Trade deals rarely face much public interest or hype. They are technocratic affairs, focusing on harmonization of complicated technical standards. Few actual tariff barriers exist in trade, thanks to the World Trade Organization (WTO). FTAs mostly remove red tape inhibiting the free flow of goods and services due to regulatory standards of some description. Thousands of FTAs exist, and are uncontroversial. The EU recently signed one with Singapore, which merited next to no popular attention. Likewise with the WTO accords in Bali. TTIP bucks this trend. Public demonstrations occurred across cities across Europe on 11 October 2014. Campaigners in the US are equally uncomfortable with the planned deal. On 10 September 2014, 550 US campaign groups sent a letter to Congressmen, demanding measures, which would seriously limit progress in negotiating TTIP[2].
Fears Around TTIP
- Fears for transparency and ‘secret’ negotiations[7][8];
- Risk of a ‘race to the bottom’;
- Loss of jobs and cultural industry to competitors in overseas markets;
- Unfair treatment for businesses by foreign courts and legal systems;
- The investor-state dispute settlement mechanism (ISDS) being abused by business to prevent governments legislating in their citizens’ interests.
These are fears held by groups in both the US and EU. Governments and negotiating teams on both sides of the Atlantic deal with similar issues in relation to TTIP.
Trade negotiations are nearly always held in secret. There is nothing new about that[9]. However, for whatever reason, TTIP is clearly panicking citizens. So, in a bid to assuage fears over the negotiations, both the US and EU Commission launched public consultations, to gather citizen input. This was not enough to assuage detractors, so the European Commission published their negotiating mandate on 9 October 2014. This was done in a bid to prove that TTIP is not a corporate agenda, which would harm citizen interests[10]. Beyond this, Commission President Jean-Claude Juncker’s Transparency Initiative, aims to increase the accountability and transparency TTIP, and EU institutions more generally, to let voters know they are in control[11].
Negotiations are now much more transparent. But the moves have been insufficient to placate many demonstrators against TTIP. This is because of fears over TTIP that go beyond opaque negotiations. Fears such as the agreement causing a race to the bottom.
Risks of a race to the bottom have always existed around free trade, and capitalism generally. The idea of big business driving down wages, and product-quality, to turn a profit was the central theme in Karl Marx’s work, ‘The Communist Manifesto’. Such fears exist over TTIP. Both the United States government, and the European Commission have promised this will not be possible[12]. Products and services will only be part of the final deal if agreement on common standards to protect both product-quality and labour standards for the production of said products can be found[13]. On issues where fundamental disagreements exist (such as on the use of hormone beef), there will be no agreement, so such goods and services will not be included in any final deal[14].
Cultural industries are a matter of concern. The French government in particular fears the loss of their cinema industry to Hollywood. However, cultural exceptions are a very common practice (the EU has countless such exceptions). And indeed, on the cited issue, an exemption has already been agreed[15].
The risk of job losses is certainly valid. Industries risk being undercut by foreign competitors. It is likely that some companies will lose out in this, as is the way with competitive capitalist markets. The counter raised by figures including Bruno Maçáes, Portuguese Secretary of State for European Affairs, who states that TTIP represents enormous growth opportunities. New markets present the ability for growth of up to 500%[16]. As with any aspect of free trade, TTIP is likely to produce winners and losers. Advocates believe it will create a net gain, with detractors arguing the opposite.
It is hard to prove whether or not courts treat foreign companies unfairly. Much rancour was inspired by BNP Paribas being fined for supplying money to Sudan, Cuba, and Iran. TTIP will not create a risk of unfair treatment by foreign courts, other than by potentially making it easier for companies to operate in foreign markets and so be subject to the jurisdiction of foreign courts. TTIP will, debatably solve this issue with ISDS.
