If you thought NAFTA was bad...

Proposed TTIP Agreement Is Profoundly Undemocratic

by Michael Nevradakis

Executive director of London-based human rights and anti-poverty organization War on Want John Hilary discusses the proposed Transatlantic Trade and Investment Partnership (TTIP), which is currently being negotiated in secret between the European Union and the United States, and the potential adverse impacts of this agreement on the economy, employment, corporate regulation and the environment.

Michael Nevradakis: Could you share with us a brief introduction as to what the proposed Transatlantic Trade and Investment Partnership is all about?

John Hilary: It’s a major trade and investment treaty, which is being negotiated between the EU on the one hand, and the US government on the other hand. And so for those of us who live in Europe, the European Commission is representing all of us in the negotiations. Each of the individual countries has no independent trade policies, so everything has gone through Europe. The negotiations began in 2013; they were trying to rush them through to a conclusion by the end of 2015, so they didn’t bump into the US presidential election.

The idea is that these negotiations will lead to a treaty [that] would somehow boost the economies of Europe and the US to get them out of recession. Also, the plan was that it would re-strengthen the trans-Atlantic alliance and it would help isolate countries like Russia, Brazil, India and China, so it’s quite a defensive move on the geostrategic level. The other side of it is, it was sold to the people of Europe that it would bring growth and extra jobs, and that’s part of the problem, because now we realize that there will be no extra jobs. In fact, at least 1 million people will lose their jobs as a direct result of TTIP.

This is not the first time that such an agreement has been proposed, and there have been efforts, in fact, to get something like this done since the 1990s.

That’s absolutely correct. In 1995, a group was formed called the Transatlantic Business Dialogue, and it was composed of major companies from Europe and the US that got together to try to create a customs union where they could trade and invest without any restriction on their profits. They tried first through the OECD [Organization for Economic Cooperation and Development], in the context of the Multilateral Agreement on Investment. But there was a massive worldwide mobilization against it, and we saw the MAI collapse in 1998. They then tried again through the World Trade Organization, and once again, the WTO crashed in 2004 and all of these new powers had to be taken off the table. So we’ve already fought back against TTIP in its previous forms, and we have won both times. That’s why we’re confident we can win again.

One of the characteristics of this agreement is the secrecy that is surrounding it. Apparently, members of the European Parliament who have followed the negotiations for TTIP have been essentially forced to sign confidentiality agreements. Is this correct?

That’s absolutely correct, and the level of secrecy surrounding these negotiations means that ordinary people across Europe and most of the national members of parliament have no idea what’s going on. The European Commission placed a 30-year ban on all public access to the key documents behind TTIP right at the beginning of the negotiations. Any members of the European Parliament who are given access to the special reading rooms where they can see some of the documents – they have to sign documents promising that they will not share any of what they’ve seen outside that room. Really, it’s like a scene from the Stalinist Soviet past, where you have individual documents marked with secret markings, so that they can trace the source of any leaks when the documents do go out into the public domain. It’s profoundly un-transparent and anti-democratic, and it’s destroying any credibility within the European Commission itself.

One of the main areas of contention surrounding TTIP are the so-called “investor-state dispute settlements,” which would allow multinational corporations to sue sovereign governments over policies that they do not agree with, in special courts. Could you share with us some examples of what these settlement courts are like and what this would mean as far as oversight of these corporations?

You’re right to say that this is one of the most controversial areas of TTIP, this idea that corporations could be elevated to the status of nation-states, and they would be given the right to sue sovereign governments in special courts. I think it’s important to say that this is not using the normal, domestic judicial system; it’s a parallel system of justice [that] is available only to those corporations. So for the first time, a US corporation could have access to these corporate courts to be able to sue our governments if they felt that their profits in the future were going to be undermined.

The examples we have are extraordinary. For example, in Canada, they introduced a ban on the poisonous fuel additive MMT, and they were immediately sued by a US corporation called Ethyl, which produced exactly that fuel additive. The Canadian government was told that it had no right to block this suit, and in the end they backed down, they paid out compensation to the company, and they had to drop the ban, even at the same time that a similar ban was being introduced in all other countries around the world.

There are lots of other extraordinary examples. One example is when Slovakia reversed a health privatization, which had been brought in earlier by a previous government and which had been very unpopular. The new government reversed the health privatization, and was immediately sued by a Dutch company [that] was benefitting from the privatization. The corporate court found in favor of the Dutch company and awarded it 22 million euros in damages. Similarly, a French company, Veolia, is suing the government of Egypt for raising the minimum wage. Philip Morris is suing the government of Australia for plain packaging requirements on all cigarettes, and Vattenfall, the Swedish company, is suing the government of Germany for deciding to phase out nuclear power.

