TTIP Update XXI

In Update XX, I noted that despite the European Commission's claims to the contrary, there was simply no evidence of any meaningful transparency in TTIP.  However, that changed today, when the Commission announced its consultation on investor-state dispute settlement.  That's because as well as the questions and useful background explanations, the consultation document [.pdf] includes not only provisions found in typical bilateral investment treaties but - and this is particularly welcome - the relevant text developed in the Canada-EU trade agreement (CETA).  That is what transparency looks like, and needs to be extended to all the other chapters.

However, I don't intend to go through the consultation document here: I'll save that for another update (we have three months to reply to the consultation, so there's no huge rush.)  Instead, I want to address an issue that comes up again and again, and which represents such a serious misrepresentation of the facts, that I really want to try to deal with it once and for all.

It concerns the famous 119 billion euros figure for the "extra" GDP growth that TTIP will produce, which I've mentioned several times before.  Here's its latest appearance, on a page from the powerful EPP political group in the European Parliament, which is entitled "Mythbusting the EU-US free trade agreement".  The relevant section reads as follows:

What's in it for the EU?

The impact assessment launched by the European Union before the start of negotiations in March 2013 suggested that the EU's economy could benefit by 119 billion euros a year and the US economy could gain an extra 95 billion a year - with gains of 545 euros for each EU family. These gains would be the result of removing tariffs and doing away with unnecessary rules and bureaucratic hurdles that make it difficult to buy and sell across the Atlantic.

Notice there's that "119 billion euros" figure, but notice that the claim is Europe would gain this *each year*.  The @EPPGroup account confirmed to me that the EPP had obtained that number from the main European Commission research on the economic impact on TTIP, "Reducing Transatlantic Barriers to Trade and Investment ; An Economic Assessment" [.pdf].  And sure enough, on page vii of that document, in the Key Findings section, we read:

An ambitious and comprehensive transatlantic trade and iinvestment agreement could bring significant economic gains as a whole for the EU (€119 billion a year) and US (€95 billion a year). 

This translates to an extra €545 in disposable income each year for a family of 4 in the EU, on average, and €655 per family in the US.

This is very curious, because that's not what the actual report says at all. 

The correct interpretation is found on page 3 of the report, where we find that 119 billion euros figure again, which is explained as the change in GDP.  But it is not the change in GDP *each year*, which is what the Key Findings section claims; in rather small print on that page, underneath the table labelled "Summary of Macroeconomic Effect", we read the words:

Note:  estimates to be interpreted as changes relative to a projected 2027 global economy

The fact that the Key Findings is wrong is confirmed on page 33 of the report, which explains things at more length:

The results are reported with respect to an economic benchmark projected out to the year 2027 which implies that that they capture the impact of the agreement a full ten years after the implementation of the agreement, providing the longer-term impact of policy changes.

As that makes clear, the results give the difference between two situations: the EU's economy in 2027 if TTIP had been in place for ten years, and the EU's economy in 2027 without TTIP.  The different is expressed as the extra GDP that would result - 119 billion euros in the most optimistic case.

So what the report is saying is that the extra growth that TTIP could bring in 2027 relative to the economy in 2027 without TTIP in 119 billion euros. 
Which means that the 119 billion euros is the *cumulative* benefit for those ten years of TTIP, compared to the ten years without TTIP.  On average, then, the claim is that TTIP could produce 11.9 billion euros extra for the European economy each year, for ten years, giving an *overall* boost to the EU GDP of 119 billion.Which means that the 119 billion euros is the *eventual* level of GDP boost, after 10 years.

It can be a little hard juggling abstractions like extra growth in GDP over a decade; so let's look at the other figure that the Key Findings mentions: "an extra €545 in disposable income each year for a family of 4 in the EU," which works out as around 136 euros per person. Assuming there are 500 million people in the EU, if that figure were *each year*, as claimed, this would give a total increase in EU disposable income of 500 million times 136 euros, which equals 68 billion euros, each year, thanks to TTIP.

But as we've seen, the increase in GDP each year is only around 12 billion euros on average.  So that 68 billion euros figure clearly refers to the *cumulative* increase in disposable income in 2027, after 10 years of TTIP, compared to what what people would have had in 2027 without TTIP, just as the figure of 119 billion euros refers to the cumulative gain for the economy.

