TTIP/TAFTA – A major disaster threatening EU economy and democracy

This is an opinion article by an external contributor. The views belong to the writer.
TTIP/TAFTA – A major disaster threatening EU economy and democracy

Corporations are attempting to achieve by stealth – through secretly negotiated trade agreements – what they could not attain in an open political process.” 
Joseph E. Stiglitz – Nobel Prize in economic Sciences 2001, World Bank chief economist 1997-2000 TTIP, the Transatlantic Trade and Investment Partnership (also referred to in the US as TAFTA – Transatlantic Free Trade Agreement) is officially under negotiation since July 2013.  These negotiations aim at removing trade barriers (tariffs, restrictions on investment etc.) so as to make it easier to buy and sell goods and services between the EU and the US.  It will also allow liberalization of public services, and prevent/decrease ‘unnecessary regulations’ (like security, health and consumer protection).

According to the European Commission, this partnership is designed to drive growth and create hundreds of thousands of jobs, boost EU economy by €120 billion, US economy by €90 billion, the rest of the world by €100 billion, and an average European household would gain an annual €545.  

Growing numbers of voices from civil organizations, NGO’s, and even inside the European Parliament are joining the movement against this Trade Agreement.  The European Citizens’ Initiative against TTIP collected close to a million signatures and has been rejected under questionable arguments.  Consequently to this decision, the Stop TTIP coalition has filed a lawsuit against the European Commission at the European Court of Justice in Luxembourg on the 10th of November 2014.  

But when asked by a journalist why NGO’s and civil organizations are not consulted during the negotiations, Mr Karel De Gucht, former commissioner for trade, replies that they don’t show interest.  

Secrecy, an affront to democracy

One of the main arguments of the opponents to TTIP is that the secrecy around the negotiations is an affront to democracy.  In the past, opposition had also taken place against the MAI (Multilateral Agreement on Investment) in 1997 and ACTA (Anti-Counterfeiting Trade Agreement) in 2012, ending with the rejection of these agreements.  A common concern is that all that was rejected before will be now implemented with TTIP, without anyone being informed.  And this is just the tip of the iceberg.

The Lisbon treaty poses conditions for the conduction of negotiations on trade agreements by the EU Commission; “The European Parliament shall be immediately and fully informed at all stages of the procedure.” (Art. 218.10 TFEU)

Only a selected group of MEP’s can have access to ‘reading rooms’, without being granted any permission to take notes, bring electronic devices, or inform third parties.  As a consequence of this, 17 EU member states have repeatedly complained about this lack of transparency and the fact that the elected political representatives in the EU Parliament are in no way being “fully informed at all stages of the procedure“.

This is unacceptable to many since the TTIP is not just a trade agreement, but also a legal act (therefore contestable via an ECI by the way) that will have a major impact in rules and law-making processes, thus representing a binding political agreement for all member states.  For this reason a political oversight is essential says MEP Heidi Hautala in her blog article “Lack of transparency in TTIP – a case for the ECJ?” published in July 2014.

Unrealistic growth and employment figures

The commission relies on ‘independent studies’ to assess that TTIP will boost our economy.  However, several studies predict exactly the contrary.  One of the most thorough ones, led by economist Jeronim Capaldo for Tufts University, shows that TTIP will actually have an adverse effect on GDP and exports, lead to the loss of 600 000 jobs in the EU, loss of labour income of up to 5000€ per worker (France being the worst hit), loss of government revenue, and increased financial instability.  Capaldo criticizes the use of Computable General Equilibrium (CGE) models – which exclude any negative effect on employment-, and points at the negative effect on employment that Latin America experienced after trade liberalization – this being despite the fact that CGE models predicted only positive effects.  Instead of the CGE model he uses the Global Policy Model (GPM), used by – among others -the UN Agency for Trade and Development (UNCTAD).

This view has been confirmed by the disastrous effects of the 1994 North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico.  Like TTIP, NAFTA promised growth, jobs, better social conditions… and brought exactly the contrary while only benefitting to major US multinationals.  Close to 900,000 jobs have been lost in the US, 300, 000 family farms in Mexico have been put out of business, income inequality dramatically increased…  

When comparing such negative impact in the facts, opposed to promises of economic boost that appear like siren chants, one wonders if instead of growth and employment we wouldn’t in fact be heading towards a major social and economical catastrophe that’s threatening more than 500 million EU citizens, and will benefit only to multinationals looking at reducing standards, costs, wages, and quality of life in general.  

ISDS, a threat to democracy and state sovereignty

Investor-to-State-Dispute-Settlement (ISDS) is one of the hottest topics of debate in TTIP.  This mechanism allows foreign companies to sue governments directly for cash compensation over earnings lost because of existing regulations over issues such as health, social welfare, safety, environment, education…  and instead of taking place before regular courts, disputes will be brought before an extralegal arbitration panel composed of corporate lawyers.  Its decisions will be binding and cannot be challenged in court.

