The Crumbling Case of the Freakout Brigade: Trans-Pacific Trade Edition

So, the Huffington Post - an online "newspaper" that happily takes money from Scott Walker - went on full freakout mode yesterday based on a leak from Public Citizen of a single chapter of a still-in-the-works trans-Pacific trade agreement with the United States that is still under consideration. What is the poutrageous matter?
Under the agreement currently being advocated by the Obama administration, American corporations would continue to be subject to domestic laws and regulations on the environment, banking and other issues. But foreign corporations operating within the U.S. would be permitted to appeal key American legal or regulatory rulings to an international tribunal. That international tribunal would be granted the power to overrule American law and impose trade sanctions on the United States for failing to abide by its rulings.
That refers to a dispute resolution section in the leaked document that allows foreign investors to file a case in international arbitration within the context of the agreement. Sounds scary, don't you think? That corporate-shilling, backstabbing good-for-nothing Obama! Impeach him!

Except, maybe one should ask if this is actually true. Would foreign corporations operating within the United States be able to contravene American law, and worse yet, appeal American legal or regulatory rulings in international tribunal?

Umm, no.
Once the investor has submitted the dispute to either the courts or administrative tribunals of the disputing Party or to any of the arbitration mechanisms provided for in Article 12.18(3) the choice of the procedure shall be definitive and exclusive.
In other words, there is no question of an international tribunal overruling a ruling from an American court or an administrative panel since once a foreign investor takes an issue to an American court or an administrative panel, they lose their right to go to the international tribunal. That is from the dispute section of the leaked document, which is itself a part of a good number of still-in-process documents constituting the agreement. And where Huffpo and Public Citizen came up with the concept of foreign companies gutting environmental regulations is beyond me, since this agreement - at least this leaked part - seems to exclusively cover financial investments and products.

But this would raise a legitimate question. Can a foreign investor just skip the American legal process and take everything to the international arbitration process provided for in the document? The answer to that is as follows: for any legal matter, no. They can only bring to arbitration cases arising out solely of the bounds of this agreement, the terms of which is still under works. At any rate, the leak consisting only of the investor and dispute resolution section rather than the whole agreement, it is impossible to do a lot of guesswork on just what is covered.

Here is what we do know, from the leaked document - it requires that the investments are made in accordance with the laws, administrative process and policies of the territory where the investment is made. Quoting it again,
Section B applies where there is a dispute between a Party and an investor of another Party related to a covered investment made in the territory of a Party in accordance with its laws, regulations and investment policies.
A simple reading of this would seem to indicate that foreign corporations that make investments in another country covered by this agreement would have to follow the laws and regulations in that country (the US, for example). The only disputes as a matter of law that would be the purview of the international arbitration, then, would be any laws or regulations that contradict and contravene the terms of the trade pact. Which, one might note, is traditionally the case under any trade agreements - as trade agreements are passed by Congress and are thus duly constituted US law.

In fact, in light of the fact that the dispute solution process itself defers to the investment laws and rules of a given country where a foreign entity is investing, it seems the only legal intra-territorial legal claim a foreign entity would be able to make before an international arbitrating body is that it is being treated differently than domestic corporations in a given country. One could reasonably deduce that the provision that Huffpo and Public Citizen are misconstruing as giving foreign investors an edge in America was in fact written to ensure and enforce equal treatment for American investors in the other participating countries.

And this process of mediation and arbitration is not alien to trade pacts. On the contrary, it's the norm. When two parties are at a dispute over the terms of an agreement, they set up a process of mediation or arbitration to solve it. That has nothing whatsoever to do with exempting foreign corporations from laws that American corporations need to abide by.

So why the freakout? If you look at the people making the accusations, you can easily tell. Public Citizen - the organization founded by Ralph Nader, and an anti-free trade organization.

It's a legitimate policy debate as to whether or not free trade is beneficial to the great many, and if so, what kind. I happen to believe that free trade can also be fair trade if the pacts incorporate labor and environmental standards as core parts of the enforceable agreements, which is exactly what the Obama administration has pursued. Be that as it may, the opponents of free trade tend to believe that the concepts of globalization and universal labor and human rights are mutually exclusive, and they have evidence aplenty - mostly as a result of the way free trade agreements ignored labor and human rights issues until recently.

That's a legitimate debate. What is not legitimate, however, is trying to score points based on misinterpretations and misdirections. What is not legitimate, is to manufacture outrage based upon the mere existence of an international dispute resolution panel. It is not legitimate to make outlandish claims based on a document that clearly does not support those claims. I suspect that this outrage was manufactured because groups like Public Citizen and Huffington Post saw it as an opportunity to smear gin up hatred against the President (with whose trade policies they disagree) and by that stop the talks in the tracks - not because their claims are legitimate, but simply because it could be a wrench in the process.

These tactics, sadly, are no better than what the Right wing uses to stop progress. Groups and people that are against all trade agreements should make their case, not manufacture falsehoods to try to score fake points.