by Joseph M. Firestone, New Economic Perspectives
Most of the critical attention given to the Fast Track Trade Agreement legislation and to the associated Trans-Pacific Partnership (TPP) Congressional – Executive Agreement on mainstream corporate media and by politicians and establishment interest groups interacting with them in the beltway echo chamber, has focused on the likely or possible economic impacts of these.
But relatively little attention has focused on sovereignty, constitutional separation of powers, or democracy impacts, which however are being covered increasingly well in alternative social media. See here, here, here, and here.
In hopes of breaking through this fragmentation by type of media of the debate over the TPP, I’ll focus this post only on governance impacts and try to make the case, that this so-called trade agreement, if passed and implemented would create profound governance changes in the United States without benefit of the constitutional amendments that would normally be required to accomplish such changes. I’ll also make the case that the governance impacts destroy national sovereignty, state sovereignty, separation of powers, and democracy.
The anti-democratic fast track process that gives Representatives and Senators no space to represent the range of people electing them. This process provides no room for debate of the TPP that includes the public and severely restricts Congressional debate.
It also incorporates secrecy of the TPP drafts, hiding them from the public and making it an impossible burden for Congresspeople to evaluate them and to solicit the views of their constituencies about them. It also then provides for keeping the proposed or actual agreement secret so that the American people can’t even know what the law is that may result in international levies of many billions of dollars upon them, for four years after the TPP is either passed or defeated.
Of course, Congress can simply take back the policy space that would be taken from them by Fast Track by defeating it, letting the Executive know in no uncertain terms that the sense of Congress is that Fast Track is an improper device for getting around Congress’s constitutional role in reviewing and giving its informed consent to Congressional – Executive Agreements, and that Fast Track proposals from the Executive Branch preceding trade deals will from then on be dead on arrival.
The separation of powers demands that Congress play its full constitutional role in such agreements and that includes its ability to amend and reconstruct them in a manner that reflects the will of Congress and the people it represents, and not just the will of the President and the leaders of foreign nations. That means there must be consideration by Congress of a number of alternatives to the proposed agreement and not just a consideration of acceptance or rejection of the President’s formulation. So, to restore traditional constitutional governance in the area of negotiating Congressional – Executive Agreements, breached most notably in the case of NAFTA and so-called “free trade” agreements since then, Fast Track must be defeated and forbidden by Congress from future consideration through establishing new Congressional rules prohibiting representatives from introducing such proposals.
Preserving the range of choice the Treasury Department now has to fund Congressional deficit spending appropriations. Right now, Treasury funds deficit spending overwhelmingly by issuing debt subject to the limit. However, it has a range of other options (see the Postscript) for accomplishing this useful in overcoming debt ceiling crises created by an uncooperative House of Congress, or for the purpose of ceasing to issue debt at all in funding deficits.
The TPP could infringe on the authority of Treasury to use these methods because it could, depending on the rulings of Investor-State Dispute Settlement (ISDS) tribunals, potentially prevent the Treasury from replacing the practice of issuing Treasury debt with other funding methods. In combination with a debt ceiling crisis such rulings could prevent the Treasury from spending mandated Congressional appropriations, forcing a constitutional crisis in which the President might have to invoke the 14th amendment and rely on the Supreme Court to rule the debt ceiling legislation unconstitutional. This is just one more way in which the TPP could infringe on the sovereignty of the Federal Government.
Preventing the Federal Reserve from using negative interest rate policies if it chooses to do so. ISDS tribunals could cause this problem in response to an ISDS suit citing expectations of lost profits arising from negative interest rates on Treasury securities. The Fed has never used that tool of monetary policy in the past. But that doesn’t mean it won’t want to in the future.
if the TPP is passed, however, then its freedom of action is compromised by providing ISDS tribunals with the authority to award lost profits to the corporations that might lose money if the Fed made this policy move. In effect, the Fed would need an implicit by your leave from the corporations and the ISDS panels to pursue such a policy.
In fact, this point may easily be generalized. Every action of the central banks in every nation costs some corporation money and creates gains for other corporations. Of course, the corporations who gain will just accept their good luck, while among the corporations that lose, some will go to the ISDS tribunals because, under the TPP, they can.
