The Trans-Pacific Partnership: Empowering Corporations to Attack Nations
Incentivizing Corporations to Offshore Our Jobs and Attack Our Laws
The TPP was a massive, controversial, pro-corporate “free trade” agreement that was defeated by thousands of diverse organizations representing working people united across borders — fighting against corporate power and for the environment, health, human rights and democracy. The key provision in the TPP would have enabled an insidious corporate power grab. If it had passed through Congress and been enacted, the TPP would have granted new rights to thousands of multinational corporations to bypass domestic courts and directly “sue” the U.S. government before a panel of three corporate lawyers. Fair trade advocates must remain vigilant to stop the spread of this corporate power grab through attempts to revive this dangerous element of the TPP. Under this system, these lawyers can award the corporations unlimited sums to be paid by America's taxpayers, including for the loss of expected future profits. The corporations need only convince the lawyers that a U.S. law or safety regulation that we rely on for a clean environment, essential services, and healthy communities violates their “trade agreement” rights. These decisions are not subject to outside appeal and the amount they can order taxpayers to give corporations has no limit.
How could multinational corporations attack domestic health, environmental and financial protections on which we all rely and that local companies have to follow? The TPP contained a provision known as Investor-State Dispute Settlement (ISDS). The ISDS provision in the TPP would have given multinational firms stunning new powers, including the ability to challenge new policies – from Wall Street regulations to climate change protections – because the corporations claim the policies violate the new TPP rights and frustrate the corporations' "expectations" of they should be treated.
Under ISDS, if a tribunal rules against a challenged policy, there is no limit to the amount of taxpayer money it can order the government to pay the multinational corporation. The amount is based on the "expected future profits" the tribunal surmises that the corporation would have earned in the absence of the public policy it is attacking. Under existing U.S. pacts, tribunals have ordered nearly $3 billion in taxpayer compensation to multinational firms, and more than $70 billion is pending.
These lawyers rotate between serving as "judges" and bringing cases for corporations against governments – a conflict of interest that would be deemed unethical under most legal systems. The “tribunalists,” as they are formally called, are not bound by precedent or the opinions of governments, and there is no outside appeal to their rulings.
While this shadow legal system for multinational corporations has been around since the 1950s, just 50 known cases were launched in the regime's first three decades combined. In contrast, corporations have launched approximately 50 claims in each of the last five years.
The U.S. has dodged ISDS liability to date because past treaties have only covered a limited number of investors here. But instead of decreasing our exposure to this surge of corporate attacks, the TPP would have roughly doubled U.S. exposure to investor-state attacks against U.S. policies. The TPP would have newly empowered more than 1,000 additional corporations in TPP countries, which own more than 9,200 additional subsidiaries in the United States, to launch investor-state cases against the U.S. government. If that were not sufficiently outrageous, the TPP special protections for multinational corporations also incentivize more job offshoring. The new corporate rights and powers would eliminate many of the usual costs and risks that make firms think twice about moving to low-wage countries, literally promoting corporations to launch a new wave of job offshoring.
The ISDS expansion planned in the TPP has been defeated thanks to the tireless work of thousands of international fair trade activists who stopped the TPP. But the unaccountable ISDS system still exists in other “free trade” agreements and could be expanded in future corporate-driven deals.
Visit www.isdscorporateattacks.org to learn more.
