Note: The following blog was submitted as a commentary in mid-June to the Minneapolis Star Tribune, which declined to print it.
Peter Orszag’s attempt to discredit Senator Elizabeth Warren’s leadership of the movement against fast-track Trade Promotion Authority and the Trans-Pacific Partnership (TPP) agreement neglects to disclose his financial interest in TPP and to accurately characterize the TPP (“So trade with Asia is OK if it benefits your own port?” Star Tribune, June 15, 2015).
Orszag identifies himself accurately as the former Director of the Office of Management and Budget under President Obama. But he left the Obama administration in 2009 to become Vice Chairman of Investment Banking and Corporate Strategy and Chairman of the Financial Strategy and Solutions Group at Citigroup. Citigroup received more than $2.6 trillion in ultra-low interest Federal Reserve Bank loans from 2007 to 2010 to save it from bankruptcy (according to a Levy Institute study by James Felkerson).
In May, the banking group pled guilty to a felony for price-fixing billions of dollars of trades in foreign exchange rates. However, the Securities and Exchange Commission voted to waive felony penalties to allow Citigroup and other felon banks to continue to do business as usual. Neither Orszag nor any Citigroup executive was personally charged with a crime, but his strategic role in defending Citigroup drives the underhanded animus of this screed.
Citigroup is among the publicly rescued Wall Street banks fiercely opposing the financial institution reforms championed by Senator Warren. Citigroup is the former employer of several Obama administration officials, including current U.S. Trade Representative Michael Froman.
Orszag’s attack on Senator Warren for her support of a bill to enhance Boston harbor infrastructure and for her opposition to the TPP, implies that the TPP is about nothing more than shipping goods through the Panama Canal to the Boston harbor. Nothing could be further from the truth.
Senator Warren knows the content of TPP, because she has read it under armed guard, but is prohibited from divulging its contents to the public under the draconian Obama administration rules for access to the negotiating texts. However, from some TPP drafts released through Wikileaks, we know that just five of 29 planned or completed chapters concern the trade of goods Orszag discusses.
The rest of the TPP chapters, when shorn of bland language about “regulatory cooperation” and “harmonization,” are about submitting all U.S. and sub-federal legislation, regulation, regulatory implementation, enforcement and court rulings to tests about their “necessity” to determine whether they are “least trade restrictive” or whether they could potentially harm the anticipated profits of “investors” under TPP. All U.S. law rules could be subject to cost-benefit tests before their implementation, a favorite Wall Street tactic to delay and, if possible, crush bank reform.
In the case of disagreement about whether governments should modify or repeal myriad “trade-related” or “investment-related” laws and rules, the TPP chapter on Investor State Dispute Settlement (ISDS) empowers foreign investors to sue governments. Governments are granted no powers to sue foreign investors for environmental or public health damage, violations of human rights or financial damage resulting from the investments. For example, under a bilateral ISDS, Phillip Morris is suing Australia, a prospective TPP member, for a cigarette packaging rule that the transnational tobacco firm alleges will reduces its profits. But Australia may not sue Phillip Morris under the ISDS.
Indeed, it would be easy to find a “foreign investor” in any of Citigroup’s hundreds of affiliates in TPP countries who could use the TPP to overturn part of the “Dodd Frank Wall Street Reform and Consumer Financial Protection Act of 2010” and/or to prevent or weaken its implementation. Orszag would get a big bonus for helping to design the strategy for such a financial regulatory overthrow of the United States.
And if you don’t think that Congress can move quickly to repeal a law, the very popular Country of Origin Labeling (COOL) provision in the Farm Bill was repealed in the House of Representatives just 48 hours after the World Trade Organization issued a contradictory ruling declaring part of COOL implementation to be WTO inconsistent. Big Ag failed four times to get U.S. courts to declare COOL illegal, but succeeded in getting the law declared WTO illegal. Passing the TPP would mean that public interest laws will be throttled so that corporations and banks like Citigroup can prosper, that is, until the next bailout. Passing fast track TPA, which prohibits Congress from amending TPP and subsequently protects them from casting politically unpopular votes against amendments, will make TPP’s approval more likely.
