isds – Techdirt (original) (raw)

The EU-Canada Trade Agreement CETA Still Isn’t Done, And May Be Partially Undone Because Of Its Corporate Sovereignty Provisions

from the well,-we-did-warn-you dept

The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is one of several long-running trade deal sagas covered by Techdirt. It seemed to be almost over in 2017. After a constant on-off excitement about whether CETA would survive, it was ratified by the European Union. But it still needed to be approved by all the EU Member States’ national parliaments before it came into force. The chief stumbling block to national ratification was the investor-state dispute settlement (ISDS) provisions, which would allow investors to sue governments over laws or decisions which could potentially harm future profits. This imposition of corporate sovereignty through trade deals is an issue that Techdirt has been covering for many years. Despite widespread concerns about ISDS, in 2019 the Court of Justice of the European Union, the EU’s top court, ruled that corporate sovereignty was compatible with EU law, apparently removing the last obstacle to CETA’s ratification by Member States.

And yet here we are, eight years after the final text of CETA was “celebrated“, and another major problem has emerged. The Irish Supreme Court has just ruled that ratification of CETA would be unconstitutional without holding a countrywide referendum on it. The argument that was used successfully to convince the court to halt Ireland’s ratification is the following:

The court was told during the March hearing that “sovereignty” was at the heart of the appeal, with the Dublin South Central [member of the Irish parliament] expressing concerns about the constitutionality of provisions in Ceta for “investor courts” to decide complaints by Canadians who invest in EU member states.

It was submitted the State cannot authorise the treaty “without the mandate of the people”, by way of a referendum.

Yes, it’s corporate sovereignty rearing its ugly head again, just as it has done many times in the past. But there’s a big difference now. As Techdirt wrote a few weeks ago, governments are finally waking up to the dangers of ISDS, and are actively seeking to withdraw from the Energy Charter Treaty, which also contains corporate sovereignty provisions.

Since politicians are themselves turning against the idea, it would not be surprising if its opponents succeed in convincing a majority of the Irish people to vote against allowing ISDS in CETA in the new referendum, whenever that is held. And if Ireland refuses to ratify ISDS in CETA, that would nullify the ISDS provisions across the whole of the EU. CETA would then come into effect, but without its worst feature.

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Filed Under: canada, ceta, cjeu, corporate sovereignty, eu, ireland, isds, referendum

Finally: Countries Start To Rebel Against Corporate Sovereignty, But Ten Years Too Late

from the we-did-warn-you dept

Back in 2013, Techdirt wrote about “the monster lurking inside free trade agreements”. Formally, the monster is known as Investor-State Dispute Settlement (ISDS), but here on Techdirt we call it “corporate sovereignty“, because that is what it is: a system of secret courts that effectively places companies above a government, by allowing them to sue a nation if the latter takes actions or brings in laws that might adversely affect their profits.

In 2015, we warned that corporate sovereignty would threaten EU plans to protect the environment in the TAFTA/TTIP trade deal between the US and the EU. TAFTA/TTIP never happened, but fossil fuel companies were able to to use other treaties to demand over $18 billion as “compensation” for the potential loss of future profits as the result of increasing government action to tackle climate change.

Chief among those treaties with corporate sovereignty provisions was the Energy Charter Treaty (ECT), which is designed to protect investments in the energy sector. Research by the International Institute for Sustainable Development (IISD) shows that the fossil fuel industry accounts for almost 20% of known ISDS cases, making it the most litigious group. Recently there has been a wave of corporate sovereignty cases brought by fossil fuel companies, with most settled in their favor. The average amount awarded was over $600 million, almost five times the amount given in non-fossil fuel cases.

It has become clear that corporate sovereignty represents a serious threat to countries’ plans to tackle the climate crisis. The obvious solution is simply to withdraw from the ECT, but there’s a problem. Article 47 of the treaty states:

The provisions of this Treaty shall continue to apply to Investments made in the Area of a Contracting Party by Investors of other Contracting Parties or in the Area of other Contracting Parties by Investors of that Contracting Party as of the date when that Contracting Party’s withdrawal from the Treaty takes effect for a period of 20 years from such date.

