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Gender: Male
Hometown: El Pueblo de Nuestra Seńora la Reina de los Ŕngeles de Porciúncula
Home country: US
Current location: East of East L.A.
Member since: Sun Jan 20, 2013, 07:15 PM
Number of posts: 5,944

Journal Archives

ISDS up close and personal: Philip Morris, FUD vs TPP

Stiglitz warns in last week's HuffPo of the dangers of ISDS, by which the evil Kenyan is secretly plotting to enable the corporatocracy to strangle us in our sleep and topple the Statue of Libertarian, muhahaha. Writes Stiglitz, like Paul Revere with a thumbdrive full of news that TPP is coming:

This is not just a theoretical possibility. Philip Morris is suing Uruguay and Australia for requiring warning labels on cigarettes. Admittedly, both countries went a little further than the US, mandating the inclusion of graphic images showing the consequences of cigarette smoking.

The labeling is working. It is discouraging smoking. So now Philip Morris is demanding to be compensated for lost profits.


So the labeling is working, smoking is declining, the regulations haven't changed, but the fact that a US tobacco company is acting assholish is Obama's fault as usual, but never mind that. Let's see what's actually going on with this case:

Much of the concern about ISDS is the risk of companies using the mechanism to challenge legitimate regulations. Philip Morris International, for example, has challenged Australia’s plain packaging regulation under a 1993 Hong Kong-Australia Bilateral Investment Treaty. Though that case has not yet been fully adjudicated and Australia has made no changes to their regulation, we nonetheless are working to ensure that TPP includes important safeguards that protect against ISDS being used to challenge legitimate regulation. That is why the United States has put in place several layers of defenses to minimize the risk that U.S. agreements could be exploited in the manner to which other agreements among other countries are susceptible:


Full transparency in cases. Governments must make all pleadings, briefs, transcripts, decisions, and awards in ISDS cases publicly available, as well as open ISDS hearings to the public. One key objective of these provisions is to allow governments that are party to the agreement, as well as the public at large, to carefully monitor pending proceedings and more effectively make decisions about whether to intervene.

Public participation in cases. Tribunals have the clear authority to accept amicus curiae submissions. In U.S. cases, amicus briefs have been submitted by a variety of NGOs, including the Sierra Club, Friends of the Earth, and Center for International Environmental Law. (Documents in all investor-State cases filed against the United States are available on the State Department website.)

Mechanism for expedited review and dismissal of frivolous claims and claims outside the tribunal’s jurisdiction. This mechanism enables respondent countries, on an extremely expedited basis, to move to dismiss (1) frivolous or otherwise unmeritorious claims (akin to provisions under the Federal Rules of Civil Procedure) and (2) claims the tribunal is not empowered to resolve.

Denial of benefits for sham corporations. This provision prevents the use of shell companies to access ISDS.

Restriction on parallel claims. This provision prevents a party from pursuing the same claims both in ISDS proceedings and domestic courts (i.e., restricting “forum shopping”).

Statute of limitations. A three-year statute of limitations protects respondents against old claims, which are difficult for governments to defend in part because access to documents and witnesses becomes more difficult over time.

Challenge of awards. Both parties to an arbitration have the option to challenge a tribunal award.

Consolidation. On request, tribunals may consolidate claims raising common questions of fact and law, which may increase efficiency, reduce litigation costs, and prevent strategic initiation of duplicative litigation.

Interim review of ISDS awards. Parties to the arbitration are permitted to review and comment on a draft of the tribunal’s award before it is made final.

Prudential exception. This exception provides that nothing prevents countries from taking measures to safeguard the stability of their financial systems. If such measures are challenged, this provision allows the respondent country and investor’s home country to jointly agree that the prudential exception applies and that decision is binding on the tribunal.

Tax exception. This exception defines and limits the coverage of government tax measures under the investment provisions. In addition, this provision provides that if the respondent country and investor’s home country agree that a challenged measure is not expropriatory, that decision is binding on the tribunal.

Mechanism for treaty Parties to issue binding decisions on how to interpret treaty provisions. A binding interpretation mechanism enables TPP countries to confer after the agreement has entered into force and to issue joint decisions on questions of treaty interpretation that bind all tribunals in pending and future cases.

Independent experts on environmental, health, or safety matters. In most ISDS cases, the disputing parties retain and appoint the experts. This provision provides arbitral tribunals with the power to appoint experts of their own choosing on environmental, health, and safety matters to ensure maximal objectivity in the evaluation of claims challenging such measures.

Limitations on obligations: Clear limiting rules and definitions, including guidance on interpretation on the obligations frequently subject to litigation, to safeguard against subjective or overbroad interpretation – for example, the incorporation of U.S. Supreme Court standards on indirect expropriation and a clear tying of the “minimum standard of treatment” obligation to requirements under customary international law (i.e. the general and consistent practice of states that they follow from a sense of legal obligation).

The case record is instructive. Tribunals adjudicating ISDS cases under U.S. agreements have consistently affirmed that government actions designed and implemented to advance legitimate regulatory objectives do not violate investment obligations. In the Chemtura v. Canada case, for example, an ISDS panel rejected a claim that the Canadian government’s actions to ban the use of chemical product breached Canada’s NAFTA obligations. In rejecting the investor’s claim, the tribunal showed deference to the government’s scientific and environmental regulatory determinations. Similarly in the Methanex v. the United States case, an ISDS panel underscored the right of governments to regulate for public purposes, including regulation that imposes economic burdens on foreign investors, and stated that investors could not reasonably expect that environmental and health regulations would not change.


Despite having 50 ISDS agreements in place, the United States has never lost a case and nothing in our agreements has inhibited our response to the 2008 financial crisis, diluted the financial reforms we put in place, or has challenged signature reforms like the Affordable Care Act or any of the other new regulations that have been put in place over the last 30 years.



So first of all, the Phillip Morris case is between two countries bound by a non-US FTA; secondly, it's had no effect on the regulations in question; third, TPP includes multiple safeguards to protect against similar litigation, and 4th, if "sovereignty" was ever a real issue, which I doubt, the record shows that the US has never lost an ISDS dispute, i.e., has so far managed to avoid surrendering its sovereignty to Philip Morris.

So maybe Joe has some catching up to do?

Warning: the OP above contains

Can we agree that jobs are not the problem with TPP?

Yes, the WH is doing a poor job of selling this thing, as usual, and doubtless there are legitimate questions to be answered before passing it, but can we cross labor issues off the list? Because creating millions of new, HIGH-PAYING, secure US manufacturing jobs is one of the main reasons Obama is so anxious to get this deal done. Altogether though it's a complex undertaking with many components and is not well-served by hot-button AM radio slogans. More on labor issues from a doc called "The President's Trade Agenda 2015," link below:

Of special interest are the NAFTA-TPP comparisons on pg. 24.

link: https://ustr.gov/sites/default/files/President%27s%20Trade%20Agenda%20for%20Print%20FINAL.pdf

WaPo: "Why Obama’s key trade deal with Asia would actually be good for American workers"

3 pro-labor economists explain why TPP benefits American workers:
Why Obama’s key trade deal with Asia would actually be good for American workers
By David Autor, David Dorn and Gordon H. Hanson
March 12, 2015

There are several reasons to support the TPP despite globalization concerns. First, the TPP — which seeks to govern exchange of not only traditional goods and services, but also intellectual property and foreign investment — would promote trade in knowledge-intensive services in which U.S. companies exert a strong comparative advantage. Second, killing the TPP would do little to bring factory work back to America. Third, and perhaps most important, although China is not part of the TPP, enacting the agreement would raise regulatory rules and standards for several of China’s key trading partners. That would pressure China to meet some of those standards and cease its attempts to game global trade to impede foreign multinational companies.


But if the TPP has little downside for the U.S., what’s the upside? Why bother with the deal at all? The reason is that the TPP is about much more than manufacturing. Most notably, it promises to liberalize trade in services and in agriculture, sectors in which the United States runs large trade surpluses, but which the World Trade Organization, despite 20 years of trying, has failed to pry open internationally. Successfully exporting information and computer services, where the U.S. maintains substantial technological leadership, requires more than low tariffs. It also requires protecting patents against infringement and safeguarding business assets and revenues against expropriation by foreign governments. To the extent that Obama succeeds in enshrining these guarantees in the TPP, the agreement would give a substantial boost to U.S. trade.


So yes, real economists support the TPP.

