Department of Homeland Security Appropriations Act, 2015 -- Motion to Proceed -- Continued

Floor Speech

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Ms. WARREN. Mr. President, the United States is in the final stages
of negotiating the Trans-Pacific Partnership, a massive free-trade
agreement with Mexico, Canada, Japan, Singapore, and seven other
countries.

I come to the floor today to ask a fundamental question: Who will
benefit from the TPP? American workers, consumers, small businesses,
taxpayers, or the biggest national corporations in the world?

One strong hint is buried down in the fine print of the closely
guarded draft. The provision, an increasingly common feature of
international trade agreements, is called investor-state dispute
settlement, or ISDS. The name may sound mild, but this provision
fundamentally tilts the playing field further in favor of big
multinational corporations. Worse yet, it undermines U.S. sovereignty.

ISDS allows foreign companies to challenge American laws and
potentially pick up huge payouts from taxpayers without ever stepping
foot in an American court.

Here is how it works. Imagine that the United States bans a toxic
chemical that is often added to gasoline. We ban it because we believe
it is dangerous for people's health or harmful to the environment. If a
foreign company that makes this toxic chemical wants to sell it in the
United States, it would normally have to challenge that in a U.S.
court. But with ISDS, the company could skip the U.S. court and go
before an international panel of arbitrators. If the company wins, the
ruling cannot be challenged in U.S. courts, and the arbitration panel could require the American taxpayers to cough up millions, even billions, of dollars in damages.

ISDS has the power to impose gigantic fines, but it doesn't have
independent judges. Instead, highly paid corporate lawyers go back and
forth between representing corporations one day and sitting in judgment
of corporations the next day.

Now I don't know, maybe that makes sense in an arbitration between
two corporations, but not in cases between corporations and
governments. We should have real doubts about how likely it is that a
lawyer looking to attract high-paying corporate clients will rule
against those corporations when it is his or her turn to sit in the
judge's seat.

It is also a real problem that only international investors--only
international investors--get to use these courts, investors that are,
by and large, large corporations.

If a Vietnamese company with American operations wants to challenge
an increase in the U.S. minimum wage, it can use ISDS, but if an
American labor union believes the Vietnamese companies are paying slave
labor wages in violation of trade commitments, the union has to try to
wind itself through the Vietnamese courts. Good luck with that.

These rigged pseudocourts were created after World War II because
investors worried about putting money into developing countries where
the legal systems were not as dependable. They were concerned that a
corporation might build a plant today only to watch a dictator
confiscate it tomorrow. ISDS was born to encourage foreign investment
in countries with weak legal systems.

Now, look, I don't know if these justifications made sense back then,
but they sure don't make sense now. Countries in the TPP are hardly
emerging economies with weak legal systems. Australia and Japan have
well-developed and well-respected legal systems, and multinational
corporations navigate those legal systems every single day, but ISDS
would preempt their courts too. And to the extent there are countries
that are riskier politically, market competition can solve that
problem.

Countries that respect property rights and the rule of law, such as
the United States, should be more competitive. If a company wants to
invest in a country with a weak legal system, then it should buy
political risk insurance, which is available.

The use of ISDS is on the rise. From 1959 to 2002, there were fewer
than 100 ISDS claims worldwide, but by 2012 alone, there were 58 cases.
That was in 1 year.

Here are some examples of recent cases under various treaties with
ISDS provisions:

A French company sued Egypt because Egypt raised its minimum wage.

A Swedish company sued Germany because Germany decided to phase out
nuclear power after the Fukushima disaster.

A Dutch company sued the Czech Republic because the Czech Republic
didn't bail out a bank the Dutch company partially owned.

American corporations are getting in on the action too. Philip Morris
is trying to use ISDS to stop Uruguay from implementing new tobacco
regulations aimed at cutting domestic smoking rates.

ISDS advocates point out that so far this process has not hurt the
United States. Our negotiators, who refuse to make the text of this
trade agreement public, claim it will include a bigger, better version
of ISDS that will protect our ability to regulate in the public
interest.

But with ISDS cases exploding in the last several years and more and
more multinational corporations headquartered abroad, it is only a
matter of time before such a challenge does serious damage here.
Letting a panel of arbitrators replace the U.S. legal system with a
complex and unnecessary alternative on the assumption that nothing
could possibly go wrong seems like a really bad idea.

This is not a partisan issue. I don't often agree with the
conservative Cato Institute, and I suspect they don't often agree with
me, but this morning the head of Cato's trade policy program said that
ISDS ``raises serious questions about democratic accountability,
sovereignty, checks and balances, and the separation of power.'' He
went on to say that these concerns about ISDS are ``one[s] that
libertarians and other free market advocates should share.'' I think
that is right.

Conservatives who believe in American sovereignty are outraged that
ISDS shifts power from American courts as envisioned by our
Constitution to unaccountable international tribunals. Libertarians are
offended that ISDS effectively offers a free taxpayer subsidy to
countries with weaker legal systems, and progressives should oppose
ISDS because it allows big multinationals to weaken labor and
environmental rules.

Giving foreign corporations special rights to challenge our laws
outside of our legal system is a bad deal. So long as TPP includes
investor-state dispute settlement, the only winners will be
international corporations.

I thank the Presiding Officer.

I yield the floor.

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