Trans Pacific Partnership: Corporations Before People and Democracy

Part 1

Part 1: The History, Scale, and Scope of the TPP 

This section outlines the development of the Trans-Pacific Partnership, focusing on the ways in which transparency and democratic participation have been compromised by both corporate power and US foreign policy interests in the formation and negotiation of the agreement. 

Trade Agreements, Fast Track, and the Erosion of Congressional Authority

The US Constitution gives exclusive authority over trade to the Congress, while only the executive branch has authority to represent the nation in international negotiations. Thus, negotiation and approval of trade agreements required coordination between the executive and legislative branches—an intentional check and balance created by the Founders. For most of US history, trade agreements were considered to be treaties requiring ratification by a two-thirds vote of the Senate with changes to tariff levels. Throughout the nation’s history, the executive branch has sought increased control over trade, and until recent decades Congress was unwilling to cede its authority.

By 1934, however, the executive branch convinced Congress that it was too burdensome to require a congressional vote on every tariff change. As a result, Congress delegated to the President the authority to cut tariffs on trade in goods and services within certain set bands for certain time periods without requiring Congress to approve the changes or approve a trade agreement. This move prompted changes in how such agreements were established, with elected officials playing a relatively smaller role.

President Nixon moved to consolidate executive branch power over trade. He proposed a much broader delegation of Congress’ constitutional trade authority that would allow him to proclaim changes to US law—not only tariff levels—to comply with trade agreement terms.ix Congress did not go along with the full proposal, but in 1974, Congress passed the Trade Reform Act, which allowed a president to sign and enter into trade agreements that covered more than tariff cuts before Congress voted to approve such terms, and a president to submit legislation to Congress to implement such pacts that would be guaranteed a vote within a set number of days with all committee and floor amendments forbidden and debate limited. Congress then reauthorized the procedure, called “Fast Track” trade authority until it lapsed in 1994.x Congress rejected President Bill Clinton’s effort to reauthorize Fast Track in 1997 and 1998, but it was approved again in 2002, when proponents sought to rename it Trade Promotion Authority (TPA).9

This infographic includes a diagram of the chapters related to trade and the non-trade related chapters.

Fast Track is the device used primarily when a president wants to push a trade agreement through Congress when it would not have otherwise made it through via traditional legislative processes.10 Since an epic 1991 Fast Track fight, delegations of the controversial authority have occurred with fierce corporate lobbying efforts.11

At the same time that the role of Congress and the public was reduced by Fast Track, the scope of the agreements began to expand. Starting with a 1988 FTA between the United States and Canada, a broad group of rules were included aimed at eliminating what were dubbed “non-tariff trade barriers”—otherwise known as environmental, food safety, and other regulatory standards. That pact also included rules on procurement, copyrights and patents, and the service sector. Thus, according to David Morris of the Institute for Local Self-Reliance, “modern multi-faceted trade pacts have more to do with pre-empting national, state and local rules that could favor communities or regional economies or domestic businesses or the environment.”12 Together, these trends would come to define trade agreements in the latter half of the 20th century.

The Trans-Pacific Partnership is thus an over-encompassing trade agreement that has required the executive branch to stretch its power. Even though Fast Track authority had expired in 2007, the US Trade Representative, on behalf of President George W. Bush, notified Congress in September 2008 that he intended to enter into negotiations for what would be known as the “Trans-Pacific Partnership,” as if Fast Track authority still applied. TPP negotiations were within months of completion when, in June of 2015, President Obama’s four-year effort to obtain Fast Track resulted in narrow passage of a new delegation of the authority. Given that a final deal on the over 5000-page agreement would be announced in early November 2015, the absence of democratic participation and transparency in the TPP’s establishment was already a foregone conclusion.

An Agreement Made in Secret

The TPP itself was primarily negotiated in secret and hidden from not only from the general populations of the 12 nations, but also from their elected representatives in their respective legislative branches. Leaders of the TPP member countries kept the full text of the agreement secret until the full package was ready to be released, supposedly fearful—according to proponents—of undercutting their own negotiators. In actuality, the TPP was kept a secret because of the fear that the public becoming aware of the details of the agreement would fuel massive opposition to it. 

The TPP text was classified and, until June 2014, not even members of Congress were given access. Even that access was conditioned on additional requirements: members of Congress were not able to bring in non-security cleared staff or any cellular devices; were handed one section of the agreement at a time; were watched over as they read; could not make copies of anything; and, were asked to hand over any notes taken before they left a secure reading room in the basement of the Capitol Visitor Center.13 Until a month after the deal was finalized, the public, press and congressional staff without security clearances were forbidden any access.

In contrast, appointed bureaucrats and hundreds of official US “trade advi - sors” representing corporate interests had access. Many of the US negotia - tors themselves were former corporate attorneys or executives and received financial packages from their former corporate employers before joining the administration as trade advisors.14 For example, United States Trade Repre - sentative Michael Froman, a driving force behind the TPP, received more than $4 million as part of multiple exit payments when he left Citigroup to join the Obama administration. The lead TPP agriculture negotiator previously worked at a trade association representing biotech firms and other USTR officials came from the pharmaceutical and content industries.15 Stefan Selig, a Bank of America investment banker who became the Undersecretary for Internation - al Trade at the Department of Commerce, received more than $9 million in bonus pay when he was nominated to join the Obama administration.16 These are only a few examples of the revolving door between corporations and US government agencies responsible for trade agreement negotiations that results in corporate interests being translated into US economic and foreign policy.17

Public interest advocacy groups, think tanks, and the press have regular - ly called for greater transparency in the process, and have called out the pervasive corporate influence shaping US economic and foreign policy. Despite intensive efforts by the TPP governments to keep the agreement’s text hidden, WikiLeaks published three draft chapters, starting in 2013.18 Until November 5, 2015, a month after the 12 negotiating countries reached an agreement, the remaining 27 chapters of the TPP remained hidden, even though negotiators and corporate actors had been given privileged access. (To circumvent that secrecy and expose the text of the TPP, WikiLeaks launched a campaign to crowdsource a $100,000 reward for the full body of the agreement19—just before the agreement was finalized in October, almost $114,000 had been pledged.)20

Impact on Public Accountability: Who’s at the Table?

