One of the main arguments leveled against the Trans Pacific Partnership is that it could weaken domestic safeguards for workers and the environment through international dispute settlements. By allowing international courts, open only to investors’ complaints, to penalize governments for passing regulations deemed out of compliance with the deal, critics warn the TPP will undermine important oversight functions and national sovereignty.
Which is why it was odd that one of the biggest supporters of the TPP, Sen. Orrin Hatch (R-Utah), made the exact same argument on the Senate floor this week, when railing against an amendment to the deal that, Hatch’s opponents say, will make it more fair.
“What country would willingly sign a trade agreement that would subject their monetary policies to potential trade sanctions?” Sen. Hatch asked rhetorically Friday morning, decrying the provision, which would require parties to the TPP to obey currency manipulation rules.
“No country that I’m aware of,” he added.
The provision, sponsored by Sens. Debbie Stabenow (D-Mich.) and Rob Portman (R-Ohio), would empower international trade tribunals known as Investor State Dispute Settlement (ISDS) courts to sanction governments found guilty of conducting foreign currency market transactions aimed at creating an advantage for their exports
“That causes me great alarm,” Sen. Hatch said.
He noted that “other countries have already accused the US of currency manipulation,” and the amendment would “set forth a clear and accessible process for turning those accusations into trade disputes subject to possible sanctions.”
The “process” that Sen. Hatch speaks of—the ISDS court—is the same institution that has repeatedly come under attack by critics of the TPP, described as catalyst in the so-called Race to the Bottom—what analysts termed the deregulatory phenomenon that occurred over the past few decades, as free trade doctrinaires became increasingly influential around the world.
In March, when Wikileaks released a top-secret chapter from the trade agreement, critics described the tribunals as operating with little transparency and bereft by systemic conflicts of interest, with their private sector attorney staffers routinely switching advocacy and judge roles.
Sen. Chuck Schumer (D-N.Y.) told the New York Times after the disclosure that it “seems to indicate that savvy, deep-pocketed foreign conglomerates could challenge a broad range of laws we pass at every level of government, such as made-in-America laws or anti-tobacco laws.”
“I think people on both sides of the aisle will have trouble with this,” Sen. Schumer added.
The ISDS provisions haven’t troubled Sen. Hatch, however, until now, with the possibility that the opaque Federal Reserve could be subject to the same international tribunal that will impact environmental, financial sector and labor regulations.
Hatch’s tirade shows how The Stabenow-Portman amendment could complicate the White House’s agenda. If approved Friday afternoon, it would be attached to Trade Promotion Authority legislation—the so-called “fast-track” bill effectively required to advance the TPP through Congress.
The White House, however, has promised to veto any package containing currency manipulation enforcement rules. The administration has said it could lead negotiating partners like Japan, to walk away from the table.
Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee, and another ardent supporter of TPP and TPA, also spoke on the floor Friday,in an attempt to assuage his colleague’s concerns with ISDS. He said that under prior trade agreements, the US “has never lost a single dispute settlement case or paid one dime in penalties.”
The vast majority of suits filed in ISDS courts are brought by US-owned corporations trying to redress their grievances related to regulations and patent claims in developing countries—the latter of which, critics say, makes medicine less accessible to the poorest of the poor.
According to an analysis of leaked TPP text by Public Citizen’s Global Trade Watch, the number of foreign-owned and US companies that have access to ISDS tribunals would dramatically increase under TPP, with tens of thousands of additional entities, under the agreement, able to challenge rules and regulations adopted by signatory nations.
