Wall Street has a new power tool to demolish financial stability policies, and it comes from a source many would not expect. It's not the cozy relationship between Wall Street and some members of Congress, or the hordes of bankster lobbyists who roam Capitol Hill. Wall Street has obtained and is now pushing for more powers to challenge U.S. and other nations' financial regulations via the international agreements that it has sold to a skeptical American public under the appealing brand of export-expanding "free trade" deals.
In Sunday's New York Times, Gretchen Morgenson described how the financial provisions of the World Trade Organization (WTO) and NAFTA (the North American Free Trade Agreement) operate as backdoor deregulation instruments. Those of us who have studied these so-called "trade deals" understand that these agreements have very little to do with trade per se. Rather, they mainly include new rights for corporations and new constraints on governments' non-trade regulatory policy space.
As my piece in a special edition of the American Prospect shows, instead of following through on President Obama's campaign commitments to fix this backdoor corporate power grab, now the administration is rushing to massively expand this mess by completing a Trans-Pacific Partnership (TPP) deal now being negotiated behind closed doors with eight Pacific Rim nations.
Like NAFTA before it, the TPP would establish a two-track judicial system for corporations, giving them the right to attack our financial regulations before tribunals of three private sector attorneys operating under World Bank and UN arbitral rules. This "investor-state" system allows firms to skirt our courts and laws to directly sue our governments for cash damages over regulatory policies that they claim undermine their "expected future profits." And, this is no hypothetical threat.
Currently, Chevron is using an "investor-state" tribunal to try to avoid paying $18 billion to clean up horrific contamination in the Amazon ordered after 18 years of U.S. and Ecuadorian court rulings. Philip Morris is using the system to attack Australian and Uruguayan cigarette plain packaging laws. More than $675 million has been paid by governments to corporations under U.S. pacts' "investor-state" provisions alone, 70 percent of which has been in attacks on environmental, health and other non-trade policies. There are 11,933 corporations cross-registered between the TPP nations to which the Obama administration is now pushing to extend these outrageous powers.
Morgenson's article serves as a rallying cry for those who care about financial stability or about the sovereign right of the Congress and state legislatures to enact an array of public interest policies prohibited in these pacts. She notes threatened attacks on the Volcker rule using NAFTA. The Volcker rule is a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It was designed to stop banks from making the kind of risky speculative moves that contributed to the financial crisis, by preventing them from making bets for themselves with deposits backed by taxpayers. The Investment Industry Association of Canada argues that " the Volcker rules may contravene the NAFTA trade agreement."
Morgenson also revealed that the Obama administration had blocked a call simply to review the 1990s WTO financial sector rules to ensure that they were consistent with the regulatory push underway in many countries. Last month, Rep. Barney Frank (D-Mass.) sent a letter to the administration calling out the administration for blocking this review, focused on how these rules ban the use of capital controls -- key tools to counter floods of speculative money that now even the International Monetary Fund (IMF) considers "an essential feature of the monetary policy framework."
As Morgenson notes, such WTO rules are controversial among the trade deal's member countries. Over a year ago, Barbados raised these problems at the WTO and proposed reforms. When Ecuador, backed by a weighty block of other WTO member countries, asked for a simple review of these rules, the U.S. blocked it - a move that is hard to understand as anything but promoting Wall Street's best interest over those of the American public.
The problems that Morgenson exposes in the WTO and NAFTA are all the more pressing, since the U.S. is currently negotiating a new "trade" deal. Once again, with the TPP, we are hearing the same sales pitch about how the deal could expand exports. This is a shameless claim, made even with respect to the recent enacted Korea Free Trade Agreement, which the official U.S. International Trade Commission study concluded would increase the U.S. trade deficit and specially slam seven manufacturing sectors.
The TPP is being negotiated behind closed doors and the text is being kept secret. However, we know that U.S. negotiators are pushing to extend a ban on capital controls, impose limits on domestic financial regulation and again empower direct corporate attacks on these policies through the investor-state regime. The TPP (which now includes Vietnam, the U.S. and seven other Pacific Rim nations, but would be open for China, Russia and others to join) would outright prohibit certain types of financial regulations that countries would no longer be allowed to "adopt or maintain" even if they apply to domestic and foreign firms alike. If it sounds like the Bush administration is negotiating the deal, it is because the draft text was written during the Bush presidency.
Morgenson's article should serve as a wakeup call that so-called "trade" deals aren't really mainly about trade but operate as a one-percenter power tool. As we mark 18 years of NAFTA's damage, there is still time to stop the TPP.
If President Obama wants to ensure financial stability here and abroad, he must tell his trade negotiators to stop pushing a TPP that is emerging as NAFTA on steroids with Asia. In the meantime, Americans must demand that the TPP text, which had its 11th round of negotiations last week in Australia, be made public. Certainly we must have the same access as the 600 corporate official U.S. trade "advisors" who are allowed to see the text. The last time a regional agreement of this sort was attempted, the Free Trade Area of the Americas, a draft text was released - by the Bush administration. But repeated demands to release the TPP text have to date been rebuffed by the Obama administration, even as it touts its commitment to government transparency.
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We should review many WTO rules AND whether we should be a member or not. I'm disappointed that the administration seems to be ruled by unrepentant "free traders".
It's a situation only an employer could love. We let in staggering numbers of foreigners in both high and low income professions under worker visas such as H-1B, L1, OPT, H-2B, etc. Of course these workers "coincidentally" come in very high percentages from the low wage countries such as India (forget higher wage Japan or Western Europe). Anyone think THAT'S an accident? Employers love it because the visa terms make it very difficult to switch employers. They have captive indentured workers for years to come.
And let's not forget the many overhead costs from immigration: education and health costs, language issues, use of govt services, population congestion, terrorism, disease, etc. Immigration has truly become a big loser for the entire country except employers!!
We have to let the corporations know that we will appreciate them hiring more Americans to keep the Recovery going:
http://www.flixya.com/blog/3201910/Beautiful-Butterflys
http://www.citizen.org/documents/FinanceReregulationFactSheetFINAL.pdf
To Rescue Main Street, We Need to Curb the WTO
"...Starting in the late 1970s, the U.S. government and corporations pushed to redefine “finance” from a service that supports the real economy to a tradable commodity whose flow across borders should be uninhibited. Starting in the late 1980s, they successfully pushed for financial services to be included in “trade” negotiations, including those establishing the World Trade Organization (WTO). “The sector was truly unique in that respect, and there is little doubt within the trade policy community that financial sector support in the European Union and the United States was a determining force in concluding the FSA [WTO Financial Services Agreement]” notes a study posted on the WTO’s own website “Financial Services and the WTO: What Next?”
The WTO rules require deregulation – and lock-in – of financial services that countries “liberalize” under these terms.
[snip]
For instance, the Glass-Steagall Act created a firewall between commercial and investment banks to prevent the former from speculating with consumers’ savings. But the U.S.’ 1997 FSA commitments noted an intent to change Glass-Steagall to conform with WTO rules. The Gramm-Leach-Bliley Act, which did so, passed in 1999 – the year the FSA went into effect...."
The U.S. should withdraw from the World Trade Organization.
All 3 of those guys are Republicans....... Phil Gramm also managed to get speculation on oil futures legal. The 1% know who's bread they can butter.
The state of the economy is a bi-partisan achievement.
Or look at H-1b work visas! Do you think the government should help to drive down wages by importing foreign labor into the US?! Obama and all Democrats do.