This is a fundamental challenge to our national sovereign democracies. Do we not have the right, as democratic countries, to decide our future policies without having to pay off every corporation [that] wants to take action against us? I think people in Europe are absolutely outraged when they hear what this ISDS clause means, and that’s why it’s become so toxic in the TTIP negotiations.

The real concern we have is that when countries concede there is the prospect of being sued in these corporate courts, they will become more unwilling to introduce regulations in the future. That’s what we call a regulatory chill because the chilling effect of seeing other countries being sued and having to pay out huge sums if they’re found that they have infringed legitimate expectations of investors, that’s enough to stop countries from taking out the regulations in the first place. It’s a profound threat to our national democracies, and that’s why when the European Commission held a consultation on these powers in 2014, they received a record 150,000 responses from across Europe, even though it was a very obscure, complicated resolution [that] they were asking about. Over 98 percent of them said, “No, we don’t want these new powers.” The problem is the European Commission is saying, “We don’t take orders from you; it’s not really you we’re listening to; we’re only keen for what the member-states of Europe tell us,” and that’s the governments. So there’s a profound gap between the official government line and what the people of Europe are calling for.

Let’s run down the possible impact of the Transatlantic Trade and Investment Partnership on some key issues, beginning with issues such as food and genetically modified organisms and the environment. How might TTIP and so-called regulatory harmonization impact policy on food safety and issues such as climate change?

The first thing to recognize is that TTIP is not your traditional trade agreement. In the past, trade negotiations were about border tariffs to goods, which are exported from one country and imported to another country. But already, the level of tariff barriers between the EU and the US is very low, so this time, it’ll be more about non-tariff barriers, and particularly getting rid of the regulatory barriers, as they call them, to trade. That means any regulations [that] will prevent corporations from being able to maximize their profits when they trade and invest across the Atlantic.

The harmonization agenda intends to reduce the standards so that they will provide less of an obstacle to the maximization of profit. We’re very concerned because clearly there are very great differences between the regulatory regimes in Europe and the US. In the US, in many areas such as food standards, the environment, pesticides, endocrine disruptors [and] labor standards, there are far weaker rules, and so we’re worried that in Europe, we might see a dilution of the standards which we have fought very hard to keep. Seventy percent of all food in US supermarkets contains genetically modified ingredients. Well, in Europe, we simply don’t want those ingredients, and yet now, the US Secretary of Agriculture is saying “you can’t have that choice.” Under TTIP, you don’t get to choose what you can and can’t eat. You have to accept these imports, or else it becomes a barrier to trade.

The proposed TTIP agreement may also have adverse impacts on education, as well as health and public services. What might be some of the impacts we might see in these areas?

One of the key areas [that] we’re very concerned about is the impact of TTIP on health, education and public services. We’ve seen the leaked offer made by the EU to the US and all of the sectors it’s prepared to put on the table in TTIP. That includes health services, education at all levels, water, sewage, rail transport and postal services. If you’ve already seen these services privatized under your own government regulations, then it will be almost impossible to get them back into public hands. And the other way around, it’s important to see this isn’t just the US corporations trying to break into European markets. The EU is also trying to force open the government procurement markets in the United States. That means, for example, getting rid of all of the local, “buy American” or “buy local” provisions that exist in certain states, which allow small, family firms to be able to survive and protects local jobs. The EU is saying, “This is a $650-billion market and we’re prevented from being able to enter it; we want TTIP to see an end to those protections.”

That brings us to the next big threat about TTIP – that it is forecast to cost the direct loss of 1 million jobs between the US and EU combined. Six hundred and eighty thousand of those jobs are set to go in the EU and 325,000 jobs in the US, and those are minimum figures, even if they don’t have the sort of ambitious TTIP they’re looking for. That’s the sort of social disaster [that] we can’t afford in Europe. If you think of the youth unemployment levels in Europe, in countries like Spain, Greece, but also elsewhere, they’re at record levels.

Could you go into detail about how this agreement will cost both the EU and the United States these jobs, and also, what the experience has been like in other similar treaties such as NAFTA, in terms of job creation or job loss?

The first thing to say is that this is a very common result from free trade agreements, that you see the “displacement” of labor. Lots of people end up losing their jobs and being forced out of the markets, which they are already working in. That was exactly the experience under NAFTA, when the US trade unions had been promised hundreds of thousands of new jobs as a result of NAFTA, and instead, the record showed that after 10 years, almost a million US workers had lost their jobs as a direct result of NAFTA.

