Corporate Sovereignty: What We Are Talking About, When We Talk About “Trade”

By J.A. Myerson

Here’s something President Obama said in his October 22 debate against Mitt Romney that deserves more scrutiny than it has gotten, which is basically none:

“When it comes to our military and Chinese security, part of the reason that we were able to pivot to the Asia-Pacific region after having ended the war in Iraq and transitioning out of Afghanistan is precisely because this is going to be a massive growth area in the future. We believe China can be a partner, but we’re also sending a very clear signal that America is a Pacific power, that we are going to have a presence there. We are working with countries in the region to make sure, for example, that ships can pass through, that commerce continues, and we are organizing trade relations with countries other than China, so that China starts feeling more pressure about meeting basic international standards.”

To break that down a bit, it seems as though the President, having identified in Asia “a massive growth area in the future,” is ratcheting up military tensions and negotiating hostile trade policies. For my money, that is at least as worthwhile a topic to discuss as, say, Mitt Romney’s oft-mentioned pledge to “label China a currency manipulator” on what was beginning to look like it would be an exhaustingly jam-packed “Day 1.”

The President’s selection of Asia as his first overseas destination after re-election was, according to Deputy National Security Advisor Ben Rhodes, “a huge opportunity for us to extend one of [President Obama’s] most important agendas, which is expanding US leadership in the Asia-Pacific region” and to“send a strong message about America’s interests, but also America’s values, and our commitment to human rights in this incredibly important part of the world.”

The chief expression of this policy is the Trans-Pacific Partnership (TPP), which President Obama’s trade delegation – and yours and mine – has been negotiating for several years. The American press did lots of valuable reporting on the Asia trip, but neglected almost entirely to mention that Obama stopped at the TPP summit while in Cambodia, a country that knows a thing or two about “our commitment to human rights.”

Despite Mr. Obama’s oblique reference to “organizing trade relations with countries other than China” and the admitted centrality of this initiative to the Administration’s foreign policy (and, tellingly, the Romney campaign’s too), I have not been able to find a single news report about the TPP on any MSNBC show, normally the go-to source for the Democratic Party’s agenda. Perhaps that is because the TPP most closely resembles not a meaningful “commitment to human rights” so much as a Glenn Beck fever dream.

For all we know. This stipulation is critical because the chief fact about the TPP is our ignorance of its contents. Negotiations are being conducted so secretively that Sen. Ron Wyden (D-OR), chairman of the subcommittee that is supposed to oversee trade, is not allowed to know what’s going into it. According to the Citizens Trade Campaign, though policy-makers are to be kept in the dark about the policy until it’s been made, “approximately 600 corporate lobbyists have been named as official advisors, granting them steady access to the negotiating texts.”

The Citizens Trade Campaign’s ability to obtain and determination to leak certain provisions is the reason we know anything at all about the deal, beyond the Administration’s laughably inadequate “outlines”and “frequently asked questions” (among which, naturally, does not appear the most frequently asked question of all, “What are the terms of the deal?”). Such details as have emerged indicate that the negotiating means bear resemblance to the negotiated ends; that is, the empowerment of corporations over the democratic masses in the crafting of the deal portends the empowerment of corporations over the democratic masses in the eventual implementation of the deal.

Said trade lawyer Lori Wallach, director of Public Citizen’s Global Trade Watch, on Democracy Now this summer, just two of the deal’s 26 chapters regard trade at all, the other 24 enumerating new rights and privileges for corporations. Specifically, Chapter 12, that regarding investor rights, constitutes, in Wallach’s words, “literally a parallel system of justice,” whereby corporations are empowered to enforce the subordination of human rights, labor, and environmental protections to the dictates of profit acquisition.

“Corporations would have a parallel system of private attorneys, three of them, no conflict-of-interest laws. The U.S. and the other countries would submit themselves to the jurisdiction of this corporate kangaroo court, and these three random attorneys would have the right to order the U.S. government to pay unlimited amounts of our tax dollars to corporations and investors who, A, claim regulatory costs need to be refunded, or, B, are saying they’re not being treated well enough, regardless if the policies they dislike are the exact same ones that apply to all of us.”

If that doesn’t sound like trade policy to you, there is nothing wrong with your ears. As economist Dean Baker, writing for Comment is free, pointed out, “actual trade barriers between these countries are already very low,” and, as such, the TPP constitutes “an effort to use the holy grail of free trade to impose conditions and override domestic laws in a way that would be almost impossible if the proposed measures had to go through the normal legislative process.” Corporations, you see, have a very difficult time using the normal legislative process to advance their agenda, or something.

