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ISDS, Jeffrey Zients, meat labeling, Mickey Kantor, Obama, regulation, sovereignty, TPP, Trade, Trans-Pacific Partnership, U.S. Trade Representative, World Trade Organization, {What's Left of) Our Economy
President Obama and supporters of his trade agenda have spread so much misinformation that it’s hard to single out the most pernicious falsehood. But their claims that new trade deals won’t undermine U.S. sovereignty must be among the worst. Moreover, the specific arguments they make have muddied American debates on trade since the Uruguay Round multilateral trade agreement created the World Trade Organization in 1995.
According to the current administration, critics of Mr. Obama’s Trans-Pacific Partnership (TPP) in particular have no basis for warning that the deal will enable foreign tribunals unaccountable to the American people to rewrite or nullify any U.S. laws and regulations, whether they concern environmental protection, financial regulation, worker safety, or any social, ecological, or cultural priorities.
No less than the president himself has promised, “No trade agreement is going to force us to change our laws.” National Economic Council chief Jeffrey Zients has stated, “It is an often repeated, but inaccurate, claim that ISDS [a provision of the TPP] gives companies the right to weaken labor or environmental standards, for example, suggesting that a trade agreement could result in the United States having to lower its minimum wage. The reality is that ISDS does not and cannot require countries to change any law or regulation.”
The most comprehensive rebuttal to TPP sovereignty concerns comes from the U.S. Trade Representative’s office – complete with underscored text:
“The United States has taken important steps to ensure that our agreements are carefully crafted both to preserve governments’ right to regulate and minimize abuse of the ISDS process….In an effort to safeguard against potential abuses of ISDS, TPP will have state-of-the-art protections. It will recognize the inherent right to regulate and to preserve the flexibility of the TPP Parties to protect legitimate public welfare objectives, such as public health, safety, the environment, and the conservation of living or non-living exhaustible natural resources. The investment chapter will include carefully defined obligations and exceptions designed to ensure that nothing in the chapter impinges on legitimate regulation or provides foreign investors with greater substantive rights than those already available under U.S. law. It will also reaffirm the right of any TPP government to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health, or other regulatory objectives.”
These arguments are correct in the sense that trade treaties create no agency, legal or otherwise, that can dictate to the sovereign governments that have signed them. The judges that participate in the dispute-resolution systems typically created by these agreements do not issue orders to these governments, and they certainly command no constabulary that can physically enforce their writs.
But what supporters of these deals leave out is that these tribunes can authorize member states to punish governments that fail to change adequately or eliminate laws and regulations that are found to interfere with trade. The punishments entail trade sanctions against the guilty country’s exports, and even in the case of the United States, they have been severe enough to prompt changes in the statutes in question. Indeed, Americans just got an object lesson when the World Trade Organization struck down U.S. regulations creating certain labeling requirements that identify beef as imported. Mr. Obama’s Agriculture Secretary, Tom Vilsack, urged Congress to change the law precisely to avoid reprisals that the WTO said could affect billions of dollars worth of American-made products.
But it’s impossible to avoid the conclusion that Washington has engaged in this double-talk for the simple reason that it works. Indeed, when the World Trade Organization itself was created, President Bill Clinton’s U.S. Trade Representative Mickey Kantor declared that “Nothing could be further from the truth” than the charge that the WTO’s authority would put American laws at risk. In fact, Kantor noted, “The first sentence of this [implementing] legislation {holds that] in any conflict between U.S. law and anything with the GATT or the Uruguay Round or the WTO, U.S. law prevails. Nothing done by the WTO or dispute settlement can alter or change any U.S. law. In fact, it says specifically in the Uruguay Round that you can maintain higher standards, as California does, under various California laws, including Prop 65, in terms of protection of human, animal or plant life. “
The Senate’s approval last week of fast track negotiating authority that makes TPP’s passage more likely indicates in part that the Executive Branch has “fooled it twice” on sovereignty. It’s now up to the House to show that American lawmakers still have a learning curve on trade and sovereignty.