John Kerry on TPP: "95 percent of the world’s consumers live beyond the borders of the US"

Secretary of State John Kerry at Boeing Renton Factory on “The World Wants What America Makes,” May 19, 2015:


As I speak, exports support about 11.7 million American jobs. And that number is only going to go up. Why? It’s pretty simple; it’s really simple math: 95 percent of the world’s consumers live beyond the borders of the United States.

And if for some reason we just decide to give up and not to do business with them, to shut down because we think somehow it’s a loss of a job here, believe me, a lot of other people will welcome that at our expense.


And the anger and frustration that has come from that has translated into opposition to trade itself, when the real focus ought to be on the other policy reforms that are necessary to address that concern. For example, on improving tax policy, on strengthening international labor and environmental standards, as is actually being done in these two deals that I’m talking about. The solution lies not in shutting the door to trade itself, but in transforming the system to make it work for everybody.

The truth is, the only people we know or I know who would benefit from a decision by the United States not to participate in the TPP would be international competitors. And believe me, they would be delighted.

Read more: http://iipdigital.usembassy.gov/st/english/texttrans/2015/05/20150519315756.html#ixzz3av6aPogD

So basically Kerry is saying that focusing on job loss is a red herring, and I'm inclined to agree: NAFTA didn't produce a net US job loss or wage decline and TPP won't either. More on the statistics that show that here: http://www.democraticunderground.com/10026700031

Better view:

Notice the pattern?

Facts? We don't need no facts.

I don't have to show you any stinkin facts.

NAFTA passed on Nov. 20, 1993, on the promise of jobs. Oddly enough . . .

. . . for the next 6 years, from 1994 to 2000, US employment steadily ROSE and unemployment steadily FELL :

US employment,1990-2014:

source: http://www.statista.com/statistics/192398/employment-rate-in-the-us-since-1990/
US unemployment,1990-2014:

source: http://www.statista.com/statistics/193290/unemployment-rate-in-the-usa-since-1990/


So maybe Bill Clinton wasn't lying when he promised that NAFTA would bring jobs? And maybe, just maybe, our current Trojan-in-Chief isn't lying either?

Supporting TPP is written into the latest (2012) Democratic Party Platform:

We remain committed to finding more markets for American-made goods—including using the Trans-Pacific Partnership between the United States and eight countries in the Asia-Pacific, one of the most dynamic regions in the world—while ensuring that workers' rights and environmental standards are upheld, and fighting against unfair trade practices.


Just in case you were wondering.

Links to my TPP threads are easily found in my journal but never mind, here they are:

Wed May 13, 2015: http://www.democraticunderground.com/10026670009

Fri Jan 30, 2015: http://www.democraticunderground.com/10026159076

Fri Jan 2, 2015: http://www.democraticunderground.com/10026034112

If you have any questions after reading through these just let me know.

Guess which "national spokesman on the issue of sovereignty" opposed TPA?

If you guessed Pat Buchanan or Donald Trump, you'd be close, as they've both come out publicly against TPA. But the winner is My Old Kentucky Home-boy Rand Paul: *

May 11, 2015

Sen. Rand Paul of Kentucky has emerged as a top spokesman for a view on trade legislation that could complicate President Barack Obama's push to pass a major Pacific trade pact.

The 2016 presidential candidate says he is a "big believer in free trade" but has qualms about the legislation, known as fast track, designed to help pass major trade deals with limited involvement by the Senate. Some other Republicans are expressing similar misgivings in both the House and Senate.


But on Monday, Mr. Paul told WMUR in New Hampshire that he opposed fast track, in part, because of his frustration about the secrecy surrounding the Trans-Pacific Partnership.

"I've told leadership I'm a 'no' vote on trade promotion authority," Mr. Paul told the station, according to an account on WMUR.com. "I'm hesitant to give blanket authority on stuff we haven't seen." He said he might be persuaded in the future to back fast track if he approved of provisions in the TPP.

Read more: http://www.nasdaq.com/article/rand-pauls-fast-track-dilemmaupdate-20150511-01586#ixzz3aIvcFiKc

So stand with Rand takes the prize again. Here's the "sovereignty" quote:

GOP Rep. Steve Russell of Oklahoma, who calls himself a "constitutional conservative," says opening up trade is " not a bad thing," but won't vote for fast track. Rep. Walter Jones (R., N.C.), who opposes fast track, called Mr. Paul the "national spokesman on the issue of sovereignty."


*note: "My Old Kentucky Home" is the official Kentucky state song.
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