> This shit is important for increasing investor confidence in countries with nascent court systems and political systems used to corruption and nepotism.

Isn't it up to a country to make itself attractive to investors, i.e. by not pulling all that shit?

Every country's leader will tell foreign investors that there is no chance that their business will be regulated differently than their nephew's competing in the same space. Investors can trust them a lot more if the country's continued enjoyment of increased foreign demand for their exports lies in the balance.

"Isn't it up to a country to make itself attractive to investors, i.e. by not pulling all that shit?"

Yes, but it would defeat the purpose of a trade agreement.

Moreover, if country ABC signs the agreement, indicating 'they won'd do this BS' - and then they actually do do it - then they get access to other markets while cheating.

The agreement is supposed to prevent countries from cheating.

It has a side effect of preventing governments from doing things they ought to do - for example, punishing international companies from polluting etc..

It's a tricky problem.

There should be clauses that allow governments to make laws to stop companies from polluting etc.

0: When my nation decides to reduce smoking in the population by significantly increasing the taxes on cigarettes, companies in other countries that want to sell cigarettes here can go get stuffed.

Why should a foreign company decide what is and isn't legal in my country? Why should a democratic country, whose government is beholden to the people, have to kneel before a corporation, beholden to foreign wealth? Why does a corporation have rights that override the democratically-determined laws of a foreign country?

Not to mention your spin doctoring - 'investor confidence' is the good guys, and 'court systems and political systems' are just corruption and nepotism (because as we know, corps don't have either of those in abundance...)

>When my nation decides to reduce smoking in the population by significantly increasing the taxes on cigarettes, companies in other countries that want to sell cigarettes here can go get stuffed.

Cool. You and the TPP are in agreement then.

>Why should a foreign company decide what is and isn't legal in my country?

It shouldn't, beyond the general representation it's due. I'm not sure where you're getting this idea that corporations would have carte blanche to dictate laws from. Certainly not from reading the actual agreement.

What is covered by the mechanism is pretty simple. You can't regulate foreign owned companies differently from domestic ones. You can't appropriate funds or capital or freeze accounts without due process. You can't deny access to local courts.

And that's about it. What's more, your suit can be thrown out if there is a public health, art, indigenous culture or a number of other concerns (this is dependent on country). Tobacco companies are banned wholesale.

Yes, tobacco is explicitly excluded because it was foreseen what would happen if they weren't. People went to the mat to exclude it specifically. Why would tobacco companies have to be specifically excluded if the TPP didn't offer a mechanism for such abuse? What prevents other industries from using those mechanisms?

You are indeed correct in that I haven't read the 2700-page document. And to be frank, I highly doubt your own claims that you read it twice. I also doubt the characterisation of this extraordinarily lengthy document argued between multiple countries for the better part of a decade as "pretty simple".

95% of the bulk of the document is endless tariff elimination tables. I hope you'll forgive me that I glossed over them. If you're concerned about the ISDS mechanism the relevant parts are in Chapter 9, with some exceptions listed in Chapter 29.

Regarding the tobacco exclusions, it seems punitive to me, they were definitely being bad actors under previous ISDS mechanisms. You're right, though, the public health interest carveouts in the TPP's ISDS implementation (based on a recent Canadian BIT) would provide sufficient tools to allow unfettered regulation without needing to ban them wholesale. These carveouts were not present in the BIT in the PM vs Australia case, for example.

So why were tobacco bad actors? In the Australian case, they launched a suit claiming that by enforcing plain packaging Australia was in essence, appropriating their brand, packaging and associated goodwill. You may think they shouldn't win this argument, I may think they shouldn't win this argument, but regardless, they deserved to have their case heard fairly. They of course lost with costs.

The problem was that PM also quite likely believed that they wouldn't win, and was instead using the process to delay plain packaging legislation in other countries such as Ireland who were waiting on the case results. This would be a clear cut case of abuse, and participating in poor faith.

As per what would prevent other companies from attempting the same thing? Fear that the same thing would happen to them. Because of likely abuse of the ISDS system, tobacco would now have no international recourse whatsoever if governments flat out nationalize their factories.

> This shit is important for increasing investor confidence in countries with nascent court systems and political systems used to corruption and nepotism.

while this is true there are already mechanisms built to counter this uncertainty, i.e. you can get insurance for operating in "dangerous" countries.

How much insurance would Apple require to cover an eventual nationalization and forced shutdown of all of its plants in China? (Purely as an example)

Without a body that can invoke broad sanctions, countries can play chicken with each other. Regimes can simply decide to seize company assets, and hope the offending parties don't cause enough of a real ruckus.

Of course this lowers investor confidence long-term. But governments that do that are rarely interested in this. They're more interested in lining their own pockets with personal wealth.

These sort of trade frameworks build a mutually-assured-destruction setup, so that any BS can get swiftly acted upon by a "neutral" party. And at the end of the day, it allows for stronger rule of law, which is better for most parties. The ones that end up the worst off are the kleptocrats.

Airliners can buy insurance for plane crashes. But most of them would rather planes just not crash.

And yet there were plenty of plants in China before it joined the WTO, right? The uncertainty just gets factored into business.

Sure, ISDS can help a country build more trust, and lower the cost of foreign investments, but it's not a panacea.

Plus, countries would still play chicken with each other. If China decides to seize Apple's plants, what should the US do, declare war? Should France and EU terminate all foreign deals with Egypt due to it not wanting to pay for the Veolia ISDS decision?

because you have the WTO, the US can declare retaliatory tariffs within a generally accepted framework.

There's less debate and uncertainty about the legitimacy of the retaliation, and its better understood than the advanced kremlinology required to decipher some other things.

Not many things are panacea, but things like the WTO have been pretty useful at avoiding trade wars IMO.

Apple doesn't need that insurance (not that anyone could cover it anyway). They have $200B in liquid funds, which they can use to set up shop elsewhere.

> Regimes can simply decide to seize company assets

And they can ignore the provisions in a treaty they sign, too. If a country is willing to start seizing assets and taking the usual penalties in business for doing so, the TPP isn't going to mean much.

Treaties are only as powerful as their ability to be enforced (whether that's militarily, politically, or economically). Have a look at the state of the 19th C treaties between the USA and various Indian nations for a crystal-clear example of this.

Such insurances simply spread the risk of losses due to this kind of corruption among multiple entities. They don't provide incentives to the country to reduce the risk itself, which is the key differentiator.

Of course they do, because they increase the cost of doing business there.

And it does it with a far lower cost to sovereignty.

>Of course they do, because they increase the cost of doing business there.

This misunderstands what incentives are at play for politicians with low accountability in developing countries. The cost of corruption is borne by these investors and domestic consumers, but the benefit of it is entirely concentrated in the political class. Therefore the opposite incentive exists, and the system becomes more resistant to any changes towards more inclusive institutions.

>sovereignty.

Meaningless buzzword. If a nation no longer favours the basket of benefits and obligations, it is entirely free to leave.