We are reposting this subject as the consequences of this alleged partnership can’t be valued high enough. We invite everybody to well reflect and research about this.
Imagine what would happen if foreign companies could sue governments directly for cash compensation over earnings lost because of strict labour or environmental legislation. This may sound far-fetched, but it was a provision of the Multilateral Agreement on Investment (MAI), a projected treaty negotiated in secret between 1995 and 1997 by the then 29 member states of the OECD (Organisation for Economic Cooperation and Development) (1). News about it got out just in time, causing an unprecedented wave of protests and derailing negotiations.
Now the agenda is back. Since July the European Union and the United States have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) or Transatlantic Free Trade Agreement (TAFTA), a modified version of the MAI under which existing legislation on both sides of the Atlantic will have to conform to the free trade norms established by and for large US and EU corporations, with failure to do so punishable by trade sanctions or the payment of millions of dollars in compensation to corporations.
Negotiations are expected to last another two years. The TTIP/TAFTA incorporates the most damaging elements of past agreements and expands on them. If it came into force, privileges enjoyed by foreign companies would become law and governments would have their hands tied for good. The agreement would be binding and permanent: even if public opinion or governments were to change, it could only be altered by consensus of all signatory nations. In Europe it would mirror the Trans-Pacific Partnership (TPP) due to be adopted by 12 Pacific Rim countries, which has been fiercely promoted by US business interests. Together, the TTIP/TAFTA and the TPP would form an economic empire capable of dictating conditions outside its own frontiers: any country seeking trade relations with the US or EU would be required to adopt the rules prevailing within the agreements as they stood.
The TTIP/TAFTA negotiations are taking place behind closed doors. The US delegations have more than 600 corporate trade advisers, who have unlimited access to the preparatory documents and to representatives of the US administration. Draft texts will not be released, and instructions have been given to keep the public and press in the dark until a final deal is signed. By then, it will be too late to change.
‘Some measure of discretion’
In a moment of candour, the recently retired US trade secretary, Ron Kirk, said: “There’s a practical reason [for which] we have to preserve some measure of discretion and confidentiality” (2). Secrecy was needed, he said, because the last time a draft text of such an ambitious agreement was released, the negotiations failed. This was an allusion to the Free Trade Agreement of the Americas (FTAA), an expanded version of the North American Free Trade Agreement (Nafta); the project, defended by the George W Bush administration, was posted on government websites in 2001. In response, Senator Elizabeth Warren argued that no agreement that could not withstand public scrutiny should ever be signed (3).
It’s easy to see why the US negotiators are keen to keep the TTIP/TAFTA negotiations secret. They are in no hurry to explain the impact the agreement would have at every level of government: federal, state and local authorities would be obliged to revise their policies from top to bottom so as to satisfy the appetite of the private sector in those sectors over which it does not yet have complete control. Food safety, chemical and toxics standards, healthcare and drug prices, Internet freedom and consumer privacy, energy and cultural “services”, patents and copyrights, natural resources, professional licensing, public utilities, immigration, government procurement: there is not one sphere of public interest that would not be subject to institutionalised free trade. The involvement of political representatives would be limited to negotiating with the private sector for the few crumbs of sovereignty it was willing to leave them.
The obligation of signatory countries to “ensure conformity of their laws, regulations and administrative procedures” to these terms would be strongly enforced. They would certainly be keen to honour the terms, since failure to do so would subject countries to legal challenges before tribunals specially created to arbitrate between investors and states, and having the power to authorise trade sanctions against the latter.
This is in line with other trade pacts already in force. Last year the World Trade Organisation (WTO) condemned the US over its rules on the “dolphin-safe” labelling of tuna and country-of-origin labelling of meat, and for banning candy-flavoured cigarettes, which it ruled were barriers to free trade. The WTO also ordered the EU to pay hundreds of millions of euros in penalties over its ban on imports of genetically modified organism (GMO) foods. The TTIP/TAFTA and the TPP would allow foreign companies to attack any signatory country whose policies impacted on their profits.
