By Rachel Sleiman, first-year law student at William & Mary Law School, and Jenik Radon, adjunct Professor at the School of International and Public Affairs, Columbia University (see full bios at the end of the article).
With the new administration of President Biden, the United States will have no alternative but to re-assess its relationships with the world. To be frank, the United States has unfortunately lost credibility and stature during the last four years. And re-envisioning, and even reinventing, the Obama initiated Trans-Pacific Partnership (TPP) would be a good start.
While former President Trump withdrew from the original TPP, its potential rejuvenation, welcomed by Australia and Japan, calls for a fresh perspective. At that time, President Obama described the TPP as “a high-standard . . . trade deal that puts American workers first and makes sure we [the United States] write the rules of the road for trade in the 21st century.”[1] Obama’s goals for the TPP were clear and ambitious: to enhance export opportunities and reduce restrictions on trading for American businesses (and engage a collective 40% of the global economy) as well as to reinforce and strengthen U.S.’s relations with countries bordering on the Pacific (and thereby also counter China’s growing influence in the region).[2] However, the TPP’s provisions were not clear. They were replete with vague, broad, and even contradictory language, which make its standards difficult to discern, let alone understand and measure, and its application and enforcement hard to achieve, placing governments potentially at the whim of companies and their lawyers, whose interests are naturally and understandably primarily focused on their own well-being, namely their profits, and not on the more general common good, which is traditionally the responsibility of governments.
The TPP’s provisions may have been written vaguely by intention to appeal to, and secure the signature of, a greater number of states and their governments, avoid too-narrow of a focus, or simply provide governments discretion regarding future political and economic uncertainty.[3] But vagueness has its drawbacks and among other things actually creates uncertainty, which will inevitably have to be resolved, and often in costly arbitrations. In particular, basic or core terms within the TPP are too broadly defined. For example, an enterprise is “any entity constituted or organised under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including any corporation, trust, partnership, sole proprietorship, joint venture, association or similar organisation.”[4] This raises more questions than it answers as the TPP fails to clarify or elaborate on the meanings of “owned” or “controlled,” despite their repeated mention in multiple articles within the agreement. Further, how much ownership and control is necessary to be considered an enterprise of a “Party,” particularly an American enterprise, is unclear.
It should come as no surprise but such lack of clarity can produce unintended beneficiaries of the TPP. For instance, if ownership is determined by place of incorporation or simply holding shares in a corporation, then what prevents a foreign national not covered by the TPP from qualifying as an American business owner? In the U.S., any one or group that owns more than 3% of a public company’s stock is held to have voting influence over that company’s board representation, and therefore the direction of the company.[5] Further, unspecific controls over rules of origin and production outcomes allow major American corporations like Apple, Inc., to: import product parts from non-Party countries to the U.S. duty-free, receive product parts from independent non-Party suppliers, and potentially escape U.S. and other foreign taxes through their offshore business operations.[6] So, a natural question is: what is an American company? An additional question is do American workers, as well as the public, really benefit? And those questions are only a start.
Professor Jenik Radon, one of the authors of this article, recently described the TPP as “set[ting] forth rules but . . . not articulat[ing] or prioritiz[ing] principles,” particularly regarding its environment and labor provisions.[7] The vague and imprecise standards set forth by the TPP do not provide enough specification and even appear to oppose each other. In its chapter on the environment, the TPP recognizes “the sovereign right of each Party to establish its own levels of domestic environmental protection and its own environmental priorities, and to establish, adopt or modify its environmental laws and policies accordingly . . . [to] encourage [and improve], high levels of environmental protection.”[8] Yet, in the same chapter, the TPP warns that “it is inappropriate to establish or use their [the Parties’] environmental laws or other measures in a manner which would constitute a disguised restriction on trade or investment between the Parties.”[9] Such measures are left open for endless interpretation and therefore potentially exploitable for commercial measures to negate environmental objectives – even climate change standards could be questioned. Costly arbitration will invariably be a result.
