The TPP And The Tobacco Carve-out Bring Together Strange Bedfellows... While Highlighting The Problems Of The TPP

from the not-a-good-idea dept

Tue, Oct 6th 2015 2:54pm — Mike Masnick

It's been rumored for years, but reports out of Atlanta suggest that it's now confirmed that in order to finalize the Trans Pacific Partnership (TPP) agreement, everyone agreed to carve tobacco out of the corporate sovereignty system, better known as ISDS (investor state dispute settlement). These systems allow companies to sue countries for passing regulations that the companies feel harm their ability to profit -- and tobacco companies have already filed ISDS complaints in a few countries that have pushed to put health warnings on cigarette packages.

While some health activists have cheered on this carve out -- it appears that almost everyone else is pissed off. Not because they think that Big Tobacco should be shaking down countries that pass anti-smoking laws (though, there may be some of that), but because they recognize the problems that occur when governments can start to set up trade deals that "carve out" certain industries. It's opening up a huge can of worms. Even some supporters of corporate sovereignty/ISDS are worried about what it means when one particular industry can just be excluded entirely from the process. Two of the biggest supporters of ISDS and TPP in Congress, Senators Mitch McConnell and Orrin Hatch, have both warned that the US should not carve out tobacco. Here's McConnell a few months ago, standing up for those poor, poor tobacco farmers:

“It is essential as you work to finalize the TPP, you allow Kentucky tobacco to realize the same economic benefits and export potential other U.S. agricultural commodities will enjoy with a successful agreement.”

And here's Hatch actually making a fairly salient point about the carve out:

“Although I don’t support tobacco at all, I still think it was essential,” Hatch said. “It’ll cost us some votes. And every vote is essential. And there are other things I am very concerned about. I’ve committed to read the bill, and I will read it, but right now I’m leaning against it.”

That doesn't bode well for the agreement, given that Hatch was a huge supporter of the TPP. Another Senator, Thom Tillis, has pointed out that carving out one industry opens up the possibility of carving out others:

“I’ll not only vote against it, I’ll work hard to have it defeated if it goes in the final agreement.... Once you carve out someone from dispute settlement agreements, then who’s next?”

And the tobacco carve-out, believe it or not, seems to be one thing that both big business and big labor agree on, though for entirely different reasons. The US Chamber of Commerce and the National Association of Manufacturers are totally against it:

we ask all of the TPP governments to reject the exclusion of products from the coverage of the TPP and its enforcement mechanism.... Such exclusions are unnecessary and would be highly damaging to the international rules based trading system and the prospects for the TPP.

And here was the AFL-CIO opposing the entire ISDS mechanism, and noting that the tobacco carve-out just highlights the problems of ISDS. Whereas Senator Tillis worried about "who's next" to get carved out, the AFL-CIO is pointing out that maybe there should be a lot more.

Any industry-specific carve-out will not address the serious structural problems inherent in the system itself. Issues of broad public interest should not be viewed through the narrow lens of trade and investment at all, let alone decided by unaccountable private panels. Systems of justice should be transparent and accessible on an equal basis. ISDS is anything but: Only foreign investors can use it and there are no requirements that affected communities be allowed to participate or even have their view considered. In many cases, there often are not even requirements that hearings or decisions be made available to the public at all! Even in the case of clear legal error, it is almost impossible to reverse a decision.

Indeed, as Sean Flynn pointed out just last week, carving out tobacco really just enforces how dangerous corporate sovereignty really is:

The new exception validates, rather than assuages, the concerns of those who have been criticizing ISDS systems for many years. Without express carve outs, ISDS provisions do threaten common health and safety regulations.

The carve out does nothing to halt the disturbing recent trend of companies using ISDS provisions in trade agreements to enforce international intellectual property norms through ISDS tribunals. This is, indeed, the claim at the heart of the tobacco cases now being litigated in ISDS systems. The claim is that tobacco regulations requiring plain packaging violate the trademark rights of tobacco companies protected by the World Trade Organization agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The pharmaceutical company Eli Lilly has also claimed that the denial of a new use patent on an old (off-patent) medicine violates rights granted by TRIPS and the North Atlantic Free Trade Agreement (NAFTA).

Meanwhile, US trade officials are, of course, trying to tap dance around the fact that basically everyone absolutely hates this. The USTR has tried to pretend this isn't a big deal because tobacco is "unique."