Companies would be able to demand compensation from countries whose health, financial, environmental and other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals. These tribunals, organised under World Bank and UN rules would have the power to order taxpayers to pay extensive compensation over legislation seen as undermining a company’s “expected future profits”.
Investor versus state
This “investor-state” (investor versus state) agenda, which seemed to have been derailed along with the MAI in 1998, has been quietly reintroduced over the years. A series of trade agreements signed by the US has forced taxpayers to pay more than $400m of compensation to companies over toxics bans and rules on the use of land, water and timber resources (4). Under these agreements, more than $14bn remains pending in corporate claims over drug patent, anti-pollution, climate, energy and other public interest policies.
The TTIP/TAFTA would vastly increase the bill for this legalised extortion, given the scale of the transatlantic trade interests at stake. Some 3,300 EU parent companies own more than 24,200 subsidiaries in the US, any one of which could decide to bring a claim. The scale of the threat far exceeds that associated with all previous agreements. The EU would be exposed to an even greater financial threat, given that 14,400 US-based corporations own more than 50,800 subsidiaries in Europe. In total, the TTIP/TAFTA would enable 75,000 companies in the US and the EU to attack public funds.
The investor-state regime was officially intended to ensure that foreign investors operating in developing countries without reliable court systems would obtain compensation if they were subjected to expropriation. But the US and the EU have strong judicial systems that fully uphold property law. The TTIP/TAFTA’s inclusion of this regime reveals that its aim is not investor protection but corporate empowerment.
The business lawyers who make up the tribunals are not accountable to any electorate. Many of them alternate between serving as judges and bringing cases for corporate clients against governments (5). The club of international investment lawyers is very small: 15 of them have handled 55% of all the cases examined to date. There is no appeal mechanism for their decisions.
‘Rights’ to protect
The “rights” the tribunals are supposed to protect are formulated in deliberately vague language, and are interpreted in a way that rarely serves the interests of the greatest possible number. They include the “right” to a regulatory framework that conforms to a corporation’s “expectations” — meaning that governments must not make any changes to regulatory policies once the investment has been made. Another “right” is to compensation for “indirect expropriation” — meaning that governments must pay if a regulatory policy diminishes the value of an investment even if such a policy applies equally to domestic and foreign firms. The tribunals also recognise the right of investors to acquire ever more land, resources, utilities and factories. The companies are not required to do anything in return: they have no obligation to the state and can pursue their activities when and wherever they like.
Some investors have a very broad conception of their rights. European companies have recently launched legal actions against the raising of the minimum wage in Egypt; Renco has fought anti-toxic emissions policy in Peru, using a free trade agreement between that country and the US to defend its right to pollute (6). US tobacco giant Philip Morris has launched cases against Uruguay and Australia over their anti-smoking legislation. US pharmaceutical manufacturer Eli Lilly has mounted an attack using the Nafta against Canada for setting patent standards that will help to ensure access to affordable medicines. And Swedish energy firm Vattenfall is using the investor-state regime to demand billions of dollars in compensation from Germany over its coal-fired electricity plant regulations and its phase-out of nuclear energy.
There is no limit to the amount of money a tribunal can order a government to pay a foreign company. A year ago, Ecuador was ordered to pay an oil company over $2bn (7). Even when governments win, they must pay the tribunal’s costs and legal fees, which average $8m per case, wasting scarce resources on defending public interest policies against corporate challenges. Governments often prefer to settle out of court: Canada avoided going before a tribunal by hastily reversing a ban on a toxic petrol additive.
The number of investor-state cases is growing. The UN Conference on Trade and Development reports a tenfold increase in the cumulative number of cases since 2000 (despite the fact that the system has existed since the 1950s). More cases were launched in 2012 than ever before. An entire industry of third party financing and specialist law firms has sprung up.