This “sunset clause” means any of the 53 signatories to the ECT can be sued in the secret ISDS courts for 20 years after withdrawing from the treaty. As a result of this, the EU in particular has been pushing for the ECT to be “modernized”, and recently announced an “agreement in principle” to achieve that. However, it still contains a corporate sovereignty tribunal system:

The modernised ECT will allow the Contracting Parties to exclude new fossil fuel related investments from investment protection and to phase out protection for the already existing investments. This phasing out of protection for fossil fuel investments will take place within a shorter timeframe than in the case of a withdrawal from the ECT, for both existing and new investments: existing fossil fuel investments will be phased out after 10 years under modernised rules (instead of 20 years under current rules) and new investment in fossil fuels will be excluded after 9 months.

Countries that later withdraw from the modernized ECT can be sued for 10 years, rather than the current 20 years. Several EU countries have decided that is not good enough, and have announced their intention to withdraw from the treaty immediately, as Politico reports:

Spain, the Netherlands and Poland have all declared their intention to exit the Energy Charter Treaty (ECT). Italy left in 2015. Germany, France and Belgium are examining their options, officials from those countries said.

France has confirmed that it will be pulling out, as has Belgium. For those countries that leave before the “modernized” ECT comes into force, companies can potentially use the sunset clause to sue them during the full 20 years afterwards. The only solution that addresses the serious threat of corporate sovereignty is to remove the sunset clause completely from the ECT. According to one analysis from the IISD, that’s possible if a group of ECT’s contracting parties agree to the move amongst themselves (“inter se”) as part of a joint withdrawal:

There is a legal basis for a withdrawal from the ECT with an inter se neutralization of the survival clause. In contrast to the continued protection of existing and certain future fossil fuel investments under the EU’s amendment proposal, such a withdrawal would put an immediate end to treaty-based fossil fuel protection and ISDS among all withdrawing states. In the short term, this would significantly reduce ISDS risks, given that 60% of the cases based on the ECT are intra-EU. It would also enable the EU and its member states to comply with the EU’s climate objectives and EU law. If further contracting states were to join, the ISDS risk to strong climate action would be further reduced and could pave the way for a fresh, unencumbered negotiation of a truly modern energy treaty that would support the expedited phase-out from fossil fuels and the transition to renewable energy.

It’s an imperfect solution, but better than the half-hearted “modernized” ECT proposed by the EU. The current mess shows that the issue should have been addressed ten years ago, when the problems of the “lurking monster” of corporate sovereignty first became apparent.

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Filed Under: climate change, corporate soveriegnty, eu, fossil fuels, isds, renewable energy, sunset clause, tafta

Fossil Fuel Companies Want Governments To Pay $18 Billion For Bringing In Laws Tackling The Climate Crisis Largely Caused By Fossil Fuel Companies

from the corporate-sovereignty-at-work dept

Back in 2013, Techdirt started writing about the boring-sounding Investor-State Dispute Settlement (ISDS) system. It was so boring, we decide to use a better term for it: corporate sovereignty. It’s an appropriate name, since this system of secret courts effectively places companies above a government, by allowing them to sue a nation if the latter takes actions or brings in laws that might adversely affect their profits. It was originally designed to protect companies that invested in unstable parts of the world, and to discourage things like expropriation by corrupt officials. But clever lawyers soon realized it was much more general than that, and could be used as a weapon against even the most powerful — and stable — nations.

It allows deep-pocketed companies — typically multinational corporations — to threaten governments with big fines if they pass laws or make decisions that aren’t to the companies’ liking. That includes actions that are clearly justified and in the interests of the country’s citizens. For example, over the years Techdirt has written about how corporate sovereignty was used to threaten governments that wanted to protect public health, even measures to tackle COVID-19.

In 2015, this blog warned that the TAFTA/TTIP trade agreement under discussion then would allow companies to challenge actions taken to protect the environment, such as bringing in laws to tackle the climate crisis. TAFTA/TTIP never happened, so fossil fuel companies have now turned to other treaties to demand over $18 billion as “compensation” for the potential loss of future profits as a result of recent decisions taken around the world to tackle climate change. Global Justice Now has a summary:

Five fossil fuel companies are suing governments for more than $18bn for taking climate action that could harm their profits, new figures reveal, as protestors demand an end to secretive corporate courts.