A rejuvenated agreement should echo a more focused approach, like in the EU-Canada Comprehensive Economic and Trade Agreement (CETA). The CETA showcases a groundbreaking emphasis on environmental law by stating: “it is inappropriate to encourage trade or investment by weakening or reducing the levels of protection afforded in their [the Parties’] environmental law . . . [a] Party shall not, through a sustained or recurring course of action or inaction, fail to effectively enforce its environmental law to encourage trade or investment.”[10]
Even when a provision contains clear language, its standards may still fall short of ensuring adequate enforcement. The TPP’s labor chapter is an example of strong provisional language in the TPP, especially in its objective to eliminate forced and child labor practices and secure a minimum wage requirement, yet it does not address how such measures should be taken.[11] Instead, the Parties have relied on separate consistency plans, independently negotiated between the U.S. and other member countries, but having such a consistency plan was not a stated requirement or condition of the agreement. Mexico, the U.S.’s third-largest trading partner, notably lacked any consistency plan to hold the country accountable to reform.[12] So we are left with a nagging question: why have provisions without teeth? Moreover, does that not simply create false expectations?
The TPP aspired to uphold environmental, health, and other regulatory standards through its Article 9.16 provision by allowing countries to adopt any measure “it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.”[13] However, that provision also requires that any measure taken pursuant to Article 9.16 is “otherwise consistent” with related provisions of the agreement.[14] The phrase “otherwise consistent” will be subject to endless interpretation and therefore litigation and manipulation by companies’ lawyers precisely because of its ambiguity. Moreover, it can be said that this phrasing effectively negates or chills a country’s regulatory objectives and rights as legislators and regulators will be fearful of adopting regulations which could result in international arbitrations. Resultant disputes have been estimated to cost governments tens of millions of dollars,[15] which heavily impact public economy and policy, and as already noted, have a chilling effect. Any revitalized agreement should therefore clearly prioritize the right to achieve regulatory objectives, which by their nature are adopted to protect the public, or the common good, so that its terms are not left to be manipulated by legal arguments in court.[16]
Like the 1994 North American Free Trade Agreement (NAFTA), the TPP contains general exceptions provisions that allow Parties “the full right to regulate in the public interest, including for national security and other policy reasons.”[17] This provision essentially affords Parties a scapegoat for going against or violating certain provisions. The United States could not, for example, hold Vietnam accountable for going against open-internet provisions when the country blocked social media applications to prevent its citizens from organizing in public protest after an environmental disaster.[18] Additionally, the United States has a demonstrated history of not enforcing certain rules, particularly labor provisions, effectively (upon a complaint, action can often be slow and ineffective, and governments and enterprises alike can side-step its provisions through its broad language and loopholes).[19] In fact, of the 20 countries the U.S. has free trade agreements with,[20] “U.S. agencies or other investigators have identified significant problems with use of child labor or other labor-related human rights abuses in 11 of [them].”[21] A Party’s commitments, according to one of the authors of this article, should be strict, meaningful, and binding, and include self-executing standards that showcase such violations result in serious consequences—including possible suspension.[22]
A revised TPP should be steadfast about prioritizing matters of public concern and values, particularly regarding core public interest concerns such as health, environment, including climate change, and labor. Corporations will likely oppose such conditions, and there may be socioeconomic and political ramifications of true reform, especially in the case of child labor. As Jenik Radon noted, “workers of the industries affected by a trade agreement [should], at a minimum, not [be] worse off as a result of the adoption of a trade agreement.”[23]
Governments have made commitments to combat climate change, and future trade agreements should reinforce—give teeth to—the terms of the Paris Accord, instead of providing another opportunity to sidestep reform of our environmental practices. [24] President Macron is leading the example of effectively advocating for environmental standards above commercial objectives. He is seeking bolstered environmental standards on Mercosur countries, like to decrease Brazil’s continued deforestation of the Amazon.[25] President Macron has thus far prevented his Parliament from ratifying the trade agreement, standing his ground until Brazil agrees to such terms. non-economic standards to the EU-Mercosur Free Trade Agreement.[26]
