My header this week is in solidarity for the Greek people. I hope they vote no and then realise that leaving the dysfunctional Eurozone will promise them growth and a return to some prosperity. They can become the banner nation for other crippled Eurozone nations – a guiding light out of the madness that the neo-liberal elites have created. While Greece battens down against the most incredible attack on European democracy since who knows when – perhaps since the Anschluss that led finally to war breaking out a year later in Europe, one wonders how low the Brussels elite will go to preserve control of the agenda. They clearly lost control on Friday when the Greek leadership decided to go back to the people to determine whether they wanted more poverty-inducing austerity. In response, the Brussels gang along with their Washington mates at the IMF have come out with personal attacks, lies, threats and ridiculous dissembling. But that is what happens when bullies can’t bully. But while these events are rather extraordinary in historical terms, other insidious attacks on democratic rights and choice are on-going. One of the more startling attempts to undermine the capacity of elected states to deliver on their mandate to their electorates and hand over almost absolute power over the state to international corporations is the so-called Trans-Pacific Partnership (TPP).
The TPP is being pushed under smokescreen of ‘free trade’, which is one of those classic neo-liberal con jobs like deregulation, privatisation, public-private partnerships and other ruses that imply that self-regulating private markets will deliver maximum wealth growth to all.
The corollary, of course, is that the state should remove the fetters of regulation on business, minimise its own economic footprint, and allow the corporate world to do what it does best – help us all.
The narrative is so obviously bereft that it hardly seems worth criticising any more. If the GFC proved anything it showed categorically that self-regulating private markets do not function efficiently and do not providing lasting benefits to us all.
We knew that already – the history of privatisation, outsourcing and the rest of the scams is littered with disasters, which are usually conveniently covered over with some gloss or another.
But the GFC brought it homein an undeniable fashion just as Greece – sorry for them – have been the most overt laboratory for the failures of fiscal austerity and the easy sounding but evil in practice ‘growth friendly structural reforms’ (aka hack as many public benefits from ordinary citizens and transfer as much national income to the rich).
But the TPP is seemingly reaching the apex of this Capitalist bastardry. We don’t know much more about it than we get by the good citizens who provide Wikileaks with documents.
The governments involved plead “commercial-in-confidence” as their reason for preventing a full public debate on the proposed TPP. They hide the negotiating details from us and then tell us that it is in our best interests for them to urgently sign of on it without the normal political oversight.
Australia has been down this route before when the national government signed the China-Australia Free Trade Agreement and the Japan-Australia Free Trade Agreement, which effectively prevented the elected parliament from legislating against any of the provisions in the respective treaties.
As Peter Martin reports in his Fairfax article today (June 30, 2015) – TPP – what we don’t know may hurt us:
… the parliament would be presented with an all-or-nothing choice. It could examine the TPP (after it had been signed) and either vote for or against it, but not change a word.
His article describes a farcical ‘consultation’ process that the Government claims provides the public with a chance to have input. Of course, “It’s hard to know that you need to write a submission if you don’t know what’s being proposed”.
There should never be any agreement between states which is not first fully disclosed to the people of each nation for their input through the usual channels.
A corporation should never have priority over a state and the citizens that the state represents.
From the leaked documents we know a bit about the TPP.
The aim of the treaty is to allow international corporations more freedom to operate across national borders without the usual oversight from the legislative environment imposed by the state.
The areas that the signatory states will lose the capacity to regulate include labour market regulations (job protection, minimum wages, etc), the cost of medical supplies, financial market oversight, environmental protection, and standards relating to food quality.
The controversial aspect of these agreements surrounds the so-called Investor State Disputes Settlement (ISDS) clauses, which set up mechanisms through which international corporations can take out legal action against governments (that is, against elected representatives of the people) if they believe a particular piece of legislation or a regulation undermines their opportunities for profit.
It is that crude. Profit becomes prioritised over the independence of a legislature and the latter cannot compromise the former. Our values have really become skewed in the ‘dark age’.
In other words, a democratically-elected government is unable to regulate the economy to advance the well-being of the people who elect it, if some corporation or another considers that regulation impinges on their profitability.
Corporation rule becomes dominant under these agreements.
The agreements create what are known as ‘supra-national tribunals’ which are outside any nation’s judicial system but which governments are bound to obey.
The make-up of the tribunals is beyond the discretion of a nation’s population and, as far as we know, will be heavily weighted under the TPP by the corporate lawyers and other nominees. The notion of accountability disappears.
These tribunals can declare a law enacted by a democratically-elected government to be illegal and impose fines on the state for breaches.
With heavy fines looming, clearly states will bow to the will of the corporations. Corporation rule!
There have already been some astounding decisions in these ISDS under other agreements, which have denied governments the right to introduce policies regarding environmental protection (for example, toxic waste safeguards, forestry management processes, etc).
Clearly, the secrecy in which the TPP is being finalised is a reflection of its toxic nature. The governments know that if the details leak out there will be an outcry and their political positions will become an object of focus.
