WASHINGTON, D.C. – The United States Senate decided to grant President Barack Obama “fast track” authority on the controversial Trans Pacific Partnership on Friday.
The Senate voted 62-37 in favor of the Trade Promotion Authority (TPA) legislation. The TPA was opposed by Hawaii’s two democratic senators, Brian Schatz and Mazie Hirono. Concerns have been raised over how the bill could prevent Congress from amending future trade agreements for the next six years. There is also the concern the Trans Pacific Partnership – a 12 nation trade deal – would “allow foreign investors to challenge governments for enforcing their own laws, potentially undermining public health, safety, or environmental policies”, as the office of Sen. Schatz wrote last week.
Sen. Hirono released this statement following the vote:
This was an important vote on an important issue. Congress should set strong, enforceable guidelines that ensure trade deals include strong labor, environmental, and other standards that guarantee workers and businesses in places like Hawaii are on an equal playing field. Trade agreements should not result in a continuing shift of manufacturing jobs to the countries that we made these agreements with, as has happened in the past. Trade deals should help, not hurt, middle class families and workers. I voted against this bill because it does not go far enough to ensure future trade deals will include fair wages, a decent standard of living, and a clean environment for all.
“Fast track bills give the President authority to negotiate trade deals on the condition that Congress will vote to accept or reject the deal without making changes—as long as the deal meets the objectives set by Congress. That’s a lot of authority to grant without knowing what a final agreement will look like. For example, the Administration has been negotiating the Trans-Pacific Partnership, which would represent 40% of the world’s economy and very few people, including Members of Congress and the public, know what is in the agreement. Past fast track bills have not put strong enough standards in place and we’ve seen whole communities and industries hurt as a result.
“In fact, because of the harm that can come to communities as a result of these trade deals, Congress passed Trade Adjustment Assistance (TAA). This program provides income support, retraining, and other resources for U.S. workers who lose their jobs as a result of foreign trade. Hawaii has had to use these programs to support workers in the past, which we’re reminded of when we see sugar plantations that remain fallow. I’m glad the bill passed by the Senate includes a renewal of TAA, but more should have been included to enhance the program.
“In addition to the lack of transparency, I’m also disappointed that such an important issue was not more thoroughly debated, and that more amendments to improve the bill were not discussed and voted on. There was no reason to rush such an important debate.
“Congress certainly shouldn’t be putting trade agreements that fail on fundamental protections on a ‘fast track’ to passage, which is why I’ve consistently opposed free trade agreements that were negotiated under fast track authority in the past. Instead, Congress should fast track legislation that will help working families like raising the minimum wage, funding job creating transportation and infrastructure projects, and enhancing U.S. competitiveness by passing comprehensive immigration reform and making college more affordable.”Sen. Mazie Hirono
Sen. Schatz took to the floor of the Senate on May 20th to speak against the TPA legislation.
I want to join my colleagues in voicing my opposition to granting fast-track authority.
I oppose the procedures contained in this bill, and I’m seriously concerned about using fast-track to pass trade agreements that do not reflect the best interests of the American people and can undermine the prerogatives of the Congress.
Some who support fast-track would have you believe that opposing this bill and the Trans Pacific Partnership means opposition to a free market, trade, and commerce. That is not true. Commerce is essential and we should promote it.
But corporate interests should not be the driving force for public policy decisions on public health, consumer safety, and the environment.
Just this week, a WTO ruling on our country-of-origin food labeling law provided a striking example of how what is called “free trade” can be used to erode consumer protection laws.
The country-of-origin labeling law was passed by Congress, and it requires producers of meat and chicken to provide information to consumers on where the animal was raised and slaughtered.
If you ask most people, they would say they want to know if their beef is from Texas or Taiwan. And even if one isn’t particularly passionate about that, it is certainly commonly viewed as squarely within the authorities of Congress to require such disclosure.
Consumers in the U.S. want to know where their food comes from. Through a legitimate democratic process, we passed a law to provide consumers with this information.
But no matter how we have revised the rule pursuant to law, it apparently still is not in compliance with our WTO commitments. It seems that we will have to repeal the law to avoid trade sanctions.
While our WTO obligations are not the same as our commitments under a free trade agreement, it does not require too much imagination to see how other U.S. laws will buckle under future trade agreements.
This is why the deal-breaker for me is the investor-state dispute settlement or “ISDS” for short.
ISDS provides a special forum outside of our well-established court system that is just for foreign investors. These investors are given the right to sue governments over laws and regulations that impact their businesses – a legal right not granted to anyone else.
This forum is not available to anyone other than foreign investors. It is not open to domestic businesses, labor unions, civil society groups, or individuals that allege a violation of a treaty obligation.
The arbitrators that preside over these cases are literally not accountable to anyone; and their decisions cannot be appealed.
To date, nearly 600 ISDS cases have been filed. Of the 274 cases that have been concluded, almost 60 percent have settled or been decided in favor of the investor.
It is true that when a tribunal rules in favor of the investor, the arbitrators cannot force the government to change its laws. But they can order the government to pay the investor, which has the same effect.
There is no limit to what compensation foreign investors can demand. The largest award to date was more than $2 billion dollars. For developing countries that must pay awards of this size, sometimes this represents up to a third of their GDP.
Most governments cannot risk such a loss and end up settling.
The government often agrees to change the law or regulation that is being challenged and still pays some compensation.
The threat of a case can be enough to convince a government to back away from legitimate public health, safety, or environmental policies. ISDS cases cost millions of dollars to defend and take years to reach their final conclusion.
The high-profile cases filed by Philip Morris International challenging cigarette packaging laws have had a chilling effect around the world. Several countries have been intimidated into holding off on passing their own laws to reduce smoking.
Every year of delay is a victory for tobacco companies. They get one more year to attract new, young smokers. In the case of tobacco, the cost of ISDS could be human life.
I would hope that if we empower corporations to challenge democratically enacted laws and regulations, we would be doing so for a very compelling reason.
Yet, the rationale behind ISDS is very thin. Advocates claim that investor protections like ISDS draw foreign investment into a country.
But no one has actually been able to demonstrate that this link exists. Studies have not even been able to show a significant correlation between investor protections and the level of foreign investment in a country.
Instead of driving decisions to invest, ISDS provisions are being manipulated by wealthy multinational corporations.
Some companies seem to be setting up complex corporate structures explicitly for the purpose of taking advantage of existing ISDS provisions.
This is what Australia is alleging that Philip Morris did to challenge Australia’s tobacco laws.
Philip Morris’s Hong Kong entity bought shares in Philip Morris’s Australian company just 10 months after Australia announced its cigarette plain packaging rules.
It seems Philip Morris did this for no other purpose than to gain access to the ISDS provision in the Hong Kong-Australia bilateral investment treaty.
ISDS is just another arrow in a quiver of legal options available to multinational corporations – and no other entity or person.
The consequences for public health, safety, and the environment far outweigh any real or imagined benefit of ISDS.
For these reasons, I oppose fast-track and any free trade agreement that contains an ISDS provision.Sen. Brian Schatz