There is already a very high level of trade and of investment between the EU and the US, so a free trade agreement is not necessary. Tariffs on goods, for instance are on average already very low.
However behind the façade of ‘trade’, which has an overall feel-good factor, the aims for the TTIP are to establish corporate control of policy-making, in international trade law.
Beyond the usual inclusions in free trade deals, these are the acknowledged main aspects of TTIP and they are also the areas of main concern: regulatory harmonisation, or convergence, investor state dispute settlement, and the establishment of global trade rules via this agreement.
‘Regulatory harmonisation’ means harmonising all US and EU regulation. Regulations that protect us from big corporations are discussed in the trade arena as ‘trade irritants’. Because this is an agreement promoted by, and in the interests of, transnational corporations, the result of TTIP ‘harmonisation’ will be regulation degraded to the lowest and most corporate-friendly level. And, once the deal is signed up, harmonisation will not be an add-on but a first priority to be considered in the formulation of new regulation.
The example of regulatory convergence that is usually put forward by those promoting TTIP is the convergence of auto safety regulations, as a seeming ‘common sense’ measure also related to the extravagant claims being made for job creation in the auto industry. It is indeed likely to have benefits for automobile manufacturers with production on both sides of the Atlantic, though the claims for what this will mean for increased cross-border sales, in both directions are in doubt.
However, beyond this overused example, the regulatory harmonisation that is central to this deal will affect many areas, including:
• food safety, with pressure on the EU to accept genetically modified and chemically contaminated food
• chemical safety, because US standards are lower than the EU’s REACH standards
• public internet freedom, while protection for corporate ‘trade secrets’ and intellectual property increases
• financial service regulation, the lack of which has caused the financial crisis, manipulated down to the most lax form
• the rights of corporations to engage in fracking protected by measures that prevent governments from responding to popular demands
• climate change controls such as Fuel Quality Standards undermined
• cheap temporary labour moved across borders, further destroying labour standards and workers’ ability to resist, more likely to lead to job losses than gains
• state-owned enterprises subjected to a specified, corporate-benefit attack as part of this ‘trade’ deal
• transnational corporations gaining rights to access all government spending at all government levels, disadvantaging Small and Medium Enterprise (SMEs) and domestic firms. This will include the disallowing of any localisation policies, such as stipulating local supply or local or even national labour supply for government spending
• privatised public services opened to transnational investors who can sue if there is any attempt at reversals.
• The Health and Social Care Act changes to the NHS made irreversible
Where regulatory harmonisation is not possible, ‘Mutual Recognition’ of the trading partner’s (US or EU) regulations, standards and testing will allow corporations to choose the lowest form.
TTIP will allow corporate power to be exercised in the processes of regulatory ‘harmonising’ or convergence.
TTIP will be a ‘living agreement’. A Regulatory Co-operation Committee will be set up for the ongoing harmonisation of all new regulation, to continue to deepen the provisions of the agreement, the attack on regulation and on governments’ rights to regulate after TTIP is signed up, on into the future.
This means the implications of this agreement are not just unknown because of current negotiating secrecy, but will still be unknown even after negotiations are completed, with the text finally made public and the deal in force, because of this ongoing mechanism.
In order to harmonise regulation, the RCC will be influence the earliest stages of governments’ policy-making and to fulfill its function will necessarily have the ability to override governments. Corporations will have a place at the committee table alongside regulators, with a formalised obligation for the committee to take account of the views of big business.
In addition corporations of the trading partner (US-EU) will have very early input into all new regulation that affects trade, which, with what is now a very broad definition of ‘trade’, will be most regulation. So if the UK government wants to propose any law that will relate in any way to TTIP provisions, the proposal will have to be shown, at an early drafting stage, to US businesses.
Having this RCC set up to continue the work, will facilitate signing the agreement quickly, as there is no need for ‘completion’ of the agreement before sign-up. The model for this is the Canada/EU free trade agreement (CETA) which was signed up ‘in principle’ in October 2013 but, as at late January 2014, is still being secretly negotiated. The RCC offers a much more formalised way for this sort of continuation after sign-up.
Investor State Dispute Settlement (ISDS) allows transnational or foreign corporations to sue governments, including the UK government, for any ‘regulatory deviation’ that negatively affects the corporation’s future profits. This is most likely to be legislative change that protects health, safety, labour rights or the environment, as this is the sort of legislation most likely to negatively affect corporations’ future profits.
Direct expropriation is where a government deliberately expropriates corporate assets, but most ISDS cases are for indirect expropriation, where government action for other purposes negatively affects corporate profits.
This can be in response to any government action at any level of government, including local government. As at February 2014, although the Trade Commission is negotiating the TTIP and the Canada /EU free trade agreement (CETA), which will both include ISDS, the EU has still to decide on financial responsibility in ISDS cases under trade agreements signed at the EU level, but brought in response to action by a member state government or even a local government.
ISDS is already included in other agreements, so we can see the likely affects from the many ISDS cases around the world in process or settled. ISDS is shown to frequently lead to big pay-outs to corporations from public money. The other effect is a ‘chilling’ effect on legislation, when governments, to avoid being sued, just do not pursue legislation that risks invoking such legal action.
About 35 % of ISDS cases have been judged for states and over 30% settled in favour of the corporations, but the rest have been settled outside of arbitration, which suggests that they have resulted in pay-outs. (Friends of the Earth Europe have listed other significant ISDS cases http://www.foeeurope.org/sites/default/files/foee_factsheet_isds_oct13.pdf ).
