eu

TTIP: what is going on, what can we do?

by Rosi Edwards

From being something that no-one knew about and could hardly pronounce, this Transatlantic Trade and Investment Partnership (TTIP) has become notorious. Even the Telegraph has noticed it. Groups in the UK, Europe and the US have steadily exposed and publicised the way negotiations were being conducted in secret, with only advisers from big business aware of the terms, and this has changed the whole process and prevented this treaty being quietly signed without any of us knowing what it means. The campaign has led to a great deal more scrutiny and opportunities for citizens of this country and the rest of Europe and the US to make their views known. Moseley and Kings Heath Branch Labour Party discussed the latest goings on with TTIP at our meeting on 9 July.

So what is TTIP?

The idea is to have a free trade area in goods and services between the USA and Europe. It is being negotiated between the USA and the European Commission on behalf of the European Union. Within the Commission is the Directorate General for Trade which is conducting the negotiations.

Where do some of the main parties stand on TTIP?

  • Conservatives and Lib Dems: wholly in favour of all of TTIP including ISDS;
  • UKIP: were wholly in favour on the grounds that it would sweep away all that pesky protective legislation, but since their conference in September 2014 are against, as it would also sweep away UK sovereignty;
  • Labour: in favour of TTIP in principle but not if it would put in jeopardy the NHS and other public services, and not unless ISDS or any other dispute resolution is removed or diluted to exclude all public policy issues; and negotiations should be much more transparent and geared to benefitting consumers and small firms;

Proponents of TTIP argue that it will bring wealth to Europe and the USA by making trade between the countries easier and removing tariff barriers. Anthea McIntyre, Conservative MEP for the West Midlands cites the European Commission estimate that: “a comprehensive deal with the US would benefit the EU to the tune of €120bn, which translates on average to an extra €545, (£433), in disposable income each year for a family of four in the EU. This is the best value stimulus that Europe can afford. For the UK in particular exports could increase by over £400million.”

Just for information: in April 2015, according to HMRC UK trade with the USA was: exports to US: £4.6bn; imports £2.8bn. UK trade with EU: exports £11bn; imports £17.6bn.

She goes on to say that “the aim of this agreement is to increase trade and investment between the EU and the US by unleashing the untapped potential of a truly transatlantic market place. The agreement is expected to create jobs and growth by delivering better access to the US market, achieving greater regulatory compatibility without lowering standards between the EU and the US, and paving the way for setting global standards. The European Council adopted a mandate for negotiations on 14 June 2013 which has since been made public.” (my italics)

The Transatlantic Trade and Investment Partnership (TTIP) will consist of three pillars:

  • Market access issues: attempt to reduce tariffs to 0% (current average around 4%) for all but the most sensitive lines;
  • Technical Barriers: aim to achieve as much regulatory convergence and mutual recognition as possible while seeking to remove as many of the technical barriers blocking trade as possible without lowering any safety standards on either side of the Atlantic;
  • Rules issues: EU and US to develop common approach to global trade issues following the failure of the Doha Round;

Now 4% isn’t much of a tariff, though McIntyre points out that anyone in the UK wanting to export sportswear faces a tariff of 32%. Though since scarcely any manufacture of sportswear (or any other clothing) now takes place in the UK, this doesn’t seem to warrant all this effort. And the European airlines can’t operate internal flights in the US, which keeps prices high, which is tough for US citizens but doesn’t seem a good enough reason for a trade and investment treaty.

Our MP Roger Godsiff in a letter to the Minister for Trade and Development questioned this view: “I understand that the only econometric modelling which has yet been done on TTIP estimates that the possible gains to GDP would be only 0.4% per year in the US by the time that its effects are fully reached in 2027, and 0.5% percent in the EU. This means that the average yearly boost to GDP is in the region of 0.03% to 0.05% or, under the less ambitious projection in the study, just 0.015% per year. Does the UK Government accept these figures, which as far as I know are the only ones which have been produced? I do not believe that this gain is significant enough to risk abandoning important regulations which protect consumer health or the environment, and nor is it sufficient to create meaningful numbers of jobs.”

A paper (The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability; GDAE Working Paper 14-03, October 2014) by Jeronim Capaldo of Tufts University in Massachusetts, predicts that over 10 years the average working Briton would be over £3,300 worse off as a result of the lower wages which TTIP will fuel. It also predicts that Europe will lose nearly 600,000 jobs as a result of the deal – that’s more than job losses in the crisis years of 2010 and 2011 – and that it will mean lower growth and would even mean lower net exports for Europe.