Remember this: when we talk about “trade,” we aren’t talking about trade; we’re talking about corporate sovereignty. The process of liberating corporations from the oversight of the states that granted their founding charters into sovereigns of their own began in earnest after the disintegration of the Soviet Union precipitated the consolidation of the entire world into one global market. As Antonio Negri and Michael Hardt wrote in Empire, which, though produced in the 1990’s, remains, to my mind, the finest conceptual framework for understanding current global social and property relations,

The activities of corporations are no longer defined by the imposition of abstract command and the organization of simple theft and unequal exchange. Rather, they directly structure and articulate territories and populations. They tend to make nation-states merely instruments to record the flows of the commodities, monies, and populations that they set in motion.

Pulitzer Prize-winner Steve Coll’s latest book, Private Empire: ExxonMobil and American Power, details the contours of a corporation at the forefront of this passage to sovereignty, wherein ExxonMobil is now in effect legally unbound and capable of executing its own foreign policy. Coll, too, cites the collapse of the USSR as the start date of this trajectory, telling Rachel Maddow,

“During the Cold War, [corporations] were part of a national system that was fighting an existential contest against another system, and so companies were much more rooted in their own states, in their home countries. And then after the Cold War, one of the things that happened is that these corporations, especially oil corporations, became dispersed all over the world, and they became more sovereign unto themselves and less tethered to their home countries.”

ExxonMobil is a harbinger of things to come. The TPP should best be seen as a codification of this transition, a crucial step in instantiating what Wallach calls “enforceable corporate global governance,”which is the scariest series of words this side of “lethal autonomous robots.”

This construct is not entirely new, of course. NAFTA’s Chapter 11 provides precedent for the TPP’s Chapter 12. Under the former provision, international corporations have raided national treasuries for hundreds of millions of dollars to date. Take an example: American waste disposal corporation Metalclad sued Mexicofor having “wrongfully refused to permit Metalclad’s subsidiary to open and operate a hazardous waste facility,”winning $16.7 million US. Or take another: American fuel additive company Ethyl Corporation won a $13 million US settlement from Canada, which it sued “alleging that a Canadian statute banning imports of the [‘highly toxic’ (PDF)] gasoline additive MMT for use in unleaded gasoline breached Canada’s obligations.”

This is as crazy as it sounds: NAFTA countries that democratically adopt environmental regulations are acting in contravention of Chapter 11 and thereby become liable for millions of dollars they have to pay to foreign corporations. The Panel of Arbitrators of the International Centre for Settlement of Investment Disputes (ICSID), the body of the World Bank that adjudicates cases like these, is made up chiefly of corporate shills. These include, just from the American delegation alone, White House Counsel for Ronald Reagan and George W. Bush Fred Fielding, George W. Bush Administration senior economic official Daniel Price, and corporate lawyers William Park, and John Townsend.

Imagine the implications on the efforts to get Genetically Modified Organisms labeled in supermarkets or to prohibit natural gas extraction by means of the hydraulic fracturing of shale deposits (fracking). Even if those movements were to achieve political success, Monsanto and Chesapeake could turn around, sue the government, win tons of money, and accelerate the harmful practices. Awesome.

The TPP’s provisions’ reach extends even further than NAFTA’s in several ways, perhaps most importantly in that the TPP is being designed as a“scalable” agreement, meaning that any country can join, as the U.S. will doubtless put them under considerable pressure to do, after its provisions have been locked in. So far, the countries involved in negotiations are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and, of course, the land where alabaster cities gleam undimmed by human tears. The extension of the deal to the entire world, plausibly only a few years off, is as good a candidate as any for the second bookend on the transition to corporate sovereignty.

Understanding the long-term effects of the erection of such a regime is impossible, but taking stock of the frontiers of capital today can give us a decent picture of how the TPP’s principles may be applied in the years just around the corner. Problematically for profit-seekers, there are very few new markets for capital to explore. That is, the whole world integrated into a single market, it is unclear how, in the long term, capital will counteract the tendency of the rate of profit to fall.

