Swimming with Sharks?

Trade agreements are always a mix of benefit and risk. So the calculation of net benefit or risk is very important. The benefit of this proposed agreement is presumed to be a much wider market with a considerable relaxation of trade barriers for those who agree to partner inside the agreement. It does not mean those outside the agreement cannot trade with those inside the agreement, it just means the trade barriers will still exist against those outside the agreement.

In recent trade agreements the most difficult clause to swallow seems to be the mediation of potential loss of profit against the countries that enact laws, regulations, or policy changes that have an impact on the potential profit of corporations. Even if the sovereign power decides the change in law or policy is an environmental necessity, the presumed profit (opportunity) loss to corporations is not deemed to be equally necessary. Instead the corporation presuming to have lost the profit can “sue” under the trade agreement by appealing to an internal tribunal or panel that has what amounts to absolute power to judge the case with no transparency of process and little if any recourse to appeal. This essentially gives the equivalent of sovereign power to corporations. In fact, it severely endangers any climate change activity to limit the extraction or use of fossil fuels. For example TransCanada is suing the USA for presumed profit loss as a result of cancelling the Keystone pipeline – the suit could be as high as $20 billion. That behaviour could be significant disincentive for a small country to enact laws that a large multi-national corporation could challenge through TPP.

In this TPP agreement, there is a great deal of verbiage about the environment, but it is largely statements of support that are undermined by the internal processes. In the case of biodiversity and ecological goods and services, it is clear the writers have no idea what these terms actually mean. For these and pharmaceutical trade ambitions, the idea is to exploit species that have biologically active properties. The only protection offered is appeal to CITES when the population level is low enough to get them listed on the Red List of endangered species. Even then there is no proscription against exploitation of the Party wishes to exploit them to extinction locally – and if the species is unique to the Party’s boundaries, to complete extinction in nature.

The statements on fisheries being an over-exploited resource are correct, but there is no mechanism to limit fisheries in areas outside a Party’s jurisdiction. Thus the “partnership” is silent on how to manage open ocean fisheries – a modern version of the “tragedy of the commons.”

My letter to the Liberal Party of Canada regarding the TPP follows:

Dear Global Affairs Canada (Ministers Stéphane Dion, Christia Freeland, and Marie-Claude Bibeau),
cc to Justin Trudeau Prime Minister of Canada

Thank you for the opportunity to comment on the TPP. I will restrict my comments to areas of my own expertise; PhD level understanding of ecology, evolution, biodiversity, biology in general, application of policy from science bases, environmental assessments, indigenous knowledge, climate science and related fields, as well as informal learning and documentary filmmaking and broadcast.

As a general comment, I find this agreement does not provide enough capacity for Canada to be able to manage its own business enterprises when they engage in trade with other countries under this agreement. I describe the specific items I find most troubling.

If the dispute resolution system defined under Chapter 28 cannot be redefined sufficiently to provide some mechanism to define penalties other than an internal panel – which in the extreme could bankrupt a country – including Canada – then Canada should not become party to this agreement.

Some of my credentials and activities are available at my website: www.kivu.com. A brief CV is available under the section labelled “About Us.”

Yours sincerely,
Alan R. Emery PhD

Hereunder are my comments:
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Article 7
1) Offers no guidance on levels of protection relying instead on mutual agreement between the parties. This means that a risk to any physically adjacent nations cannot be managed by that sovereign nation.
2) Requires that any security measures be limited to “no more than is necessary” thus “the precautionary principle” cannot be applied if greater risk is suspected but not proven. This Article is written to maximize trade opportunities and avoid caution. The result is potentially dangerous.
3) Allows for disposal of infected goods but only if the infection can spread. This means that an infection that does not spread but that can be harmful locally is by implication not permitted to be disposed of.
4) Does not require infected goods to be disposed of, nor does it afford penalties for shipping infected goods to another Party – not an acceptable policy.
5) Allows Chapter 28 dispute settlement which means that penalties can be applied to the nation disposing of the goods if they are not spreadable pathogens. This will encourage the sale of infected goods that are dangerous only locally.

Article 8
1) Sections 10 through 12 imply that marketing regulations are limited to the technical aspects of the product and not to the accuracy of the marketing materials. This should be modified to allow any nation to require non-misleading marketing, and to disallow marketing that implies safety or efficacy greater than is inherent in the product. Further these regulations should not be subject to chapter 28.
2) In all instances the only requirement is for Parties to “consider” scientific or technical guidance, but the Parties are not bound to abide by the scientific or technical findings. The implication here is that such recommendations can be dismissed after consideration.
3) Section 8d under cosmetics allows a product, once granted marketing authorisation, to marketed indefinitely even if it is later found to be deleterious to health.
4) Sections 8 through 11 under Cosmetics appear to permit unsafe products to be marketed because no internal testing is allowed by the receiving party – the receiving party must rely on the manufacturer’s marketing material sight unseen.
5) Under proprietary formulas, it would appear that legal action cannot use the formulations to prosecute if such use reveals the proprietary information. That could be dangerous.