The enthusiasts who tell us TTIP will bring us all wealth (well, £433 a year for a family of four) ignore the evidence of previous similar partnerships, notably the North Atlantic Free Trade Area, agreed 20 years ago. It was supposed to bring vastly greater prosperity to Mexico, America and the USA, and thus stop immigrants from Mexico to the US (they’d be so well off in Mexico). Instead, the neoliberal economic policies this brought in created not prosperity in the US but the loss of an estimated million jobs as companies relocated in low-wage Mexico. What little protection there had been in Mexico for workers’ rights went, and prosperity did not dawn there either – there are still countless Mexicans trying to enter the US. And Canada has suffered attacks on new environmental legislation through the Investor-State Dispute Settlement (ISDS) provision.

 

What is ISDS?

ISDS gives companies the power to challenge democratic decisions made by a state and claim compensation if those decisions could be argued as harming their profits, using special tribunals which are not part of the state’s legal structures – they are separate tribunals of three commercial lawyers, one of whom is appointed by the company making the claim. Under similar treaties, costly claims have been successfully made or are underway. Examples are the legal challenge by the Hong Kong subsidiary of Philip Morris to the Australian government’s plan in cigarette packaging. The prospect of this will inhibit democratic processes and if disputes arise they will be both expensive and risky.

When the negotiations were about to begin, the Department for Business, Innovation and Skills sensibly sought a view from eminent economists. They reported in April 2013. They stated:
“Ultimately, we conclude that an EU-US investment treaty that does contain ISDS is likely to have few or no benefits to the UK, while having meaningful economic and political costs. Removing ISDS from the treaty would be unlikely to have an appreciable impact on the (already negligible) benefits of a treaty with ISDS, while largely removing the costs of the treaty to the UK.” (“Costs and Benefits of an EU-USA Investment Protection Treaty” Lange N Skovgaard Poulson, Oxford University; Jonathan Bonnitcha, LSE; Jason Webb Yackee, University of Wisconsin, on behalf of LSE Enterprise, April 2013)

So three eminent economists think the benefits of the treaty including ISDS will be negligible, and ISDS would be risky. Their concerns are already being borne out: already in negotiations with the US, EU officials are under pressure to water down or pull legislative proposals. The Guardian reported on 23 May 2015 that EU moves to regulate hormone-damaging chemicals linked to cancer were shelved following pressure from US trade officials over TTIP free trade deal.

Serious proponents of free markets are also coming out against TTIP. In an article on 11 October 2014, the Economist decried the ISDS mechanism which allows foreign corporations to sue national governments for damaging their profits. Listing the very large number of ISDS disputes (56 last year) it highlights the Swedish Utility company who are suing the German Government for 3.7bn Euros when it decided to shut down its nuclear power industry, and the award of $2.3bn to Occidental against the government of Ecuador over its termination (apparently legal) of an oil concession contract. The Economist adds: “At the same time, academics have begun to question whether ISDS delivers the benefits it is supposed to, in the form of increased foreign investment. Foreign investors can protect themselves against egregious governmental abuse by purchasing political-risk insurance, points out Terra Lawson-Remer, an economist at the Brookings Institution. Brazil continues to receive lots of foreign investment, despite its long-standing refusal to sign any treaty with an ISDS mechanism.”

So we don’t actually need ISDS in TTIP at all.

Secrecy v transparency

Organisations like War on Want and 38 Degrees, trades unions (particularly Unite) have been exposing the secret negotiations underway since 2013. And the light they have shone on these activities have led to changes: here is Anthea McIntyre, Conservative MEP for the West Midlands:

In order to be as transparent as possible and due to pressure from the INTA committee [Committee of International Trade of the European Parliament], the Commission has laid out new guidelines to its administration. All meetings held by senior civil servants in the European Commission from the 1st December 2014 onwards must be published on its websites. This information must include the names, dates and locations of said meetings. Commissioner Malmstrom went even further in stating that more negotiating texts, the documents guiding negotiations, were to be published. In addition, the reading room of all the negotiation papers is to be opened up to more than just the current set of MEPs on the International Trade Committee. Furthermore, less TTIP documents will be classified with ‘EU Restricted’ status, making external access even easier. All these measures highlight the desire to be as upfront and as transparent as possible.

None of this was happening until the pressure groups starred exposing the secret meetings and lobbying that had been going on.

 

What’s happening now?

In America, on 12 June 2015, President Obama went in person to the House of Representatives in an attempt to fast-track TTIP. The proposal was voted down because Democrats, strongly influenced by trades unions, voted with Republicans against it.

In Europe, according to Sion Simon, Labour MEP for the West Midlands:

The European Parliament is in the process of adopting a resolution on the ongoing negotiations for the Transatlantic Trade and Investment Partnership. The European Parliament has no formal power while trade negotiations are ongoing, but it has the power to veto any trade deal once negotiations are concluded. Labour MEPs have been pushing the European Parliament to adopt a text setting out clearly what we want to see in the final agreement and what we reject. This is one of the most significant means at our disposal to ensure that TTIP negotiators take the public’s concerns into account. The vote on this resolution will take place on Wednesday 8 July.

An amendment was tabled by Conservative MEPs to weaken a Labour amendment which was intended to protect the NHS and public services. “We had managed to introduce a strong paragraph calling for a full exclusion of all public services from TTIP, and now conservative MEPs are trying to remove a crucial element of this paragraph. I want to make it clear that I am not prepared to accept this. Labour MEPs will not accept TTIP if it endangers in any way our public services, and we have made it clear that we will vote against the final deal if this is case. We have therefore decided that we will vote against the European Parliament resolution if this conservative amendment is adopted,” continues Sion.

So what did happen on 8 July? According to the Blog Global Justice Now, “Pro-TTIP report passes European parliament after ‘dirty tricks’ from President Schulz.”

The European Parliament expressed a positive opinion on TTIP (the US-EU trade deal). “After angry scenes in Strasburg in which MEPs accused Parliamentary president Martin Schulz of “shredding the rules of procedure”, several much fought amendments were not voted on. The vote, formally on a report by the INTA (trade) Committee, had originally been scheduled to take place in June but had controversially been delayed at the last minute on the behest of President Schulz who had cited the high number of amendments to the report as the reason for the delay.

MEPs including Green MP Yannick Jadot accused President Schulz of continuing to use underhand political machinations to ensure that an amendment that was entirely opposed to ISDS wasn’t voted on in the plenary.

One of the proposals that MEPs were voting on was a modified version of the Investor State Dispute Settlement (ISDS) mechanism that would grant corporations more opportunities to sue the governments that were party to the trade deal in supranational secret courts. The proposal had been introduced by members of the Socialist and Democratic group in parliament as a means of allaying some of the public outcry against ISDS, but the ‘ISDS lite’ proposal was still opposed by the network of 480 civil society groups across Europe fighting against TTIP, who had argued that the proposal didn’t address the fundamental problems of ISDS.”

Nick Dearden of Global Justice Now said:

This corporate court system known as ISDS has proven to be one of the most controversial pieces of legislation that the European Parliament has ever debated. In the Commission’s own public consultation on the issue, 97% of the respondents were opposed to it. In the UK, the parliament Business (BIS) committee said that it was not convinced by the need for this mechanism. The only reason that MEPs are still trying so desperately to push this through is because of the enormously powerful corporate lobby machine in Brussels. TTIP is fundamentally an issue of people and democracy versus encroaching corporate power. Of course we praise those MEPs who voted against this toxic mechanism today, including members of the Labour Party. But we clearly have much more work to do to reclaim this parliament from the clutches of big business.

The European Parliament vote today is no way binding towards the final outcome of TTIP. Public opposition to TTIP is continuing to mushroom at an astonishing rate and will prove decisive in stopping this toxic trade deal from going through. The fact that pro-TTIP politicians like Martin Schulz are prepared to use such dirty political tricks to railroad this toxic trade deal through means that the enormous coalition that has formed across Europe in opposition to TTIP is going to have to up its game, and that’s what’s going to happen.

EU parliamentary leaders will try to spin this report as real departure on ISDS – but it’s nothing of the sort. If enacted, this would still hand massive powers to tens of thousands of US corporations to sue our government.

What we can do

If you don’t like TTIP, make your views known to your MP and MEPs. Ask them what they know about TTIP and if they think it’s so good, why. While free trade may be a good thing and no-one wants to argue with prosperity (though see the reports above which suggest it’s unlikely), let’s argue for a levelling up of standards of protection for workers, the environment, food safety, and honest banking, not levelling down. Let’s argue that a treaty which would in any way inhibit our ability to make policy is anti-democratic and not worth having; and that ISDS is definitely not wanted.

M&KH Branch Labour Party has been campaigning on TTIP since 2013, alongside 38 Degrees and Unite the Union, and with church groups and world development charities, on street stalls and demonstrations, writing letter and collecting signatures on petitions. We’ll be carrying on until we get the treaty we want – something that benefits the citizens of the UK, our fellow citizens in rope and the USA – or the process runs into the sand.

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