TPPA and the Democratic Deficit

- Bill Rosenberg

Bill Rosenberg is the Policy Director and Economist, New Zealand Council of Trade Unions

Imagine the Government began making laws by committing themselves to them before giving you 20 days to comment, however complicated they were – but Cabinet could make the law binding anyway, despite what the public might say? Sound far-fetched? That’s what happens with international treaties like the proposed Trans-Pacific Partnership Agreement (TPPA). In many ways the democratic deficit is even greater with treaties. Many cannot be changed without the agreement of other states that are parties. So a future New Zealand government can’t simply change treaties as it can with domestic legislation. These treaties are almost like a constitution – very difficult to change, and tie the hands of future governments indefinitely. That’s particularly important for commercial treaties like the TPPA which go beyond traditional areas of trade and intrude deeply into the kinds of policies that help decide elections, including GE labelling, the health budget, foreign ownership or the riskiness of our financial system.

Stakeholders concerned about the direction of the TPPA negotiations have called on governments to break the secrecy surrounding the talks and make draft texts of the agreement available on a regular basis during negotiations. In 2010, union centres from most TPPA countries sent a joint letter to the Trade Ministers with this request, and again in June 2011, Sharan Burrow, the General Secretary of the International Trade Union Confederation, the world’s main international trade union organisation representing 175 million workers, also wrote to all Trade Ministers calling for draft negotiating texts to be made public. In February 2011, letters endorsed by civil society organisations from Australia, Chile, New Zealand, Malaysia and the US who collectively represent millions of people, were handed to the heads of delegation negotiators of each party. In New Zealand, that letter was signed by over 850 organisations and individuals and sent to both the Prime Minister and Minister of Trade, Tim Groser.

Openness would allow citizens and experts to analyse and debate its effects before it gets signed off by governments and it is too late to change. Currently, their only chance to comment is by submission to a select committee (1) – giving 20 days or less to come to grips with a phonebook-sized highly technical document. In the unlikely event the select committee recommended any changes they would have zero effect: the Cabinet has already made a public commitment to it by then, all the deals have been done, and changes are almost impossible for political and practical reasons. The Cabinet effectively has the power to make the agreement binding, unless legislation is required. Legislation is usually limited, sometimes not needed at all, with passage usually guaranteed by the Government’s majority.

Flat Refusal To Open Drafts Of Text To Public Scrutiny

Negotiators have flatly rejected requests to open drafts of the text to public scrutiny, even when it was pointed out that the World Trade Organisation (WTO) – the Goliath of negotiations – frequently publishes draft text on its Website and all TPPA countries are WTO Members. They each claim that they cannot release text without the consensus of all other parties, but none of them are willing to ask other parties to consider it. The credibility of that claim was reduced in June 2011 at the Vietnam round of negotiations where the chief negotiator, from Vietnam, said that it was up to each country to decide what it would release. The only text that has made it into the public arena has been a leak of proposed text on intellectual property.

Why is reform of the treaty-making process so urgent? Whether backing or opposing it, experts are united in describing the TPPA as an exceptional negotiation because of the ambitions of those backing it, the size of it – the US plus eight other countries, so far – and its plan for changing the way countries can work with far reaching effects on our lives. One of its work streams is called “regulatory coherence”. The New Zealand US Council, a leading TPPA advocate, translates that to mean the TTPA “has the potential to go far deeper into domestic policy settings than any other agreement since CER” (2) Closer Economic Relations, with Australia). Negotiators use similar descriptions. In other words it is planned to greatly limit the future decisions each country – including New Zealand – will be able to make without the agreement of the other countries.

Gives Corporations Equal Standing To Sovereign Governments

Similarly, the US – which dominates the negotiations – will want powers for overseas investors to sue the New Zealand and other TPPA governments in tribunals which act in secret and have, in the past, forced governments to pay investors hundreds of millions of dollars, and change their laws. So far US$327 million has been awarded in nine cases under similar provisions under the North American Free Trade Agreement (NAFTA) alone. (3) Hundreds of cases under other agreements have been made public, and an unknown number have not.

This “investor-state disputes process” gives corporations an equal standing to sovereign governments, and can put the interests of an individual business ahead of the social, economic and environmental needs of an entire nation. It could allow BP, fresh from its environmental disaster in the US, to sue the New Zealand government if it considered that our environmental laws significantly reduced the profitability of an asset here. Or Goldman Sachs, despite its part in the financial crash in the US, could sue our Government over actions to make our financial system safer. The tobacco company Philip Morris is currently threatening to sue both the Uruguay and Australian governments over their tobacco control laws under similar provisions.

Perhaps, as we are told by the business groups, Government and negotiators, a TPPA would “reduce costs, open up new business and lead to new trade, investment and jobs” (4). By refusing to release text to public scrutiny they are effectively saying: “trust us – we know what we are doing”. It is especially hard to swallow at a time of global financial crisis in which many financial businesses in New Zealand and internationally were spectacularly irresponsible. When negotiators were asked in Auckland in December 2010 whether the secret text on financial services – one of the most advanced parts of the negotiations – reflected any of the lessons of the global financial meltdown, we were told “no”. Perhaps all these concerns are being taken care of. But we won’t know until it is too late to change. Would we place this kind of trust in any other rule-making that could have such profound effects on our daily lives?

1. See and experience of past practice.
3. NAFTA Chapter 11: Corporate Cases:
4. NZ US Council at Auckland TPP negotiations

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