TTIP Update XXX

As well as all the developments I discussed in the previous TTIP update, plenty has been happening recently in the hotly-contested area of investor-state dispute settlement (ISDS).  The United Nations Conference on Trade and Development (UNCTAD) has published another of its informative reviews of developments in the ISDS field [.pdf].  This edition is particularly welcome since it focuses on the interaction between the EU and US in this area.  Here are some of its findings:

16 [ISDS] cases have been initiated against the US to date, among those not a single one originated from an investor from a EU Member State.

EU Member States have been respondents in 117 known cases, of which almost a quarter faced by one country (the Czech Republic). Several EU countries (e.g. Austria, Denmark or Finland) have faced no known ISDS claim to date. 88 of the 117 cases are intra-EU disputes.

To date, there are few (nine) known claims in the EU-US relationship. All of them were filed by US investors, constituting about seven per cent of all ISDS claims filed by US investors.

The nine cases also represent close to eight per cent of all cases faced by EU Member States (or close to one third, if intra-EU disputes are disregarded).

All nine cases were brought against “new” EU Member States.

That shows that already the EU suffers disproportionately from ISDS cases; including an ISDS chapter is likely to open the floodgates of US companies suing across the whole European Union.  One of the most interesting facts in the new report is the following:

The US-EU relationship is the largest in terms of the amount of FDI [foreign direct investment] stock held by investors from these countries in each other’s territories. 10 Investors from EU Member States hold a total of 1.6 trillion USD of FDI stock in the US, which represents 62 per cent of the total inward US FDI stock. 11 Investors from the US hold a total of 1.9 trillion USD of FDI stock in EU Member States which represents around 38 per cent of the total inward FDI stock in the EU.

That is, even without ISDS in place between the US and most of the EU (the US currently has agreements including ISDS with Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania and Slovakia), the total transatlantic investment is 3.5 trillion euros - much more than when I last looked, which suggests that it is continuing to rise rapidly.  This demonstrates beyond any doubt that ISDS is simply unnecessary for the EU and US: investment is already flourishing on an unprecedented scale.

Bringing in ISDS would therefore have no benefit for Europe - but plenty of dangers.  An important post by Ante Wessels over on the FFII site explores one aspect I hadn't seen before: the fact that the ISDS system is inherently biased in favour of the US:

Investor-to-state dispute settlement (ISDS), the most controversial element of the proposed trade agreement with the US, has characteristics of a rigged system. ISDS gives the US an unfair advantage, we can not expect EU companies to win ISDS cases against the US.

Here's why:

The appointment of arbitrators is not neutral. One arbitrator is appointed by each of the disputing parties. In which supreme court can parties bring their own judge? The third arbitrator, the presiding arbitrator, is appointed by agreement of the disputing parties.

The US appoints the president of the World Bank. This president

- is ex officio chairman of the International Centre for Settlement of Investment Disputes (ICSID) Administrative Council,
- proposes the ICSID secretary-general,
- appoints all three the arbitrators in appeal cases under ICSID rules.

The secretary-general of ICSID

- appoints the third arbitrator if the parties can not agree on the third one,
- will decide over conflicts of interest. (ICSID, articles 5, 10, 38, 52 and Commission, 2014b, Table 8, article x-25.10)

The ISDS system gives the US an unfair advantage. Adjudicative processes have to be free of reasonably perceived bias. This is not the case with ISDS.

The rest of the post provides compelling evidence that this bias is already visible in the results of previous years' ISDS cases, where the US always seems to win.  

Against that worrying background, it becomes even more vital to respond to the European Commission's consultation on ISDS.  The deadline for replying is July 6, and I'll be writing an update detailing my own response soon.  In the meantime, here's what other people think about ISDS and are planning to send to the Commission - you may find them useful in framing your own.

First, a splendidly robust response from the Trade Union Congress, which states quite bluntly:

The TUC's response to this consultation will not follow the specific questions outlined, as they present ways to improve ISDS and investment protection measures in TTIP. The TUC, like the ETUC and AFL-CIO, opposes any form of ISDS in TTIP.  Our response, therefore, will detail why ISDS is unnecessary in trade agreements and poses a serious threat to public services and states’ ability to legislate in line with citizens' interest and wishes.

After that wonderful start, it goes on to offer cogent reasons why ISDS is simply superfluous, like this one: 

The fact that the UK has not been sued through an ISDS procedure in the past is also not a credible argument for its inclusion in TTIP.  This merely shows that the British governments have refrained from signing investment treaties with large capital-exporting states. It can be seen that when Canada, another country not previously subject to ISDS proceedings, signed the North American Free Trade Agreement (NAFTA) with USA and Mexico, they found themselves the subject of several ISDS cases, several of which were successful.  Canadian companies also used ISDS to sue the US government successfully through ISDS provisions in NAFTA.

