by David Kavanagh

First off, what even is the TPP?

As always, it’s a good idea to start with the most basic of basics. TPP definitively stands for the “Trans Pacific Partnership”, a supposed free trade agreement between several countries bordering the Pacific Rim.

Negotiations are still underway but this would involve countries such as the United States, Australia, New Zealand, Canada, Mexico, Japan, Vietnam, Chile and a small host of others.

Ultimately, potential member states are hoping to use the TPP to reduce trade barriers and lower the tariffs for goods between one another, as one would expect from a free trade agreement.

However, as is common with modern day trade agreements, this barely scratches the surface.

Why is the TPP controversial?

Confusingly, trade agreements nowadays are generally about a lot more than just trade.

On one track, they create the rules and guidelines that govern the global economy, and to a more specific degree, they can influence a whole host of domestic and international policy areas and issues.

For instance, the TPP specifically is expected to have far-reaching implications for issues as varied as public health and the pharmaceutical industry, copyright laws, agriculture, food safety and labeling, labour rights, corporate power, and others that I won’t go into in the interest of time.

Importantly, many people and groups advocating for political transparency are outraged because current negotiations are effectively taking place “behind closed doors”.

Since the TPP could affect so many niches of the average citizens daily life, the fact that politicians are not sharing details about their interstate discussion and, more significantly, the potential clauses and points that will be included in the TPP, people are feeling understandably uneasy.

A second element commonly raised is the fact that the TPP seems to be a lot more about the political and economic interests of the United States in particular than about free trade generally.

It is no secret that China is becoming an increasingly powerful actor with a great deal of sway in the Asia-Pacific region, an area in which the United States, arguably with the intention of remaining the world hegemon or “leader”, wants to establish its own dominance.

The fact that China, despite being on the Pacific Rim, has not been included in the TPP, while the United States forges ever stronger relations with the larger nations in the Pacific, rings loud about America’s true intentions.

If you want to know more about the various areas that the TPP could potentially impact, I’d recommend having a look here and here. From this point on, this piece will focus more so on how the TPP could increase corporate power distinctively to a dangerous degree.

TPP and corporate power:

Critics of the TPP, such as outspoken US Senator Elizabeth Warren, often argue that the trade agreement could have profound implications for the relationship between nation states, multinational corporations, and the citizens of the world.

Most notably, they claim that certain provisions of the TPP could effectively increase the power corporations have over states and their subjects. In arguing, they point particularly to the way in which the TPP could spread ISDS (yep, another obscure acronym, but bare with me!).

What is ISDS?

ISDS stands for Investor-State Dispute Settlement and usually involves tribunals that act as mediators or the go-between for companies or foreign investors that have a problem with a certain government, and vice versa.

Basically, as the name suggests, ISDS exists to settle disputes between states and corporations or investors.

If, for example, a foreign investor feels like they have been treated unfairly or unlawfully by and lost profits or investments because of the actions of a particular government, they can direct their grievances to an ISDS mechanism and ideally come to a solution.

Importantly, the TPP is expected to include an ISDS clause, which would allow foreign companies to sue member states for the loss of profits in the future.

That said, ISDS is not foolproof and can be exploited. In some ways, it could even threaten democracy itself. One need only look at history.

Philip Morris v. Australia:

On 1 December 2011, Australia introduced the Tobacco Plain Packaging Act 2011 that would require tobacco companies to use plain packaging on their cigarette products, lowering the products appeal and consequently reducing the profits made by these companies.

Phillip Morris, an international global tobacco giant selling goods in over 200 countries, including Australia, took the Australian government to the High Court of Australia with claims that this law infringed on its intellectual property rights.

Sanely, the High Court disagreed and Philip Morris suffered an astounding defeat. It wasn’t, however, ready to give in.

Seeing that a 1993 trade agreement between Australia and Hong Kong included an ISDS clause, Philip Morris’ Hong Kong subsidiary purchased and took over its Australian branch and launched a new legal action, this time ignoring Australia’s most powerful court altogether and going straight to an ISDS tribunal.

At present, the dispute between Philip Morris and the Australian government is still underway.

How does ISDS threaten democracy?

The issue here revolves around this idea that ISDS allows multinational corporations and foreign investors to circumvent or wholly disregard the domestic legal systems of any government signed up to trade agreements with ISDS clauses (like the TPP).

Unlike democratic governments that are founded on principles of free and fair elections and are (when they work) designed to serve and reflect the interests and concerns of the public, multinational corporations are driven by one thing and one thing only – profits.

Public health and public policy are secondary concerns, if concerns at all.

It becomes worrying then when legislation designed to improve the health of citizens and implemented by governments elected by a majority of people, legislation like the plain packaging laws, can theoretically be overthrown by a private corporation (see: Philip Morris) that is not elected at all and only out to protect its own corporate and economic interests.

On a second note, there are common concerns about the actual effectiveness and technical operation of ISDS tribunals.

As opposed to more regulated courts within countries, ISDS tribunals often lack transparency and independence, with arbitrators and judges sometimes actually promoting the interests of an investor involved in an ISDS case in another country.

Furthermore, the results of ISDS negotiations are only binding on the parties involved in each particular dispute.

While a court system like that found in Australia looks at past cases to ensure that its ruling are fair and consistent over time, ISDS tribunals do not consider previous precedents and do not even offer avenues for appeal.

The question arising becomes this: if ISDS is so seemingly unfair and can be exploited by companies to sue governments over issues such as those mentioned, should it really be included in a trade agreement as far-reaching as the TPP?

And if there is no cause for concern or outrage as some pro-TPP policymakers, such as Australia’s Trade Minister Andrew Robb, constantly claim, why are TPP negotiations taking place in secret?

This is one to keep an eye on folks.

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