Put another way, that 545 euros is the *total* increase in disposable income across 10 years, not the extra disposable income available each year, as the Key Findings erroneously claims.  That equates to an average of 60 euros extra, per year, for a family of 4.

In other words, even under the most optimistic assumptions, and using the European Commission's own forecasts, the real-life effect of TTIP would be that each week, everyone in a typical European family of 4 would be able to buy an extra cup of coffee, but only after TTIP had been in place for 10 years.  Before that people will have to share their coffee.

As this shows, even under the most favourable assumptions - assumptions that are unlikely to be realised - TTIP's benefit to European citizens would be negligible.  The threats, on the other hand, are considerable, not least from investor-state dispute settlement, which is likely to cast a chill over legislative initiatives in the European Union, just as it did in Canada under NAFTA.

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TTIP Update XX

At this stage of the negotiations it's clear that there are two controversial areas: investor-state dispute settlement, and transparency.  I've discussed ISDS extensively in the previous updates, so here I'd like to look more closely at transparency - or rather its absence.

As I mentioned in my previous update, the fact that that US Trade Representative felt compelled to release a document that it called "U.S. Objectives, U.S. Benefits In the Transatlantic Trade and Investment Partnership: A Detailed View" is a sign that it knows full well that the talks so far have been almost totally devoid of transparency: the document is a sop - nothing more - to the crescendo of voices calling for real openness.  After all, had transparency been something that the USTR truly cared about, it would have released the document as soon as the TTIP negotiations began, not some arbitrary number of months later.

Further proof that the US and European Commission are under pressure is a new document from the latter entitled "Towards an EU-US trade deal: Making trade work for you" with the subhead "We're listening and engaging" [.pdf].  And if you were wondering who "you" is, here's a clue:

We know we'll only get the best deal - one that benefits as many Europeans as possible - if we involve everyone with a stake in the outcome, at every stage.  That's why we're consulting the public.

The rest of the four-page document is essentially geared to trying to demonstrate that fact.  Here, for example:

1. Consulting and updating the public

We're using the web to get a clearer idea of the wider public's wishes and concerns."

Great. So how might the European Commission be doing that?

Before the talks started we held three online consultations to better understand the measures people want us to take to boost EU-US trade and investment.

Well, that's impressive, no?  Just one small problem. Even though I follow trade deals pretty closely - indeed, I sometime think I'm the only person reading some of these documents apart from those drafting them and their mothers - I didn't take part in any of those consultations.  Not, as you might imagine, because I didn't think they were important, or that I wanted to keep my views secret, but for the simple reason that I never heard about them.  Any of them.  And I would humbly like to submit that if I didn't get to hear about them, not many members of the public did either (indeed, I'd really like to hear from any readers that did know about any of these three consultations.) 

I've now managed to track down some of those consultations.  For example, according to the results of one held in 2012, a total of 114 submissions were made, of which precisely 8 came from citizens. Another consultation from earlier that year received 48 submissions, of which two look as if they might be from the public.  That's transparency?

Of course, for the next TTIP consultation, things are likely to be very different, because we all know it's coming, and are keen to take part:

A fourth consultation asks for the public's views on our draft ideas on protect ing investors . These include improvements to a system known as investor - state dispute settlement, or ISDS, which dates back over 30 years.

There are (at least) three interesting things about that short statement.  First, the complete non-sequitur that ISDS dates back over 30 years.  As I've discussed at length, the point is that ISDS has never existed between the US and European Union, and yet despite that fact, the US has invested 1.3 trillion euros in Europe, and Europe 1.4 trillion euros in the US, so the absence of ISDS doesn't seem to have deterred investors that much.

The second point is that the consultation will be about "protecting investors" - not, as you might hope, about protecting the public, who are the main ones threatened by the ability of corporations to sue entire nations under ISDS, with the taxpayer footing the billing when the companies win.  No, we're only being asked about how to protect those defenceless international investors.

Finally, we have flagged up here the fact that the public will be asked for comments to "improvements" the system, which suggests that we will not be given the option to reject the idea completely.  Instead, I suspect, the questions will be framed largely in terms of "do you think the improvements are, er, improvements."  We shall see - this consultation is rumoured to be coming out later this week.