It also explains why ISDS is "inequitable and undemocratic:

Inequality lies at the very foundation of ISDS as it privileges foreign investors over any other economic actors - domestic investors or interest groups such as consumers or workers – by giving them the right to access special courts for pursuing claims of expropriation.

It notes that ISDS is a particular danger for the UK:

In the UK, there is a danger that if a future government were to bring parts of the National Health Service back into public ownership by overturning the Health and Social Care Act (2012), it would be prone to challenge through ISDS by American companies that have significant investment in the NHS.  In addition, ISDS mechanisms could be used by US companies to litigate against tighter regulation of the UK’s growing for-profit education sector.

It's really well-worth reading the rest of the TUC response, which is in a similar vein.  It's great to see, not least because it shows that trade union organisations have woken up to the very real threat that ISDS represents for their members.

Next, an equally fine response to the unnecessary and frankly rather dishonest EU ISDS consultation, this time from the Trade Justice Movement (TJM).  You can read the detailed, ten-page question-by-question response [.doc] - indeed, I urge you to do so, if you can - but here's TJM's summary of its main points:

Approximately 70% of global investment happens without this kind of [ISDS] investment protection.

There is no valid reason to transfer business risk to communities by making governments liable. Transferring the risk to governments causes 'policy chill' whereby governments resist passing policies in case they get sued. For example: governments thinking of introducing plain packaging to cigarettes are watching the Philip Morris cases against Uruguay and Australia carefully: the company is arguing that the legislation is a breach of their intellectual property rights, the countries could face million-dollar compensation bills.

There is no reason to give international investors greater rights than domestic investors: both kinds of investors can access domestic courts, only international investors can access the private tribunals associated with ISDS.

Businesses should protect against risk via insurance: a scheme already exists via the World Bank. This could be supported by mediation and state-to-state diplomacy where necessary.

Finally, I need to point people to a new site that has been set up with the rather self-explanatory name "No 2 ISDS", which explains its purpose as follows:

The arguments against investor-state dispute settlement have been known for many years. Despite this, the European Commission has attempted to silently push it through in its ongoing trade negotiations with the US. It was only after sustained and substantial protests by citizens, trade unions and civil society groups that the European Commission launched a public consultation on the mechanism. However, this consultation - that was initially sold by the European Commission to the public as a way to involve citizens, trade unions and civil society - turns out to be a mere caricature.

First of all, the consultation does not ask the public whether they want investor-state dispute settlement or not in TTIP. Furthermore, ordinary citizens are overwhelmed with a highly technical and lengthy questionnaire. To make matters worse, the public are forced to exclusively stick to this electronic questionnaire that is not very user-friendly. Letters or E-Mails are not permitted. This contradicts the very essence of public consultations and makes it highly problematic from a democratic point of view.

For all of these reasons, AK EUROPA (the Brussels office of the Austrian Federal Chamber of Labour), the ÖGB Europabüro (the Brussels office of the Austrian Trade Union Federation), and Friends of the Earth Europe (the largest European environmental grassroots network), wish to offer guidance to anyone who would like to speak out against investor-state arbitration and secretive, opaque trade negotiations taking place behind closed doors.

We believe that special privileges for investors should be excluded from TTIP. We therefore also reject the Commission’s proposal to ‘improve’ the currently foreseen investor-state dispute settlement system. The only viable solution is: NO INVESTOR-STATE DISPUTE SETTLEMENT AT ALL!

It is of fundamental importance that we send a clear and strong message to the European Commission. Take part in the consultation and help us push back unjustified privileges for private investors at the expense of people and societies as a whole!

They're right, of course, and the good news is that this site (also available in French and German) helps people do that.  It does so by running through the questions found on the Commission's ISDS consultation, explaining in very clear terms what the issues are, and offering sample answers to those questions.

Once you've had a glance at these, you can then provide your own answers for the EU's online form, or wait a little longer for my comments too.  Either way, it is really important that as many people as possible reply to this consultation so that the European Commission cannot claim that nobody really cares about ISDS, and that it can therefore negotiate as it wishes.  This is an important opportunity to make our voices heard: let's take it.

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TTIP Update XXIX

In my last update, I introduced the secretive Trade In Services Agreement (TISA), currently being negotiated in parallel with both TTIP and sibling the Trans-Pacific Partnership agreement.  With rather nice timing, WikiLeaks has just released one of the key chapters from TISA, concerning financial services.  Since the text itself is pretty dry, WikiLeaks has asked one of the world's top experts on these trade agreements, Professor Jane Kelsey of the Faculty of Law, University of Auckland, New Zealand, to provide a detailed guide to what it all means.  I strongly recommend reading her analysis, since it really explains what all those innocuous-sounding phrases really mean.  Here is her summary of what the new leak tells us:

The secrecy of negotiating documents exceeds even the Trans-Pacific Partnership Agreement (TPPA) and runs counter to moves in the WTO towards greater openness.