Simply, the TPP appears to have been written primarily and narrowly to benefit corporations. The deal was negotiated infamously in secret, with the highest levels of confidentiality.[27] The secrecy of this, and other, trade negotiations not only kept information from the public but allowed powerful interests to overstep the checks and balances of democratic process and ultimately delegitimize the deal to citizens and country-partners alike.[28] Therefore, a resurrected TPP requires clarity in purpose and principle, and structured with promoting the interests of our environment and global welfare—meaning that “workers need to be protected and their voices heard, which, practically speaking, requires that they have a seat at the table in the creation of these agreements.”[29]
Almost five years after the original signing of the TPP, President Biden echoed similar sentiments about trade to those of his former partner, President Obama. At a press conference in Wilmington, Delaware in November 2020, President Biden vowed to “set the rules of the road” when his administration takes the reigns on negotiating trade agreements with other countries.[30] President Biden described his intentions to invest in American workers, ensure labor and environmental interests are represented, and stop punitive trade wars with American allies but stopped short of expanding further until he steps into the Oval Office. President Obama had genuine intentions for the success of the TPP, and the incoming administration seems inclined to resurrect the agreement, but it can benefit from improving and clarifying its language through a broader range of input and perspective to achieve the world we want. It should set true inspirational standards which clearly prioritize the common good. We have made the case that stand-alone agreements, focusing narrowly on commercial or economic issues only, are not effective in achieving the results we seek, including as noted adherence to climate change commitments. A systems-thinking approach will be our best opportunity for success when we recognize that environment, labor, health, and trade are fundamentally intertwined and influence the trajectory of each other. [31]
About the Authors
Rachel Sleiman is a 1L at William & Mary Law School. Before pursuing her legal education, Rachel worked for 4.5 years as a paralegal specialist supporting the U.S. Department of Justice’s Criminal Fraud Section. This opportunity sparked Rachel’s interest in criminal law, and her education and experiences studying International Studies and Anthropology at Case Western Reserve University, including a semester abroad in Amman, Jordan, helped cultivate her desire to one day pursue a career that involves international law.
Jenik Radon, adjunct Professor at the School of International and Public Affairs (SIPA), Columbia University, is an international lawyer who has lectured and worked in over 70 countries, and has advised public authorities and civil society around the world on sustainable natural resource development, investment agreements, governance and business and human rights. He has been awarded the Cross Terra Mariana and the Cross of Service by Estonia and the Order of Honor by the republic of Georgia for his work.
Footnotes
[1] Barack Obama, The TPP Would Let America, Not China, Lead the Way on Global Trade, Wash. Post (May 2, 2016), https://www.washingtonpost.com/opinions/president-obama-the-tpp-would-let-america-not-china-lead-the-way-on-global-trade/2016/05/02/680540e4-0fd0-11e6-93ae-50921721165d_story.html.
[2] Id.
[3] World Trade Org., World Trade Report 2009: Trade Policy Commitments and Contingency Measures 21-39 (2009), https://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report09_e.pdf.
[4] Trans-Pacific Partnership Full Text art. 1.3, Office of the U.S. Trade Rep. (Feb. 4, 2016), https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text [hereinafter TPP Agreement] (emphasis added).
[5] Press Release, U.S. Sec. Exch. Comm’n, SEC Adopts New Measures to Facilitate Director Nominations by Shareholders (Aug. 25, 2010), https://www.sec.gov/news/press/2010/2010-155.htm.
[6] Article 3.6 of the TPP states, “Each Party shall provide that if a non-originating material undergoes further production such that it satisfies the requirements of this Chapter, the material is treated as originating when determining the originating status of the subsequently produced good, regardless of whether that material was produced by the producer of the good.” TPP Agreement, supra note 3, art. 3.6.
[7] Interview with Columbia’s Jenik Radon, Lawyer, Negotiator, Professor and Scholar: How to Restore Trust with America’s Allies, Earth Inst. (Jan. 11, 2021), https://ac4.earth.columbia.edu/news/interview-columbias-jenik-radon-lawyer-negotiator-professor-and-scholar-how-restore-trust.
[8] TPP Agreement, supra note 3, art. 20.3(2)-(3).
[9] Id. at art. 20.2(3).
