Sen. Elizabeth Warren (D-Mass.), a hero to progressives and the choice of some activists for president in 2016, has already tangled with President Barack Obama over the $1.1 trillion spending bill passed this month. Going into 2015, she appears likely to lead the charge for the left on another battle with the White House.
Obama is working to secure the Trans Pacific Partnership, a free trade deal with 11 other countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Trade is an area where Obama has said he hopes to be able to work with Republicans on and recently told his Export Council the deal would “create a higher standard for trade in the fastest-growing, most populous and dynamic region in the world, the Asia Pacific region.”
“I think the odds of us being able to get a strong agreement are significantly higher than 50-50, whereas last year I think it was still sort of up for grabs," Obama said.
But Warren and two other freshmen senators want answers from U.S. Trade Representative Michael Forman, expressing fear that such an agreement “could make it harder for Congress and regulatory agencies to prevent future financial crises.”
“The investor-state settlement process permits for foreign companies to bypass American courts and challenge U.S. government policies before a panel of private attorneys that sits outside any domestic legal system,” said a letter from Warren, her Massachusetts colleague Sen. Edward Markey and Sen. Tammy Baldwin of Wisconsin, all Democrats.
“If the foreign company prevails, the panel can order compensation from American taxpayers without any review from American courts. The investor-state settlement process thus gives foreign companies a greater right to challenge U.S. government policies than their American allies,” the letter said.
The senators warned that “market access rules” in the agreement could limit the ability of the U.S. to regulate risky financial products: "To protect consumers and to address sources of systemic financial risk, Congress must maintain the flexibility to impose restrictions on harmful financial products and on the conduct or structure of financial firms."
The administration disagrees with the assessment of the TPP and has touted the trade agreement as an avenue to increase the export of products made in America, while also including strong labor and environmental standards among member countries.
The Obama administration would not do anything to undermine the financial reforms made through the 2010 Dodd-Frank law, said Jeff Zients, director of the president’s National Economic Council, who seemed to reject outright the concerns of the three Democratic senators.
“As for TPP, there is nothing in the proposed agreement that would have inhibited our decisive response to the recent financial crisis or that would dilute the important financial reforms we have implemented over the past four years,” Zients wrote in a White House blog post. “There is also nothing that would prevent us from taking similar steps in the future. The president will not allow this agreement to undermine essential financial reforms.”
“On the contrary, this agreement will raise standards and level the playing field for American companies to compete abroad, including for services suppliers, the largest sector of our economy,” Zients continued.
Zients did not specify any individuals by name, but wrote two days after the senators’ letter was sent that “questions have arisen over how we will protect the progress toward a safer financial system.”
“The United States wouldn’t negotiate away its right to regulate in the public interest – with regard to public health and safety, the financial sector, the environment, or any other area,” he wrote, casting the deal as a “once-in-a-generation opportunity for America to set the rules for global trade in the 21st century.”