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Global Trade Watch Home  Trans-Pacific Partnership (TPP) Page

The Trans-Pacific Partnership: Empowering Corporations to Attack Nations

Incentivizing Corporations to Offshore Our Jobs and Attack Our Laws

The key provision in TPP enables an insidious corporate power grab. If passed through Congress and enacted, the TPP would grant 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. These lawyers can award the corporations unlimited sums to be paid by America's taxpayers, including for the loss of expected future profits. These 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 TPP rights. Their 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 contains a provision known as Investor-State Dispute Settlement (ISDS). ISDS would give 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.

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.

The TPP allows such lawyers to 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. These “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. 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

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 four years.

Instead of decreasing our exposure to this surge of corporate attacks, the TPP would roughly double U.S. exposure to investor-state attacks against U.S. policies. The TPP would newly empower 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.

The U.S. has dodged ISDS liability to date because past treaties have only covered a limited number of investors here.

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