Obama’s Keystone decision shows why we should reject TPP

Earlier this month, President Obama announced that his administration had decided against the Keystone XL pipeline that the TransCanada Corp. proposed to build between Canada and the United States. He did so explicitly citing environmental concerns, notably the need for the U.S. to be “a global leader when it comes to taking serious action to fight climate change.” Obama’s decision, and the reasoning behind it, are to be celebrated.

{mosads}What should not be celebrated is that just a day earlier, the U.S. government released the text of the Trans-Pacific Partnership, a trade and investment agreement among 12 countries that will now go to Congress for consideration.

These seemingly unconnected events are in fact connected. Indeed, the Keystone experience should give Congress even more pause about passing the TPP.

Why? Well, Obama’s Keystone decision is something that could be found to be counter to what is allowed under the “investor state dispute settlement” (ISDS) chapter of the TPP.  

Again, what Obama did regarding Keystone was correct.  But, if the TPP passes, it will further limit the ability of a member government — be it the U.S. or Peru or Canada or Australia or Mexico or another — to block such corporate projects if they threaten social, environmental or economic criteria or regulations.

Indeed, TransCanada could bring an investor-state suit against the U.S. government under an existing trade agreement. TransCanada’s charge could be that the U.S. government, through the State Department under former Secretary of State Hillary Clinton, reviewed the Keystone pipeline and found the environmental impact not to be of concern.  Thus, TransCanada could argue, it had every reason to believe that the pipeline would be approved.

And, TransCanada could argue, the U.S. government changed the criteria for review belatedly and, in so doing, committed an investor-state no-no that lawyers call “indirect taking” — not expropriating TransCanada’s property (what lawyers call “direct taking”), but expropriating future profits unfairly since the criteria changed from when TransCanada submitted its proposal. As TransCanada President Russ Girling phrased it, “misplaced symbolism was chosen over merit and reason.”

Corporate supporters of the TPP would undoubtedly hope that you not focus on understanding what might sound like legal gobbledygook. But it’s a decidedly troubling part of the TPP draft. Even though Obama has promised that the TPP is a kinder and gentler trade and investment agreement, it is not. Every time a new trade agreement is passed and the number of corporations that can bring investor-state disputes expands, we as people and our governments lose some freedom to make key decisions to ensure an environmentally, socially and economically sustainable future — not just for ourselves, but for our children’s and grandchildren’s futures.*

As we see in the rejection of the Keystone pipeline, this is one of the most important roles of governments. Governments need the “policy space” to listen to their constituents’ concerns and to make the right decisions about such projects as the Keystone pipeline. That is a central part of what is at stake with the upcoming TPP vote in Congress, and that is one of the reasons why Congress (and legislatures in the other 11 countries) should firmly and decisively say “no” to the TPP.

So, if you are applauding President Obama’s “no” on Keystone, you should vote no — or tell your congressperson to vote “no” — on the TPP.

*For an egregious, but not unusual case of how investor-state dispute resolution is arbitrated at the World Bank Group’s International Center for Settlement of Investment Disputes (ICSID), see my article in the University of Pennsylvania Journal of International Law, “Corporate Bias in the World Bank Group’s International Centre for Settlement of Investment Disputes: A Case Study of a Global Mining Corporation Suing El Salvador.”

Broad is a professor at the School of International Service at American University. Prior to that, she worked as an international economist at the U.S. Treasury Department, in the office of then-Rep. Chuck Schumer (D-N.Y.) and the Carnegie Endowment for International Peace.