The U.S. Government seeks to include this language because tobacco is a unique product – it is highly addictive, always harmful to human health, and the single most preventable cause of death in the world. Recognizing these facts about tobacco through the TPP will represent an important step forward for public health in the international trade community.

It's true that tobacco can be a serious health concern, but shouldn't we be raising questions about why this procedure is no good for tobacco companies, but just dandy for every other industry -- including some that produce harmful products? Or those like pharmaceutical companies who are jacking up prices to keep necessary medicines out of the hands of the poor?

Oh, and then there are those who are in complete denial, who are insisting that there really isn't a carve-out for tobacco, even though there almost certainly is (we can't say for sure, of course, because the documents are secret):

“TPP will not discriminate against any agricultural commodity nor will it exclude tobacco. On the contrary, TPP will provide protections to ensure that governments can implement tobacco control measures, while guaranteeing that tobacco has the same legal status as any other product,” a U.S. official told CQ Roll Call last week.

In short, the whole tobacco carve-out situation is a microcosm of the problems with the TPP. You have a terrible idea (corporate sovereignty) mixed with a weak attempt to appease health activists (carve out tobacco), that basically fixes nothing and satisfies no one. And, now, the same Senators in Congress who demanded the fast track authority be granted, which ties their own arms behind their backs in terms of changing the agreement, are threatening to force this change, even though they've already given up the power to do so.

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Filed Under: carve-out, corporate sovereignty, exemption, isds, mitch mcconnell, orrin hatch, tobacco, tpp, trade, winners and losers

29 Comments

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TruthHurts (profile), 6 Oct 2015 @ 3:05pm

I wonder if the corporations know this...
If the corporations pushing TPP for Corporate Sovereignty understand that if they get it, they no longer hold any copyrights or patents in the United States.

As sovereign entities, they can only own their embassies and the land the embassies sit on.

All patents and copyrights that they held prior to gaining sovereignty will immediately enter the public domain.

Can't wait... :)
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Glenn, 6 Oct 2015 @ 3:09pm

Tobacco isn't a significant health issue. Cigarettes are. The tobacco in cigarettes is loaded with toxic and addictive substances (to keep a cigarette burning after lit and to get the smoker to keep buying more and more cigarettes) that don't exist in almost all cigar and pipe tobacco. The tobacco industry screwed itself.
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Adrian Lopez, 6 Oct 2015 @ 3:14pm

USTR claims ISDS can't be used for any of the things it has been used for in the past (this is from back in March):

https://www.whitehouse.gov/blog/2015/03/26/isds-important-questions-and-answers
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Anonymous Coward, 6 Oct 2015 @ 3:30pm

Australia + New Zealand
Some more research on the matter would have shown you that Australia and New Zealand are in the process of introducing plain packaging for tobacco, i:e no trade names or colours just large health warnings and gruesome photos of damaged lungs, teeth and limbs. Australia is already on it's way to court with the matter and New Zealand is waiting to see what happens.

http://aftinet.org.au/cms/node/519

http://www.smh.com.au/federal-politics/political-news/tran spacific-partnership-the-surprise-offer-that-could-kill-court-challenges-by-tobacco-giants-20151001- gjzjja.html
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Anonymous Coward, 6 Oct 2015 @ 3:32pm

Re:
While cigars and pipe tobacco are unquestionably healthier then cigarettes, they can still cause cancer. Only smokeless tobacco (excu. chewing tobacco and suns) such as e-cigs and dissolvable tobacco is safe (still addictive, of course, but there not physical danger).
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Anonymous Coward, 6 Oct 2015 @ 3:35pm

Re: Australia + New Zealand
Carving out exceptions for the tobacco industry shows only that the ISDS mechanism is inherently open to abuse, despite assurances by USTR and others to the contrary.
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Anonymous Coward, 6 Oct 2015 @ 3:40pm

This can not be allowed to pass. Very few people know about corporate sovereignty or that the ISDS system exists. I've tried to explain it briefly and the response is that it's another conspiracy theory, i.e. too extreme to believe. News coverage isn't touching the subject.

