[A2k] Washington Post (Plum Line): Battle rages over key Obama trade policy

Thiru Balasubramaniam thiru at keionline.org
Fri May 1 01:54:47 PDT 2015


Plum Line <http://www.washingtonpost.com/blogs/plum-line/>

Battle rages over key Obama trade policy

By Greg Sargent <http://www.washingtonpost.com/people/greg-sargent> April
30 at 3:32 P

For many liberal critics, the problem with the Trans-Pacific Partnership
trade deal isn’t simply the worry that it could lead to more job loss by
exposing American manufacturing to more import competition. Rather, they
the TPP is in many ways not even a trade agreement: Its real offense is in
the areas of intellectual property and global dispute settlement, where the
deal, they say, could further tilt the playing field towards major

Specifically: Many on the left have raised concerns about the
Investor-State Dispute Settlement mechanism, which would allow major
corporations to litigate disputes with local governments in a manner
designed to create a stable legal environment for investments in
participating countries.

Now a group of senior legal experts — including Obama’s old Harvard mentor,
Laurence Tribe, who has been representing the coal industry against Obama’s
EPA regulations — is weighing in on the controversial ISDS provision,
pronouncing it contrary to American legal traditions.

In a new letter to Congressional leaders
these legal experts lay out an expansive case against the ISDS on
*legal* grounds,
as opposed to economic ones, claiming it would “undermine democratic
norms.” Alliance for Justice helped organize the letter.

This takes the argument a bit outside the turf where it has mostly been
fought. Elizabeth Warren has raised legal concerns but has mostly argued
TPP’s ISDS would allow foreign companies to challenge and undermine
American regulations and gouge American taxpayers in settlements.
President Obama has aggressively pushed back, arguing
the ISDS can’t trump American law; that there are many ISDS mechanisms
already in existence; and that the U.S. has never lost a case in one.

In their letter
the legal experts — who include Tribe, Yale’s Judith Resnik, University of
California’s Cruz Reynoso, former federal judge Lee Sarokin, and Joseph
Stiglitz, who is not a lawyer but a major economist — argue:

*Our legal system rests on the conviction that every individual, regardless
of wealth or power, has an equal right to bring a case to court. To protect
and uphold the rule of law, our ideals of fairness and justice must apply
in all situations and equally to everyone. ISDS, in contrast, is a system
built on differential access. ISDS provides a separate legal system
available only to certain investors who are authorized to exit the American
legal system. Only foreign investors may bring claims under ISDS
provisions. This option is not offered to nations, domestic investors, or
civil society groups alleging violations of treaty obligations. Under ISDS
regimes, foreign investors alone are granted legal rights unavailable to
others — freed from the rulings and procedures of domestic courts.*

*ISDS also risks undermining democratic norms because laws and regulations
enacted by democratically-elected officials are put at risk in a process
insulated from democratic input. Equal application of the law is another
critically important hallmark of our legal system — one that is secured
through orderly development of the law. Court decisions are subject to
appeal, ensuring that conflicting lower court decisions are resolved by a
higher authority. Judges also must follow legal precedent. The goal is
uniform application of the law regardless of which judge or court hears a
case. This law development allows people, entities, and nations alike to
order their behavior according to well-established legal principles.*

*In contrast, ISDS does not build in the development of the law. An ISDS
arbitral panel’s decision cannot be appealed to a court. The ISDS
provisions of which we are aware provide only limited — private — review
through a process called annulment that does not permit decisions to be set
aside based even on a “manifest error of law.” Moreover, ISDS arbitrators,
like other arbitrators, do not make law because their decisions have no
precedential value, and ISDS arbitrators in turn are not obliged to follow
precedent in reaching their own decisions…*

*ISDS arbitrators are not public servants but private arbitrators. In many
cases, there is a revolving door between serving on ISDS arbitration panels
and representing corporations bringing ISDS claims. Yet, although such a
situation would seem to call for more — not less — oversight and
accountability, ISDS arbitrators’ decisions are functionally unreviewable.*

The Obama administration would argue that ISDS does not function as a
shadow mechanism outside *American* courts; it provides a fair, stable
mechanism for resolving disputes between American companies and

“Part of our goal here is to make sure that there is a neutral process that
is legally recognized, so that if an arbitrary burden or tax or tariff is
imposed on a U.S. company in these countries, that they have recourse to a
fair, impartial venue to resolve it,” Obama said recently
“Foreign countries already have that here in the U.S.”

Meanwhile, the Huffington Post reports that Hillary Clinton’s book, Hard
Choices, contains a passage that criticizes the ISDS mechanism
arguing that it empowers investors to “sue foreign governments to weaken
their environmental and public health rules.” That’s the case Warren and
others have already made. The new criticism from legal experts could push
the debate over ISDS in a new direction.

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