TTIP Update XVII

In a previous update a couple of months ago, I discussed a low-key meeting that took place between  the European Commission and some of the biggest companies in the world (mostly from the US), which essentially revealed that the Commission was, after all, intending to bring back some of ACTA's worst ideas.  Things just became rather more worrying on this front as the result of the following announcement in the US:

This morning, President Obama nominated Robert Holleyman as deputy U.S. trade representative. If confirmed by the U.S. Senate, Holleyman will help lead the effort to pass the controversial Trans-Pacific Partnership trade deal.

Notably, Holleyman is a former lobbyist who led efforts to pass the Stop Online Piracy Act legislation, better known as SOPA, when he was leader of the Business Software Alliance. The SOPA debate (along with its sister legislation, PROTECT-IP, in the Senate) brought a spotlight on industry efforts to undermine Internet freedom through what many considered to be draconian intellectual property policy.

As that notes, he was formerly head of BSA; that means that he is no friend of open source.  Coupled with the European Commission's admission that it wants to bring in "Christmas list" of new demands in the area of intellectual monopolies, makes TTIP alll-the-more dangerous for both free software and online freedom.

Alongside that bad news, we've also had some good news in the shape of two significant leaks of relevant documents.  One concerns the Canada-EU trade agreement (CETA), which I discussed recently.  The German Pirate Party has obtained a copy of part of this agreement (.pdf), dating from December last year - quite recent, then.  Interestingly, even here there are sections that have still not been finalised. The leaked section concerns intellectual monopolies; a good early analysis of it has been made by Ante Wessels of FFII.  In particular, he compares its measures to those found in ACTA:

The damages in CETA do not contain the much criticized retail price damages, which were part of ACTA, the Anti-Counterfeiting Trade Agreement, and are part of the EU – Singapore trade agreement proposal.

The injunctions do not contain “inaudita altera parte”, the much dreaded possibility to decide on injunctions without the infringer present.

So far so good. But, I do not see what was footnote 2 in ACTA, and is footnote 33 in the EU – Singapore agreement, the right to exclude patents from the scope of the civil enforcement section.

All the strong enforcement measures (damages, injunctions, provisional measures) will be available for software patent trolls.

The strong enforcement measures further create problems for access to knowledge and taking part in culture, for remix artists, and for inventors involved in sequential invention – like software developers.

Bad news, in other words.  And because agreements tend to build on one another - as I mentioned last year - it's very likely some of this language will re-appear in TTIP. 

The other leak is the European Commission's draft proposal on trade in services, investment and e-commerce for the TTIP negotiations [.pdf], obtained by the German newspaper Die Zeit.  Although it dates from July last year, it still offers some useful insight into the Commission's general thinking as regards TTIP.  That's also true of its latest official document, entitled "EU US Trade Agreement – The Facts" [.pdf]  This is very similar to the text that I discussed in October last year, headed "Incorrect claims about investor-state dispute settlement".  It takes the same form: statements allegedly made about TTIP, and their rebuttal.  For example:

TTIP will enable foreign firms to undermine EU laws. FALSE

An existing law cannot be undermined by a trade agreement. An existing ban on fracking or chlorine - washed chicken cannot be questioned, for example.

Although that's true, the European Commission omits to mention that  foreign firms will be able to undermine *future* laws by threatening to sue the EU or national governments if they are brought it.  This chilling effect is not merely theoretical: it has been happening for years in Canada, where NAFTA's ISDS chapter has allowed US companies to undermine proposed legislation in just this way.  If TTIP includes ISDS, it seems certain US companies will do the same here in Europe.  And remember that the great thing about such threats is that they can work even when it is not at all clear that the company would win in the ISDS tribunals: the mere possibility of such expensive actions is usually enough to "persuade" governments to back down.  That's the real danger here.

Moreover, from a true statement, the European Commission rather naughtily segues into an untrue one:

What the agreement does provide for – and this is in the EU's interest - is a ban on discrimination. That means that what applies to domestic firms must also apply to foreign firms.

What the Commission elides here is the fact that US companies will actually have *more* rights than EU companies in Europe, because EU companies are not able to sue there for any claimed "indirect expropriation of future profits", as US companies can using ISDS.  So introducing ISDS in TTIP will actually put EU companies at a disadvantage in their home markets.

