02 January 2016


The most important news of the last few days is undoubtedly that the European Commission's consultation on ISDS in TTIP has been extended by a week until 13 July - for full details on how to reply, see previous update.  Other than than, what is striking is how TTIP is moving into the mainstream, with developments across the entire political and economic spectrum.

For example, over 100 organisations from 17 EU member states have expressed support for organising an European Citizens' Initiative (ECI) on TTIP:

Organisations from all across Europe are currently gearing up for a European Citizens’ Initiative (ECI) with the aim of repealing the European Union’s negotiating mandate for the Transatlantic Trade Investor Partnership (TTIP) and not concluding the Comprehensive Economic and Trade Agreement (CETA). The registration of the ECI is planned for July. The collection of signatures is due to start in September 2014.

It is highly significant to see CETA here as well as TTIP - a recognition of the fact that allowing CETA to be ratified with an ISDS chapter would effectively allow US companies to sue Europe using Canadian subsidiaries as a proxy.  Here's what an ECI is and does:

An ECI can request a legislative act from the European Commission and force a hearing at the European Parliament. For an ECI to be successful, at least one million signatures must be collected. At the same time, country-specific quorums must be achieved in at least seven EU member states. In Germany, for example, the quorum will be 72,000 signatures. France has to collect 55,500 signatures and the United Kingdom and Italy need 54,750 signatures. Estonia, Malta, Luxembourg and Cyprus have to collect 4,5000 signatures. The level of the quorum depends on each country’s number of deputies in the European Parliament. The most notorious ECI so far is “right2water”. It led to the exclusion of the liberalisation of water supply from the scope of the EU directive on concessions.

Clearly, achieving those numbers will require considerable effort, but the success of the right2water ECI shows that it can be done.  Moreover, resistance to TTIP is growing rapidly, and brings together groups from the most diverse areas, so the pool of support is probably even larger than that for water as a basic right.

At the other end of the political spectrum, the person likely to be the next President of the European Commission, Jean-Claude Juncker, was quizzed today by the Greens in the European Parliament, who are deciding whether or not to support him.  Here's what he said when asked about the inclusion of ISDS in TTIP:

Juncker replied that he does not understand why great democracies do not have confidence in their own judicial systems, and that he personally does not see the benefits of ”private courts”, which does not need to justify their decisions. ”I believe in the rule of law, and the application of the rule of law”, Juncker concluded.

TTIP has assumed such importance in the European Union, that Juncker had earlier made it one of just five priorities that he promises to set himself.  Here's what he wrote [.pdf]:

under my presidency, the Commission will neg otiate a reasonable and balanced trade agreement with the United States of America. It is anachronistic that, in the 21st century, Europeans and Americans still impose customs duties on each other’s products. These should be swiftly and fully abolished. I also believe that we can go a significant step further in recognisin g each other’s product standards or working towards t ransatlantic standards. However, as Commission President, I will also be very clear tha t I will not sacrifice Europe’s safety, health, social and data protection standards on the altar of free trade. Notably, the safety of the food we eat and the protection of Europeans' personal data will be non-negotiable for me as Commission President.

Talking of sacrificing standards, the US Senate Finance Committee on trade enforcement  has held some interesting hearings in which representatives of US agricultural industries made it clear that the European Commission's statements that food standards would not be lowered were simply "not an acceptable position". The TTIP site put together by the European  Greens has a good explanation of what is likely to happen if the Commission caves on this:

allowing US lobby groups like the National Chicken Council to challenge EU regulations as part of TTIP, could result in sub-quality produce entering the EU market; an inferior, but cheaper, product to buy. This in turn risks undermining EU producers who could be priced out of the market. The knock on effect of this alone will be the downward pressure on regulations, as EU farmers will call for changes to allow them to compete with these cheaper US imports. Hence, the inferior product will reign. Our regulators and the Commission should be doing all in their power to resist such moves by industry.

That's true for all sectors: if cheaper, lower-quality US products are allowed into the EU, European manufacturers will be unable to compete, and so will either go bankrupt or - more likely - lobby hard for EU standards to be lowered in order to create a "level playing field."  The net result will be an inevitable race to the bottom.