TC Energy, RWE, Uniper, Rockhopper, and Ascent are suing governments through investor-state dispute settlement (ISDS), a shadowy system of corporate courts that operates outside of a country’s domestic legal system as it is built into trade and investment deals.

Four of the five cases are under the Energy Charter Treaty (ECT), an energy investment agreement that includes ISDS, which the UK and EU are signed up to. TC Energy’s case against the US government is under the North American Free Trade Agreement (NAFTA).

The 18bn(?13bn)demandedbyjustfivecompaniesisalmostequivalenttotheentirenetannualclimatefundingprovidedbyrichcountriestothedevelopingworld,whichOxfamassessesas18bn (?13bn) demanded by just five companies is almost equivalent to the entire net annual climate funding provided by rich countries to the developing world, which Oxfam assesses as 18bn(?13bn)demandedbyjustfivecompaniesisalmostequivalenttotheentirenetannualclimatefundingprovidedbyrichcountriestothedevelopingworld,whichOxfamassessesas19-22bn.

As that last paragraph points out, if the companies are successful — by no means guaranteed, but entirely possible, given the nature of the special ISDS courts — the money needed to pay companies would amount to the the entire annual climate funding provided to the developing world. It seems a bit rich that these companies should not only make huge profits from selling fossil fuels that are largely responsible for our climate crisis, but also want to be paid serious money for being forced to stop. But that’s corporate sovereignty for you; it’s clearly time to get rid of it.

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Filed Under: climate change, corporate sovereignty, ect, fossil fuels, isds, lost profits, nafta
Companies: ascent, rockhopper, rwe, tc energy, uniper

Corporate Sovereignty Lawyers Prepare To Sue Governments For Bringing In Measures To Tackle COVID-19 And Save Lives

from the priorities,-priorities dept

Regular readers of Techdirt will be all too familiar with the problem of corporate sovereignty — the ability of companies to sue entire countries for alleged loss of profits caused by government action. Also known as investor-state dispute settlement (ISDS), there have been indications that some countries are starting to drop ISDS from trade and investment treaties, for various reasons. But a worrying report from Corporate Europe Observatory suggests that we are about to witness a new wave of corporate sovereignty litigation. Hard though it may be to believe, these cases will be claiming that governments around the world should be reimbursing companies for the loss of profits caused by tackling COVID-19:

In the midst of a crisis like no other, the legal industry is preparing the ground for costly ISDS suits against government actions that address the health and economic impacts of the coronavirus pandemic. In written alerts and webinars law firms point their multinational clients to investment agreements’ vast protections for foreign investors as a tool to “seek relief and/or compensation for any losses resulting from State measures”

No claims have been filed yet, but experts are so worried about this threat that they have called for an immediate moratorium:

on all arbitration claims by private corporations against governments using international investment treaties, and a PERMANENT RESTRICTION on all arbitration claims related to government measures targeting health, economic, and social dimensions of the pandemic and its effects.

Law firms specializing in corporate sovereignty are already well advanced in their preparations for demanding money from governments because of the “damage” the pandemic response has inflicted on corporate profits. Corporate Europe Observatory links to numerous reports and client alerts from these ISDS firms, which spell out the grounds on which big claims might be filed. These include:

ISDS claims against government action to provide clean water for hand-washing

Challenging relief for overburdened public health systems

Lawsuits against action for affordable drugs, tests and vaccines

Investor attacks on government restrictions for virus-spreading business activities

ISDS suits against rent reductions and suspended energy bills for those in need

Disputes over debt relief for households and businesses

Legal action against financial crises measures

Tax justice on trial

Suing governments for not preventing social unrest

The idea that governments around the world struggling to contain the pandemic and save thousands of lives might also have to fight such ISDS claims in court, and even pay out billions in fines when funds are needed for rebuilding lives and businesses, is bad enough. But the fact that law companies evidently have no qualms about recommending the use of corporate sovereignty in these difficult circumstances is a hint of even worse to come.

If these kinds of ISDS actions succeed, and governments are ordered to make huge payments to companies because of national pandemic responses, it is highly likely that similar cases could and would be brought over action to tackle climate change. That in itself might discourage some countries from adopting urgently needed measures. And for those that do, there is the prospect of big fines at just the time when maximum resources will be needed to deal with the environmental, social and economic effects of a climate catastrophe.