TTIP will lead to privatisation in areas such as health care, water and education. FALSE

The TTIP Agreement has nothing to do with privatisation – only governments can decide that. No free trade agreement obliges the EU's Member States to liberalise or privatise the water industry or other public services, such as public health systems public transport or the education system.

Again, this misses the point - wilfully, perhaps.  The problem with TTIP is not that it will force nations to privatise services, but that once they are privatised, and provided by a US company, it will effectively be impossible to re-nationalise them.  That's because under ISDS that would amount to an "expropriation" of future profits, which would mean that the US companies concerned could sue the governments for those "lost" monies.  That would make re-nationalisation punitively expensive, and ensure that it rarely happened.

TTIP will restrict the rights of internet users. FALSE

Both the EU and the US have efficient regulations for protecting intellectual property rights, even though their respective regulations achieve their goals in different ways. The TTIP aims to simplify trade between the EU and the US without weakening these regulations. The TTIP will not be "ACTA throug h the back door" and it will not call into question the European Parliament's rejection of the trade agreement on combatting piracy of labels and products (ACTA).

As I noted above: the European Commission has already said to corporates that ACTA by the back door is precisely what it hopes to achieve here; the appointment of one of the main SOPA supporters as a key US negotiator guarantees that this will be high on the agenda.

The TTIP is undemocratic and elected politicians have no influence over it. FALSE

Both the EU's national parliaments as well as MEPs in the European P arliament have considerable influence on the TTIP negotiations. The European Commission is negotiating the trade agreement in the name of, and with a mandate from, the EU's Member States. The EU's negotiators meet weekly with representatives of the dem ocratically elected governments of the Member States in order to brief them 'live' before, during and after negotiating rounds and to take into consideration their positions. The European Parliament is also regularly informed of the state of the negotiati ons so that the positions and interests of the democratically elected parliamentarians can also be taken into consideration in the negotiations. Finally, it will be the EU Member States and the European Parliament which will have the last word on the TTIP and so it is obvious their interests will be taken into consideration.

This is nonsense.  Here's the reality:

USTR demands for hyper-secrecy in the Trans Atlantic Trade and Investment Partnership (TTIP) continue to be a major block to continuing negotiations. The current issue under discussion is access to US proposals by EU member states — which are of course themselves sovereign countries. The member states are demanding access to the text of proposals that would constrain their domestic law making, as they ave had in all other EU trade agreements (e.g. the recent EU-Canada FTA). But Inside US Trade (2/28/2014) reports that USTR Froman has offered only that “he might be able to allow the European Commission to share the U.S. negotiating documents it receives if they were accessible only in a secure reading room.”

As that makes clear, even the "representatives of the democratically elected governments of the Member States" don't have access to all the relevant documents: they are currently being offered peeks in a "secure reading room" - how insulting is that? For MEPs, it's even worse:

There is no word yet on whether EU Members of Parliament will obtain access to consolidated TTIP text after each negotiation round, as was provided in at the end of the negotiation of the of the Anti-Counterfeiting Trade Agreement (ACTA). Increased access to ACTA text for EU (but not US) legislative staff followed a March 2010 Resolution of the EU Parliament lambasting the Commission for its intense secrecy, including accusations of violations of the Lisbon Treaty governing EU affairs.

If MEPs can't even see the text, they are certainly not informed.  There's no way that they can exert "considerable influence" as the Commission claims if they don't know what's in the negotiating texts.  And that "last word" is literally that: a single, "yes" or "no" vote, where MEPs will be under tremendous pressure to accept the horrors - things like ISDS - for the sake of some much-needed growth.  Talking of which:

Why bother? The Transatlantic trade and Investment Partnership could have a similar effect to a package of economic stimulus measures. It could boost growth by 0.5% of GDP or some €120 bn, equivalent to €500 for every EU household because savings for companies also mean cheaper products, higher quality and more choice for consumers.

Yet again, the European Commission fails to note that the extra 0.5% GDP growth is compared to what would be obtained without TTIP *in 2027*, after 10 years of the agreement.  That means that even under the most favourable circumstances - something else it also fails to note - TTIP will increase GDP by just 0.05% each year on average.  It makes no sense to talk about the cumulative GDP effect: it might as well say that TTIP will produce 50% GDP growth - but without mentioning that would only be in 2117.  The only meaningful measure is the extra GDP growth that TTIP will produce *each year*, and that figure is 0.05%. 