Now this time, TTIP is predicted, under the official estimates, not our estimates, to lead to the direct loss of at least 1 million jobs through this process of dislocation, as small firms are brought into direct competition with bigger competitors. That means that TTIP is likely to bring the sort of dislocation we’ve seen in trade agreements like NAFTA, and it’s worth saying that although the original estimates for job losses were made by the official studies, which the European Commission got done at the beginning of the negotiations, new studies using the UN’s preferred model for estimating these types of gains and losses have come up [with] exactly the same results. At the end of 2014, a new study was published [that] also said that we can expect 600,000 jobs in the EU as a result of TTIP.

While these discussions are taking place on TTIP, there are also discussions ongoing between the United States and countries in the Pacific Rim for the so-called Trans-Pacific Partnership (TPP). Are we talking about essentially the same sort of agreement for the Pacific region?

It’s a very similar sort of negotiations. The US is looking west towards the Pacific countries, and that includes countries of Latin America and also Asia and the Pacific, through the Trans-Pacific Partnership, and its looking east towards Europe with the Transatlantic Trade and Investment Partnership. The basic premise behind both of those sets of negotiations is the same. It’s about prioritizing the needs of capital over the needs of society, working people and the environment.

I think it’s worth saying both of these agreements will lead to significant increases in greenhouse gas emissions and in climate change. We’ve already had a study from the European Commission, which admits that existing levels of climate change gases will go up, we will see a loss of biodiversity, and what the EU is hoping most, it will see a massive increase in fracking, which is the very controversial practice of trying to extract shale gas from underneath the soil and underneath, often, people’s homes. So the environmental impact of TTIP and the TPP will be catastrophic, at a time where we’re meant to be trying to reduce our impact on the environment and reduce climate change.

Ultimately, what is needed for TTIP to be agreed upon and ratified?

Firstly, once the negotiations have come to their end, the final text of TTIP would be presented to the Council of Ministers; that’s the 28 member-states of the EU. The heads of all of those member-states would have to vote in favor of TTIP for it to go through, and we’ve already had a very nice commitment from the new government in Greece, the Syriza government, that they would vote against TTIP. So we are hoping the people of Greece will be our saviors in this respect.

If the Council of Ministers agrees to TTIP, then it also goes to the European Parliament, and they have to ratify it. Unfortunately, at the moment, there is a majority in favor of TTIP amongst the European Parliament because the Social Democrats as well as all of the right-wing parties have decided that they would prefer to see this go through. But we’re working very hard to sway opinion there. Then, TTIP would have to go for ratification at the national parliament level, to each of the 28 member-states. But unfortunately, the European Commission is very well versed in wriggling through those procedural niceties, and often you can find that even if there is opposition in member-states, the passage of the bills happens anyway.

For us, the most important thing is to raise a massive wall of opposition to TTIP throughout the whole of Europe, and stop it before it can get to that stage of ratification. We have also a current negotiation, which is being completed between the EU and Canada, the Comprehensive Economic and Trade Agreement (CETA). The negotiations on that finished in September and the text is now being prepared for ratification through a process which is called “legal scrubbing,” and that is now going to come before the European Parliament, we believe early or halfway through 2016. That will be a key test case as to whether or not we can stop that type of deal, because CETA also includes the same investor-state dispute settlement powers, which allow corporations to sue national governments in their own parallel judicial system. If we allow CETA to go through, we know that the vast majority of US corporations already have Canadian subsidiaries, and they could use ISDS in the Canadian agreement to sue our governments anyway. So we’re fighting not just against TTIP, but also against CETA.

War on Want has been leading an awareness campaign against TTIP, and in addition, you have presented an alternative solution, the Alternative Trade Mandate. Tell us about your efforts and about this alternative proposal.

One of the problems we’ve had in fighting against the European Commission’s trade policy over the past 15 years is that every time we resist and every time we defeat a new proposal, it just comes back again in another guise. So we defeated the MAI in 1998, we defeated the WTO in 2004, and yet still, we’re fighting the same battles here in 2015. So we wanted to try to create a new model of how trade could look, how trade and investment policy within the EU could be completely reformed so it wouldn’t just lead to interests of transnational capital, but it would meet the interests of society, of working people, and it would end up protecting the environment rather than destroying it.

And so, together with a group of other civil society organizations across Europe, we worked on this Alternative Trade Mandate. It’s only a start; what it tries to do is, it says if you start with different principles, more progressive principles than just the maximization of profit, then you could come to different solutions. And that’s really our concern about TTIP and all the EU’s free-trade deals. They only address the interests of capital. They don’t address any of the interests [that] exist outside that transnational capital class, and that’s what the Alternative Trade Mandate tries to do. If you start with different principles, negotiate it a different way, you will come to different conclusions.