The establishment of a transatlantic free trade agreement is a longstanding project of the Trans-Atlantic Business Dialogue (TABD), a programme of the Trans-Atlantic Business Council (TBC). The TABD was created in 1995 by the US Department of Commerce and the European Commission to establish a direct dialogue between US and EU business leaders, US cabinet secretaries and EU commissioners. The TBC provides a forum for the largest US and EU corporations to coordinate attacks on consumer, environmental, climate and other public interest policies on either side of the Atlantic.
Their publicly expressed goal is to eliminate what they call “trade irritants”, which limit their ability to operate under the same rules in the US and EU, without government interference. “Regulatory convergence” and “mutual recognition” are the slogans they use to encourage governments to allow products and services that do not meet domestic standards.
Rewriting the script
But rather than calling for a relaxation of existing legislation, the transatlantic market activists propose to rewrite these themselves. The US Chamber of Commerce and BusinessEurope, two of the world’s largest business organisations, have called on TIPP-TAFTA negotiators to arrange for major industry stakeholders on both sides of the Atlantic to be “at the table with regulators to essentially co-write regulation.”
The corporate interests have been remarkably candid about their goals, for example rolling back GMO regulation. Half of US states are now considering GMO labelling requirements, a move supported by more than 80% of US consumers, many of whom regard the EU system with envy, but firms that produce and use GMOs are pushing for the TTIP/TAFTA to ban GMO labelling. The US National Confectioners Association has bluntly stated: “US industry also would like to see the US-EU FTA achieve progress in removing mandatory GMO labelling and traceability requirements.” The Biotechnology Industry Organization (BIO), a corporate alliance that includes Monsanto, is concerned that GMO products sold in the US are not automatically approved in the EU. The firms complain of the “significant and growing gap between the deregulation of a new biotechnology products in the United States and the approval of those products in the EU” (8). Monsanto and other BIO firms hope that the TTIP/TAFTA can be used to push through the “burgeoning backlog of GM products awaiting approval/processing” (9).
The offensive is equally vigorous over personal privacy. The Digital Trade Coalition, a group of high-tech and Internet companies, has encouraged TTIP/TAFTA negotiators to ensure that EU data privacy policies do not encumber the flow of personal data into the US. After the recent revelations of the US National Security Agency’s (NSA) indiscriminate data spying programmes, the tech corporations’ statement that “the current judgment of the EU that the US does not provide ‘adequate’ privacy protection is not reasonable” seems particularly outrageous. The US Council for International Business, which includes companies such as Verizon that have handed vast quantities of personal data over to the NSA, has stated: “The agreement should seek to circumscribe exceptions, such as security and privacy, to ensure they are not used as disguised barriers to trade.”
Food safety is also a target. The US meat industry is seeking to use the TTIP/TAFTA to remove the EU ban on the post-slaughter dipping of meat in chlorine. The North American Meat Association laments that “only the application of water and steam are permitted for use on meat carcasses by the EU.” Restaurants International, the owner of Kentucky Fried Chicken, explicitly asks that the TTIP/TAFTA be used to change EU food safety standards so that Europeans can buy chlorinated KFC. The American Meat Institute protests that “the EU continues to maintain its unjustified ban on meat produced with beta-agonist technologies, such as ractopamine hydrochloride.”
Ractopamine is a drug used to promote leanness of meat in cattle and pigs. It has been banned or limited in 160 nations (including EU member states, Russia and China) due to potential risks to human and animal health. The National Pork Producers Council sees these protective measures as a distortion of the principle of free trade that the TIPP-TAFTA must rectify urgently: “US pork producers will not accept any outcome other than the elimination of the EU ban on the use of ractopamine in the production process.” Meanwhile, BusinessEurope, Europe’s largest corporate group, states: “Key non-tariff barriers affecting EU exports to the US include the US Food Safety Modernization Act.” In force since 2011, it authorises the US Food and Drug Administration to recall contaminated food, a prerogative that European corporations would apparently like to see removed via the TTIP/TAFTA.