Claiming that TTIP "could boost growth by 0.5% of GDP" without explaining that this is the  cumulative, not annual, figure is a serious misrepresentation of what its own projections suggest might happen in the best-case scenario - and certainly not a "fact" about the EU-US trade negotiations.

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TTIP Update XVI

The European Commissioner responsible for TTIP, Karel De Gucht, has just held a "stocktaking" of the negotiations with his US counterpart, Michael Froman.  One thing that's clear is that the talks aren't moving as fast as politicians had hoped when they announced the project.  For example, nobody is talking about finishing this year, and even 2015 is looking hard.

Nonetheless, the stocktaking represents the start of the next phase, when the serious bargaining begins.  That's led to more information beginning to flow about TTIP, which is good news given the almost total secrecy in which the negotiations are being conducted.

Talking of transparency, and its absence, there's a very interesting report in the Financial Times on the subject (subscription required, but limited free access available with simple registration.)  It seems that one of Washington’s "main negotiating priorities" will be - you guessed it - transparency, but only in the domain of regulations:

There is, they argue, too little transparency in the current European process, with businesses given too few opportunities to see or comment on proposed regulations.

US companies also complain that they are often shut out of the regulatory process in Europe because the EU system can depend on closed consultations with local industry groups that make it difficult for outsiders to register their concerns.

Specifically, here's what the US wants:

The US has proposed that EU regulators be required to publish the proposed texts of regulations and open them to public comment. It also wants regulators to be required to consider comments and explain why they had adopted – or failed to adopt – outside suggestions when they finalise regulations.

US officials argue that there is a growing emphasis on transparency in regulation and greater public consultations are increasingly important.

Well, that's certainly true, and since TTIP is by the European Commission's own admission 80% about regulations, that same logic would suggest that the proposed TTIP texts should be published for public comment.  And as far as the concern that "secret" negotiating documents can't be revealed for fear that they will undermine tactical plans, that's simple to address: publish all documents once they are "tabled" - that is, revealed to the US negotiators.  At that point, they are no longer secret, so publishing them can't do any harm, but allows the public to see what is being done in their name.

Aside from this deeply ironic call for "transparency" from the US negotiators, who are even more paranoid about secrecy than the EU side, there is another little tidbit about the negotiations, which comes courtesy of CETAWatch, a Canadian organisation focussed on the Canada-EU trade agreement I've discussed before.   According to CETAWatch, CETA's investment chapter will be published by the European Commission in March, as part of its imminent public consultation on the highly-controversial ISDS provisions.  That would seem to suggest that the European Commission's forthcoming proposals for ISDS, which the EU public will have the chance to comment on, will be based on CETA.  That makes sense, because we know from another leak that CETA's ISDS provisions contain many of the modifications that the Commission has said it will seek in TTIP.  Unfortunately, those modifications do not, in fact, address the deep underlying problems of ISDS, as I've discussed in another TTIP Update.

That obviously raises the question: what will the US be proposing on ISDS?  Fortunately, we have another (public) document, that gives us a good idea.  It's called the US Model Bilateral Investment Treaty, and was released a couple of years ago.  I won't go through it because it's hard to tell how close it will be to TTIP; moreover, the US Institute For Policy Studies has already produced a useful analysis that points out its many deficiencies.

Significantly, it is ISDS that lies at the heart of a column published recently in the Wall Street Journal by Ken Clarke.  It isn't the first time that Clarke has defended ISDS: he did it back in November last year, when he attacked George Monbiot for his article in the Guardian pointing out the dangers of TAFTA/TTIP, and of ISDS in particular.

I want to explore Clarke's latest article in some detail here, because it shows us the latest arguments that are being deployed by those seeking to defend ISDS.  After some misleading comments that ISDS is "not about setting standards for consumer or environmental protection" - which is true, but it does allow corporates to challenge existing and cast a chill over future regulations in these areas - Clarke moves on to his main argument:

Investment protection of this sort is a longstanding policy of the U.K. and the rest of the European Union. Investment protection clauses are reflected in more than 1,400 bilateral investment treaties that have been concluded by EU member states. They have been included in every British investment deal, without doing the slightest damage to consumer protection or undermining our sovereignty or our legal system.