Reports and Memos | Press Room | Congress Speaks Out | Civil Society Speaks Out
- Updated Quote Sheet: Selected Government Statements and Actions Against Investor-State Dispute Settlement (October 19, 2016)
- Polling Memo: Public Anger About Corporate Power Dominant Factor in Views on Trade and TPP. Graphs Available Here. (July 13, 2016)
- Secret TPP Investment Chapter Unveiled: It’s Worse than We Thought (November 5, 2015)
- See all corporate investor-state cases and claims launched under U.S. 'free trade' deals (June 2015)
- Debunking Ten Common Defenses of Controversial Investor-State Corporate Privileges (May 11, 2015)
- Analysis of Leaked Trans-Pacific Partnership Investment Text (March 25, 2015)
- Case Studies: Investor-State Attacks on Public Interest Policies (March 6, 2015)
- Ecuador's Highest Court vs. a Foreign Tribunal: Who Will Have the Final Say on Whether Chevron Must Pay a $9.5 Billion Judgment for Amazon Devastation? (December 10, 2013)
- Updated and Expanded – U.S. Pharmaceutical Corporation Uses NAFTA Foreign Investor Privileges Regime to Attack Canada's Patent Policy, Demand $100 Million for Invalidation of a Patent (March 2013)
- Rebutting Misleading Industry Claims on Investor-State Case that Ignored CAFTA Annex (March 15, 2013)
- Renco Uses U.S.-Peru FTA to Evade Justice for La Oroya Pollution (December 2012)
- Occidental v. Ecuador Award Spotlights Perils of Investor-State System (November 2012)
- U.S.-Peru FTA Investor Rights: Lessons Learned and New Approaches Needed for TPP (available in Spanish here) (November 28, 2012)
- "Fair and Equitable Treatment" and Investors' Reasonable Expectations: Rulings in U.S. FTAs & BITs Demonstrate FET Definition Must be Narrowed (September 5, 2012)
- TPP's Investment Rules Harm Public Access to Essential Services (August 20, 2012)
- TPP's Investment Rules Harm Environmental Protection (August 20, 2012)
- TPP's Investment Rules Harm Public Health (August 20, 2012)
- CAFTA Investor-State Ruling: Tribunal Ignores CAFTA Annex, Cites Another Tribunal to Rule against Guatemala (July 19, 2012)
- Global Trade Watch's analysis of the leaked TPP investment chapter (leaked chapter found here) (June 13, 2012)
- "Loewen" NAFTA Case: Foreign Corporations Unhappy with Domestic Jury Awards in Private Contract Disputes Can Demand Bailout from Taxpayers (April 16, 2012)
- Renco Uses Trade Pact Foreign Investor Privileges to Chill Peru's Environment and Health Policy, Undermine Justice (March 12, 2012)
- Key Elements of Damaging U.S. Trade Agreement Investment Rules that Must Not Be Replicated in TPP (February 28, 2012)
- 220+ Law and Economics Professors Urge Congress to Reject the TPP and Other Prospective Deals that Include Investor-State Dispute Settlement (ISDS) (September 7, 2016)
- Consumers Union and Consumer Federation of America Urge Congress Not To Support Approval of the TPP (September 6, 2016)
- TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection (June 25, 2016)
- Pending Trade Deals Threaten Efforts to Keep Fossil Fuels in the Ground; more than 450organizations urge opposition to the Trans-Pacific Partnership (June 6, 2016)
- Sierra Club Report: Looming Trade Deals Threaten Efforts to Keep Fossil Fuels in the Ground (March 23, 2016)
- Interactive Map of the Fossil Fuel Investments Owned By Corporations That Would Be Empowered to Use ISDS Under the TPP and TTIP (March 23, 2016)
- Statement from Mark Ruffalo on Tuesday’s Senate Vote on Fast Tracking the Trans-Pacific Partnership (June 22, 2015)
- Senior Legal Experts, including Obama's Harvard mentor Lawrence Tribe, pronounce ISDS contrary to American legal traditions (April 30, 2015)
- Maryknoll Office for Global Concerns: TPP investment chapter will further threaten God's Earth and vulnerable people (March 31, 2015)
- Faith Groups Declare TPP Investment Chapter Unjust and Puts Profit Ahead of People (March 26, 2015)
- Lawyers Write to Congressional Leaders to Oppose the Inclusion of Investor-State Dispute Settlement (ISDS) Provisions in the TPP (March 11, 2015)