HOT TOPICS ▶ Climate Change     Undoing The New Deal     The Real Baltimore     Reality Asserts Itself     United Kingdom    

  January 14, 2016

The Deeper, Uglier Side of TPP

In his State of the Union address, President Obama said the Trans-Pacific Partnership was about staying on top as a global economic power, but a close look at the text shows how that only applies to multinational corporations
Members don't see ads. If you are a member, and you're seeing this appeal, click here


Share to Facebook Share to Twitter

I support The Real News Network because it is not Conservative, it is not Liberal; it is Real. - David Pear
Log in and tell us why you support TRNN


THOMAS HEDGES, TRNN: Last night, President Obama used a portion of his 2016 State of the Union address to lobby for the Transpacific Partnership agreement or TPP, which is slated to be passed this spring in Washington.

PRESIDENT BARACK OBAMA: It cuts 18,000 taxes on products made in America, which will then support more good jobs here in America. With TPP, China does not set the rules in that region, we do. You want to show our strength in this new century? Approve this agreement. Give us the tools to enforce it.

HEDGES: But critics of the TPP say the United States-China contention is a red herring. Instead, the TPP represents a huge victory for multinational corporations that have devised a complicated system where they can sue foreign governments for interfering with their profits.

MELINDA ST. LOUIS: Even though the treaty is negotiating between governments, it's a private corporation that can then try to enforce this treaty, outside of the courts in private tribunals.

HEDGES: Melinda St. Louis is part of Public Citizen’s Global Trade Watch, and says that the TPP’s accountability system under what’s called Investor State Dispute Settlement or ISDS heavily favors corporations by allowing them to sue governments if they pass laws that threaten a company’s profit margin.

ST. LOUIS: They're made up of three private lawyers who determine whether the extreme investor rights that have been included in the treaty have been violated. And then that tribunal of three private lawyers, who are not bound by precedent, who are not bound by typical conflict of interest rules that you would expect for judges, they decide whether they will award damages to the corporation, which is taxpayer money from the governments. And it has been in the order of millions or even billions of dollars in taxpayer damages, compensation, to corporations. And the violations of the rights that they are claiming are our laws, our judicial decisions, our administrative acts.

HEDGES: Proponents of the TPP say it's the most progressive deal in history because it protects labor and environment. But deep inside the rabbit hole are another set of rules called Most Favored Nation rules or MFN rules, which allow multinationals to circumvent almost any regulation from existing trade deals, including the quote-on-quote “most progressive” ones from the TPP.

ST. LOUIS: And what that means is that a government has to provide the same treatment to an investor from, from a TPP country as they provide to any other country in any other treaty that they have. And so through that mechanism it's actually possible for investors to sue through one treaty, but say we actually want the protections that were included in a third treaty that we're not even, that our government isn't even a part of.

HEDGES: ISDS and MFN rules are bolstered by the fact that they are privileges only corporations can enjoy.

ST. LOUIS: It is only corporations that can bring cases. Governments can't bring cases. They can--they are defendants. But a government cannot challenge a corporation.

HEDGES: As if the balance couldn't be tipped any more, corporations increase their odds of winning lawsuits by engaging in a practice called “stacking”.

ST. LOUIS: What corporations will do when they launch an investor state case is they'll stack, and they'll basically say we, the violations of our rights, have been indirect expropriation, minimum standard of treatment, you know, proportionality--they'll basically list all of the standards that are in the treaty hoping that at least one of them sticks. That, in fact, has happened a lot. In fact, the minimum standard of treatment is the standard by which most investors have received awards and kind of positive outcomes for the investor, because it is so broad and can be interpreted so broadly.

HEDGES: Put all those privileges together and you get a judicial system that allows for some absurd lawsuits that are completely legal. Take the case of Phillip Morris and Australia for example.

ST. LOUIS: Phillip Morris International, which is a U.S. tobacco company, decided to incorporate its Australian holdings into its Hong Kong subsidiary because Australia and Hong Kong had a bilateral investment treaty that had investor state dispute settlement, or ISDS. The treaty that the United States had with Australia did not have ISDS in it. So they incorporated, their subsidiary took the Australia holdings from Hong Kong, and then launched their investor state dispute settlement through the Hong Kong-Australia bilateral investment treaty.