Despite the ubiquity of such clauses, no successful investment protection case has ever been brought against the British government by a foreign company. Yet bilateral investment agreements are not always honored by the countries that sign up to them.

That figure of 1,400 bilateral investment treaties has been rolled out by the European Commission, too.  As I've noted before, the reason these treaties have not proved problematic for either the EU - or the UK - is that they were all with relatively small nations, often emerging economies.  As such, they were generally the *recipients* of EU or UK investment; the ISDS clauses were there to protect the EU and UK investors.  There was no "damage" to the sovereignty of the EU or the UK legal system because there were few or zero companies able to take the UK to ISDS tribunals.

Contrast that situation with TTIP: there we are talking about giving US companies - surely the most litigious in the world - the power to sue the EU and member states (including the UK) over court cases or legislation they think causes their profits to suffer.  Given the US tendency to sue first and ask questions later, this will inevitably lead to a flood of actions against EU nations.  There is simply comparison with those 1400 BITs.

And when the terms are breached, it is companies—small and medium firms, as well as big businesses—that are the losers. In cases like these, access to proper legal redress is vital.

Well, it's important to note that ISDS gives companies *additional* legal redress: they are already able to use the local courts.  The argument that such courts may be biased simply doesn't apply to TTIP - unless Clarke wishes to suggest that the US is a banana republic.  But there's something that he omits to mention here.  Not only could US companies use ISDS provisions in TTIP to sue the EU or members states (or quite possibly both), but the costs for defending those actions would be borne by the tax payer.  That is, this is a classic case of privatising the profits, and socialising the costs:  companies get to keep any awards they win in ISDS tribunals, but it is the public that must pay when countries lose there.

But investment protection is not simply a rod for business to beat up government, as some pressure groups have recently claimed. The arbitration system is independent and cases are decided on their merits. Investors do not win them all.

According to a study by the United Nations Conference on Trade and Development, only 31% of concluded investment-protection cases have been resolved in favor of the investor.

The arbitration system can hardly be called "independent" when tribunals are made up of the same lawyers that represent companies using them.  There are no measures to prevent conflicts of interest.  As for that figure of 31% of cases being resolved in favour of the investor, that's true, but a historical aggregate over the last 20 years.  Here's what happened in 2012 according to UNCTAD's 2013 review of ISDS cases:

In 70% of the public decisions addressing the merits of the dispute, investors’ claims were accepted, at least in part. Nine public decisions rendered in 2012 awarded damages to the claimant, including the highest award in the history of ISDS (US$ 1.77 billion) in Occidental v. Ecuador, a case arising out of a unilateral termination by the State of an oil contract.

That is, more recently, cases have been concluded in favour of corporates.  Worryingly, there is another upward trend  here:

In 2012, 58 new cases were initiated, which constitutes the highest number of known treaty-based disputes ever filed in one year and confirms that foreign investors are increasingly resorting to investor-State arbitration.

Finally, Clarke wheels out the old line about improving ISDS:

Moreover, the European Commission—which is beginning a three-month public consultation on its approach to investment protection in the treaty with the U.S.—has made clear that any agreement will include safeguards to ensure that the arbitration process is transparent and that businesses cannot thwart governments' legitimate public-policy objectives.

First, the "safeguards" that the European Commission has placed in CETA have major shortcomings;  and secondly, it's not at all clear whether the US will accept even those modest changes.  So there is no way Clarke can claim that TTIP will include safeguards that "ensure" that "businesses cannot thwart governments' legitimate public-policy objectives" - it's quite likely there won't be.  And without effective safeguards, the EU and UK would be exposed to the very real - and very grave - problems that ISDS gives rise to.

Full list of previous TTIP Updates.

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TTIP Update XV

When it became clear that the EU and US were planning to start negotiations for what would be the world's largest trade agreement, people naturally started analysing its various aspects and possibilities.  This formed a kind of conceptual framework for TTIP/TAFTA.  But in a stunning demonstration of the fact that it's foolish to think that those frameworks are anything more than contingent and provisional, Edward Snowden's revelations about massive spying by the NSA (with quite a lot of help from GCHQ) has introduced an important new element.