I didn't read that companies would need to give up rights to patents.
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Anonymous Coward, 6 Oct 2015 @ 3:45pm

Re: Re:
From that wiki page "dissolvable tobacco...may have mortality and morbidity risks for oral cancer and heart disease" and a whole chapter on how it's poisonous to young children.
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Anonymous Coward, 6 Oct 2015 @ 3:48pm

Re: Australia + New Zealand
Australia has paid for the right to have plain packaging in court costs and litigation. There's a number of countries that can't afford to do that. Just like US courts, the one with the deepest pockets wins. What a lovely ideal to export.

http://www.independent.co.uk/news/business/analysis-and-features/big-tobacco-puts-countries-on-trial -as-concerns-over-ttip-deals-mount-9807478.html
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cypherspace (profile), 6 Oct 2015 @ 4:33pm

Wow, so Congress is so greedy it might just turn on itself because the TPP only gives them 99.99% of what they asked for? I'll believe it when I see it.
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Anonymous Coward, 6 Oct 2015 @ 5:31pm

Non combustionable tobacco is much safer, 95% safer. There's an element of common sensen since it's combustion that harbors tar and cancer causing agents. Not nicotine itself. The wiki page is in flux since this is a controversial politicized topic with billions at stake for various industries. It's also a topic that might not be necessary to discuss right now.

How the tpp tobacco exception will impact pending FDA regulations over ecigs is curious. I can't figure it out.

US tobacco makers aren't big in the industry but the FDA would like to turn the industry over to them. Didn't RJR use Ukraine to sue Australia? The biggest names are Chinese but they are not signers. Would this impact the sale of liquid nicotine? Then we have India and China as the largest sources. None of the nicotine supplers are "tobacco companies", they are labs.

"Foreign investor" is a strange requirement. Why were domestic investors excluded?

This idea of "global government" via trade and corporations stinks. Most of the tpp is not about trade but public policy and an end run around democracy.
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Anonymous Coward, 6 Oct 2015 @ 6:32pm

So ISDS doesn't work for tobacco -- the primary place it has been tried,
yet we want to repeat this failed experiment with everything else.

Isn't this the definition of 'insanity' ?
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Anonymous Coward, 6 Oct 2015 @ 9:53pm

"Special" laws for BIG companies
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Anonymous Coward, 6 Oct 2015 @ 9:55pm

If they'd put 1% as much effort in human rights law as they put into corporate law(sic), we'd probably would be in a much nicer world
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Anonymous Coward, 6 Oct 2015 @ 11:50pm

Oil and gas industries should be carved out of corporate sovereignty. That way these harmful industries can't sue when kicked out of neighborhoods for poisoning drinking water due to fracking and causing rising sea levels from global warming.

I would say these industries are more harmful than tobacco. Oil and gas industries effect everyone in the world! Not just smokers.
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John Fenderson (profile), 7 Oct 2015 @ 6:56am

Re: Re:
Consuming tobacco or nicotine in any form cannot reasonably be called "safe", although there are clearly some ways of using it that are a lot safer than others.

Smoking is pretty much the most dangerous way to do it.
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Ninja (profile), 7 Oct 2015 @ 7:08am

And, now, the same Senators in Congress who demanded the fast track authority be granted, which ties their own arms behind their backs in terms of changing the agreement, are threatening to force this change, even though they've already given up the power to do so.

sweet. I hope it moves forward in the face of the idiots that decided to give up their own power and passes with all the bad, effectively causing economic damage to the US as well. Maybe this will make the idiots in power think twice before building secret trade deals that benefit the biggest buyers.
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Mattmon (profile), 7 Oct 2015 @ 7:13am

Even for the other industries that were not carved-out, this presents a problem if governments actually get sued by those other companies under corporate sovereignty. The governments can just point to this exclusion and claim that they should be exempt from other lawsuits as well.
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hopponit (profile), 7 Oct 2015 @ 9:56am

tpp
"And there are other things I am very concerned about. I’ve committed to read the bill, and I will read it, but right now I’m leaning against it.” Yep, he has strong opinions on this and he is "committed" to read the bill. He just hasn't bothered to yet! Yeah, trust me, I know what I'm doing.
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AI, 7 Oct 2015 @ 9:59am

The feeling I get (along with some TPP articles from around the world) is that TPP isn't actually finished. The trade officials and Obama might be celebrating, but like anything done at the last minute, there are always outstanding issues and problems left to be resolved. It's only a matter of time before they surface.

I am sure some officials are expressing support just to keep Obama and USTR happy. You never know what they do once they return to their country.
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nasch (profile), 7 Oct 2015 @ 10:03am

Re: I wonder if the corporations know this...
All patents and copyrights that they held prior to gaining sovereignty will immediately enter the public domain.

Where did you get that?
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nasch (profile), 7 Oct 2015 @ 10:09am

Re:
Oil and gas industries should be carved out of corporate sovereignty.

No, corporate sovereignty should be carved out of these agreements.
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Anon, 7 Oct 2015 @ 10:34am

Obviously...
The problem isn't that tobacco is a harmful product, so should not be able to sue governments for restricting it. The problem is that the fact that it is necessary to exclude a product in obvious need of strong regulation - simply demonstrates that the other "carved-in" products will very likely enjoy excessive rights to challenge and override normal government restrictions; enough so that the tobacco carve-out was deemed necessary.

"If we promise no to let Big Tobacco grab you by the throat, will you allow any other big business to do so?"

It'll be fun to see when the USA gets a taste of its own medicine. They have happily ignored international agreements and tribunals whenever it suited them. I wonder how that will play with TPP? (Look up Canadian Softwood Lumber dispute under NAFTA and IATT...)
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Andrew D. Todd, 7 Oct 2015 @ 11:30am

How About Coal Mining?
The Investor-State Dispute Resolution Process would presumably apply to Don Blankenship, former CEO of the Massey Energy Company, whose conspiracy to violate mining safety laws led to the Big Branch Mine Disaster, on April 5, 2010, in which 29 miners were killed. Blankenship is on trial, and facing up to thirty years in prison. Stringent regulation has gotten fatal accidents in American coal mining down to about twenty or thirty a year. That, of course, does not include the long-term effects of silicosis, which results from inhaling small quantities of coal and rock dust for years on end. The Chinese coal mining industry is much more poorly regulated than the American coal mining indusry, and thousands of Chinese miners are killed every year. One suspects that by de-facto Chinese standards, Blankenship would be considered to have a right to kill 29 American miners. Doubtless, Blankenship will produce numerous Chinese expert witnesses to prove that this, that, and the other practice is perfectly acceptable in Chinese mines. It sounds as though the Trans Pacific Pact might be a "get out of jail free" card for Blankenship.

https://en.wikipedia.org/wiki/Don_Blankenship
https://en.wikipedia.org/wiki/List_of_coal_ mining_accidents_in_China
http://www.rfa.org/english/commentaries/energy_watch/china-coal-deaths-0316 2015103452.html

The official Chinese figures will be on the low side. There will be large numbers of accidents only involving one person which were covered up. That is the situation in general for Chinese industrial accidents and illnesses.

When these facts are appreciated, West Virginia's congressional delegation would be well-advised to vote against the treaty if they want to be re-elected to office.
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TruthHurts (profile), 7 Oct 2015 @ 3:47pm

Re: I wonder if the corporations know this...
And yes, it was wishful thinking on my part...

Ah well, it's good to dream.
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TruthHurts (profile), 7 Oct 2015 @ 4:03pm

Re: Re: I wonder if the corporations know this...
What does the government do to known thieves / tax evaders as they "leave" the country?

:)
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JMT (profile), 7 Oct 2015 @ 4:07pm

Re: Australia + New Zealand
"Some more research on the matter would have shown you that Australia and New Zealand are in the process of introducing plain packaging for tobacco..."

Some research on the matter would have shown you this has been discussed several times on Techdirt.

https://www.techdirt.com/articles/20140319/03205226620/australia-may-soon-regret-giving-up- its-refusal-to-accept-corporate-sovereignty-trade-agreements.shtml
https://www.techdirt.com/articles/ 20150803/09020531838/australias-legal-bill-fighting-philip-morris-corporate-sovereignty-case-35-mill ion-so-far.shtml
https://www.techdirt.com/articles/20140829/03425628359/corporate-sovereignty-debate- heats-up-australia.shtml

Be careful with snark, it can bite you in the ass.
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Andrew D. Todd, 8 Oct 2015 @ 4:20am

And How About Milk?
Does this mean that food regulations are forbidden? The Chinese Milk Scandal was a case in which 300,000 Chinese children were harmed, to some degree or other, by a few businessmen who added plastic resin to milk which was used to make various prepared foodstuffs. Some of the tainted milk reached the United States in the form of specialty candies, and the Food and Drug Administration did what it had to do, punishing all Chinese importers out of an abundance of caution. The Chinese shot the two most guilty culprits, and sent others to prison for long terms.

https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal
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Anonymous Coward, 9 Oct 2015 @ 7:03am

Re:
...and alcohol...and vehicles...and...
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