Last Updated: 28 September 2015
Are we reaching TTIPing point?
The Transatlantic Trade and Investment Partnership (TTIP) could be the biggest bilateral trade deal in history.
Talks began between the European Commission and US negotiators in July 2013, and they originally hoped to complete in 2014. The speed at which it is being pushed through is thought by critics to be a result of a desire to get it done and dusted before most people figure out what the hell is going on. If you’ve not heard of it, you’re not alone.
On the 25th February 2014 the TTIP was debated for the second time in the British parliament, having been tabled by a backbencher. About 15 MPs bothered to turn up. The near-absence of democratic scrutiny of the TTIP at a national level mirrors the negotiations themselves, which are being thrashed out in secret by a small clique within the European Commission and a few of their US counterparts.
Members of the European Parliament and US Congress alike are not privy to the negotiations. They will get a yes or no vote on the final agreement. In the USA, however, 600 “advisers”, largely representing corporations and industry groups, have access to the negotiating documents.
The end of 2015 was supposed to signal the end of negotiations concerning TTIP. However, many don't believe in this deadline because negotiations have slowed down in recent months. This is largely thought to be in reaction to massive public outcry over TTIP.
Free trade is good for all?
Advocates of the deal say that it will boost trade, create jobs, increase choice for consumers and make everybody richer. Twenty years ago the same promises were made about the North American Free Trade Agreement (NAFTA) between the USA, Canada and Mexico. In reality, however, NAFTA devastated Mexico’s agricultural sector as the USA proceeded to dump huge quantities of cheap, subsidised food on its neighbour. Producer prices plummeted by 66%, leading to waves of migration out of rural areas and a country dependent on imported food. When the food price spikes hit in 2007-8 the result was a popular uprising which became known as the tortilla riots.
Meanwhile, in the USA, the first 12 years of NAFTA led to a net loss of over one million US jobs, as well as exerting a downwards pressure on wages and employment conditions. (2) And Canada has been hit by a pernicious mechanism known as Investor State Dispute Settlements.
Investor State Dispute Settlements
The most controversial element of the TTIP are Investor State Dispute Settlements (ISDS). If implemented, this would allow US companies to sue EU governments (or EU companies to sue the US government) for taking action which could result in a reduction in their future profits. The implications are hard to overstate.
Here are just a few of the over 500 known current or previous cases of the mechanism being used against states:
- Under NAFTA, the US company Lone Pine Resources is suing Canada for $250 million over Quebec’s moratorium on the controversial process of fracking.
- In Germany, Swedish company Vattenfall is using the Energy Charter Treaty to sue the government for phasing out nuclear power, a decision taken in the wake of the Fukushima disaster. The case could cost German tax-payers €3.7 billion. Germany has paid out once before to Vattenfall as a result of the environmental regulations the state attempted to impose on the company’s coal-fired power plant in Hamburg. The company sought €1.4 billion in damages plus interest. The case was settled out of court and Germany backed down on the environmental regulations.
- The Australian government is being sued by Philip Morris (under a cleverly-manipulated bilateral trade treaty signed with Hong Kong in 1993) for introducing plain cigarette packaging. How much the company hopes to win is in the billions of dollars.
John Hilary, Executive Director of War on Want, says that ISDS could be the TTIP’s Achilles heal – a deadly weakness in the powerful treaty which could lead to its downfall. In December 2013, hundreds of organisations, including Greenpeace, the International Trade Union Confederation and Corporate Europe Observatory, signed an open letter to the lead US and European negotiators calling for it to be removed.
Internationally, countries such as Australia, South Africa, Brazil and India are starting to refuse the ISDS elements of bilateral trade deals. Germany, having been stung already, is particularly sensitive to this element. The pressure from civil society is mounting, and at the end of January 2014 a three month consultation period on ISDS was announced, which began at the end of March. The results of the online consultation were clear: 97% of participants (almost 150,000 replies) are against ISDS.
Supporters of TTIP have emphasised the benefits that reducing trade tariffs will have on economies. But the European Commission has already admitted that tariffs between the EU and the US are already so low that they are not the main issue on the table. It is clear that the biggest battles, and the most complex to resolve, will be around regulatory ‘coherence’, ‘convergence’ or ‘harmonisation’. In somewhat less Orwellian terms these are also known as ‘behind-the-border barriers to trade’.
Both the European Commissioner for Trade (Karel de Gucht) and the only British Cabinet Minister that seems to be talking about TTIP (Kenneth Clarke) have said that standards will not be undermined by TTIP. Given the fact that regulations in the USA are usually far less stringent than in Europe, it is hard to understand how this could possibly be the case.
To take a few examples:
- 1,200 chemicals are banned for use in cosmetics in Europe due to safety concerns while only a dozen are banned in the USA.
- Genetically modified organisms must be labelled in Europe but not in the USA.
- Labour standards are dramatically lower in the USA than in Europe: maternity leave is just twelve weeks unpaid and not everybody qualifies for this, and the country has refused to ratify key International Labour Organisation standards.
- In the USA, the food industry uses practices that are banned in Europe, such as treating cattle with hormones to promote growth, thus “beefing” up profits, and treating chicken carcases with chlorine to kill off bacteria.
- It is legal to sell the milk and meat of cloned animals in the USA, but not in Europe.
- It is permitted to test cosmetics on animals in the USA but not in Europe.
- Standards for animal welfare are different in the two regions.
