Public Citizen’s Global Trade Watch has carefully analyzed the Financial Services Chapter of the recently released Trans-Pacific Partnership. One story that has not been told about the TPP is how this first U.S. trade agreement negotiated since the global financial crisis would impose the same model of financial deregulation that is widely understood to have fueled the crisis.
For the first time in any U.S. trade agreement, analysts say the TPP empowers some large financial firms to challenge U.S. financial regulatory policies in extrajudicial investor-state dispute settlement (ISDS) tribunals using the broadest “minimum standard of treatment” claim.
That would take protection of consumers away from Congress and the courts, and place the power to make decisions in the hands of corporate interests, entirely bypassing the democratic political systems of sovereign nations.
And, the TPP would be the first U.S. pact to empower some of the world’s largest financial firms to launch ISDS claims against government financial policies. Now none of the world’s 30 largest banks may bypass domestic courts, go before extrajudicial investor-state tribunals of three private lawyers, and demand taxpayer compensation for financial policies enacted by lawmaking institutions defined by our Constitution.
Among the top banks in TPP countries that could newly do so: Mitsubishi UFJ, Mizuho, ANZ, Commonwealth Australia, West Pac, National Australia Bank, Bank of Tokyo, Sumutomo, Royal Bank of Canada.
Despite the pivotal role that new financial products, such as toxic derivatives, played in the financial crisis, the TPP would require countries to allow new financial products and services to enter their economies if permitted in any other participating countries allow them.
Meanwhile, the provision US Trade Representative calls a “prudential filter” would not shut down investor attacks on American policies. Rather, it would provide for 120 day delay before the case could proceed unless the government of the suing investor agreed to shut down the case.
This analysis provides interested parties with a guided walk-through of the chapter and related annexes.
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