A new free trade agreement being pushed by the Obama administration could allow foreign corporations to challenge American laws and regulations before international tribunals.

The Trans-Pacific Partnership (pdf) (TPP), being negotiated between the U.S. and governments throughout the Western Hemisphere and the Pacific region, includes a provision authorizing companies to sue the U.S. government for actions that undermine their investment “expectations” and damage their business opportunities.

The controversial section of the treaty, kept hidden as part of the ongoing negotiations for the TPP, was only revealed after The New York Times obtained a copy of the classified document with help from WikiLeaks.

The language could be used by corporate lawyers in other nations to challenge U.S. federal, state or local laws, regulations, court rulings and government actions. Multinational companies based in Asia, North America and South America could bring such challenges to legal bodies operated by the World Bank or the United Nations.

The provision amounts to “a scheme hidden inside a scam,” wrote AlterNet’s Jim Hightower. Twenty-four of the 29 chapters in the accord, he says, “create a supranational scheme of secretive, private tribunals that corporations from any TPP nation can use to challenge and overturn [U.S.] laws. All a corporate power has to do to win in these closed proceedings is to show that a particular law or regulation might reduce its future profits.”

“It's been negotiated among trade officials of the 12 countries in strict secrecy,” he added. “Even members of Congress have been shut out -- but some 500 corporate executives have been allowed inside to shape the ‘partnership.’”

Democrats in Congress have been the most vocal opponents of the provision, saying it would give foreign banks as well as pharmaceutical, tobacco and other companies the ability to undermine U.S. sovereignty.

“This is really troubling,” Senator Charles Schumer (D-New York) told the Times.  “It seems to indicate that savvy, deep-pocketed foreign conglomerates could challenge a broad range of laws we pass at every level of government, such as made-in-America laws or anti-tobacco laws. I think people on both sides of the aisle will have trouble with this.”

Schumer and others like Senator Elizabeth Warren (D-Massachusetts) are hoping to enlist help from those on the right to fight the TPP.

“Conservatives are likely to be incensed that even local policy changes could send the government to a United Nations-sanctioned tribunal,” Jonathan Weisman wrote at the Times.

However, most GOP lawmakers reportedly favor the agreement, as they have with other free-trade pacts because of their business-friendly provisions. Obama administration officials are defending the accord and accusing its critics of drumming up fear that they say has no basis in reality.

Senator Sherrod Brown (D–Ohio) says the entire agreement is problematic, not only the “investment expectations” section. “This continues the great American tradition of corporations writing trade agreements, sharing them with almost nobody, so often at the expense of consumers, public health and workers,” he told the Times.

Meanwhile, negotiations on the pact are said to be nearing completion.

-Noel Brinkerhoff, Danny Biederman

To Learn More:

Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S. (by Jonathan Weisman, New York Times)

Jim Hightower: Obama's Terrible Trade Pact Is a Scam That Must Be Stopped (by Jim Hightower, AlterNet)

Trans-Pacific Partnership treaty: Advanced Investment Chapter working document for all 12 nations (January 20, 2015 draft) (WikiLeaks) (pdf)

Obama’s Secret International Trade Treaty Caving on Environmental Protections (by Noel Brinkerhoff, AllGov)

Proposed Obama Trade Agreement would Ban Buy America Laws (by Noel Brinkerhoff, AllGov)