ISDS
Critics of ISDS argue arbitration panels unfairly favour big business over governments in disputes, and force governments to pay out millions simply because a government has acted in the public interest rather than the business interest[19]. The Australian government are often shown as victims in this light. They are presently in dispute with US tobacco maker Philip Morris over the rules on plain packaging for cigarettes. ISDS detractors argue ISDS arbitration courts are not required. Inter-state dispute settlement can be used as an alternative. Instead of companies being given privileged status as legal actors and being capable of taking governments to court, the company’s national government instead represent the company – either through direct political talks, or at the WTO’s dispute settlement mechanism[20]. It is further put forward that ISDS makes it harder for countries to legislate if they know they might face litigation[21]. The actual ISDS arbitration panels are criticised too. They are said to be:
- Opaque,
- Not subject to appeal,
- Tend to favour business interests,
- And do not have to follow precedent, making verdicts inconsistent, and so difficult to follow the law[22].
Where the Negotiators Stand
Whether ISDS deserves all the focus it receives is a serious questions. Alessia Mosca, S&D MEP and member of the EU Parliamentary Trade Committee has pointed out that, although it merits scrutiny, other parts of the treaty, which are equally important, do not receive anything like the same amount of focus[28]. There are those who argue that the ire levied at TTIP, and ISDS in particular, are simply the disenfranchised, seeking a target for their socio-economic marginalisation. How much water these arguments hold is somewhat moot, as the criticisms against ISDS are justified, and the questions demand answers.
The Commission also considers TTIP to be crucial as it is a mechanism to harmonize standards of behaviour for businesses operating trans-atlantically. Presently there is only one EU market to access, but there exist some 1,400 odd treaties between EU member states and the US, each stipulating different standards for how investors and companies can behave. This has led to enormous fragmentation, make the common market far less wieldy. TTIP’s ISDS would create one standard for behaviour, and so make the single market manageable again[29].
So the TTIP negotiations continue, but with heavy public scrutiny. The European Commission is answering citizen calls for more involvement, with First Vice President Frans Timmermans now being required to co-sign off on agreement made on the ISDS issue, alongside Commissioner for trade Cecilia Malmström. The issue is contested as to whether it will be of net benefit, creating prosperity, new jobs and growth, or whether it will create a race to the bottom, harming customers and citizens, and privileging big business.
Bibliography
[2] Tony Burke (2014), “TTIP Free Trade Deal Hit By Fresh Blow”, Left Foot Forward, 11 September 2014, available at: http://leftfootforward.org/2014/09/ttip-free-trade-deal-hit-by-fresh-blow/
[3]Gaia Foundation (2014), “What is the TTIP? Why is it bad news? What can you do about it in the UK?”, 27 June 2014, available at: http://www.gaiafoundation.org/orsinittip
[4] Editorial Team (2014), “Top 3 Reasons Why The US Should Oppose TTIP”, Atlantic-Community.org, 7 April 2014, available at: http://www.atlantic-community.org/-/top-3-reasons-why-us-should-oppose-ttip
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[9] Lorenzo Coutla (2014), “Europe's controversial TTIP treaty: The good, the bad and the unnecessary”, International Institute for Environment and Development, 10 July 2014, available at: http://www.iied.org/europes-controversial-ttip-treaty-good-bad-unnecessary
[10] Bruno Maçáes, Portuguese Secretary of State for European Affairs, speaking at, “ISDS and TTIP – Must-Have or Deal Breaker?”, European Policy Centre (EPC) conference, 20 November 2014, Brussels
[11] Press Team (2014), “Transparency initiative – Press conference by Commissioner Malmström”, European Commission, 25 November 2014, available at: http://europa.eu/rapid/press-release_MEX-14-2125_en.htm
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[28] Alessia Mosca, Member of the European Parliament (MEP), speaking at, “ISDS and TTIP – Must-Have or Deal Breaker?”, European Policy Centre (EPC) conference, 20 November 2014, Brussels
[29] Leopoldo Rubinacci, European Commission, DG Trade, Head of Unit, Investment, speaking at, “ISDS and TTIP – Must-Have or Deal Breaker?”, European Policy Centre (EPC) conference, 20 November 2014, Brussels