The United Nations Conference on Trade and Development (UNCTAD) keeps a database on – Investor-State Dispute Settlement (ISDS) – which they say is “currently being redesigned and updated”. The so-called “reduced version of the database” makes for interesting analysis.
Since 1987, 24 per cent of the 608 cases taken out have been resolved in favour of the state being sued. There are still 58 per cent of the cases outstanding.
Here are some summary data that I gleaned from the database. The first graph shows the escalation in the ISDS cases since 1987.
The next graph shows the top 30 countries of investors who sued various states. The US clearly dominates with American corporations taken action in 21 per cent of the total cases. Dutch firms also appear to be particularly litigious.
The final graph shows the disputes by state being sued for the top 30 states. Argentina is involved in 9.2 per cent of the total cases followed by Venezuela (6.1 per cent), and the Czech Republic (4.8 per cent).
What evidence is there that these agreements advance well-being? Answer: none. In fact, the evidence so far produced of prior agreements (noted above) tends to conclude that the operation of these agreements undermines the national welfare.
The Australian Productivity Commission released its latest – Trade and Assistance Review 2013-14 – on June 24, 2015.
The APC can hardly be described as anything other than a pro-market body. Its history is that it began life as the Tariff Board (overseeing the protection system in Australia) and in recent decades, became the government’s free market agency – arguing relentlessly for deregulation and privatisation.
So it is hardly a left-leaning organisation.
Its latest Review studied, among other things, the so-called “Preferential trade agreements”, which Australia has entered into in recent years (with China and Japan). These agreements are similar to what we expect will be in the TPP.
The Productivity Commission concluded that:
Preferential trade agreements add to the complexity and cost of international trade through substantially different sets of rules of origin, varying coverage of services and potentially costly intellectual property protections and investor-state dispute settlement provisions.
… The emerging and growing potential for trade preferences to impose net costs on the community presents a compelling case for the final text of an agreement to be rigorously analysed before signing. Analysis undertaken for the Japan-Australia agreement reveals a wide and concerning gap compared to the Commission’s view of rigorous assessment.
1. The “proliferation of preferential trade agreements at the bilateral and regional level (referred to commonly as ‘free trade agreements’) is adding to the complexity and business transaction costs of the international trading system”.
2. The “practical impacts of agreements being entered into by Australia remain unclear and highlight the need for thorough evaluation of the negotiated agreement text prior to their signing.”
3. “In substance, the devil resides in the detail of these agreements and full and transparent analysis is not afforded to the final texts for many of them.”
4. “current assessment processes in Australia fall well short of what is needed to adequately assess the impacts of prospective agreements.”
5. “Current assessment processes do not systematically quantify the likely costs and benefits of negotiated texts to an agreement, fail to consider the opportunity costs of pursuing preferential arrangements compared to unilateral reform and ignore the extent to which agreements actually liberalise existing markets”.
6. “that services provisions negotiated under the ASEAN-Australia- New Zealand agreement added little if anything, to those already afforded by services commitments under the General Agreement on Trade in Services (GATS)” but exposed the Australian state to unnecessary risks.
The Productivity Commission also comments on the ISDS activity relevant to Australia. The national government is being sued by an international tobacco company for introducing plain packaging with health warnings. The company claims it undermines its profitability.
The Commission says:
The Australian Government continued defence of its tobacco plain packaging laws in a case brought by Philip Morris Asia in the Permanent Court of Arbitration and a number of countries in the WTO dispute settlement body. This case highlights the potential (and un- provisioned) contingent liability of Investor State Dispute Settlement (ISDS) provisions in trade and investment agreements that confer procedural rights to foreign investors not available to domestic residents. The final outcome of the case is not expected to be known for some time. The ongoing costs to Australian taxpayers of funding the preparation and defence of the tobacco plain packaging legislation, and the ultimate ruling, are unknown, unfunded and likely to be substantial.
In other words, international corporations have more rights than local residents.
The TPP is one component of the corporate intolerance for democratic oversight by states. The agreements are being advanced by neo-liberal governments who think the role of government is to advance the interests of the corporations as a way of increasing wealth.
We already know that the distribution of income and wealth is becoming more skewed as the neo-liberal era continues.
These trade agreements are just dirty scams designed to continue the redistribution of income and wealth to the top end of the distributions and to further neuter the capacity of governments to act independently according to elected mandates.
They line up with fiscal rules, independent fiscal commissions, and the like as key vehicles to suppress our freedoms and choice of legislative environment in which we live.
These so-called “free trade” agreements are nothing more than a further destruction of the democratic freedoms that the advanced nations have enjoyed and cripple the respective states’ abilities to oversee independent policy structures that are designed to advance the well-being of the population.
The underlying assumption is that international capital is to be prioritised and if the state legislature compromises that priority then the latter has to give way.
This is truly a ‘dark age’ we are living through.
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.