Although there was some talk of cancelling the negotiations completely in the wake of the leaks, that was never a realistic possibility given the vested interests here.  But as Snowden's documents have continued to appear, each one filling out the picture of total online surveillance, so the anger has been building up in Europe.  One manifestation of that came in a speech from Viviane Reding , Vice-President of the European Commission, EU Justice Commissioner who said:

data protection is a fundamental right. The reason for this is rooted in our historical experience with dictatorships from the right and from the left of the political spectrum. They have led to a common understanding in Europe that privacy is an integral part of human dignity and personal freedom. Control of every movement, every word or every e-mail made for private purposes is not compatible with Europe's fundamental values or our common understanding of a free society.

She then went on to make the following significant call:

This is why I warn against bringing data protection to the [TTIP] trade talks. Data protection is not red tape or a tariff. It is a fundamental right and as such it is not negotiable.

That was back in October.  At around the same time, the  Civil Liberties, Justice and Home Affairs (LIBE) committee was conducting a major inquiry into the mass surveillance of EU citizens.  It has just agreed its final report and recommendations:

The text, passed by 33 votes to 7 with 17 abstentions, condemns the “vast, systemic, blanket collection of personal data of innocent people, often comprising intimate personal information”, adding that “the fight against terrorism can never be a justification for untargeted, secret or even illegal mass surveillance programmes”.

"We now have a comprehensive text that for the first time brings together in-depth recommendations on Edward Snowden's allegations of NSA spying and an action plan for the future. The Civil Liberties Committee inquiry came at a crucial time, along with Snowden´s allegations and the EU data protection regulation. I hope that this document will be supported by the full Parliament and that it will last beyond the next European Parliament's mandate", said rapporteur Claude Moraes (S&D, UK), after the vote.

The recommendations are wide-ranging, but in this update's context here's the key one:

Data protection must be excluded from trade talks

Parliament's consent to the final Transatlantic Trade and Investment Partnership (TTIP) deal with the US “could be endangered as long as blanket mass surveillance activities and the interception of communications in EU institutions and diplomatic representations are not fully stopped and an adequate solution for data privacy rights of EU citizens, including administrative and judicial redress is not found”, MEPs say.

Parliament should therefore withhold its consent to the TTIP agreement unless it fully respects fundamental rights enshrined in the EU Charter, the text adds, stressing that data protection should be ruled out of the trade talks.

It's worth exploring what that means in practice. 

The European Parliament has no power to demand that data protection be removed from TTIP, so instead the LIBE committee wants to apply some pressure indirectly.  Since any final TAFTA/TTIP agreement must be approved by a plenary vote in the European Parliament, a statement that it would not give its approval if there were a data protection chapter means that the European Commission, which is responsible for the negotiations, would be aware of the risk of including it.  It might decide that it would be better to drop data protection in order not to antagonise the European Parliament before the big "yes" or "no" vote on TTIP.

However, the US has been adamant that data protection must be included in TTIP: that's because all the most powerful US Internet companies – Google, Microsoft, Facebook etc. - need it so that they can continue to take data about European citizens out of Europe and use it as they wish.  They do this currently under the so-called Safe Harbour scheme, which is, in fact, not very safe for Europeans – something mentioned by the LIBE committee's report:

MEPs call for the "immediate suspension" of the Safe Harbour privacy principles (voluntary data protection standards for non-EU companies transferring EU citizens’ personal data to the US). These principles “do not provide adequate protection for EU citizens” say MEPs, who urge the US to propose new personal data transfer rules that meet EU data protection requirements.

The Terrorist Finance Tracking Programme (TFTP) deal should also be suspended until allegations that US authorities have access to EU citizens’ bank data outside the agreement are clarified, say MEPs. The EU-US data protection framework agreement to be struck in spring 2014 must ensure proper judicial redress for EU citizens whose personal data are transferred to the US, they add.

If the LIBE committee's recommendation to keep data protection out of TAFTA/TTIP is accepted by the European Parliament, this will create a big problem for the European Commission's TTIP negotiators, since the US will be pushing very hard to keep data protection in the agreement.  The European Parliament vote is scheduled to take place in March, and I'll be writing about what we should be saying to our MEPs nearer the time.

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