Since the official start of the negotiating process for the TTIP (Transatlantic Trade and Investment Partnership) between the EU and the USA in July 2013, problem after problem has arisen. First, the scandal of the NSA (and later other agencies, including European ones) spying on European citizens and leaders stopped the meetings for weeks. Then came the government shutdown in the USA last October, which delayed the third round of negotiations until December 2013.
Now the problem the European Commission (EC) is facing is internal. Public opinion is turning against the lack of transparency of this whole process, and claiming that European politicians seem to be more focused on the interests of big corporations than on citizens. This explains the new “halt” in negotiations starting next March (although meetings are still on hold). This break will provide the opportunity for an open consultation period regarding the investment aspects of the negotiation.
The TTIP has two different areas of negotiation: one regarding trade and the other regarding investment, both under the banner of liberalization. Nowadays, the sum of both economies – the EU and the US – makes up nearly half of the world’s GDP, and a third of all trade exchanges. Trade barriers in the form of customs duties, quotas and taxes are almost nonexistent, so the treaty will be focused on the reduction of regulatory barriers and the facilitation and promotion of FDI (Foreign Direct Investment). Experts hope this treaty will lead to the creation of millions of new jobs on both sides of the Atlantic, due to the increase in bilateral exports.
The TTIP “could bring significant economic gains as a whole for the EU (€119 billion a year) and the US (€95 billion a year) once the agreement is fully implemented. […] EU exports to the US would go up by 28%, equivalent to an additional €187 billion worth of exports of EU goods and services. […]. This translates on average to an extra €545 in disposable income each year for a family of four in the EU” (MEMO/13/211).
It is this last aspect, the promotion and protection of FDI, in addition to the Investor-to-State Dispute Settlement (ISDS) mechanism, which have led to highest degree of controversy.
The ISDS mechanism allows foreign companies to bring governments directly to court if they believe that their national regulations are contrary to the company’s interest, with the possibility of demanding a compensation for the lack of a ‘predictable regulatory frame’.
Consumer protection, relegated to the background
The inclusion of the ISDS in the bilateral treaty is worrying because of its possible repercussions for the power of states in the face of big corporations’ private interests. There is a risk that attempts to avoid the conflict reaching the tribunals leaves citizens unprotected in issues such as public health, labour conditions, energy policy, or land rights, which may be subject to the threat of long and costly legal processes. As the Corporate Europe Observatory denounces, of the $14 billion in 16 open trials that await resolution under US free trade agreements, all are focused on issues regarding environment, energy, financial regulation, public health, land use and mobility policies – none regard traditional trade issues.
In addition, the TTIP talks which have already taken place suffer from a lack of transparency, despite including such sensitive issues as those mentioned above. Of course, the European Commission denies all these accusations. But, while the EC claims it has been carrying out meetings with all groups involved (industry, consumer associations, unions, etc), the truth is that many of these “negotiation committees” are held behind closed doors, and usually with lobbies of various industries.
Among the most prominent of these industries is the food and beverage sector, as MEP Raül Romeva points out. Romeva, an expert in the EU’s ins and outs, reveals how infamous Monsanto (for more information on this transnational company, see the documentary Le monde selon Monsanto from 2008, or read our article) is lobbying to sell its products on the European market. This would lead to client dependence on this big corporation’s products: Monsanto typically achieves a monopolistic position by encouraging monocultures.
The EC replies: Let’s talk about it
European Commissioner for Trade Karel De Gucht announced that in March, the EC will be publishing a text about investment which will include issues such as FDI protection and the ISDS. Afterwards, European citizens will have three months to discuss the text.
Through this measure, he is trying to calm the European citizens worried about the effects of the TTIP, whose number is growing. On January 22, De Gucht mentioned in Düsseldorf that
“investment agreements also exist for a reason. Europe’s economy […] benefits from the investments our companies make in other countries. And it is a sad fact that governments in those countries sometimes use their power to treat foreign companies unfairly, putting those investments – and ultimately European jobs – at risk. Investment rules, including the dispute settlement system – are an important protection against these unfair actions. […]The fundamental objective of our international investment policy is to reinforce the legitimacy and transparency of these rules.”
The Commissioner believes the consultation process, which will open in March (coinciding with thefourth round of TTIP negotiations), will show clearly and transparently the position of the EU regarding the protection of European companies in the American market. De Gucht uses the cases of other companies which have experienced problems in countries like Venezuela, Bolivia or Argentina (see for example our Spanish-language article “Argentina vs. Repsol: claves y hechos de la expropiación”, from 11th May 2012), which are clearly not related to this bilateral treaty, nor are they comparable to the two economies that are negotiating it. And, of course, nothing is said about the protection of American companies in EU countries, each of which has particular regulation features.
Civil society mobilises
At the beginning of this year, ten NGOs devoted to health, transparency and environment from both sides of the Atlantic Ocean, published a joint manifesto denouncing that “for the EU, that could mean accepting US standards which in many cases are lower than its own. At the same time this agreement could open the gates for multinationals and investors to sue EU Member States if new environmental or health legislation is introduced that adversely affects their business prospects”.
These ten NGOs are: CEE Bankwatch Network, Climate Action Network Europe (CAN), Corporate Observatory Europe (CEO), European Public Health Alliance (EPHA), European Environmental Bureau (EEB), Friends of the Earth Europe (FOEE), Health and Environment Alliance (HEAL), Nature Friends International (NFI), Transport & Environment (T&E), and World Wide Fund for Nature (WWF).
According to these NGOs, states will be afraid of introducing new regulation for social and environment protection, which will lead to a true cost for their citizens (note that besides the loss of rights and protection, states can be pushed to pay fines to compensate for the claimant companies’ ‘potential losses’). They also question the need for an independent body similar to an arbitrage court, given that Europe already has its European Court of Justice.
The worries are not unfounded. There are currently hundreds of unsolved disputes between big companies and sovereign states; they do not paint a rosy picture. Among the most renowned is Lone Pine Resources Inc against the Canadian government, regarding the banning of fracking in the region of Quebec. The multinational is demanding a financial compensation of around 250 million dollars for this government-instated ban. Another example is Philip Morris against Australia (under the ISDS Australia-Hong Kong), for the changes in packing and labelling of tobacco packages: the cigarette producer is claiming billions of dollars of compensation for their sales losses.
The Transatlantic Trade and Investment Partnership, currently under negotiation, will have important and direct effects on the lives of European and American citizens. Despite the millions of euros and new jobs being announced (which we do not deny), there are other aspects to bear in mind in the negotiations. These require more transparency and information to the public, the ones who can be ultimately harmed through loss of protection, especially in sensitive aspects as water, food quality, the use of chemicals, climate, energy, drug security and so on.
As it is almost certain that the TTIP will be signed, the best we can do is to make sure it does not result in damages in the medium term for the citizens on both sides. This is our duty and our right.
[Cover photo: EU-US Summit, Lisbon, 20 November 2010 – by President of the European Council, on Flickr]
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