If the ‘harmonisation’ of regulations and standards across the Atlantic will not result in them being reduced in Europe under TTIP, perhaps they will be improved in the USA? And genetically modified pigs could fly?
The liberalisation of trade over the last few decades has meant that countries are less and less able to implement environmental and social regulations that could be interpreted as barriers to trade, which the above examples could all be argued to be.
John Hilary is emphatic that TTIP can only drive standards down.
Monique Goyens, Director General of the European Consumers’ Organisation BEUC, told Ethical Consumer that “it is not an agenda of regulatory convergence – it’s an agenda of deregulation”.
Who is fighting for consumers’ rights?
The TTIP has the potential to negatively impact the rights of consumers in a whole swathe of ways. Restrictions on labelling could reduce consumer choice (think GMOs); changes in regulation could result in increased exposure to harmful substances; policies that favour multinational companies could squeeze out local providers, and the ability of governments to introduce policies around ethics – such as animal-tested products, products from cloned animals or the labelling of Israeli products from the occupied Palestinian territories – could be undermined.
In John Hilary’s words, “We have to win the battle because if we don’t, everything we would hope to build for our future will be at risk.”
The Trans-Atlantic Consumer Dialogue (TACD) is a network of more than 75 organisations representing consumers’ interests in Europe and the USA. It has raised a number of concerns about TTIP, and made a detailed set of recommendations to protect consumer rights and prevent the driving down of standards.
Monique Goyens is the European CoChair of TACD. She was invited to join a European Commission advisory group on TTIP in December 2013, and Ethical Consumer caught up with her shortly after the group’s second meeting in March. At that point it was still unclear how the advisory group, which is comprised of seven public interest organisations and seven industry groups, will feed into the TTIP negotiations, and indeed, whether it would have any meaningful role to play.
According to Goyens, the group was formed as a result of outside pressure on the European Commission to increase transparency and include civil society in the negotiations. “But there is still not a clear line on how they are going to improve transparency, or whether and under what conditions we will have access to the negotiating documents”, she said. “I don’t want to be overly optimistic or pessimistic, but if we don’t have a tangible role to play or meaningful access we will walk.”
A different line
In apparent contrast to the concerns raised by the TACD, the British consumer organisation Which? has greeted TTIP far more enthusiastically. It has stressed the potential benefits in terms of reducing prices and increasing choice, with the caveat of ensuring that standards are not reduced.
In an article on the Huffington Post website, Which? Executive Director Peter Vicary-Smith lamented the fact that a pair of designer jeans bought from America would cost European consumers more if they purchased them on-line at home than if they travelled across the Atlantic and put them in a suitcase.
It is difficult to reconcile the enthusiasm that Which? has bestowed on the TTIP with policy concerns highlighted on its website around choices related to food, nanotechnologies, online privacy and the environmental impacts of products and services that consumers use.
Goyens told Ethical Consumer that Which?’s position was not in opposition to that of other consumer organisations, rather that Vicary-Smith has chosen a different emphasis. This, she said, highlighted the need to maximise the direct consumer benefits when negotiating. Nevertheless, Vicary-Smith’s participation in a roundtable event at Westminster in early March 2013 allowed the Cabinet Office to announce “Which? Group Chief Executive Peter Vicary-Smith threw the organisation’s weight behind any deal that would see prices fall for consumers, as long as their rights remained protected.”
Ethical Consumer asked Goyens to compare the involvement of civil society groups in TTIP negotiations with those of business. “I’ll give you an example”, she said, “tonight the American Chamber of Commerce are having a networking cocktail party. We – the advisory group – have been invited by DG Trade (the European Commission’s Directorate-General for Trade). It’s like the companies and Commission are family and then they invite some civil society friends...”
Alongside the TTIP, two other trade deals are in the pipeline: the Comprehensive Economic and Trade Agreement (CETA) between Europe and Canada, and the Trans-Pacific Partnership (TTP), between nine countries including the USA, Peru, Australia and Thailand.
This unholy trinity of trade deals has been dubbed “NAFTA on steroids”.
They could herald a period of neo-liberal trade going into hyper-drive, ramping up the power of corporations and preventing states from implementing social and environmental protection mechanisms that could hit corporate profits. Perhaps they signal the dying throes of the capitalist system, forced to become more extreme to sustain itself through its inevitable crises?
In the parliamentary debate in February, even the MPs raising serious concerns about TTIP – in relation to labour rights, the impacts it could have on farmers, etc. – preceded their speeches with a little eulogy to free trade. “We know that it’s good, but... can we just make sure that these rights are protected in this particular area...?”
This position utterly ignores the fact that one in eight of the world’s population goes hungry every night. Do we really want to work towards a situation where the trade blocs of Europe and the USA get richer, even though the poorer within them get poorer, whilst the rest of the world suffers? Isn’t it already bad enough that the richest 1% have accumulated 43% of the world’s wealth whilst the poorest 80% have just 6%? Who cares about the price of designer jeans?
Furthermore, the current set-up is simply not addressing the crisis of climate change, specifically by the countries and corporations most responsible for it. The TTIP, with its threat of reducing the capacity of states to limit the activities of carbon-intensive practices such as fracking, and its stated aim to increase the trade of goods across the Atlantic, is not going to be good for our climate or planet. We need a structural shift away from the power of corporations in order to address these issues.
Perhaps the TTIP will push us to tipping point?
TTIP explained in less than 5 minutes. Video by 38 Degrees: