02 January 2016


In my last update I raised the issue of an apparently obscure facet of investment chapters - the presence of "Most Favoured Nation" clauses - that actually undermined any attempts to bring in "safeguards" against the manifest dangers of that form of supranational corporate sovereignty known as investor-state dispute settlement (ISDS).  Cynics among you probably thought this was nit-picking, but support for the idea has arrived from a rather surprising quarter:

According to Rupert Schlegelmilch, director of services, investment and procurement at DG Trade, speaking on behalf of the Commission at a public debate yesterday on investor-state dispute settlement (ISDS) and the TTIP, the EU is rethinking a “Most Favoured Nation” (MFN) article in the CETA investment chapter that new analysis suggests undermines much of the more careful language in the treaty relating to a government's ability to regulate. As written, the MFN article would let Canadian and EU investors ignore the definitions of “fair and equitable treatment” or “indirect expropriation” in CETA and take other more investor-friendly language from past agreements signed by either party.

Obviously, it's great news that the European Commission has recognised there's a problem here, and is trying to do something about it.  But this incident actually underlines a much bigger point.  The problem with MFN only emerged because the CETA chapter dealing with ISDS was leaked.  That meant that experts such as Nathalie Bernasconi-Osterwalder and Howard Mann at the International Institute for Sustainable Development were able to spot this huge loophole there [.pdf].  But that immediately raises the question: how many other serious problems are lurking in the many other chapters of CETA for which we do not have leaked versions? Would it not be better to have many experts searching for loopholes in the agreement *before* it is signed, rather than afterwards, when fixing them will be very hard, if not impossible?

Really, this comes down to applying Linus' Law -  the insight that given enough eyeballs, all bugs are shallow - to the code of international treaties.  Not to do so is wilfully to throw away the power of parallelised production, which allows better results to be produced much more quickly.  In other words, keeping texts secret is not just an insult to the public in whose name they are being negotiated, but actually leads to worse results thanks to the lack of proper scrutiny.

So, in the absence of texts that have been discussed during the latest round of the TAFTA/TTIP negotations - texts that are by definition not secret, since they have been discussed by both sides - in this update I will analyse some other documents that provide useful insights.

For example, the US Trade Representative, which is the negotiation partner for the European Commission, has released what it calls "U.S. Objectives, U.S. Benefits In the Transatlantic Trade and Investment Partnership: A Detailed View".  That in itself is interesting, and shows that it is feeling the pressure to open up.  Of course, releasing one very general document does little to address that, but it does contain one or two tidbits worth noting.

For example, in the section "Electronic commerce and information and communication technology (ICT) services" we read:

free flows of data are a critical component of the business model for service and manufacturing enterprises in the U.S. and the EU and key to their competitiveness.

But as we know, the European Parliament has come out against such "free flows", and wants to see European-style data protection for personal data when it leaves the EU.  So it will be interesting to see how that works out.

One aspect of TTIP that has not been discussed much yet concerns intellectual monopolies.  Here's what the USTR has to say on the subject:

We seek new opportunities to advance and defend the interests of U.S. creators, innovators, businesses, farmers, and workers with respect to strong protection and effective enforcement of intellectual property rights, including their ability to compete in foreign markets.

The question is: will the US try to use TAFTA/TTIP to bring in ACTA-like measures?  Since everything is being negotiated behind closed doors, we don't yet know, but I'm confident we'll soon see some leaks that gives us an insight into this crucial area.

Finally, there is the controversial area of investor-state dispute settlement (ISDS):

We recognize that trade agreements that are effectively enforced establish a set of high-standard rules and obligations that help keep markets open to U.S. exporters and investors and ensure a level playing field.  When we negotiate and implement a trade agreement, we expect our trading partners to stick by the rules and obligations they agreed to.  However, when our trading partners fall short of what they promised – whether to reduce tariffs, implement strong labor and environment provisions, or otherwise provide U.S. exporters fair and non-discriminatory treatment – we need a means to hold them accountable.  This is why we have this important objective to establish a fair and open dispute settlement mechanism.  Dispute settlement gives us a means to discuss our concerns in a timely way and to seek compensation if they are not addressed.  Dispute settlement with trading partners in T-TIP will give the American public the confidence that we not only negotiate strong, high-standard obligations, but that we also have the means to enforce them.

You've got to love the subtle suggestion that the European Union is some kind of large, fragmented banana republic where the rule of law is uncertain, and thus supranational tribunals of the kind employed by ISDS are indispensable.  Just can't trust that sneaky Euro-trash...

Meanwhile, we're starting to see some sectoral information about what various industry want from TTIP, and hidden away in the details there are some interesting angles.  For example, here is a "Proposal on US-EU Regulatory Cooperation" [.pdf] from The European Crop Protection Association (ECPA) and CropLife America (CLA).  As you might expect, most of that document falls outside the scope of this column, but there's one section that certainly touches on issues I've discussed before:

ECPA and CLA strongly support that the EU and US continue to promote (a) minimum standards of 10 years for protecting regulatory data, and (b) protection of CBI [Confidential Business Information] through Free Trade Agreements with other countries, where protection of regulatory data is sub-optimal. Protection of regulatory data from unauthorized use by competitors is essential for stimulating investment in research and development of agricultural crop protection products. This protection provides benefits to all stakeholders – from farmers to consumers – ultimately contributing to the economic development of industrialized and developing countries alike.

That "regulatory data" is essentially health and safety information.  This must be made available as open data, for the same reason that clinical data should be.  It allows it to be checked by independent researchers, and also allows it to be analysed and re-used in new ways.  Making it proprietary as the ECPA and CLA call for blocks those kind of uses.  As it becomes more widely recognised that data is a crucial resource for the future, we need a general principle that "regulatory data is always open data" to be enshrined not just in TTIP, but in all agreements.

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