30 Hours Clashing with Corporate Lobbyists on a White House Committee Showed Me How Hard "Change" Really Is
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During the past several months, I spent nearly 30 hours in meetings of a private sector committee tasked with advising the Obama administration on a particular set of international economic policies.
My seat at the table was one of many signs of the new opportunities for advocates of progressive change in Washington. At the same time, my experience was an up-close-and-personal look at how hard corporate lobbyists are fighting to make sure nothing changes.
The committee was made up of about 30 people, with one-third from labor, environmental, and other public interest groups and nearly all the rest representing global corporations, including Citigroup, ExxonMobil, and Procter and Gamble, as well as the major corporate lobby groups.
Our assignment was to review the U.S. approach to bilateral investment treaties (BITs), deals that are nearly identical to the investment chapters of our trade agreements. The topic may sound obscure. But for all those many hours, we grappled with what I see as the critical question of our time: What is the proper role of government in our economy?
Even before uncontrolled corporate greed drove the global economy off a cliff, civil society groups around the world had pointed to so-called "international investor protections" as dangerous tools in a deregulatory agenda.
In a nutshell, these rules give private foreign investors the right to bypass domestic courts and sue governments directly in international tribunals. The most controversial is the right to sue over government actions — including health, environment, and other public interest regulations — that diminish the value of an investment.
For example, Mexico had to pay off a U.S. company that had been denied local permission to build a hazardous waste facility in an environmentally sensitive area. Canada repealed a public health law in the face of a threatened lawsuit by a U.S. chemical company. The U.S. government has spent millions of dollars defending itself against claims over legitimate environmental regulations.
A growing number of international cases demonstrates how these rules threaten democracy and the public interest. Even more disturbing are the hidden costs. We'll never know how many times governments have decided to not take actions in the public interest — for fear of provoking an expensive investor lawsuit.
On the campaign trail, President Obama committed to changing these rules, stating "With regards to provisions in several free trade agreements that give foreign investors the right to sue governments directly in foreign tribunals, I will ensure that foreign investor rights are strictly limited and will fully exempt any law or regulation written to protect public safety or promote the public interest. And I will never agree to granting foreign investors any rights in the U.S. greater than those of Americans."
The economic crisis has added even more urgency. Beyond their overall deregulatory thrust, these investment agreements specifically prohibit certain policies designed to mitigate or prevent financial crisis. Surely, I thought, the time had come for some serous rethinking. The advisory committee seemed to present just such an opportunity.
The corporate representatives on the advisory committee didn't quite see it that way. Instead, as the final report to the Obama administration reveals, they fought back hard against nearly every proposal to increase policy flexibility. In fact, in several areas, they pushed to further curtail regulatory powers. Their favorite argument was that if U.S. investment deals were to allow governments more policy space, U.S. corporations would be at a disadvantage relative to foreign competitors. By that logic, the regulatory race to the bottom would never end.
There was a modicum of consensus on a few narrow issues. For example, in light of concerns over a new debt crisis in the poorest countries, we were all able to agree that the administration should at least take a look at the potential danger of international investors using these treaties to undermine debt restructuring programs.