Forcing the TPP signator nations to bail out insolvent banks through ISDS settlements. The US and other nations now have the choice of bailing out insolvent banks or allowing them to fail, but there is at least one case where an investor in a bank has been awarded damages from the Czech Republic by an ISDS panel, because it lost its investment in a bank that was failing, was declared insolvent, and then was taken over by a sovereign government signator to a free trade deal.
So, we know that ISDS tribunals can decide that way and restrict the policy space of sovereign governments to do anything but bail out investors in failed banks. How do we suppose the American public including, of course, tea party activists will react to such an infringement on sovereignty, if the next time there’s a great financial crisis, the President or the Fed says that they can’t refuse to bail out the big banks because multinational investors in them are likely to win a massive court case against the US if they do let those banks fail and then take them over?
Turning over the legislative power of the Federal government to the ISDS panels and the multinational corporations buying their loyalty.
Of course, the legislative power turned over to the ISDS tribunals isn’t the positive power to pass laws. But it is the power to paralyze legislative action by future Congresses that might reduce corporate “expectations of profits,” and it is also the power to prevent Congress from even considering a whole range of solutions to the many serious problems of the United States that would work, but that Congress sees as ruled out by past or likely ISDS tribunal decisions.
Much of the power to legislate lies in the power to block legislation and to direct legislation away from certain alternatives. It is these powers that the TPP would be able to impose in undermining the sovereignty of national governments signing the TPP including the US government.
Since the TPP provides these negative legislative powers to the ISDS tribunals which would direct and constrain the positive legislative powers of national legislatures, the ISDS tribunals fuse legislative and judicial functions, breaching the separation of powers guaranteed by the US and other constitutions. Also, this fusion is unconstrained because it is legislative authority that could be applied in almost any area a government decides to legislate about, since multinational corporations or multinational corporate investors may be involved in, and may find, that their “expectations of profits” are impacted by any new legislation in any area.
Indeed, one has to ask the important question, of whether, under the TPP and the standard of impacting “expectations of profits” of multinationals, there is, operationally, any area of government activity in which new legislation by a local, state, or national government would not impact the expectations of any number of corporations, some favorably, and others unfavorably? If not, then isn’t it true that governments can expect to have to cope with ISDS actions, in connection with any legislation they pass, and any rule change they make? And isn’t it also true that the ISDS provisions in the TPP are in fact a grant of exclusive authority to profit making corporations in comparison to all other types of social institutions to review and veto legislation by democratically elected legislative bodies, countering popular sovereignty, with multinational corporate sovereignty?
Destroying US Federalism. Amendment 10 of the US Constitution says:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
That is, the power to impose fines on the States, or local governments, formed as sub-divisions within States, due to laws and regulations passed by States in pursuit of the general welfare of their citizens, isn’t explicitly granted to the Federal government by the Constitution. So, how can the Federal government delegate a power it does not have under the Constitution to the ISDS tribunals by signing the TPP?
Treaties are the law of the land, and they trump previously passed legislation. But, first, according to the Constitution a Congressional – Executive Agreement is not a treaty. And second, even if it were, it would not trump the Constitution, which is the supreme law of the land. So, Federalism, as expressed in Amendment 10, means that the states of the union have a limited sphere of state sovereignty that cannot be breached by either the Federal government, or by treaties or international agreements concluded by it.
And that sphere of state sovereignty is precisely in the area of providing for the general welfare of its citizens. If a state in the US decides, for example, that the Federal minimum wage isn’t high enough for the general welfare of its citizens, it is free, right now, to pass a minimum wage at any level exceeding the Federal minimum that it thinks is desirable. Multinational corporations have nothing to say about this in any tribunal, but under the TPP they could sue the State for lost profits and collect damages.
So, if enacted, the TPP would violate Federalism, state sovereignty, and therefore the Constitution of the United States, in a way that the Federal Government cannot now do. It is clearly an unconstitutional treaty, which the United States has no right to conclude.
