The false makeup for the TPP-11: the debate on the “attached letters”

Luciana Giotto[1]

In recent weeks, especially since the victory of the rejection of the text of the Constitution, there has been enormous pressure from the economic right on the government of Gabriel Boric to speed up the approval of the Trans-Pacific Treaty (TPP-11) in the full Senate. That last step for approval has been on hold since 2019, when the mobilized Chilean civil society managed to stop the process. Technically and politically showing the problems of TPP-11, it seemed to have generated a tacit progressive consensus that this treaty would go against any project to change the neoliberal matrix in the country.

For this reason, the announcement by some sectors of the government that this would be the moment to put the TPP back on the table has caused surprise. But what has attracted the most attention is the recent strange conviction of officials, who maintain that with some “attached letters” (side letters as they are known in English) the treaty could be “improved”. Particular focus has been placed on the “investor-State dispute resolution mechanism. That is something that we did explicitly include in our government program”, as Senator Juan Ignacio Latorre pointed out.[2].

Most notably, the government is made up of a large number of members who know the deep problems of the TPP. For example, in 2015 Carlos Figueroa, current advisor to the Presidency on international issues, took up the words of Joseph Stiglitz, Nobel Prize in Economics, about how the TPP “would harm developing nations like Chile, in areas such as the environment and digital rights[3]. For his part, the current Undersecretary for International Economic Relations, José Miguel Ahumada, stated before this Radio in 2021 that “it is not correct that the economy will be reactivated with the TPP-11 (…) the market access generated by the TPP they are minimal, as we already have a trade agreement with all the member countries”[4]. However, and despite the critical look at the treaty as a whole, the officials maintain that with the signing of the attached letters it would be possible to “comply with our government program” [5]. Is this possible?

What are the attached letters and why are they not enough to modify the essence of TPP-11

signature of side letters to free trade agreements has become an increasingly common practice, given that these treaties incorporate so many different disciplines (going far beyond simple “trade” and market access), that some States request certain safeguards for some issues .

With respect to TPP-11, the attached letter experience exists because New Zealand signed five attached letters with Peru, Australia, Brunei, Malaysia and Vietnam, to limit the access of investors from these countries to the investor- State (ISDS for its acronym in English) against New Zealand. This mechanism allows foreign investors to sue States in international arbitration forums if they understand that a public policy affects their property or profit in any way. Said mechanism is included in Annex B of Chapter 9 on Investments of the treaty.

What can we conclude from the New Zealand experience? Undoubtedly, this country managed to restrict access to a mechanism that is detrimental to the state’s regulatory capacity. This ISDS mechanism has been the reason for lawsuits against Latin American countries on 327 occasions, according to a recent report[6]. However, while the enclosing letter mechanism is valid, its practical effectiveness is undermined by a number of factors: New Zealand already had other treaties providing ISDS to investors, including bilateral investment protection treaties with some of these countries; investors have the ability to bypass this type of restriction by doing what is known as “treaty shopping”, where they choose which treaty to use to sue a State; and third, the possibility of new countries accessing TPP-11 in the future, such as Great Britain, which has begun formal negotiations to join the bloc.

So, are the accompanying letters enough to modify the essence of all the TPP? The answer is no.

The TPP is made up of 30 chapters. Of these, only 7 chapters refer to specific trade issues (trade in goods, rules of origin, sanitary and phytosanitary measures, among others). A specific chapter on Investments also includes the aforementioned ISDS mechanism. So what do the other 22 chapters include? They include commitments on public procurement, services, electronic commerce, telecommunications, intellectual property, financial services, regulatory coherence, the environment, and labor issues. The number of disciplines covered turn the agreement into a kind of octopus that traps everything in the public space that can be converted into private, giving free action to companies and pushing the primary-export model, and restricting the action of public policy in all the sectors mentioned.

The impacts that TPP-11 will have then must be analyzed in an integral way, not by chapters. For years now, from various academic and social sectors, we have been explaining that agreements such as the TPP are negative in their entirety.[7]. Nothing changes that TPP-11 is the worst free trade agreement in history; not even restricting access to the ISDS mechanism for foreign investors. As the officials themselves maintain, there is no way that the treaty will collaborate in the construction of a different development model for Chile, one that pushes levels of industrialization while respecting human, labor and nature rights.

Relying on these attached letters is then not only a technical error, but a tremendous political mockery. It seems incredible that after so many years of debate we have to bring up technical arguments again. There is nothing that has not already been discussed about TPP-11. But as we see, the problem at this point is not technical, but political. We therefore hope that the government “resists archiving” and lives up to the circumstances of what its own citizens demanded in the 2019 protests: no to TPP-11.

[1] Luciana Ghiotto is a career researcher at CONICET-Argentina, based at the Institute of Political Studies of the National University of San Martín (UNSAM). She is an adjunct professor of International Political Economy. She is a collaborator of the Transnational Institute (TNI) and coordinator of the Better Latin America Platform without TLC.

[2] https://www.cnnchile.com/pais/latorre-tpp11-votos-senado-aprobacion-independiente-postura-apruebo-dignidad_20220915/

[3] https://www.youtube.com/watch?v=pMd_Ssyr3kg

[4] https://radio.uchile.cl/2021/01/10/jose-miguel-ahumada-por-tpp-11-la-salida-de-mas-libre-comercio-en-un-contexto-en-el- which-trade-is-reduced-is-not-sustainable/

[5] https://www.subrei.gob.cl/sala-de-prensa/noticias/detalle-noticias/2022/09/12/ministra-urrejola-y-subsecretario-ahumada-exponen-estrategia-de-side-letters- y-di%C3%A1logo-por-tpp-11-al-comit%C3%A9-pol%C3%ADtico

[6] https://isds-americalatina.org/

[7] https://www.eldesconcierto.cl/nacional/2022/09/17/las-9-razones-de-la-grupacion-chile-mejor-sin-tlc-para-rechazar-el-tpp-11.html

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