One example of ISDS rebounding on public policy is the Swedish company Vattenfall suing the German government for loss of profits resulting from the German phase out of nuclear energy. Another is transnational tobacco company, Phillip Morris International, suing the Australian government in relation to Australia’s cigarette plain packaging legislation. (This is in addition to a dispute being raised at the World Trade Organisation in regard to Australia’s TRIPS (Trade related Intellectual Property Rights agreement) commitments and the packaging legislation. WTO disputes are not subject to ISDS but are state-to-state. This is being raised by The Ukraine, which has a Phillip Morris subsidiary.)
ISDS cases are heard by arbitration panels of trade lawyers in a supranational jurisdiction of the corporation’s choice. The EU Trade Commission’s argument for ISDS and against the use of national court systems for trade disputes under TTIP, even when both trading partners, the US and the EU, have robust court systems, is that these courts will be biased. This reasoning is also being given as to why the European Court of Justice would not be suitable either.
These arbitration panels judge only on the values of ‘free trade’, without reference to other values such as of human rights, or social or environmental protection, and the majority of cases are judgments are in favour of the corporations.
The adjudicators are from a small circle of trade lawyers who at other times will be representing corporations in such cases.
Thus with ISDS, democracy is undermined and the power of corporations is increased.
Regulation should develop and improve, but the ‘regulatory harmonisation’ provision in TTIP, with its ongoing RCC structure and backed by ISDS, will disallow regulatory innovation or development, giving ‘security’ to corporations.
The EU Commission tries to counter concern about ISDS by asserting that ISDS does not limit the ability of governments to regulate. Indeed, they will be free to legislate but they risk being sued.
The EU Commission has in January 2014 announced a moratorium on ISDS negotiations, and a public consultation. However, these factors suggest these moves are not really about addressing concerns: the scope will be limited and is not likely to include the possibility of removing ISDS from TTIP; negotiations on all the rest of the agreement will continue meanwhile; there is a delay in beginning this consultation/moratorium which will then take 3 months; and it is for a period when negotiations on ISDS were unlikely to be taking place anyway; and the EU has still has to finalise where financial responsibility lies in ISDS cases, between the EU and member states.
Establishing ‘global rules’ for trade is a stated aim for the TTIP. The rest of the world will then be coerced into accepting these rules.
In the context of the World Trade Organisation, developing countries have been able to join together to resist the trade agenda that the US and the EU have attempted to impose on behalf of transnational corporations. It is for this reason that the WTO Doha Development Round, begun in 2001, stalled and eventually came to a standstill.
Now, with this massive agreement between the EU and US, and the parallel Transpacific Partnership (TPP) between 12 countries on the other side of the world with similar aims and inclusions, (the US is in both), the ‘trade’ norms in these agreements can be imposed on the rest of the world, bypassing the defence mechanism that the WTO provides.
These global rules may include regulatory convergence and Mutual Recognition, Investor State Dispute Settlement, and the negative listing of service liberalisation exceptions rather than positive listing of services to be liberalised, a much more coercive mechanism.
If these two huge agreements go through, other countries will either be coerced into joining or be particularly excluded, much like membership of the WTO, which countries have to jump regulatory hoops to join. It has been made clear that further applicants for the TTIP will not be limited by the geography of the Atlantic, provided that they accept the rules.
Public procurement is a major part of the trade agenda and of the TTIP though it is generally kept from public attention, particularly in the EU.
Public or government procurement includes everything that governments purchase, at all levels of government. It is about 18% of global GDP. It is often much safer investment territory than other investment opportunities and it is a particular target in trade agreements.
In trade terms ‘public procurement’ means corporations not just accessing government procurement, but gaining rights, via international trade agreements, to access public procurement.
In the TTIP, a major aim of the EU, or, rather, transnational corporations using the EU mechanism, is achieving rights to access US states’ and more local procurement, in addition to US federal procurement. This may prove to be a stumbling block in TTIP negotiations if US state governments resist.
Yet meanwhile, EU procurement is not mentioned: it is just accepted that it is offered, wide open, to US investors.
Procurement includes public service spending and thus includes the UK NHS. The Health and Social Care Act has already opened the NHS to private contractors, broad scale, and this is automatically liberalised, that is opened to transnational investment, as are all investment opportunities in the UK, in both the public and private sectors.
Our NHS is the public procurement jewel on offer to the US in the TTIP. When the deal is signed up, the liberalisation of the NHS investment opportunities will become effectively irreversible, and so will the underlying privatisations.
The go-ahead for the TTIP came – supposedly- from a final report of a High Level Working Group on Jobs and Growth, set up at the end of 2011, headed by EU Trade Commissioner Karel de Gucht and (then) US Trade Representative Ron Kirk (despite the fact that the trade deal had been planned, and much of the negotiations sorted long before). The makeup of the rest of the group however was shrouded in mystery. In response to attempts by EU Non Government Organisation Corporate Europe Observatory to find out about this group, the Commission would only respond that the group had no set membership. Similar enquiries to the US side however, revealed that it was just the trade bureaucrats on both sides whose job it is to promote and negotiate trade agreements, and who take major input from corporations for this in the process. Yet this report was supposedly the deciding factor in recommending the go-ahead of this massive, corporate-power ‘trade’ deal.
Along with the secrecy, spin and technical language in which ‘trade’ deal communications are wrapped, to deter media and public interest, this was fundamental trickery.