The three tactics on which the ownership class has traditionally relied most heavily – the conquest of protected territories, the inflation of consumer credit markets, and the intensification of labor exploitation – are reaching hard limits as land runs out, defaults among the global consumer base accelerate, and militancy among industrial and retaillaborersgrows. Even ExxonMobil’s days are numbered, either because its industrial output will beget the extinction of humanity or because the energy sector will rotate to renewable sources, whose ongoing production costs are extremely low once the capital goods requisite to production are in place.

Smart money, so to speak, is increasingly turning toward the immaterial products of which the digital age is composed. Above all, intellectual property is seen as the market of the future, and it is therefore unsurprising that the TPP focuses heavily on this field.

From my non-expert vantage point, it is very hard to make any sense at all of intellectual property – the ownership of ideas as financial assets – except as a framework for the artificial imposition of scarcity where there is none. This makes sense; the profit-accumulation class requires scarcity, lest exchange value evaporate, the way it does in the world of, say, torrents. Copyrights and patents, essentially monopolies granted by the government, are the only ways to monetize products which, like digital movie and music files, can be reproduced and shared at no cost.

The internet militates for the commons, which is why intellectual property proponents have fought so hard for measures like the roundly-defeated and ferociously unpopular SOPA and PIPA, attempts to impose on the digital commons the same type of wealth-extraction regime as capitalists have imposed on the material commons. A widespread and justly-held concern among critics of the TPP is that it can be used to implement laws like these by means invulnerable to democratic opposition.

Perhaps the most troubling intellectual property field is one where immaterial and material products form a nexus: medical patents. According to Doctors Without Borders, the Obama Administration is lobbying hard for the TPP to “roll back public health safeguards.” The new patenting regime which would have the effects of bidding up the cost of medicine to the afflicted and suffocating the burgeoning South Asian production centers for generic pharmaceuticals. The AIDS pandemic can be stemmed, the organization maintains, but only if inexpensive generic antiretroviral therapies can be produced to scale, the primary threats to which are the intellectual property articles the Obama Administration wants written into the TPP (PDF).

Baker points out the irony of including such provisions in what hopes to be talked of as a “free trade” agreement, noting that “stronger copyright and patent protection, along with data exclusivity, is the opposite of free trade. They involve increased government intervention in the market; they restrict competition and lead to higher prices for consumers.”

In this spirit, the Federal Reserve Bank of St. Louis recently published a paper by Michele Boldrin and David K. Levine making “The Case Against Patents,” (PDF) in which they contend that, “in spite of the enormous increase in the number of patents and in the strength of their legal protection we have neither seen a dramatic acceleration in the rate of technological progress nor a major increase in the levels [research and development] expenditure.” In other words, the one function patents serve is as a guarantor of profits for the rentier class in their possession.

That is, of course, the point. That rentier class is the one negotiating the terms of the agreement, the one seeking corporate sovereignty. Theirs are the interests for whom President Obama is acting as steward when he says that the United States is “working with countries in the region to make sure, for example, that ships can pass through, that commerce continues.”

That the President is also devoting American military might to the region raises what is, to my mind, the scariest question of all: what happens when private corporations, fully liberated from national constraints, no longer require national militaries, themselves increasingly exercised by private corporations, because they – the corporations – command militaries of their own? Put another way, how far into the future is ExxonMobil’s acquisition of a fleet of lethal autonomous robots?

It’s enough to drive one to drink, but organizing is more effective – in fact, I find a balanced approach best – as the defeat of a similar “free trade” deal, the Free Trade Area of the Americas (FTAA) goes to show. Pacts like these can be defeated, but only with considerable public outrage and steadfast opposition from nations skeptical of the benefits.

Three efforts come to mind as worthy of concerned citizens’energy. Firstly, there is supporting the 21stCentury Trade and Market Access Act, which was introduced by Sen. Sherrod Brown (D-OH), author of Myths of Free Trade. The legislation would bust open the negotiating process’opacity, requiring a host of parties to deliver regular reports to Congress on the developing terms of trade negotiations. It would also set mandatory criteria in an array of fields, including labor, the environment, and intellectual property. Secondly, there is a crowd-funded commission for WikiLeaks to obtain and reveal the rest of the negotiating text of the TPP, which, as I write this, stands at $38,419, and to which anyone can contribute. Lastly, there is good old-fashioned protest and civil disobedience, which can garner crucial publicity since, above all, by whatever means are most effective, the TPP’s existence and implications need to be brought to the attention of a lot more people.

The terms of the next set of global social and property relations are being negotiated right now. We ought to occupy a seat at the table, don’t you think?

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