Although already in use in many trade agreements, if ISDS is to be implemented within TTIP it will dramatically extend the power of companies against state sovereignty.  Member states would have to completely adapt their regulations (at a very high cost which is obviously not taken into account in the ‘independent’ studies in favor of TTIP) in order to meet investors’ interests instead of national interest. 

Germany is already facing the consequences of such ISDS.  After the Fukushima disaster in 2011, and the decision to shut down its nuclear power industry, the country is being sued by Swedish company Vattenfall (that operates two nuclear plants in Germany) who demands compensation of €3.7 billion under the ISDS clause of a treaty on energy investments. 

Similarly, American oil and gas company Lone Pine Resources is suing Canada for 250$ million after Quebec’s fracking moratorium (they dared opting for clean air and water); Philip Morris is suing Uruguay for 25$ million over graphic cigarette packaging; When Argentina imposed a freeze on people’s energy and water bills It was sued by the international utility companies whose vast bills had prompted the government to act; In El Salvador, when local communities persuaded the government to refuse permission for a vast gold mine which threatened to contaminate their water supplies, Canadian mining company Pacific Rim filed a damage suit for 315$ million; French company Veolia is suing Egypt for raising minimum wages, and the list goes on.

Needless to say that ISDS will act as a huge deterrent for countries to pass any legislation that protects consumers and environment for fear of being challenged. Furthermore, financial compensation would represent a significant burden on states’ public finances and guess who would have to pay eventually?  …Yes, you and me.  

ISDS will also disadvantage domestic investors, who need to use normal courts to pursue their governments in case of wrongdoing.  

In October 2013, and in an attempt to make ISDS look better, the European Commission issued a “fact sheet” entitled “Incorrect claims about investor-state dispute settlement“.  In reality, this document is so biased and tendentious that one might wonder if it’s even the least serious.  The real question we should ask the EU Commission is why is everything done in order to give almighty power to corporations and investors, while nothing is done similarly to protect the interests of consumers, workers or environmentalists? 

Negative impact on education, health, environment, public services, employment…

Unlabeled GMO’s, chlorinated chicken, meat from cloned animals, beef injected with hormones, ractopamine… TTIP will allow these on the EU market.  Ignacio Garcia Bercero, EU’s chief negotiator on TTIP said the EU’s strict regime for control of chemical substances would not be altered, but several US congressmen said they are not going to approve a deal that does not open more market access for American agribusiness, “including through getting rid of certain food safety standards”.

The agenda is very clear, and the EU has to lower its health standards, but not only these because green policies, energy efficiency labels, fuel efficiency standards, chemical rules… can all be interpreted as “substantial trade barriers” and lead to costly ISDS procedures. 
Education is also at stake, and in a letter sent in June 2014 to both presidents of the US and of the European Commission, Education International states:

If education is covered in the TTIP, the consequences could be serious. Rules governing market access could restrict the ability (…) to limit the entry and regulate the quality of private and for-profit schools and institutions.  Any measure adopted by a public body to promote high quality standards (…) could potentially be interpreted as a “disguised barrier to trade” (…). …private education companies from the EU or the US would have the right to challenge (…) measures adopted by the other party that they feel interferes with their profits.

European Trade Union Committee for Education (ETUCE) European director Martin Rømer states on a press release (16th June 2014)

 “With some minor exceptions, the EU is essentially opening the door wide open to for-profit American companies to provide education from primary school all the way to university,” “And the rules of the TTIP will make it very difficult for Member States to effectively regulate these companies.” 

And what about environment?  TTIP calls for the export of energy goods from the US, which have been defined as “coal, crude oil, oil products, natural gas, whether liquefied or not, and electrical energy.” This will result in more fracking in the US, increased reliance on fossil fuels in the EU and more climate emissions.  Auto, airline and appliance emission regulations, tar sand oils standards, are all at stake under TTIP.  Oil corporations are also asking for the ban of climate initiatives such as tax credits for alternative, climate-friendly fuels.  Under TTIP, dirty energy corporations will be able to directly challenge climate policies that they view as violations of their foreign investor rights.

In Conclusion

Although being oversold as the answer to all of Europe’s problems, TTIP will have devastating consequences for our economy and well-being, and this agreement represents the ultimate takeover of our democratic institutions by major private corporations.  Despite the secrecy around it, nearly a million EU citizens already signed the petition against TTIP.  What would the proportions be if every citizen in the EU were properly informed?  More and more MEP’s are also taking a stand against the lack of transparency of the negotiations, and the Greens/EFA group has become one of the leading voices against TTIP.  The European Union has always been a symbol for democracy, it should lead by example and not allow corporate interests to prevail over the fate of 500 million citizens.

By Xavier Rossey

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