The Up-Coming US/EU Free Trade Agreement: TTIP/TAFTA
Unbeknown to the vast majority of the population, an ignorance it would seem shared by the media, in secret and by unelected apparatchiks, the future of our world is being constructed.
What is commonly described as the EU/US free trade agreement but which is officially known as the Transatlantic Trade and Investment Partnership (TTIP) in Europe and the Transatlantic Free Trade Agreement (TAFTA) in the USA is being negotiated, on our behalf but in secret, by the unelected European Commission in Brussels.
The intention of all this cloak-and-dagger activity is to benefit transnational corporations and make the world safe for profit. As a mirror to the TTIP, the Transpacific Partnership (TPP) is simultaneously being negotiated, on the other side of the world, but with the same purpose.
The intention of both these agreements is to subjugate public policy, arrived at by democratically elected and accountable bodies, to the legalised absolute right of corporations to maximise their profits.
How is this to be done? This is, as one can imagine, a complex matter and here I will only present a basic picture. But I hope it will be enough to make you worried for the future and encourage you to agitate against it.
Who is deciding all of this? The TTIP is being negotiated behind closed doors by officials of the European Trade Commission and US Trade representatives. Our elected MEPs and the European Parliament have no input into these negotiations as neither do the national parliaments of the 28 EU member states or elected representatives in the US Congress. Nor do they have access to the negotiating texts. Negotiations are held in complete secrecy and we only know about them via leaks. There is a complete lack of transparency.
These frameworks of regulations covering the ability of transnational corporations to trade obviously vary from country to country reflecting different histories, culture and the balance of class forces in each location. To give themselves the maximum advantage transnationals are pushing via TTIP and TPP for regulatory harmonisation. Considering where the impetus for these trade agreements comes from, it is obvious that this harmonisation will represent a loosening of regulatory constraints rather than a tightening of regulation. Where EU regulation is stricter than in the US it will be reduced to the laxer US level and vice versa. Where this may not be possible they are pushing for “Mutual Recognition”, each trading partner recognising the standards of the other. One effect will be that a corporation operating in two jurisdictions will be able to choose which set of regulations is more favourable to it and comply with those, its choice being accepted by the regulatory authorities of the country it is operating in.
- What is the Free Trade Agreement about? Its aim is to reduce barriers to trade and hence to corporate profit. Transnational corporations are concerned about two main impediments to their ability to maximise profits:
- 1) Tariff barriers. These are where national governments raise revenues by imposing taxes on traded goods. These may also be used to protect a national industry e.g., to protect a domestic car industry a government may impose a tariff on importing cars from a competitor nation. In an increasingly globalized world market tariff barriers are reduced, becoming less of a ‘problem’ to transnational corporations.
- 2) Non-tariff barriers. These are all the other impediments to “free” trade resulting from the legislation of national governments. It is often these non-tariff barriers that protect the people from the more voracious aspects of unbridled capitalism. These non-tariff barriers may be: health and safety legislation, controls on the ingredients of processed foods or the raising of livestock e.g., animal welfare legislation or controls on the use of antibiotics or pesticides in the production of our food, limits on the sale of tobacco and alcohol, holiday entitlements for workers, sick pay and benefits, the right of workers to join unions and defend their working conditions and remuneration, restrictions on the ability of banks and other financial institutions to do more or less what they want. These ‘non-tariff barriers’ interfere with the ability of corporations to “freely” maximise profit and are indeed referred to in the trade agreement as “trade irritants”. A major trade irritant in the UK until recently was the NHS system of public provision of public health care, closed to private companies. Or as they prefer to call it “the healthcare market”.
For the UK it is a relaxation of financial regulations that is most important reflecting the importance of the City of London in the promotion of TTIP. Here US regulation is now stronger, and the proposals amount to a Bankers’ Charter leading to the elimination of the regulations that have had leading banking institutions fined in recent years over such matters as the manipulation of the Libor rates. Anticipating the consequences of this harmonisation, the Health & Social Care Act 2012 was specifically designed to fit in with the corporate-benefit basis of the US public healthcare model, opening up the provision of healthcare, previously the remit of the NHS, to US transnational healthcare providers and other multinational corporates.
There are similar concerns over the opening up of the British education system to the transnationals. (See the University and College Union Briefing Document, which gives a very good overall analysis of TTIP)
How are the transnational corporations going to protect their interests? Trade agreements under the auspices of the World Trade Organisation (WTO) usually have a state-to -state mechanism for resolving disputes between corporate investors and national governments; when companies feel that government legislation threatens their actual or potential profits, their home state raises a dispute on their behalf against the other country, and the remedy is state-to –state trade sanctions. TTIP/TPP are different. They contain a mechanism for Investor-State Dispute Settlement (ISDS). ISDS is perhaps the most pernicious element to TTIP.
If a transnational company feels that the legislation of a nation state threatens its future profits it will be able to sue the government. (This may even be for potential profit it may calculate it might have earned at some time in the future). The company’s case will be heard by an extra-territorial tribunal i.e., not a legally constituted court in a national jurisdiction, where the case will be adjudicated by 3 “judges” who are corporate trade lawyers who will not operate within the ideology of impartiality that prevails in a court of law but just on the basis of ‘free trade’, with no consideration of other values, such as environment, human rights, safety etc. So ISDS can lead to national governments having to pay billions of tax-payers’ money to the corporations. It will also lead to legislators having their hands tied in regard to new legislation.
So the application of ISDS will have a profound effect on the democratic process. Not only does it have the real potential of costing governments billions in compensation payments to big business there is also the danger of “legislative chill”. This is where governments scrutinise and then decide to pull potential legislation because of the perceived danger of corporate litigation. A future Labour government may decide not to legislate to rein in the activities of the financial sector because of the risk of ISDS. It almost certainly means that, no matter how disastrous the “reforms” of the NHS turn out to be, a future government will not undo the Health and Social Care Act because of the costs of compensating, for example, Virgin Care and United Health. Similarly it doesn’t bode well for those hoping for an eventual renationalisation of the railways in Britain.
- If you think this sounds far-fetched and that nobody would allow this to happen, currently:-
- A Swedish company, Vattenfall, is suing the German government as a result of its decision in the post-Fukushima world to cease the generation of electricity from nuclear power. The Swedish company, which makes machinery used in nuclear power stations, is suing for loss of potential profit.
- Infinito Gold, a Canadian mining company, is currently suing the small Central American country of Costa Rica for a billion dollars because that country has decided it does not want its pristine subtropical forest to end up like parts of the Amazon rainforest that have been totally devastated by the surface extraction of gold and the use of mercury in that process.
- Philip Morris, the US tobacco giant, is using Hong Kong to sue the Australian government because of its decision to legislate for the sale of cigarettes only in plain packaging.
It is relevant that in the Canada/US Free Trade Agreement, still being negotiated, Canada is insisting that its healthcare system is exempt from the scope of the agreement; Cameron is insisting that everything (including provision of healthcare) will be covered by TTIP. A CBI (Confederation of British Industry) representative at a recent parliamentary meeting on TTIP said that, for the corporations that the CBI represents public procurement, that is all government spending, is the “big prize”. The EU target is US public procurement, especially at the level of US states. But our public procurement including, EU welfare systems, the NHS, education, elements of state administration, security, prisons, will all be up for grabs with tax-payers’ money going directly to multinational corporations. In this way public welfare becomes “corporate welfare”.
Another aspect of TTIP is Mode 4, which covers transnational corporations moving workers across borders as part of trade-in-services. The EU stipulates ‘skilled’ workers in its Mode 4 offers. This then allows corporations to bring in skilled temporary workers, inevitably as cheaper labour. Where this has happened in existing agreements, it has led to a general undermining of salaries and working conditions.
It was pointed out above that national governments have no input or scrutiny of the negotiations over TTIP. But surely they will have some say once the negotiations are complete? Yes they will, but there will be no right of amendment or modification. The governments of the 28 EU member states will only be allowed a YES/NO vote. A state will have to buy the whole package or reject it in its entirety. The European Parliament will discuss the Agreement after negotiations have concluded and then, assuming assent has been given, the Commission will provisionally implement the Agreement even before Members State parliaments have discussed it. Under those circumstances it can be seen as little more than a rubber-stamping procedure particularly in Britain’s case where the ConDem government is one of the main proponents of TTIP.
Our elected representatives may have no input into the negotiations but corporate lobbyists certainly have the ear of the negotiators. In the TPP negotiations, corporate interests met with negotiators some 150 plus times while representatives of “civil society” (NGOs and the like) only managed to access them some half-a-dozen times.
What can you do if all this alarms you?
Tony Hodges - UCU London Retired Members Committee
- Firstly you could affiliate to stopttip which is organising to oppose the Free Trade Agreement. (There is a fairly high email load here but it is good stuff from people who know what they’re talking about)
Stopttipfirstname.lastname@example.org - A website is in preparation.
- Request a StopTTIP speaker for a meeting of your organisation
- Seek the endorsement of your organisation for this campaign.
- Write to your MEP telling them that you oppose the democratic deficit implicit, not only in the complete opacity of the negotiation process, but also in the ISDS system.
- Write to your MP with the same concerns. At the end of the day, although they will obviously be whipped, it is these people who will be giving the TTIP the legislative nod.
- George Monbiot has written extensively on TTIP on his blog and he is worth following for information as is Glyn Moody, one of whose blogposts has been included above.
- See also Open Democracy:
- The Seattle to Brussels Network
- and Corporate Europe Observatory provide up-to-date, informed and critical perspectives.
- There is an exceedingly thorough examination of TTIP in December’s Le Monde Diplomatique (in English!)
- And an article in a recent New Statesman looking at the consequences of TTIP implementation