The Trans-Pacific Partnership, or TPP, is an international trade treaty among 12 Pacific Rim nations (with the notable exception of China). It is an important issue in the coming election, and it is important to know why.
The treaty has been put in its final form through largely secret negotiations by the trade representatives of the countries involved and is now waiting to be ratified by the governments of the 12 nations. President Obama wants it, but there is some doubt that the Senate will approve it.
If you are familiar with NAFTA—the trade agreement between Canada, Mexico and the United States—you will understand why there are concerns about TPP, which has some of the same provisions as NAFTA. Most concerns about TPP are about its NAFTA-like potential to ship American jobs to other nations.
However, there is another provision in both treaties that threatens the sovereign ability of the United States and her local governments to exercise or make laws protecting citizens if those laws threaten the investments of foreign companies in the United States.
It’s called the Investor State Dispute Resolution (ISDR) section and it allows a foreign corporation to sue the government of a country if the laws of that country prevent the company from profiting on its investments. Whew! That sounds confusing and I’ll try to clear that up with an example from NAFTA in a moment.
Businesses need stability and predictability in a government if they are to prosper. Companies engaged in international trade also want uniformity of law within the boundaries of its trading partners. That uniformity is easy in a country with a strong central government where all laws are made by the national government.
In America, however, local governments can make their own laws as long as they are constitutional, so you can get a patchwork of different laws from state to state. It’s that lack of uniformity that is of concern.
Under provisions of ISDR, when a trade dispute between a company and a government arises, it would be resolved by a tribunal of judges in a closed court. There would be no possibility of appealing the tribunal’s decision to a higher court.
Now, for the example. In the early 2000s there was a gasoline additive called MBTE that not only boosted octane, it also reduced carbon dioxide emissions. Shortly after its introduction, MBTE began turning up in municipal water supplies that were near gasoline spills. MBTE is soluble in water and moves through the ground faster than gasoline.
It gave the water a taste that made it undrinkable, and new water supplies had to be found at great expense. Logically, since MBTE was the culprit, states began banning its use, starting with California in 2004. Because of that ban, Methanex, a Canadian company that makes methanol (wood alcohol), one of the ingredients of MBTE, sued the United States government for almost $1 billion.
The company claimed that the ban on MBTE prohibited Methanex from making a return on its investment, thus violating the provisions of NAFTA. The case went to the tribunal, which ruled against Methanex, meaning the U. S. government was off the hook. That has not always be the case in these disputes.
Here’s the important concern. Because of the potential for this kind of lawsuit, it is possible that Congress might change our laws to accommodate the rules of an international treaty, and, taking it a step further, ban states and local governments from passing laws protecting their citizens if there was a possibility that they would violate NAFTA or TPP.
A treaty entered into by the United States is the law of the land, just like the Constitution. It is important that the United States protect the sovereignty of our local, state and national governments by not agreeing to a treaty that would compromise that sovereignty.
It is even more important that our sovereignty not be compromised by a foreign company.
Jim Elliott is a former chairman of the Montana Democratic Party and a former state senator from Trout Creek.