Public Banking Activists Should Take Note of Seattle Council's Resolution Opposing TPP Fast-Track Authority

On Monday, March 30, the Seattle City Council adopted a resolution opposing Trade Promotion Authority, or "fast track" authority, of the President of the United States to implement U.S. agreement to the Trans-Pacific Partnership. The TPP, a regional trade pact between the U.S. and 11 other nations.

Seattle.jpgIn its resolution opposing fast-tracking the TPP, the Seattle City Council listed two general areas of concern. The first is with the known content of draft elements of the TPP. These elements include provisions with the potential to undermine "fair trade practices and agreements that protect American jobs, maintain enforceable labor and environmental standards, and preserve the sovereignty of America's judicial system," according to a Council press release.

In a January 2015 draft of the proposal, released via WikiLeaks, provisions are included that could give multinational corporations the power to undermine local governmental authority to create reasonable rules and regulations, including those related to environmental safeguards, future climate policy, and food safety standards. Provisions would allow foreign companies to challenge American laws by skipping the United States judicial system and instead going before an international panel of arbitrators. Seattleā€™s environmental standards, labor laws, or even the minimum wage could be challenged, and the international panel would be empowered to collect damages from American taxpayers.

The second area of concern is with the "closed-door manner in which the agreement is being brokered." This has been an area of concern among several labor, environmental, and economic justice groups around the nation. "Unlike other international trade deals," the Council press release states, "the [TPP] proposal has not been available to the public or state or local elected officials." Moreover, fast-track authority would further undermine scrutiny of the deal, potentially limiting elected officials' ability to review, debate, or amend the TPP.

As an alternative, the Council urges "that the President and Congress conduct a fully transparent and inclusive legislative process for consideration of the TPP."

Coincidentally, the Seattle City Council has been taking a hard look at public banks, and although their resolution doesn't explicitly mention them, the general proposition that the TPP could undermine national sovereignty and rule of law includes, as a subset, a threat to the implementation and operation of public banks. Since public banks are "state-owned enterprises," there is strong speculation that the TPP would allow multinational corporations to interfere with, or demand compensation for, public banking institutions and practices seen as competitors with big private banks.

Sam Knight's 2013 analysis remains the most comprehensive approach to this specific subject. According to Knight, an institution like the Bank of North Dakota would be a target because of the paradigmatic conception that "state-owned enterprises" compete directly with private enterprises. Les Leopold agrees. "Depending on the final language," he says, "it is possible that the activities of the Bank of North Dakota could be ruled illegal because 'foreign bankers could claim the BND stops them from lending to commercial banks throughout the state'."

As I argued back in January, the entire assumption that state-run financial institutions "distort" the free market ignores the way that governments routinely spend trillions of dollars of taxpayer money propping up big private banks. That kind of destructive economic activity is not seen as "interference," but government involvement in the operation of the financial infrastructure is--even though markets would work much better with public banks backing up small community banks. Such is the logic of current free trade advocates.

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