Defeating the requirement, fundamental to democracy and popular sovereignty, of having the consent of the governed. Within the TPP, “investment” is defined so broadly that it applies to any asset that is either owned or controlled and therefore to any new regulation that may be passed by any democratic government to achieve normative standards such as “the general welfare,” “public interest,” or “the public purpose,” placing chains on all democratic governments and defeating the requirement of needing to get the consent of the governed.
Under the TPP, governments will need only to pass legislation that can pass the scrutiny of multinational corporations looking to whether their “expectations of profits” from their assets are lessened, along with the ISDS tribunals that will serve them and compensate them for any expectations of losses due to legislation. The consent of the governed and their democratically elected governments will be irrelevant.
Subordinating national sovereignty to ISDS bodies external to the United States and other proposed signators by failing to provide a clear legal provision allowing nations to regulate multinational corporations and their investments at all levels of government for the general welfare, or the public purpose, that would not be subject to the interpretations of ISDS tribunals not accountable to the nations signing the treaties or to their citizens.
The Preamble of the Constitution of the United States states the purposes sought and says:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
and in Article 1, Section 8 gives Congress the power:
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes . . .
So, it is for the purposes in the Preamble that the power to regulate commerce by treaty is granted to the Congress. Note that this enumerated legislative power is explicitly granted for fulfilling the purposes stated in the Preamble. There is no purpose there that provides for “expectations of profits” of multinational corporations to function as a higher purpose than the general welfare of the citizens of the United States or the States of the Union. Nor is their any such purpose stated in any other part of the Constitution granting powers to Congress.
Nor is it obvious that the dominance of that purpose is part of the “general welfare,” or if part, is more important than other components of the general welfare and has priority over all of them. Nor is there anything in the Constitution suggesting that whether a US or State law is consistent with pursuit of the general welfare should be determined by quasi-judicial tribunals external to the United States and unaccountable to its people or its legislatures, or to any other tribunals external to nations and not subject to the consent of the governed.
In fact, Article 1, Section 8, also provides Congress with the power “. . . to constitute tribunals inferior to the Supreme Court,” but it does not provide the power to establish tribunals super-ordinate to the Supreme Court whose decisions would bind the nation and its citizens to paying fines to compensate multinational entities for the consequences of legislation passed by our governments. But the TPP and its ISDS mechanism would do that. So, this “free trade” treaty violates both the Constitution of the United States and also its national sovereignty.
The likely impact of the TPP on the economy, working people, wages, economic inequality, US manufacturing, and unemployment is likely to be severe and to exacerbate the trends toward inquality we see all around us. Anyone who thinks that the TPP will create jobs here in the face of all previous experience with much more limited “trade” deals is highly credulous or blinded by the money flowing from those interests who are licking their chops over the opportunities for excessive profits they believe the deal will bring them.
Signing the TPP would be terrible if these awful impacts were the only ones. However, the governance impacts I’ve described in these posts will create more fundamental damages than these for signators, including the United States.
Ellen Brown has called the TPP “the death of the Republic.” It certainly is that. But, I think I’ve shown that it is the death of National Sovereignty, State Sovereignty, Separation of Powers, and Democracy, as well. These impacts on governance and politics are even more important, I believe, than its economic ones, since it from these that our benefits, both economic and non-economic flow.
The elevation of the principle of “expectation of profits” above all other principles including the principles of “public purpose,” “consent of the governed,” “the general welfare,” and “separation of powers,” is tantamount to the overthrow of democracy, preserving its form in national level elections, but emptying its elections of meaningful content in mandating change and in conferring legitimacy on national authorities. I’ve said previously that the rule of the TPP, even if passed over the mushrooming opposition from all segments of American society except the uncritical globalists, will never be viewed as legitimate in the United States and will also always be viewed as tyranny for as long as we live under it. This problem will become increasingly severe the larger, more frequent, and more outrageous ISDS awards defending the “expectations of profits” of multinational become.
That makes those who want to pass the TPP guilty of conspiracy to create tyrannical rule of the international few over the people of the United States and other TPP member nations. Eventually, I believe that a vote for the TPP will be viewed as vote to betray the Constitution and a violation of the oath of office of any who vote that way.
How can there be any other outcome when an action taken in office destroys National Sovereignty, State Sovereignty, Separation of Powers, and Democracy with a single vote?