Despite swearing blind that it won't, the European Commission may well capitulate on this - after all, that's what happens in tough negotiations.  You state you absolutely won't compromise, but what you really mean is you are going to extract a high price for your capitulation.  The problem is that we already know of two areas where the European Commission is pushing hard for things that the US is also swearing blind that it won't do - which also means that it will extract a high price for doing so, like lowering EU health and safety standards.

One concerns energy.  Here's what the EU Greens' blog post has to say about a recent leak here (also includes the full document):

The Washington Post has leaked a non-paper by the European Union regarding the Energy and Raw Materials chapter of TTIP. The letter, dated May 27 2014, details efforts by the Commission to secure commitments from the US to export natural gas and crude oil to Europe, the latter of which has not been available for export since it was banned by Congress in 1975.

Such a move has alarmed environmentalists on both sides of the Atlantic, who fear that such an deal as part of TTIP will lock both sides into increased use of fossil fuels, driving up harmful production methods such as fracking in the US, and making it more difficult for both regions to curb their greenhouse gas emissions.

Here's why the US will extract a high price for agreeing to this:

US Senator Edward J. Markey (D-Mass.) released a statement on Tuesday criticising the move saying that “attempting to use a transatlantic trade agreement to scuttle established U.S. law prohibiting the export of America’s oil would be a titanic mistake for our consumers, national security, and energy policy. The Middle East is in turmoil. Gas prices are sky high in the middle of driving season. And we still import millions of barrels of oil a day. Exporting our crude oil is not the answer for anyone but oil companies."

This secret move is particularly blameworthy, because it goes against the European Commission's own research that analysed the environmental impact of TTIP [.pdf]:

[TTIP] is estimated to lead to a total global increase of 4 and 11 thousand metric tons under the two different experiments respectively [less ambitious and ambitious]. CO2- emissions are expected to increase in the EU and US by around 3 and 4 thousand metric tons, respectively. On the other hand, emissions are expected to decrease somewhat across some other countries. Looking at the percentage increase, the estimated changes are shown to be very small, being 0.02 per cent in the
less ambitious case and 0.07 per cent in the ambitious case. Depending on future changes in the coverage of emissions trading in the EU (increased and more binding coverage), and possibilities for future introduction of such a scheme in the US, the net effect would then be even smaller than
reported here.

As that makes clear, the modelling takes no account of the possibility that the US will export oil and gas directly to the EU - something that is likely to increase emissions drastically, especially if it slows down the move to renewables.

The other leak concerns financial services, analysed here by Corporate Europe Observatory:

If the EU has its way, a final agreement between the EU and the US to establish a free trade and investment agreement the Transatlantic Trade and Investment Partnership (TTIP) will weaken regulation and raise obstacles to much needed reform of the financial sector. That is the conclusion after the leak of an EU proposal for so-called “regulatory cooperation” on financial regulation.1 tabled by the EU in March 2014. Regulatory cooperation is a continuous process of ironing out disagreements and differences between the two Parties to ensure agreement on what constitutes legitimate regulation – which in this case, would serve the interests of the financial industry. In the document, the EU suggests a number of mechanisms that will both scale back existing regulation, and prevent future regulation that might contradict the interests of financial corporations from both sides of the Atlantic. The leak follows news that EU negotiators have increased political pressure on the US to accept negotiations on “financial regulatory cooperation", which the US negotiators have so far refused.

This shows that the US is likely to demand extremely painful concessions from the EU if it were to contemplate accepting the Commission's proposal.  The end-result would be a lose-lose situation: losses for US consumers thanks to weakened oversight of the financial industry, and losses for EU consumers thanks to weakened health and safety.   And for those who like to claim that such compromises can't possibly be made, it's worth bearing in mind that if they aren't, there will be almost nothing major in TTIP, and only a tiny fraction of the already small gains that are predicted to flow will be realised.  In other words, the EU and US have painted themselves into a corner, where the only way out is to make extremely broad and bad concessions in a desperate attempt to justify their earlier exaggerated promises.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

No comments: