration, world leaders have forged a series of increasingly large and complex trade deals, pinning hopes for peace and prosperity on the value of turning wartime adversaries into commercial partners. But if a deal negotiated at the highest level between two large and advanced economies like Canada and Europe can be upended by narrow interest groups — like the dairy industry in a relatively minor participating nation — forget about every other large and complex deal under discussion.

 One may presumably close the books on the Trans-Pacific Partnership, the enormous trade and investment pact championed by the Obama administration and encompassing a dozen nations around the Pacific Rim. One may reasonably perform last rites on the Transatlantic Trade and Investment Partnership, the similarly gargantuan deal between the European Union and the United States.

As for anyone still nursing fantastical notions that Europe and Britain will set aside domestic politics in negotiating what may be the most complicated divorce in history, Friday delivered a sobering development.

The British government has insisted that it will find a way to leave the European Union while maintaining access to the European single market — the buyer of almost half of Britain’s exports. But any deal resulting from tortuous negotiations must win the assent of the 27 other members of the European Union. Any one of those countries seeking to protect the concerns of a single affected industry can essentially stop any deal from proceeding. On Friday, that is precisely what happened when Chrystia Freeland, Canada’s international trade minister, left the talks and went home to Ottawa.

“It is evident to me — evident to Canada — that the European Union is incapable of reaching an agreement,” she told reporters.

Under Belgium’s complicated federal system, Charles Michel, the country’s prime minister, can give his approval to the deal only once all of the country’s regions assent. The Wallonia region of Belgium is home to 3.5 million of the country’s 11.2 million people. Yet in single-handedly blocking a trade deal produced over seven years between the European Union and Canada, it effectively determined the terms of commerce applying for 500 million Europeans.

The Walloons did not relish the idea of having to compete against imported dairy products from Canada. Britain makes cars, medical devices and sophisticated parts for airplanes. It is a global leader in financial services. Somewhere in the European Union must surely lurk some other Wallonia that will seize the opportunity to slap tariffs on British goods even at the cost of broader economic interests. That was already apparent to anyone paying attention to European politics. After Friday, London’s ministers will need spirits to maintain delusions of an amicable divorce. (And if those spirits come from the other side of the English Channel, they are likely to cost more.) There is now “a huge question over whether the common European trade policy can survive,” said Hosuk Lee-Makiyama, the director of the European Center for International Political Economy, a research organization based in Brussels.

It is now beyond argument that liberalized trade between wealthy countries and developing countries exposes vulnerable workers to substantial perils. When cheaper imports arrive from low-wage countries, people making more expensive domestic goods can find themselves looking for new jobs.

Trade economists will say with justification that the inclusion of China and Mexico in the global trading system promoted economic growth, increased consumer choice, lowered prices on a variety of goods and allowed companies in wealthy countries to export more of their own wares. Yet if the gains of trade were broad, the pain befalling communities directly in the path of China’s export juggernaut proved intense and poorly cushioned by government policies. A voluminous body of economic literature has in recent years brought home just how intense and damaging the China shock has been in the United States alone.

The distrust left after that shock, and anger over the broader workings of trade, have transformed politics in many major economies. Rage over factory closures in the American heartland propelled the rise of Donald J. Trump. Such sentiments fuelled Britain’s vote to leave the European Union. Here is part of the explanation for the growth of right-wing populist parties in France, Germany, Hungary and elsewhere.

Now, even a deal between Europe and Canada looks unachievable.

How the TPP Would Fuel Displacement and Fail Migrant Workers

For far too long, trade and immigration policies have prioritized corporate interests over good jobs and worker rights.

unnamed

Since the implementation of the NAFTA in 1994, corporate-driven free trade agreements have undermined workers’ bargaining power, disrupted rural economies, and displaced whole communities in developing countries. Millions of workers have been driven from their homes and families, often undertaking difficult journeys in search of work abroad, where their status is precarious and they are likely to face abuse, exploitation and discrimination.

Now politicians and corporations seek to repeat the failed policies of the past by implementing the TPP, a massive trade deal between the United States and 11 other Pacific Rim nations. The TPP would repeat and expand economic rules that destabilize communities, perpetuate low wages and undermine labor rights — all of which are factors driving forced migration.The TPP broadly fails migrant workers in three ways: (1) It would displace working people and contribute to forced migration; (2) Its labor provisions would not adequately address ongoing violations of migrants’ human and labor rights; and (3) It would further empower corporate and investor interests potentially undermining efforts to win immigration reform and strong labor laws. Although the TPP puts all the downside risk on the most vulnerable, saving its strongest protections for global corporations, it doesn’t have to be this way.  Different trade rules could promote commerce while advancing the working poor and building shared prosperity.

Read the full report Trading Away Migrant Rights: How the TPP Would Fuel Displacement and Fail Migrant Workers.

A Progressive Approach to Globalization

The new president needs a fresh approach to trade.

stop_tppa_rally-_15550752528While political and media elites wonder why international trade has emerged as a top election issue this year, we were not surprised. Our question is, “What took so long?”

Obviously, the anti-establishment candidacies of Senator Bernie Sanders and Donald J. Trump were instrumental in elevating the issue, but it is not hard to identify the energy source behind the current debate: The inherent inequities in the “trade” agreements pushed by the United States for the last 30 years have finally surfaced, and the voices of the people and the communities long hurt by those deals are finally being heard.

The important question for progressives is, “What now?” How can we tap this moment such that we bring lasting change to an area of tremendous portent—globalization?

Globalization isn’t going away.

The first thing to realize is that, despite Trump’s nostalgia for a bygone era when the United States was insulated from global trade, stopping or slowing trade is not at issue. Global trade volumes—imports plus exports—have grown from 25 percent of global GDP in the mid-1960s to 60 percent today. In the United States, that same metric has grown from 10 percent to 30 percent (with imports a larger share than exports over almost that whole time; i.e., we’ve run trade deficits). We view that expansion as potentially positive, as it is through expanded trade that we seek new markets for U.S. products, expand the supply of goods and services, and provide emerging countries with opportunities to grow by trading with wealthy countries.

But trade and contemporary free trade agreements (FTAs) are far from synonymous. Today’s FTAs, of which the Trans-Pacific Partnership (TPP) is Exhibit A, are not mainly about cutting tariffs to expand trade nor are they about jobs, growth, and incomes here in the United States. Rather, they’re about setting expansive “rules of the road” that determine who wins and who loses.

With 500 official U.S. trade advisers representing corporate interests having been given special access to the policy process while the public, press, and largely Congress have been shut out, it is not surprising that corporate interests have thoroughly captured the negotiating process and ensured they are the “winners” under these rules. Their message to the rest of us has been: “Don’t worry, this will be great for you, too. And, hey, if it isn’t, we make it all better with adjustment assistance and some training.” The fact that the hollowness of such false promises are finally evident to the broad electorate provides an opening to come up with new rules of the road.

The new rules must prioritize the economic needs of low- and middle-income families while preserving the democratic, accountable policymaking processes that are essential to creating and maintaining the environmental, consumer, labor, and human-rights policies on which we all rely. In what follows, we briefly outline our “Out with the bad, in with the good” reform of FTAs. We also recognize that achieving such inclusive policies will require a new policymaking process to replace the current system of opaque negotiations, a system heavily influenced by hundreds of official corporate trade advisers while the “fast-track” process limits Congress’s role and largely shuts out the public.

Read the whole article on American Prospect

The Big Problem With The TPP’s Super Court That We’re Not Talking About

unnamed

Opponents of the Trans Pacific Partnership (TPP) trade agreement protest outside of the White House in Washington February 3, 2016. REUTERS/Gary Cameron

TPP would hugely expand the number of companies that could sue the U.S. government.

A secretive super-court system called ISDS is threatening to blow up President Barack Obama’s highest foreign policy priority.

Investor-state dispute settlement — an integral part of the Trans-Pacific Partnership trade deal — allows companies to sue entire countries for costing them money when laws or regulations change. Cases are decided by extrajudicial tribunals composed of three corporate lawyers. Buzzfeed, in a multi-part investigation launched Sunday, called it “the court that rules the world.”

Although the ISDS process has existed for years, TPP would drastically expand it. The most common criticisms of the system are that it’s secret, that it’s dominated by unaccountable big-firm lawyers, and that global corporations use it to change sovereign laws and undermine regulations. That’s all true.

But here’s what most of the coverage and the critics are missing.

The ISDS system ― which is now written into over 3,000 international trade treaties, including NAFTA ― was designed to solve a specific problem. When corporations invest abroad, they fear that their factories might be nationalized or their products expropriated by governments that also control the local courts. ISDS is meant to give companies confidence that if a country seizes their accounts or factories, they’ll have a fair, neutral place to appeal.

But instead of helping companies resolve legitimate disputes over seized assets, ISDS has increasingly become a way for rich investors to make money by speculating on lawsuits, winning huge awards and forcing taxpayers to foot the bill.

Here’s how it works: Wealthy financiers with idle cash have purchased companies that are well placed to bring an ISDS claim, seemingly for the sole purpose of using that claim to make a buck. Sometimes, they set up shell corporations to create the plaintiffs to bring ISDS cases. And some hedge funds and private equity firms bankroll ISDS cases as third parties — just like billionaire Peter Thiel bankrolled Hulk Hogan in his lawsuit against Gawker Media.

It’s the same playbook that hedge funds were following when they bought up Argentine, Puerto Rican and other U.S. housing debt for pennies on the dollar. As The Huffington Post reported in May, the financiers were betting they could use lawsuits and lobbying to influence the political system in favor of the creditors like them and reap huge rewards.

Indeed, the damage of ISDS goes far beyond the money that investors manage to extract from public coffers and extends to the corruption of a political system by investors who buy off scholars, economists and politicians in pursuit of whatever policy outcome leads to a payoff. And there’s nothing stopping plutocrats with agendas that go beyond profit-making from getting involved ― again the way Thiel did with Gawker. That alone changes the power dynamic: If you’re the government of Thailand, the billionaire you’re negotiating with has one extra threat at his disposal.

If these investors are able to cement ISDS as part of the Trans-Pacific Partnership, the opportunities for hedge funds to do what they’ve already done to Argentina will be endless ― possibly even in cities and states under financial pressure in the U.S., like Detroit and Illinois.

So-called third-party funding of “international arbitration against foreign sovereigns” has been expanding quickly, according to Selvyn Seidel, a pioneer in the litigation finance industry and now CEO of the advisory firm Fulbrook Capital Management.

“You can get an award for billions of dollars when that award would never come out in domestic law,” said Gus van Harten, a professor at Osgoode Hall Law School at York University in Toronto. “It’s just a jackpot for speculators.”

Read the whole article on Huffington Post

Sierra Club Announces Anti-TPP Ad Buy

A five-figure ad buy will activate members against the Trans-Pacific Partnership or TPP, as a disaster for our air, water, and climate.The ads will run for three weeks, from coast to coast, in states from Massachusetts to Washington.

1419-toxictrade-1200x628-text_02

“As extreme weather intensifies and soaring temperatures set new records, the urgent need for climate action becomes more real.Unfortunately, the toxic Trans-Pacific Partnership threatens climate action and environmental protection and must be stopped,” said Ilana Solomon, director of the Sierra Club’s Responsible Trade Program. “We’re spreading the message that toxic corporate trade has no place in our clean energy economy. The time is now to stop the TPP and build a new model of trade that protect communities and the climate.”

This campaign follows the Sierra Club’s release of its Toxic Trade map, reported omn this blog last week – the first comprehensive look at the fossil fuel projects that would gain new protections under the TPP and TTIP, a proposed trade deal between the U.S. and the European Union. The map plots more than 400 polluting projects across 48 states, each of which is owned or operated by a multinational corporation that could sue the U.S. government in private tribunals over new climate and environmental protections if Congress were to pass the TPP and TTIP. The Sierra Club will continue to educate and mobilize its 2.4 million members and supporters about the threats of the toxic TPP.

Stop Subsidizing Climate Change

 

Trade deals like the Trans-Pacific Partnership don’t cut off huge subsidies for oil and gas companies.

www-usnews

 

Whether you love them or hate them, Donald Trump and Bernie Sanders have shown Americans the downsides of trade deals like Trans-Pacific Partnership and its trans-Atlantic counterpart. These deals, like NAFTA before them, aim to take down barriers to trade globally and encourage economic growth. But they also take down factories and jobs in many parts of the U.S. The economic pain they cause has become a big election year issue.

Proponents of these treaties say that economies grow stronger when companies everywhere compete on a global market. They say that this will cause inefficient and unproductive companies to shut down. Then capital and labor can flow around the world and settle wherever money and people can be most productive. So goes the theory.

But ironically, while these treaties demolish some trade barriers, the actually erect and strengthen others. Now it’s emerging that one of the main effects of the treaties is to lock in huge subsidies for coal and oil – two fuels that cause most of the world’s climate change. Worldwide, these subsidies totaled nearly half a trillion dollars in 2014.

Countries use a lot of excuses for subsidizing coal and oil. Some say it is for self-defense, in case their supplies are shut off. Some say it is to make sure poor people don’t suffer for lack of affordable fuel. All too often the subsidies result from cronyism and corruption – and a desire on the part of undemocratic leaders to placate the restless poor in their midst.

Whatever the reason, these subsidies are bad economics and worse for the climate. The economic damage is two-fold. First, coal and oil extraction create few jobs. The entire U.S. coal industry employs barely 65,000 people at this point, after years of decline. Renewable power sources generate more employment for the amount of power generated. Second, once nations start on the transition to renewables they put themselves on a path to spending much less on energy. The economics just get better over time: Solar cells and batteries get cheaper and more efficient every year. Wind and sunshine are free. Meanwhile fossil fuels – coal, oil, and natural gas — cost money, even though their cost has slumped in recent years.

Beyond these economic problems, these coal and oil subsidies hurt the climate. The more coal and oil are subsidized, the more people will burn them. Less investment will flow to wind and solar. Last fall, at COP21 (a major climate conference in Paris), world leaders committed themselves to slashing carbon emissions over the next few decades. These reductions are almost impossible to achieve unless nations phase out fossil fuel subsidies.

Major global insurance companies are the world’s best appraisers of risk, and they too urge heads of state to cut the subsidies. They speak up not because they are treehuggers; they speak up because they insure against flooding and other climate-related risks. They know climate change is real, and it will have real economic costs.

This week, a group of major insurance companies with more than $1 trillion in assets issued a statement directed at the leaders of the G20 nations. The insurers called for a “clear timeline” to phase out all fossil fuel subsidies in G20 nations by 2020.

It’s time for the proponents of trade treaties to walk their talk. It they truly believe in the power of markets, let them take step back and let markets work. Let Exxon and the rest of the fossil fuel industry face the consequences of being on the wrong side of history and nature. Let entrepreneurship and technical advance take us forward to a carbon-free future.

By David Brodwin

Read more on US News

Multinational companies are getting paid by our Governments

At the heart of today’s “trade” agreements are provisions that grant multinational corporations extraordinary new rights and powers. This system – called Investor-State Dispute Settlement (ISDS) – empowers individual foreign corporations to skirt domestic courts and sue governments before a panel of three corporate lawyers.

photo3165

ISDS cases are decided by tribunals composed of three corporate lawyers that are authorized to order governments to pay unlimited sums of taxpayer money to corporations that claim our domestic laws or government decisions violate special new rights provided in ISDS agreements. Payments include what the three corporate lawyers deciding the case surmise are the “expected future profits” that the corporation would have earned in the absence of the public policy it is attacking. There is no outside appeal. Many of these lawyers rotate between acting as tribunal “judges” and as the lawyers launching cases against the government on behalf of the corporations. Under ISDS, multinational corporations are provided greater rights than residents of the countries signing these ISDS agreements or domestic firms.

This extreme ISDS system already has been included in a series of U.S. “trade” deals, forcing taxpayers to hand more than $440 million to corporations that have successfully attacked toxics bans, land-use rules, regulatory permits, water and timber policies and more. Under one pact, a tribunal ordered payment of more than $1.4 billion to a multinational oil firm after it violated the terms of its contract with the Ecuadorian government to explore for oil in the Amazon. Just under U.S. deals, more than $70 billion remains pending in corporate claims against climate and energy laws, medicine patent policies, pollution cleanup requirements, and other public interest policies we rely on to protect the environment, our health, safety and financial stability.

Read the whole article here 

Find out how much has already been paid out