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A little well-founded paranoia about a loss of U.S. sovereignty

WB-1008 [1]

New trade agreement could undermine many federal and state consumer protection laws

There are a lot of good reasons to be skeptical about the claims of those who issue regular rants about “world government” and supposedly diabolical plots to subvert U.S. sovereignty. If you ever venture out into the political blogosphere or the world of social media (or just check your “junk mail” file), you know how these claims tend to go.

Usually, the allegation is that liberal elites led by our power mad, socialist President are on the verge of ceding all powers of the United States government to the United Nations. Sometimes the reference is to something called “Agenda 21.” [2] At others, the claim is that a move is afoot to merge all of North America into one large new country that will be flooded with dark-skinned immigrants bent on overrunning Anglo Saxon culture.

The rants are, in a word, mad and deserving of all the derision that sane people can pour on them.

The world’s largest economy and most powerful country has nothing to fear from a paper tiger like the United Nations (or the people of Canada or Mexico for that matter) and the notion that any American president would voluntarily “surrender” to any or all of them is just plain silly.

Corporate power: A genuine threat

None of this is to say, however, that negative consequences don’t frequently flow from international agreements. As states like North Carolina know only too well (see for instance the sometimes devastating legacies of “NAFTA” and “CAFTA”), the power of “free trade” agreements to cause harm to U.S. citizens while benefiting foreign and multi-national corporations is well-established. As analysts at the Economic Policy Institute detailed back in 2013 [3], NAFTA cost hundreds of thousands of American jobs in its first two decades of operation.

And while such agreements are, of course, not always a one-way street — there are important national interests that can be served via an expansion of free trade, even sometimes at the expense of American jobs – it’s worth noting that average Americans have been much more likely to lose out to giant corporate interests than they have been to foreign governments or the bodies like the U.N. when it comes to the pursuit of international agreements in recent years.

This brings us to a topic much in the news in recent weeks: the so-called Trans Pacific Partnership or “TPP.” As reported in this space two years ago [4], the United States has been engaged for quite some time in secret negotiations to craft a giant new trade agreement that has the potential to have enormous and lasting impacts on the global economy. What’s more:

[U]nlike actual trade agreements of bygone eras that focused on the taxes and tariffs applied to exports and imports, [TPP} is based on the premise that signatory countries must alter their domestic non-trade policies in order to participate.

In plain English, this means that when a country signs up, it promises to conform its laws and rules governing issues like worker rights, the environment and consumer protection to the standards spelled out in the agreement. What’s more, if a country fails to do so, it can be subjected to enforcement proceedings in international tribunals and forced to endure penalties and sanctions.”

The demise of consumer protections laws?

The NAFTA-like threats to U.S. workers posed by TPP have received a great deal of attention in recent weeks. Indeed, even Presidential frontrunner Hillary Clinton has gone so far as to speak out against the proposal [5] being negotiated by her former boss.

“It was just finally negotiated last week, and in looking at it, it didn’t meet my standards. My standards for more new, good jobs for Americans, for raising wages for Americans. And I want to make sure that I can look into the eyes of any middle-class American and say, ‘this will help raise your wages.’ And I concluded I could not.”

Senator Elizabeth Warren has also weighed in in opposition [6].

One area, however, that has received much less attention is the danger that TPP appears likely to pose to average consumers as they interact with corporations. As the advocates at the nonprofit watchdog Public Citizen [7] explained in a memo last week:

The TPP is rumored to contain provisions that will allow corporations based in member states to bring cases through ’investor state dispute settlement’ [8] forums against governments that have laws that are alleged to inhibit the expected future profits the corporation will not make due to the law that interferes with their business practice. This can lead to laws being weakened in numerous ways that impact health care, financial services, and jobs among other areas.”

What this means, as a practical matter, is that U.S. consumer protection laws surrounding things like financial services (e.g. banking, insurance, asset management, pension funds, securities) and even pharmaceuticals, health care and environmental protection could be subjected to a “race to the bottom” competition in which countries seek to outdo each other in making their laws more favorable to business and then export them to fellow TPP states. For a relatively tame, real world example, think of the way U.S. credit card companies moved to Delaware and South Dakota to evade interest rate caps and then import higher rates back into other states.

If such a regime were in place on an international level (and a related agreement under negotiation — the “Trade in Services Agreement” (TISA) [9] — could make matters even worse) it’s not hard to conceive of even more frightening examples that could ensue.

Predatory payday lending, for instance, is fully legal in the TPP signatory states Australia and New Zealand. From what we know so far about TPP, it seems quite possible that such businesses in those countries could bring actions to have U.S. laws (like North Carolina’s outright ban on payday loans) invalidated as unduly burdensome. What’s next – “lawful” home improvement scams based in Singapore? Vietnam-based credit insurance rip-offs?

And here’s Public Citizen on the pharmaceuticals issue:

The Trans-Pacific Partnership [10] would provide large pharmaceutical firms new rights and powers to increase medicine prices and limit consumers’ access to cheaper generic drugs [11]. This would include extensions of monopoly drug patents that would allow drug companies to raise prices for more medicines and even allow monopoly rights over surgical procedures. For people in developing countries involved in the TPP, these rules could be deadly – denying consumers access to HIV/AIDS, tuberculosis and cancer drugs.

The TPP would also establish new rules that could undermine government efforts to contain rising medicine prices in developed countries like the United States [12]. A leaked TPP text could expose taxpayer-funded public health programs to pharmaceutical company attacks and constrain future policy reforms to reduce prescription drug costs for Americans. The text explicitly binds Medicare to TPP rules that would limit proposed policy changes to tamp down healthcare costs for seniors. 

TPP would further empower foreign pharmaceutical corporations to directly attack our domestic patent and drug-pricing laws [13] in foreign tribunals. Already under NAFTA, which does not contain new corporate privileges proposed for the TPP, drug firm Eli Lilly has launched such a case against Canada [14], demanding $500 million for the government’s enforcement of its own patent standards.”

A little well-founded paranoia?

None of this means, of course, that there’s some nefarious conspiracy afoot to deprive Americans of fundamental freedoms or to impose some massive and sudden overhaul of the republic. Most of the authors and supporters of TPP have no doubt convinced themselves that the overall impact of the deal will be positive for Americans.

That said, there is good reason to be extremely worried that the TPP represents an enormously troublesome transfer of law and rulemaking authority from democratic institutions to an undemocratic regime driven by profit and greed. As such, it represents but the latest in a long series of such events in which unaccountable multinational corporations are seizing greater and greater control of our lives.

Let’s hope members of Congress in both parties evince a significant measure of paranoia over such a possibility.