This section on "Consulting and updating the public" concludes:

We also post regular updates on our dedicated webpages and on Twitter . And we regularly brief the press.

That's good, but is purely about "updating the public": the striking thing is that the only "consulting" going on in this section was from those mysteriously invisible three consultations that very few members of the public responded to.  So as evidence of "transparency" I think we can call this section a failure.

Other sections try to convince us that talking to the governments of the 28 member states, to MEPs, and to some "TTIP Advisory Group" somehow counts as transparency, but of course it doesn't.  It keeps the information in the same restricted circles it's always been in (and even then, we know that very little useful information is passed on to MEPs, say.)  Section 4 "Hearing from other interest groups" - recognises there are others involved:

We want to hear from everyone with a stake in this agreement.

We regularly meet people from firms large and small, and from industry bodies.  This is, after all, a deal about the mechanics of doing business.  So we need their input.

That's absolutely true - and nobody said they shouldn't provide it.  But the other side of the coin is that this is a deal about the everyday lives of 500 million Europeans, and so we need *their* input.  Here's how the Commission thinks it is getting it:

But we also listen to people from:

consumer associations
trades unions
environmental groups and other NGOs

In addition:

Since 2012, we've held seven meetings in Brussels - each time with hundreds of people.

Well, yes, but unfortunately it tends to be hundreds of people from companies.  For example, back in January, the European Commission organised what it called an "Outreach" session in Brussels.  It sounded promising:

As part of an ongoing commitment to transparency, DG TRADE is organising a second Civil Society Dialogue to discuss progress and to exchange views on the TTIP.

Well, that's great - except for one tiny detail: out of the 196 entities registered as taking part, only about 30 were from civil society: the rest were - you guessed it - from companies and their lobbying organisations.  In other words, wherever you turn, it is always business that has the loudest voice, and has most of the Commission's attention.  Civil society - never mind the actual public - barely gets a look in.

The final hope for some transparency is the sharing of documents, covered in section 5 of the new text:

We aim to share as many documents as possible - not just with governments and MEPs, but also with out panel and the public.

Hooray - the public gets a mention. 

In fact we've published more than 50 documents online, including:

factsheets and FAQs
press releases and memos
studies and meeting reports

Well, I'm sorry, you can't claim things like factsheets, FAQs and press releases as examples of transparency: they are created purely for the purpose of being distributed.  What we want are the key documents that are being used for the negotiations.

In any negotiation, partners need to build trust.  For that they need a degree of confidentiality. 

So there are some text we can only show to governments and MEPs - like our offers to the US to:

cut tariffs on goods they export to us open our services markets to their firms.

While it is true those details need to be kept secret before the negotiations, once thay have been laid on the negotiating table for the US to see and discuss, they are no longer secret by definition, and thus can be published, since they would reveal nothing to the US that is not already known.  So by the European Commission's own arguments, tabled documents could be made available to the public in whose name they are being negotiated.

As the above makes plain, the Commission's claims for transparency are pretty weak.  That's evident from its parting shot:

But at the end of the process, the whole deal will be open to scrutiny in any case.

And the final decision comes with a double democratic guarantee.  Only a majority of both EU governments and MEPs can approve an agreement.

This is just an insult to our intelligence.  There is no meaningful "scrutiny" at the end of the process, because nothing - zero - can be changed at this point.  Instead, it's a "take it or leave it" decision that will be offered to the European Parliament.  And we know exactly how the conversation will go: "yes, there may be things you absolutely hate in there, but you've *got* to accept it otherwise you will be personally responsible for throwing away all those jobs..." - moral blackmail in other words.   Of course, as I've shown elsewhere, that's not even true - the European Commission's own figures show that the extra annual GDP that TTIP would produce in the most optimistic case is just 0.05% - statistically indistinguishable from zero. 

But the European Commission won't let a little thing like facts get in the way; which is precisely why it refuses to allow any real transparency for TTIP.  That would show all-too clearly that is the transnational corporations that benefit, and that the majority of their gains - 80% according to the Commission's own predictions - come from cost-cutting made possible by deregulation through the elimination of "non-tariff barriers" - health and safety standards, environmental regulation and the like.  And no amount of re-assuring four-page documents with key words printed in bold for easy consumption will change that.

Full list of previous TTIP Updates.

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TTIP Update XIX

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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