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Filed Under: corporate sovereignty, covid-19, isds, lawsuits, pandemic

Uber Wins Dubious Honor Of Being First Big Tech Company To Bully A Small Nation Using Corporate Sovereignty

from the welcome-to-the-ISDS-club dept

Six years ago, when Techdirt first started writing about the investor-state dispute system (ISDS) — or corporate sovereignty as we prefer to call it — it was largely unknown outside specialist circles. Since then, more people have woken up to the power of this apparently obscure element of international trade and investment deals. It essentially gives a foreign company the ability to threaten to sue a nation for millions — even billions — of dollars if the latter brings in new laws or regulations that might adversely affect an investment. The majority of corporate sovereignty cases have been brought by the extractive industries — mining and oil. That’s not least because many of the laws and regulations they object to concern environmental and health issues, which have come to the fore in recent years. New legislation designed to protect local communities might mean lower profits for investors, who then often threaten to use ISDS if they are not offered compensation for this “loss”.

Big tech companies, for all their real or supposed faults, have not turned to corporate sovereignty as a way of bullying small countries — until now. En24 News reports that Uber is threatening to invoke corporate sovereignty in a dispute with Colombia. According to Uber:

a series of recent measures by the Republic have had a serious adverse impact on Uber’s investments in Colombia and the viability of its operations in the country. On December 20, 2019, for example, through the Superintendence of Industry and Commerce (“SIC”), the Republic ordered Uber, Uber Colombia, and another Uber subsidiary that will virtually cease to make the Uber Platform available of Associated Drivers and passengers in Colombia.

Uber points out:

other companies in Colombia and third countries that offer similar forms in Colombia have not undergone the same treatment and continue to operate in Colombia without similar interference from the Republic.

The company claims a wide range of harms:

The illegal order of the Republic to block the Uber Platform in Colombia also constitutes an act of censorship in contravention of international human rights instruments that protect net neutrality, freedom of expression on the internet and freedom of use of the internet.

At the moment, this is all just saber-rattling, designed to encourage the Colombian government to unblock Uber in the country. If it doesn’t, the company says, it will invoke the ISDS Articles (pdf) of the 2012 United States-Colombia Trade Promotion Agreement, and ask a tribunal to award compensation. Even if the current threat to use corporate sovereignty is not followed through, it is surely only a matter of time before another big tech company joins the ISDS club.

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Filed Under: colombia, corporate sovereignty, free trade agreement, isds, trade agreements, trade promotion agreement
Companies: uber

Another Nail In the Coffin Of Corporate Sovereignty, As Massive Asian Trade Deal RCEP Nears Completion Without It

from the ISDS,-what-is-it-good-for? dept

Remember RCEP? The Regional Comprehensive Economic Partnership is a massive trade deal being negotiated by most of South-East Asia — including China and India. Although still little-known, it has been grinding away in the background, and is drawing closer to a final agreement. Almost exactly a year ago Techdirt noted that there were some interesting rumors that corporate sovereignty — officially known as investor-state dispute settlement (ISDS) — might be dropped from the deal. A story in The Malaysian Reserve confirms that is the case:

After missing several deadlines, member countries of the proposed Regional Comprehensive Economic Partnership (RCEP) have agreed to exclude the investor-state dispute settlement (ISDS) mechanism, a move that might expedite conclusion of the talks by the end of the year.

[Malaysia’s] Ministry of International Trade and Industry (MITI) Minister Datuk Darell Leiking ? said all RCEP member states — 10 Asean countries plus six free trade agreement (FTA) partners namely Australia, China, India, Japan, New Zealand and South Korea — have decided to drop the ISDS, but the item could be brought up again within two years of the agreement’s ratification.

So corporate sovereignty is definitely out of the initial agreement, but could, theoretically, be brought back after two years if every participating nation agrees. Despite that slight loophole, this is a significant blow against the entire concept of ISDS. It’s part of a larger trend to drop corporate sovereignty that has been evident for some time now. That still leaves plenty of toxic ISDS clauses in older investment treaties and trade deals, but the tide is definitely turning.