Article 18
1) Under “Principles,” section 18.3.2 is so non-specific that just about any action that restricts trade or adversely affects transfer of technology by using copyright for parts of works is not allowed. This is in the grey area of “fair use,” which in international dealings is often stretched well beyond reasonable limits – this section is not well-worded.
2) Similarly article 18.5 with its caveat within the provisions of this chapter is far too open to misuse. The chapter wants to foster diffusion of knowledge etc. while fostering competition. By emphasizing either side of that equation, a reader can demand relaxation of regulations.
3) Article 18.16 does not provide for the necessary involvement of the indigenous holders of the traditional knowledge to be part of the determination of what is intellectual property and to whom the property belongs – to the state or to the native community.
a. The premise in this section is to fostering cooperation among Parties through the exchange of traditional knowledge, genetics, or works. The section ignores the fact that the Party may not own the copyright, that instead the copyright belongs to the originators – the indigenous peoples.
b. This section implies that the only relevant intellectual property is genetic resources – no doubt because from a pharmaceutical perspective; it should be broadened, however, to include works of traditional knowledge and proprietary knowledge contained within traditional knowledge.
c. This section discusses only patentable items. Not all intellectual property is patentable but much that is non-patentable should remain copy restricted. This should be clarified especially because of the increasing theft of indigenous designs and understanding of natural processes.
d. Patent examiners for indigenous genetics and works should, by statement within this Chapter, either be indigenous Elders themselves, or be trained and certified by indigenous Elders.
e. There should be some provision within the section to prevent bio-poaching by multi-national corporations in indigenous territories or lands used by indigenous peoples.
4) Article 18.37 is too loosely worded.
a. In section 2 the phrase “a Party may limit those new processes to those that do not claim the use of the product as such.” Is too ambiguous and allows no other limitation.
b. Section 3 allows exploitation by an external Party if the external Party claims that while such exploitation may be detrimental, it is not “serious” and that the restriction is in any case used merely because a previous law exists within the country’s jurisdiction. In other words the law of the land protecting itself can be challenged on the basis that it is not a serious problem if exploited and that the existing law is irrelevant because the damage is not serious.
5) Article 18.48 deals with pharmaceuticals and has no provision for safety testing – only a requirement to process applications as quickly as possible including the relaxing of rules and regulation on marketing. This is a very bad idea given the history of and the excessive haste often displayed by Big Pharma.