The secrecy of the TPP during the negotiation process was unprecedented, and US legislators responded accordingly. For example, in May 2012, Senator Ron Wyden (D-OR) argued that, “the majority of Congress is being kept in the dark as to the substance of the TPP negotia - tions, while representatives of US corporations like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America are being consulted and made privy to details of the agreement.”i

In protest of the TPP’s secrecy, Senator Wyden introduced a bill (S.3225) calling for congres - sional oversight over the detail of the TPP negotiations. Though it never gained traction, the bill made requests that members of the Congress should be provided with “access to documents, including classified materials, regarding trade agreement negotiations to which the United States is a party and policies advanced by the USTR to any Member of Con - gress who requests such documents as well as Member staff with proper security clearanc - es.”ii Additionally, in a May 2014 open letter to the Trade Minister Andrew Robb, 46 Australian unions, public health, church groups, and other community organizations called upon the gov - ernment of Australia to reject what they called a “harmful proposal in the TPP which poses unacceptable risks and costs, and should not be traded away in secret negotiations.”iii

The Origins of the TPP and US Influence

The theme of the lack of transparency and equitable participation during the negotiation process of the TPP was also at play among the negotiating parties themselves. The way the TPP was negotiated illustrates how the US dominated the negotiating process, acting in service of its own interests in the Pacific.

The TPP has its roots in the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4), a comprehensive agreement between Brunei, Chile, New Zealand, and Singapore that covered trade in goods, rules of origin, trade remedies, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy.21 The pact included the elimination of all tariffs between member countries by 2015. The TPSEP/P4 had built-in negotiations on the issues they could not agree—namely, investment and financial services. The US joined those sectorial talks in 1998. Only once the US entered did other countries ask to join.

Shortly thereafter, the US took charge of the negotiations, with President Obama reaffirming in November 2009 that the US would engage with the member countries of what would soon be renamed the Trans-Pacific Partnership. The stated goal of doing so was to shape a “regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement.”22 Though the original TPSEP/P4, and the TPP that it would later become, shared many of the same features, the entrance of the US and its centering of its own economic interests under the banner of a “21st century trade agreement” reflected a shifting dynamic in trade among the Pacific nations. 

In joining the TPP negotiations and becoming a key mediator for the process, the US took the opportunity to wrest greater concessions from other countries that it held (or desired) bilateral trade agreements with—among them, Chile, Peru, and Malaysia.23 The leading role of the US in the negotiations for an expanded agreement among the Pacific nations raised legitimate fears for Chile and Peru, two South American countries that had prior bilateral Free Trade Agreements (FTAs) with the US.24 Soon after President Bush announced the intention of the US to join the negotiations in 2008, one Chilean trade official complained that, with an FTA with the US already in place, he could “only expect greater politically and perhaps economically difficult, demands from the Americans in a TPP.”25 Furthermore, as a Chilean economist put it, renegotiation within the TPP of existing commitments on issues such as intellectual property rights, investment and environment—issues that Chile has already made concessions on through an existing FTA with the US—involves for South American countries the risk of “paying twice” in areas of great political sensitivity and which relate to a broad range of public policies.26

Malaysia had been involved in negotiations for a bilateral FTA with the US, which ultimately stalled because of disagreements on some issues. The TPP, in this light, has afforded the US a second opportunity to wrest from Malaysia what it could not secure in bilateral negotiations.27 Such maneuvers are illustrative of longstanding attempts by the US to secure its own interests (influenced as they are by corporate interests) by shaping the terms and conditions of the negotiation process itself.

Scale and Scope: The Largest Trade and Investment Agreement in History

The scale of the TPP is unprecedented. It comprises 40 percent of global economic output while TPP coverage would represent onethird of global trade. Of the TPP’s total GDP—about $27.5 trillion among the original 12 parties—the US accounts for approximately $15.5 trillion, or over 56 percent, thus helping establish the United States’ strategic importance for other TPP parties as the starting point for the negotiations.28 As a “docking” agreement, any country in the region can add themselves to the agreement after the initial 12 member-countries have approved it. New countries could opt in if they agree to meet existing rules, rather than the US Congress or legislative bodies from other TPP countries negotiating new terms appropriate to new joining countries.29 Finally, the TPP, like all modern trade agreements, would have no expiration date.

Although it is called a “Free Trade Agreement,” the TPP is not solely, or even primarily, about trade. The scope of the agreement is much broader. As outlined above, the agreement deals with an increasingly broad group of rules called non-tariff trade barriers. For example, of the TPP’s 30 chapters, only 6 chapters deal with traditional trade issuesxi and one chapter would provide incentives to offshore jobs to low-wage countries,xii while many would impose limits on government policies tied to copyrights and patents, labor, product standards, subsidies, health and medicine, environmental standards, and more.30xiii The scope and reach of the TPP is also unprecedented. For example, the agreement’s rules on tariff and non-tariff trade barriers would be even more stringent than those currently used by the World Trade Organization (i.e., ultimately putting more emphasis on reregulation). As PART II addresses, the policies enacting regulatory, economic, and legal systems of the TPP member countries—from countries with less-developed economies to the US itself—must be conformed to meet the criteria of the agreement.31