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Filed Under: china, corporate sovereignty, dispute settlement, india, isds, rcep, trade agreements

Top Court Rules CETA's Lipstick-On-A-Pig Version Of Corporate Sovereignty Is Compatible With EU Law

from the it-may-be-legal,-but-is-it-moral? dept

Techdirt readers with good memories may recall the long saga of the EU-Canada Comprehensive Economic and Trade Agreement (CETA). One important moment was when Canada agreed to use the EU’s proposed replacement for corporate sovereignty, the Investor Court System (ICS). Both are versions of so-called “investor-state dispute settlement” (ISDS), which allows companies to sue countries for alleged losses caused by government decisions. Although ICS was devised in order to blunt the growing criticism of traditional ISDS, it amounts to little more than lipstick on a pig. It still gives foreign investors unique legal privileges not possessed by local companies. However, as part of the deal to persuade the Belgian region of Wallonia not to veto CETA, the EU agreed to allow Belgium to ask the region’s top court to rule on whether the new ICS was compatible with EU law.

As is usual in such referrals, one of the top legal advisers of the Court of the Justice of the European Union (CJEU) offered a preliminary opinion. In this case, Advocate General Yves Bot found that the ICS was compatible with EU law. The main CJEU has now issued its own judgment (pdf), essentially agreeing with Bot on every point. The key ruling is that, according to the CJEU, the ICS won’t be able to overturn EU decisions:

the CETA contains provisions that deprive those [ICS] tribunals of any power to call into question the choices that have been democratically made within a Party to that agreement in relation to, inter alia, the level of protection of public order or public safety, the protection of public morals, the protection of health and life of humans and animals or the preservation of food safety, protection of plants and the environment, welfare at work, product safety, consumer protection or, equally, fundamental rights. Consequently, that agreement does not adversely affect the autonomy of the EU legal order.

That seems a little naive. It may be true, from a strictly legal point of view, but it ignores the reality of the situation. Even if the ICS cannot force an EU Member State to amend its laws, or change its decisions, it can impose fines for the “losses” an investor may suffer because of those moves. In such cases, a government may decide that it would rather repeal the law or cancel its decision than pay hundreds of millions of euros in fines. Even the threat of losing may be enough to convince governments to back down — exactly as has happened many times with traditional ISDS. However, the Stop ISDS campaign points out:

The case against ISDS (or its rebranded version ICS) has never been primarily a legal one. It is a moral one.

ISDS allows multinational companies access to an obscure, parallel justice system closed to the rest of us. Calling it a court system for the 1% would be generous. It is really a court system for the 0.01%.

ISDS has allowed corporate interests to trump those of the public time and time again. Countries have been threatened for passing pollution regulations, approving health and safety measures and for hitting the pause button on fracking. It has been used to defend land grabs, environmental destruction and lock in privatisation of key public services.

None of these arguments depend on the opinion of the ECJ. The moral case is as strong as ever — ISDS must go.

That’s not a hopeless aspiration. As Techdirt reported earlier this year, the EU has already announced that corporate sovereignty claims can no longer be brought over internal EU matters. Meanwhile, the US seems to be cooling on the idea. So while the ICS has been blessed by the CJEU, it may be that corporate sovereignty is on the way out anyway.

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Filed Under: canada, ceta, cjeu, corporate sovereignty, ics, investor court system, isds

EU Drops Corporate Sovereignty For Internal Bilateral Agreements, But Top Court Adviser Says It Can Be Used In CETA

from the one-step-forward,-one-step-back dept

As Techdirt noted last September, corporate sovereignty — the ability of companies to sue entire countries for allegedly lost profits — has been on the wane recently. One important factor within the EU was a decision earlier last year by the region’s top court that investor-state dispute settlement (ISDS) — the official name for corporate sovereignty — could not be used for investment deals within the EU. The reasoning was that ISDS courts represented a legal system outside EU law, which was not permitted when dealing with internal EU matters. As a direct consequence of that ruling, the Member States of the EU have just issued a declaration on the legal consequences (pdf). Essentially, these are that all bilateral investment treaties between Member States will be cancelled, and that corporate sovereignty claims can no longer be brought over internal EU matters.