Airlines for America (A4A), the biggest US airline industry association, has drawn up a list of “needless regulations [that] impose a substantial drag on our industry” — which they hope can be dismantled via the TTIP/TAFTA. First is the EU Emissions Trading Scheme, Europe’s central climate change policy, which required airlines to pay for carbon emissions. A4A labels the policy a “barrier to progress,” asking that the scheme’s current temporary suspension be made permanent.
Return to Thatcherism
But the most determined enemy of regulation is the financial sector. Five years after the global financial crisis, the US and EU negotiators have agreed that regulation has had its day. The framework they want to put in place would remove all safeguards on high-risk investments and prevent governments from controlling the volume, nature or origin of financial products on the market. Basically, the word “regulation” would be removed from the dictionary.
Where has this return to Thatcherism come from? The Association of German Banks has “concerns” about the (timid) reform of Wall Street after the financial crisis of 2008. The association includes Deutsche Bank, which received hundreds of billions of dollars from the US Federal Reserve in 2009, in exchange for mortgage-backed securities (10). Deutsche Bank takes issue with the Volcker Rule, a centrepiece of the Wall Street reform, calling it “much too extraterritorially burdensome for non-US banks”. Insurance Europe, a federation of European insurance firms, has stated its hope that the TIPP-TAFTA can be used to “remove” collateral requirements that keep financial firms from taking on high-risk investments.
The European Services Forum, another association of which Deutsche Bank is a member, is lobbying at the transatlantic negotiations for US regulators to stop interfering in the affairs of big foreign banks operating in the US. US financial firms hope that the TTIP/TAFTA will bury, once and for all, EU plans for a tax on financial transactions. This already seems likely, given that the European Commission has decided that such a tax would go against WTO rules (11). Since the transatlantic free trade zone promises neoliberalism even more unfettered than that provided by the WTO, and the International Monetary Fund is opposed to any kind of controls on the movement of capital, the Tobin tax is no longer of much concern to anyone in the US.
Financial services would not be the only sector deregulated. The TIPP-TAFTA would open up to competition all “invisible” and public interest sectors. Signatory states would be obliged to submit their public services to market forces, and to abandon all regulation of foreign service providers operating within their territories. This would reduce to almost nothing the room for policy manoeuvre in health, energy, education, water and transport. The TTIP/TAFTA would even cover immigration, its promoters giving themselves the power to establish a common border policy — to facilitate the entry of those who have goods or services to sell to the detriment of others.
The pace of negotiations has quickened over the last few months. In Washington, the conventional wisdom is that European leaders are desperate for anything that will revive economic growth, even sacrificing social protections. The argument put forward by the promoters of the TIPP-TAFTA — that deregulated free trade would encourage trade and create jobs — seems to count for more than fears of social upheaval. Yet the remaining tariffs between the US and the EU are “already quite low” (12), as the US trade representative acknowledges. The TTIP/TAFTA’s creators admit that the primary goal is not tariff reduction, but the “elimination, reduction, or prevention of unnecessary behind the border” policies (13), such as domestic financial regulations, climate policies, food safety standards and product safety rules.
The few studies of the likely impact of the TIPP-TAFTA do not dwell on its social and economic consequences. A frequently cited report by the European Centre for International Political Economy claims that it will deliver economic benefits equivalent to three extra US cents per person per day — from 2029 onwards (14).
Despite this optimism, the same study estimates the increase in GDP in the EU and US resulting from the TIPP-TAFTA at only 0.06%. Even this is unrealistically high, since it assumes that free trade leads to strong economic growth, a theory regularly disproved by events. Economists estimate that the introduction of the fifth version of Apple’s iPhone delivered a GDP increase up to eight times higher than the projected effect of the TTIP/TAFTA.
Nearly all the studies on the TTIP/TAFTA have been funded by institutions in favour of free trade or by business organisations, which is why they do not mention its social costs or its direct victims, who could number in the hundreds of millions. But all is not yet lost. The fate of the MAI, the FTAA and some rounds of the WTO negotiations indicates that attempts to use trade as a sly way to dismantle social safeguards and install a junta of business leaders can be blocked.
Souce: Le Monde Diplomatique
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