Phillip Morris International then incorporated as a Swiss subsidiary to sue the government of Uruguay, because there was a Switzerland-Uruguay bilateral investment treaty that they wanted to, that they wanted to use to be able to sue Uruguay because Uruguay, like Australia, had instituted tobacco control legislation that was meant for public health purposes.

HEDGES: Last month, Phillip Morris lost the case in Australia, but St. Louis says that even when corporations lose, they win.

ST. LOUIS: Because just the mere threat of these types of cases can for, especially for a small country, can mean millions of dollars just in legal fees, and so it will make them think twice about enacting a policy that a corporation doesn't like.

HEDGES: The 12 member countries of the Trans-Pacific Partnership already have a total of 35 investment treaties between themselves. But if the TPP goes through, that number could close to double the number of options multinationals have to sue foreign governments.

The United States hasn’t dished out any money to multinationals from ISDS disputes. But that could change very quickly. Last week, the Canadian energy company TransCanada announced it was suing the United States using the North American Free Trade Agreement over the Keystone XL pipeline rejection.

ST. LOUIS: TPP does expand the liability and the danger much more than we had before, because not only does it increase the number of treaties that companies can use, but it's he first time that the United States has had this type of mechanism in a treaty with multiple developed countries. Before, the only developed country we had ISDS with was Canada, under the North America Free Trade Agreement, or NAFTA. And so there weren't that many Salvadoran or Peruvian companies in the United States that could launch these cases. Well, with TPP, now there are Japanese companies, Australian companies, who will be newly empowered to be able to use this mechanism in the United States.

HEDGES: For the Real News, Thomas Hedges, Washington.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at

latest stories

Inequality in America: A National Town Hall
Will Congress Affirm its Constitutional Power to Stop the War in Yemen?
Trump and the Rise of the European Right, with Reps of UK Labour Party, De Linke, Podemos, and Syriza
Petroleum Executives Visit Trump, Increasing Offshore Oil Drilling
Marilyn Mosby: From Freddie Gray to GTTF
EPA Sued for Removing Independent Scientists from its Advisory Board
Laura Flanders Show: Women's History Makes The Future
Corbyn Allies in Labour Attacked For Supporting Palestinian Struggle
Paul Jay: Threats facing Humanity, Russiagate & the Role of Independent Media
Kochs and ALEC Behind Criminalization of Dissent Bills in Five States
West's Anti-Russian Fervor Will Help Putin Win Election On Sunday
Stephen Hawking: Fighter for Progressive Politics
Corbyn Smeared as 'Russian Stooge' for Requesting Evidence on Poisoned Spy
Chief in Charge of Internal Affairs To Retire from Baltimore Police
Corbyn Calls for Evidence in Escalating Poison Row
Sanders Resolution Against War in Yemen Challenged by Mattis
Senate Expands 'Lobbyist Bill' to Deregulate Real Estate
Expressions of Afro-Asian Solidarity During the Cold War
Economic Benefits of Tax Cuts Should Have Arrived - Where Are They?
Trump's Tariff Travesty Will Not Re-Industrialize the US
Is Another World Possible? - Leo Panitch on RAI (4/4)
Students Demand Leaders Address the Root Causes of Gun Violence
Far-Right Ministers in Chile's New Government Placed in Sensitive Positions
Israeli Military Strangles Its Own Weapons Manufacturer to Privatize It
Not Without Black Women
Newly Tapped Sec of State Mike Pompeo Comes with Deep Ties to the Koch Brothers
The CIA's New Torturer-in-Chief
Anti-Pipeline Indigenous 'Mass Mobilization' Has Begun
UN Rapporteur: US Sanctions Cause Death in Venezuela
Colombia's Conservatives Make Gains in Congress Vote Amid Fraud Allegations,, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Web Design, Web Development and Managed Hosting