However, that leaves an important question: what about trade deals between the EU and non-EU nations — can they include ISDS chapters? In order to settle this issue, Belgium asked the Court of Justice of the European Union (CJEU) whether the corporate sovereignty chapter of CETA, the trade deal between the EU and Canada, was compatible with EU law. As well as clarifying the situation for CETA, this would also provide definitive guidance on the legality of ISDS in past and future trade deals. As is usual in cases sent to the CJEU, one of the court’s top advisers general offers a preliminary opinion, which has just been published (pdf):

In today’s Opinion, Advocate General Yves Bot holds that the mechanism for the settlement of disputes is compatible with the EU Treaty, the [Treaty on the Functioning of the European Union] and the Charter of Fundamental Rights of the European Union.

His argument is that ISDS courts can’t bind national courts, so the latter’s autonomy is not threatened, and thus corporate sovereignty chapters are compatible with EU legislation. That may be true as a matter of law, but ignores the political reality of corporate sovereignty. If huge fines are imposed by ISDS tribunals unless proposed changes to laws are dropped, governments frequently roll over and do as the corporations wish, because it seems the easier, cheaper option. So even though in theory corporate sovereignty cases can’t override national laws, in practice that’s often the outcome.

However, this is only the Advocate General’s view, which isn’t necessarily followed in the main CJEU ruling. It will be interesting to see whether the EU’s top court extends its earlier ruling on intra-EU investment agreements, and throws out ISDS for all trade deals, or whether it agrees with Advocate General Bot and permits corporate sovereignty chapters for things like CETA.

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Filed Under: ceta, cjeu, corporate sovereignty, eu, isds, trade agreements

Corporate Sovereignty On The Wane, As Governments Realize It's More Trouble Than It's Worth

from the but-not-dead-yet dept

A few years ago, corporate sovereignty — officially known as “investor-state dispute settlement” (ISDS) — was an indispensable and important element of trade deals. As a result, it would crop up on Techdirt quite often. But the world is finally moving on, and old-style corporate sovereignty is losing its appeal. As we reported last year, the US Trade Representative, Robert Lighthizer, hinted that the US might not support ISDS in future trade deals, but it was not clear what that might mean in practice. The Canadian Broadcasting Corporation (CBC) site has an interesting article that explores the new contours of corporate sovereignty:

The preliminary trade agreement the U.S. recently reached with Mexico may offer a glimpse of what could happen with NAFTA’s Chapter 11 [governing ISDS].

A U.S. official said the two countries wanted ISDS to be “limited” to cases of expropriation, bias against foreign companies or failure to treat all trading partners equally.

The new US thinking places Canada in a tricky position because the latter is involved in several trade deals, which take different approaches to corporate sovereignty. As well as the US-dominated NAFTA, there is CETA, the trade deal with Europe. For that, Canada is acquiescing to the EU’s request to replace ISDS with the new Investment Court System (ICS). In TPP, however — still lumbering on, despite the US withdrawal — Canada seems to be going along with the traditional corporate sovereignty approach.

A willingness to move on from traditional ISDS can be seen in the often overlooked, but important, Regional Comprehensive Economic Partnership (RCEP) trade deal. India’s Business Standard reports:

Despite treading diametrically opposite paths on tariffs and market access, India and China, along with other nations, have hit it off on talks regarding investment norms in the proposed Regional Comprehensive Economic Partnership (RCEP) pact.

In a bid to fast-track the deal, most nations have agreed to ease the investor-state-dispute settlement (ISDS) clauses.

As with NAFTA and CETA, it seems that the nations involved in RCEP no longer regard corporate sovereignty as a priority, and are willing to weaken its powers in order to reach agreement on other areas. Once the principle has been established that ISDS can be watered down, there’s nothing to stop nations proposing that it should be dropped altogether. Given the astonishing awards and abuses that corporate sovereignty has led to in the past, that’s a welcome development.

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Filed Under: ceta, corporate sovereignty, isds, nafta, rcep, trade agreements, ustr

After Removing US From Negotiating Process, Now Trump Suddenly Wants US Back In TPP

from the say-what-now? dept

The Trans Pacific Partnership (TPP) Agreement is deeply unpopular with Americans for a variety of reasons (some of which we’ll discuss below). Because of its unpopularity, both Donald Trump and Hillary Clinton denounced the agreement during their campaign for the Presidency. Trump’s denunciation seemed a lot more genuine — he’s argued against free trade and in favor of protectionism for quite a long time. Clinton’s denunciation was highly suspect, as she had long been a supporter of the TPP, and many people expected that, if elected, she’d flip flop back to support the agreement. Of course, she didn’t get elected… but now it’s apparently, Trump who has flip flopped to now supporting TPP.

