Exposing Secret Trade Pacts

These deals endanger our democracy — and the safety of our citizens.

By Ron Carver

Ron Carver


That numbing spoonful of alphabet soup represents four so-called free trade pacts that benefit global capital at the expense of everyone else.

The North American Free Trade Agreement came first, and NAFTA will soon mark its 20thanniversary. The Dominican Republic-Central America Free Trade Agreement, known officially as CAFTA-DR, went into effect a decade later.

DonkeyHotey / Flickr

The Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) are in the works now. President Barack Obama wants Congress to grant him “fast track” authority to expedite these deals.

Thanks to firm opposition by progressive and tea-partying activists and legislative gridlock, it’s looking like his administration won’t get this power.

Are you one of the hundreds of thousands of manufacturing workers who lost their jobs when U.S. factories moved to Mexico or China? If so, you’re probably more aware of these deals than most Americans.

But all of us should care. You may not believe trade agreements affect you — but they do, profoundly. They also endanger our democracy.

A few cases making their way through shadowy World Bank and UN tribunals should help everyone see what’s dangerous about these deals.

Do you care about the environment and clean water? El Salvador did, and instituted a moratorium on new mining operations after a popular uproar. People there are living with the consequences of gold mining, including the contamination of more than 90 percent of El Salvador’s surface water by cyanide and arsenic.

However, citing the CAFTA-DR trade agreement, a Canadian mining company called Pacific Rim Mining Corporation brought a case before the World Bank’s “investor-state” tribunal. Pacific Rim claims El Salvador has no right to restrict mining on its own soil or to require that disputes be resolved in its own courts.

Never mind that the proposed mine is located by a river supplying two-thirds of El Salvador with drinking water. Or that Canada wasn’t even a party to the CAFTA-DR accord. Pacific Rim simply moved its Cayman Islands office to Reno, Nevada. Then, it declared it had jurisdiction under that pact. When that ploy failed, Pacific Rim cited an obsolete law that has since been rejected and replaced.

Philip Morris took a similarly low road when it tried to stop Australia from requiring tobacco companies to sell cigarettes in plain brown paper packages — minus the cowboys and camels.

After unearthing an old Australian accord with Hong Kong that allows dispute resolution before tribunals, the tobacco titan shifted some investments to Hong Kong. Then it claimed to be an investor there and filed a complaint through its Hong Kong office.

Phillip Morris is now trying to force Australia to abandon its public health initiative or pony up billions to cover the loss of future profits.

Even U.S. regulations are vulnerable.  Apotex, a Canadian drug manufacturer, is suing the United States government for $520 million.  Why?  FDA inspectors temporarily cut off the company’s U.S.-bound exports a few years ago due to manufacturing woes.  Apotex now claims that enforcing U.S. drug safety regulations threatens its potential profits and violates NAFTA’s terms.

How can this be?

Our leaders sell trade deals to the public as a means of building our economy by boosting exports. They don’t talk about big business’s desire to topple national regulations and laws that protect public health, labor rights, and the environment.

That’s because the negotiations are held in secret.

Well, they aren’t entirely secret. The corporations who benefit are invited to participate. After Congress made a stink, its members were finally briefed on the ongoing talks as long as they promise not to divulge anything.

The rest of us are kept in the dark.

And those fast-track votes Obama wants on the TPP and TIPP? They’d deny Congress a chance to add or delete provisions along the lines of the ones companies are using to challenge consumer-protecting laws in El Salvador, Australia, and right here in the United States.

It’s time we demand that trade deals be negotiated in the light of day. To paraphrase a Civil Rights movement’s anthem: “We’ve got the light of freedom — let it shine, let it shine, let it shine.”

Ron Carver is an Institute for Policy Studies associate fellow. IPS-dc.org.  TPP graphic compliments of DonkeyHotey / Flickr.  Distributed via OtherWords (OtherWords.org)

Mining Gold, Undermining Democracy

Neither foreign investors nor unelected tribunals deserve the power to trump democratically elected leaders.

By Robin Broad and John Cavanagh

John CavanaghRobin BroadA tribunal in Washington, D.C. that nobody elected recently issued a verdict that potentially hinders the democratic rights of millions of people. Its three members ruled that a foreign company may continue to sue El Salvador for not letting the company mine gold there. The impoverished Central American country could potentially be forced to pay a Canadian mining company called Pacific Rim $77 million or more in damages. This anti-democratic ruling has ominous implications for all of us.

We visited El Salvador last year to learn more about this landmark case. A wide vein of gold lies alongside the northern portions of a large river that flows down the country’s middle. This river provides water for more than half its population. The gold remained relatively undisturbed until about a decade ago, when foreign companies began to apply for mining permits.

Farmers and others told us that they were initially open to gold mining, thinking it would bring jobs to ease the area’s deep poverty. But as they learned more about the toxic chemicals used to separate gold from the surrounding ore and about the massive amounts of water used in the process, they began to organize a movement that opposed mining. Their simple cry: “We can live without gold, but we can’t live without water.”

By 2007, polls showed that close to two-thirds of Salvadorans opposed gold mining. In 2009, Salvadorans elected a president who promised he wouldn’t issue any new mining permits during his five-year term. He has kept this pledge.

But Pacific Rim didn’t sit idly by as democracy worked its way from El Salvador’s northern communities to its national government. The company sought a mining license. When the government didn’t approve its environmental impact assessment, the Canadian company resorted to lobbying Salvadoran officials. And, when its lobbying failed, Pacific Rim lodged a complaint against El Salvador at the International Center for the Settlement of Investment Disputes in Washington under a U.S.-initiated trade agreement and a little-known investment law in El Salvador.

Laws and trade agreements like these grant corporations the right to sue governments over actions — including health, safety, and environmental regulations — that reduce the value of the corporation’s investment.

To the surprise of many observers, the tribunal ruled on June 1 that Pacific Rim can proceed with the lawsuit against El Salvador. Even if the cash-strapped Salvadoran government wins in the end, it will likely have to shell out millions on legal fees to defend an action taken after lengthy democratic deliberations. If it loses in the tribunal’s next ruling, it will cost even more.

Laws and trade agreements that allow corporations to sue governments should worry us all. No international tribunal should have the right to punish countries for laws or measures approved through a democratic process, be it in the United States, El Salvador, or anywhere else. President Barack Obama said this himself in 2008 when he promised to limit the ability of corporations to use trade agreements to sue over public-interest regulations.

Alison McKellar/Flickr

Yet the Obama administration is currently negotiating a Trans-Pacific Partnership with several countries. And it’s pushing for provisions that would allow companies to sue governments under this trade pact. But an expanding coalition of labor, environmental, religious, and other groups opposes giving Big Business this privilege. A similar coalition in Australia, another country negotiating this trade deal, has convinced its government to oppose such corporate “rights.” The Trans-Pacific Partnership may well prove an opportunity for this outrageous assault on democracy to be defeated.

Democracy belongs to the people. Those of us standing up to defend democracy and counter corporate abuse should strongly oppose any new “rights” for corporations being written into new trade pacts as we try to overturn the existing ones.

El Salvador’s government has the right to act upon the will of its people — and should be expected to do so. Neither foreign investors nor unelected tribunals deserve the power to trump democratically elected leaders.

Distributed via OtherWords (OtherWords.org)

Robin Broad is a professor at American University’s School of International Service, and John Cavanagh directs the Institute for Policy Studies. www.ips-dc.org