Article 20
1) Article 20.2 section 3 appears to invalidate almost all the provisions that a Party can set its own laws and regulation for the environment. This section would allow a second Party to argue that the intent of a law was not just an environmental law, but that it establishes a restriction on trade. This section should immediately be struck from the TPP. If a country has a declining biodiversity and decides to restrict trade in any organism it wishes, the second Party, on the basis of this section, can argue that it interferes with their ability to trade in those organisms. The Party owning the biodiversity should be able to restrict that as freely as it wishes, not as a trade barrier but as insurance against loss of biodiversity, a measure only the Party can make. Similarly if for example a Party wishes to reduce its fossil fuel use to zero and wishes to reduce its exploitation of oil and gas reserves to zero as a means to combat climate change, there should be no recourse on the part of foreign owners of corporations with licenses to extract oil to claim the law produces stranded assets on which they would have been able collect earnings.
2) Article 20.3 argues that the only rationale for environmental protection is sustainable development. Sustainable development may not, however, be the desire – it could instead be simple conservation and protection.
a. section 5 contains another enabling phrase that gives the judgment of “reasonable” to the second Party rather than being able to define reasonable for the first Party.
3) Article 20.5
a. Section 1 should include the phrase “or eliminate” as well as control and production and consumption of…
b. Needs a section to define penalties for Parties that engage in illegal trade of ozone depleting products such as suspension from the TPP until the trade is brought under control
4) Article 20.10 is exceptionally weak and demonstrates no intention to require, enforce, or otherwise direct or guide corporate responsibility toward the environment. Given that the entire Chapter is supposed to protect the environment in the context of trade and given that corporate trade from production to sale and disposal is the main culprit for environmental damage, this is nowhere near a strong-enough statement.
5) Article 20.11 has a similar tone. The section states that is it is entirely voluntary for corporations to have policies that support the environment, but that these policies should not “unnecessarily” constrain trade. These mechanisms for delivering corporate responsibility are all seen as within market forces promoting competition and innovation. This has never worked and never will work. Market forces have no responsibility to society. The overall implication is that the Parties do NOT agree that enforcement of ethical behaviour on the part of corporations is permitted under the partnership agreement.
6) Article 20.12 while commendable also implies that frameworks to constrain other Parties from carrying out activities such as production or trade within the boundaries of another Party can do so only within the specific laws of the offended Party; that is to say, the offended Party cannot constrain by policy or practice unless there is a formal law or regulation. Given that corporations can sue Parties for loss of potential profit for any new laws or regulations, this means that inappropriate environmental behaviour on the part of corporations that is not already covered by laws or regulations cannot be controlled. Furthermore it means that the implementation of any new laws or regulations by Parties concerning corporate environmental behaviour may be enacted only if corporations agree to the enactment. Thus corporations under this section combined with Chapter 28, can strip Parties of the ability to act as sovereign nations.
7) Article 20.13 is another example of an intention to exploit while recognizing that, while biodiversity is a “nice thing,” nonetheless it is important to be able to exploit it. The wording clearly indicates a misunderstanding of the word “biodiversity” to mean “the organisms within a Parties boundaries.” The real meaning of biodiversity is the number of different species and their population sizes. The importance of biodiversity is to maintain the ecological integrity of the environment. One cannot for example (see section 2, 3, 5,6a) “use” biodiversity. Biodiversity is a concept, not a thing.
a. It is clear that the aspect of interest in this Article is the potential to exploit species that have useful products. The number of “useful” species is greater than it is in others, so the intent of this Article is to encourage exploitation by corporations of the greater numbers in other countries by allowing sharing of access to the species.
b. The only protection a country can have at this juncture is to immediately enact laws (before this agreement comes into force) to specifically allow the Party to protect the and enhance the numbers of species within their boundaries and to effectively manage and control their use by anyone. Years ago, as president of the Canadian Museum of Nature, I enabled a research team to use Canada as the first country study in the world. In this study we defined the concept of ecological services and made the first efforts to provide a valuation of those services to Canada. That format should be used to create an up-to-date register of the value of the many ecological services to Canada. This provides a means to evaluate damage and benefit. It also underscores that ecological services are also not available for sale or trade because they are an inherent effect of the existence of a particular biodiversity in a specific ecological context. The effect cannot be extracted and traded. It can only be achieved by the maintenance of biodiversity within a Party’s boundaries.
8) Article 20.14 (as with Article 7) offers no provision for disincentives to Parties introducing invasive alien species into the territory of another Party. Yes, it suggests acting together in a cooperative way to eradicate and control once the damage is done, but there is no reason why one Party will feel the need to protect another Party under this Article.
9) Article 20.15 is so weak as to be meaningless. In effect emission will continue at the whim of corporations and the definition of “low” is left to industry. For example at the present time, “low” emissions are considered by industry to be an aspect of natural gas. Accepting such a definition would ensure that global warming continue unabated. If the intent of the Paris Agreement is to be met, there must be no transition to a low emissions economy, it must be to a zero emissions economy within a very few (35 to 50 years) years.
10) Article 20.16 has the potential to do good, but it is not in a form to accomplish anything much. At the present time, almost every commercial species in the ocean is overexploited. To see a model of what will happen, learn the lessons of the Great Lakes fisheries. Where once the fishery relied on large high-quality food fish, the overexploitation and pollution of the lakes has reduced the fisheries to what would in the past have been considered trash fish. In one example, a complete biological extinction occurred with the blue pike. Once the dominant species in the Great Lakes fisheries, it is now completely extinct – not just in the fisheries, but forever gone from nature.
a. Section 2 recognizes the problem, but then in subsequent sections offers no solutions. Most countries at least in law seek to protect their fisheries by science-based management, but in practice almost none have succeeded for any important species.
b. The intent of sections 5, 6, 7, 8, 9, 10, and 11 on subsidies is a means of removing trade barriers on overexploited fisheries while cloaking the effort as a removal of subsidies. This will further encourage their exploitation until they are extinct from the fisheries, if not from nature. In fact what should be recognized in this trade agreement is that trade barriers should be erected over-exploited species to limit their further exploitation. If the overexploitation is merely seen as a continuing decline in stocks, overshoot has already been reached and disaster will follow unless all trade in that species is ceased until it has had a chance to recover. At the present time to be limited in catch a species must come under the Red List (IUCN) of endangered species. And even then the limitation is voluntary by country. This Article is not going to work to slow the decline of fisheries stocks. The next Article invokes CITES, but CITES should not be the mechanism, it is too late at that point.
11) Article 20.17 illustrates the underlying problem with the intersection of economy and biology. The philosophy is well-rooted and goes back centuries to Adam Smith (Wealth of Nations) in which he pronounces that nature has no value until it is worked by the hand of man. The opening sentence in this article ends with the sentiment that the illegal trade of species “reduces the economic and environmental value of these natural resources. In fact what happens is that the capacity of the world to support human civilization is considerably reduced by these activities because of their profound impact on the ecological services on which we all rely for our health and food.
a. For a Party to allow things to get so bad that that the Red List from CITES must be used to control the situation means that the Party has essentially lost control of its own resource management and the resource exploitation is now in the hands of thieves or eve of legal corporate activities.
b. Section 5 mentions sanctions, but the sanctions are not defined as from all Parties against the offending Parties. By leaving the sanction undefined, it is implied that sanctions would apply to a corporation. This is one area where erecting trade barriers and enforcing them by suspending Parties from the agreement for violations would be effective. If offending Parties were suspended, they would no longer have access to the trade amongst the other Parties.
c. Section 7 is good and can effectively be expanded to encourage law enforcement networks.
12) Article 20.18 on Environmental Goods and Services is essentially gibberish. “Environmental goods and services” are a biological phenomenon in ecological terms; they cannot be lifted or extracted from the system without destroying the phenomenon. I presume the intent is to deal with environmental “goods” but that is also not made clear. To illustrate the point, ask yourself what is an example of an environmental goods and services that you could sell.
13) Article 20.19 is a good thing to have even if it has no power or ability to do anything other than review and recommend.
14) Article 20.23 on dispute resolution is essentially useless with no powers to address any substantial issues. Calling on CITES to offer advice is a good idea, but there is no mechanism to follow through.