President Trump, in a sharp reversal, told a gathering of farm-state lawmakers and governors on Thursday morning that the United States was looking into rejoining a multicountry trade agreement known as the Trans-Pacific Partnership, a deal he pulled out of days after assuming the presidency.

Mr. Trump?s reconsideration of an agreement he once denounced as a ?rape of our country? caught even his closest advisers by surprise and came as his administration faces stiff pushback from Republican lawmakers, farmers and other businesses concerned that the president?s threat of tariffs and other trade barriers will hurt them economically.

We spent years explaining the many, many problems associated with TPP. While we tend to be supporters of free trade, the problem with the TPP was that it wasn’t actually a free trade agreement. Yes, a few parts of it included lowering tariffs and opening borders to trade (and those parts were, for the most part, pretty good), but the bigger part of the agreement was that it was an “investment” agreement, rather than a trade agreement. And thus it included two parts that were really problematic.

First, was an intellectual property section which was the exact opposite of “free trade.” Rather it required higher barriers to trade, creating mercantilist barriers to information and ideas, in locking up “intellectual property” under ever more draconian terms. The second part was what we’ve referred to as the “corporate sovereignty” section, which is officially referred to as “Investor State Dispute Settlement” provisions or (ISDS). This is a system by which companies can effectively take governments to a private tribunal, who will determine if their regulations cut into the expected profits of the company. The original idea behind such corporate sovereignty provisions was to deal with the situations in which, say, a big company invested in an economically developing country, and that country’s leadership suddenly decided to seize the factory or whatever. But, as we’ve seen, over the years, is that ISDS/corporate sovereignty has mainly been used as a tool for corruption.

Given all of that, we were happy that one of President Trump’s first moves in office was to drop out of the TPP, even as we noted that he was clearly doing so for the wrong reasons (his stated reasons being wishing for more protectionism, when it was the lowering of trade barriers that we found to be the only good parts of the TPP).

With the US out of the TPP, the remaining countries picked up the ball and ran with it — under the leadership of Canada who agreed to remove the intellectual property section. An agreement was reached earlier this year without the awful copyright and patent provisions, but with corporate sovereignty still in there. It’s ironic that Canada took over the leadership role, since it was actually a late entrant into the TPP after the US bent over backwards to keep Canada out of the agreement, partly in the belief that it would push back on things like the draconian intellectual property section.

So… given all of that it seems doubly ironic that Trump now apparently says he wants back in. His tweet on the subject is, as per usual, somewhat nonsensical.

Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama. We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!

— Donald J. Trump (@realDonaldTrump) April 13, 2018

Claiming he’d only rejoin the TPP if the deal is better than what Obama negotiated is a reasonable enough claim to make, but if that was the case… why did Trump completely drop out of the negotiations and let the other countries conclude all of the negotiations without any US influence at all? Reopening such negotiations at this point seems like a total non-starter, and even if it happened, the US would be at a distinct disadvantage, given that everyone else has already agreed to nearly everything.

And, of course, there’s little to suggest that the attempt to rejoin now is to get rid of things like corporate sovereignty, or to do the actual good stuff around lowering trade barriers (this is coming just weeks after Trump announced plans to put in place tariffs on certain Chinese products) and soon after the dubious claim that winning trade wars is “easy.”

As far as I can tell, this appears to be Trump trying to make a group of people he was talking to happy, and not really understanding the details:

As he often does, the president started to change gears after hearing complaints from important constituents ? in this case, Republican lawmakers who said farmers and other businesses in their states would suffer from his trade approach since they send many of their products abroad.

That, of course, seems like an odd way to lead. Or to negotiate.

Chances are nothing significant comes of this — certainly not a wholescale renegotiation of the TPP. Instead, we’ve just got yet another political mess.

Filed Under: canada, china, copyright, corporate sovereignty, donald trump, free trade, isds, negotiations, patents, tpp, trade agreements