With the election of Donald Trump to the presidency of the United States, the death toll began to sound for the, already flailing, Trans-Pacific Partnership.
It was a deal that many conservatives and libertarians lauded as a beacon of hope for free trade, in a world where populism (from the left and right flanks of the political spectrum alike) was darkening the doorway to the future.
Yet now that it is almost certainly dead, they shouldn’t be crying: they should be celebrating.
First off, let it be known that my own personal views on trade are complicated. I am neither a religiously devout pro-free trader, nor am I a radical protectionist. Like most pragmatists, I find myself somewhere on the vast spectrum between these two poles of the trade debate; regardless of where it is that I have landed I can tell you I have found myself in the anti-TPP camp.
It is not because I oppose all international trade; rather, it seems that the costs of national sovereignty outweigh the benefits of the increased trade created by the conditions of the TPP.
Loss of national sovereignty? Yes, you heard me correctly. The TPP aides in the erosion of the traditional powers of the nation state via the investor-state dispute settlement (ISDS). ISDS, in laymen’s terms, acts as a system of courts; with super-national jurisdiction over all member states that are party to the trade agreement. Some in the liberty movement disregard national sovereignty as a valuable asset to maintain, brushing it off as nothing more than a relic of a less free and more nationalistic past. Yet this eroding of national sovereignty should not be so quickly dismissed, as the downsides are prevalent.
For example, look at what an ISDS system did to the Czech Republic in 2001: The national government at the time was in the process of refusing a major bailout of a private bank that a Dutch company, Saluka Investments, held a major stake in. In a system of strict, national sovereignty based trade law, the Czech Republic would have prevailed; but instead, a panel of super-national corporate lawyers ruled in favor of the Dutch company, forcing the national government of the Czech Republic to pay a 236-million-dollar settlement.
Libertarians and conservatives often deride crony capitalism and its hallmark tendency to bailout “too big to fail” businesses; yet here we have a system that many of them approve of allowing for just that. Now, to be fair, it is true that the opposite could happen under ISDS. A case could arise in which a restrictive national law could be overturned making the nation better off overall in regards to economic liberty.
Yet such cases aren’t enough to make ISDS a system we should support. Bad decisions can come just as often as good ones; and bad decisions, already difficult to reverse at the national level, are nearly impossible to reverse at the super-national level – that is the crux of the matter.
The greater the degree of decentralization is, in judicial and political systems, the greater the degree of power individuals have to reverse systematic mistakes. For example, it takes more time, people, and funding to change a restrictive state law on, let’s say, a smoking ban in private establishments, than it would to change a local town ordinance on the same topic. This state vs. town paradigm holds just as true when the parties pitted against one another are a nation vs a super-national institution.
That is the guiding principle behind why libertarians should not dismiss – and should even outright advocate for – support of national sovereignty over transnational political institutions like the European Union, or TPP (the latter of which we will finally see put to rest this year – good riddance). Let us also hope that, as Britain leaves it, the EU will follow in the TPP’s footsteps – becoming a shattered globalist dream.
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