Article 28
1) By requiring all Parties to subject their trade practices to complaints by other Parties through an arbitrary panel, the panel strips the rights of a Party to govern its internal business affairs or to appeal to regular justice and court systems where transparency and representation of the cases are mandatory. The best course of action would be to withdraw from this Article entirely and require resolution in normal judicial and court proceedings.
a. In this Article lies the basis for catastrophic decisions by the internal panel. For example, in the case of Canada and the tar sands, many multi-national corporations have invested money in anticipation of continuing access to the oil contained in the sands for many decades to come. The value of these carbon-based assets in the tar sands if fully developed is in the $ trillions. In the wake of the Paris agreements and following up on the best scientific evidence, it is clear that the world must move to zero carbon emission within a very short while. Should Canada decide to enact laws that constrain the development of the tar sands to zero, the normal course of action would be to negotiate or impose a compensation package to the owners of the properties, which would be overseen by the laws of the land in an internal federal or provincial court. In this section, the normal course of action is removed from the Party and placed in the hands of a panel set up by a group of people who at base have pecuniary interests, not in the interests of long-term world ecological health. Furthermore the actions of the panel are not transparent and appear to have no built in appeal system. The judgement could be that Canada should pay the value of the stranded oil assets to the corporations currently licensed to extract the oil. Should that happen, Canada would be bankrupted. And there appears to be no alternative – even withdrawal from the TPP agreement is not provided in such instances of disastrous penalties. One could argue that such an outcome is not probable, but on reading the text, one cannot argue that such an outcome is not possible.
b. Article 28.21 appears to argue that an offended or potentially damaged party cannot protect itself outside of the TPP by enacting internal protective laws against another Party. This once again strips sovereign rights from a nation and delegates them to the panel within TPP. This is a disastrous idea.
c. See also the Annex 1 Schedule of Canada wherein the investment of a foreign company in Canada is effectively established as an entity under this agreement, further enhancing the powers of the panel to decide loss of potential revenue. This annex also removes authority from provinces which, in Canada, normally have authority over internal resources, and delegates that authority to the panel for dispute resolution.

Article 29
This Article deals with exceptions but is missing two vital exceptions:
1) The article should read: “Nothing in this Agreement shall be construed to:
a. preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of environmental safety or security, or the protection of its own essential environmental health and security interests.
b. preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of public health safety or public health security, or the protection of its own essential public health and public health security interests.
2) Article 29.8 the word “should” must be replace by “shall.”

Annex IV
This is a list of state-owned or state designated monopolies. It is unclear what the purpose of this list might be. The implication is that these entities are not subject to the agreement in the sense that they may, without limit, provide subsidies or produce products that are not intended to be in fair competition with the free-trade concept. That implication however, is not made explicit and it should be. Also there should be a provision to expand this list indefinitely without penalty should Canada wish to nationalize aspects of its economy.