[10] The Comprehensive and Economic Trade Agreement, EU-Can., art. 24.5 (Oct. 30, 2016), https://ec.europa.eu/trade/policy/in-focus/ceta/ceta-chapter-by-chapter/.
[11] Alana Semuels, The TPP’s Uneven Attempt at Labor Protection, Atlantic (Jan. 22, 2016), https://www.theatlantic.com/business/archive/2016/01/tpp-mexico-labor-rights/426501/.
[12] Id.
[13] TPP Agreement, supra note 3, art. 9.16.
[14] Id.
[15] Colum. Ctr. on Sustainable Inv., Primer: International Investment Treaties and Investor-State Dispute Settlement 4 (May 31, 2019), http://ccsi.columbia.edu/files/2019/06/Primer_-International-Investment-Treaties-and-Investor-State-Dispute-Settlement.pdf.
[16] Interview with Columbia’s Jenik Radon, supra note 6.
[17] Off. of the U.S. Trade Rep., Trans-Pacific Partnership Chapter 29 Summary – Exceptions and General Provisions (2016), https://ustr.gov/sites/default/files/TPP-Chapter-Summary-Exceptions-and-General-Provisions.pdf.
[18] Susan Aaaronson, The White House Exaggerates the Benefits of the TPP to the Open Internet, Council on Foreign Rels.: Net Pol. (Jun. 8, 2016), https://www.cfr.org/blog/white-house-exaggerates-benefits-tpp-open-internet; Sarah Perez, Facebook Blocked in Vietnam Over the Weekend Due to Citizen Protests, TechCrunch (May 17, 2016, 4:44 PM), https://techcrunch.com/2016/05/17/facebook-blocked-in-vietnam-over-the-weekend-due-to-citizen-protests/.
[19] Staff of Sen. Elizabeth Warren, Broken Promises: Decades of Failure to Enforce Labor Standards in Free Trade Agreements 7 (Apr. 30, 2015), https://www.warren.senate.gov/files/documents/BrokenPromises.pdf.
[20] Free Trade Agreements, Off. of the U.S. Trade Representative, https://ustr.gov/trade-agreements/free-trade-agreements (last visited Jan. 18, 2021).
[21] Staff of Sen. Elizabeth Warren, supra note 18, at 2.
[22] Interview with Columbia’s Jenik Radon, supra note 6.
[23] Id.
[24] Michalis Polygiannis & Jenik Radon, A Trade Agreement with a Possible Twist: The EU-Mercosur Agreement, Compar. Jurist (Jan. 13, 2021), https://comparativejurist.org/2021/01/14/a-trade-agreement-with-a-possible-twist-the-eu-mercosur-agreement/.
[25] Id.
[26] Id.
[27] Eric Bradner, How Secretive is the Trans-Pacific Partnership?, CNN (Jun. 12, 2015, 11:11 AM), https://www.cnn.com/2015/06/11/politics/trade-deal-secrecy-tpp/index.html.
[28] Margot E. Kaminski, Don’t Keep the Trans-Pacific Partnership Talks Secret, N.Y. Times (Apr. 14, 2015), https://www.nytimes.com/2015/04/14/opinion/dont-keep-trade-talks-secret.html.
[29] Interview with Columbia’s Jenik Radon, supra note 6.
[30] See President-elect Biden and Vice President-elect Harris in Wilmington, Delaware, (C-SPAN Nov. 16, 2020), https://www.c-span.org/video/?478136-1/president-elect-biden-warns-more-people-die-smooth-transition; David Lawder, Biden Says U.S., Allies Need to Set Global Trade Rules to Counter China’s Influence, Reuters (Nov. 16, 2020, 7:15 PM), https://www.reuters.com/article/us-usa-trade-biden/biden-says-u-s-allies-need-to-set-global-trade-rules-to-counter-chinas-influence-idUSKBN27X00U.
[31] See Interview with Columbia’s Jenik Radon, supra note 6.
Citation for Cover Image
U.S. Embassy in Mongolia, U.S. and Other Pacific Rim Countries Reach ‘Very Big Deal,’ (Oct. 6, 2015), https://mn.usembassy.gov/u-s-pacific-rim-countries-reach-big-deal/.