The TISA is being promoted by the same governments that installed the failed model of financial (de)regulation in the WTO and which has been blamed for helping to fuel the Global Financial Crisis (GFC).

The same states shut down moves by other WTO Members to critically debate these rules following the GFC with a view to reform.

They want to expand and deepen the existing regime through TISA, bypassing the stalled Doha round at the WTO and creating a new template for future free trade agreements and ultimately for the WTO.

TISA is designed for and in close consultation with the global finance industry, whose greed and recklessness has been blamed for successive crises and who continue to capture rulemaking in global institutions.

A sample of provisions from this leaked text show that governments signing on to TISA will: be expected to lock in and extend their current levels of financial deregulation and liberalisation; lose the right to require data to be held onshore; face pressure to authorise potentially toxic insurance products; and risk a legal challenge if they adopt measures to prevent or respond to another crisis.

Although financial services are not currently part of TTIP, largely because the US government is unwilling to water down its standards, expect something very similar to the leaked TISA chapter to turn up in TTIP once the haggling begins.

Although not exactly a leak, because obtained through the US Freedom of Information Act, the publication of a letter from the US Chief Negotiator Dan Mullaney to EU Chief Negotiator Ignacio Garcia-Bercero is rather ironic, since it contains details of the efforts that the US will be making to keep TTIP as secret as possible.  It's in reply to a letter from the EU to the US outlining the measures in place there - although unfortunately we don't have this. 

The letter is easily summarised: the only people who will be granted access to TTIP documents are US government officials and "persons outside the US government who participate in its internal consultation process and who have a need to review or be advised of the information in these documents" - industry lobbyists, in other words.  No surprise there, given the US government's refusal to allow any relaxation of secrecy by the European Commission.  But the following section is something we didn't know before:

The United States will hold the TTIP documents in confidence for five years after entry into force of the TTIP Agreement, or if no agreement enters into force, for five years after the last round of negotiations.

So not only is the US doing everything in its power to stop the public seeing the negotiating documents while TTIP is being discussed, but it aims to keep them under lock and key for another five years after TTIP is agreed - or fails.  That really shows an extraordinary contempt for the US people who are not even allowed to see what their officials are doing for many years after its too late to do anything about it anyway.

Finally, a quick note about what the pro-TTIP camp have been up to recently.  Things aren't going to well for them, of course: resistance throughout Europe is growing by the day, as more people - and media - wake up to the deep problems of TTIP, not least ISDS.  Because of this pushback, momentum has been lost, and the negotiations aren't moving forward as fast as had been expected at the beginning.  In an attempt to get things going again, the Business Europe organisation has put together a Q&A page on TTIP.  Sadly, it contains the same old misleading claims, like this one:

For the EU, independent studies point out to an additional GDP growth of 0.5%, translating into EUR 120 billions annually. This compares to a GDP growth of 0.1% in the EU-28 and of 0.4% in the Eurozone in 2013.

Except, of course, as readers of this blog will know, that is comparing two completely different kinds of growth: the predicted cumulative extra GDP growth after *ten years* of TTIP (0.5%), with the *annual* growth in the EU-28 (0.1%).  A more honest way of putting that would be that the most optimistic forecast from the European Commission's research is that at best TTIP would add on average just 0.05% extra GDP growth per year.  The fact that Business Europe has to resort to this kind of obfuscation shows how weak the case for TTIP really is.

More interesting is a recent speech from Anthony L. Gardner, the US Ambassador to the European Union.  Here's the problem he's noticed:

Despite the benefits that would flow from a deal, the media coverage – especially in social media in certain EU member states – has started to turn negative.

Well, maybe the real problem is that there are *no* overall economic benefits, as the European Commission's own econometric models definitively prove.  But choosing to ignore that rather important fact, here's what Gardner says needs to be done:

I think our strategy has to change: I intend to take the debate to the critics, rather than accept speaking engagements only from the usual business federations where we preach to the converted. I intend to meet with representatives of civil society that have an open mind – including from labor, environmental and consumer groups; and I intend to focus in particular on rallying small and medium sized businesses because they struggle to spend the resources to deal with the bureaucratic red tape that we hope to reduce.

And here's how he intends to do that:

I believe this public diplomacy has to be centered on stories, not statistics: simple language that ordinary people can understand.

That's a wonderful admission that the facts about TTIP simply don't stand up to scrutiny, as I've shown in multiple previous updates.  Instead, what Gardner will offer is "stories", and "simple language that ordinary people can understand".  Isn't that consideration for the public's sadly-limited ability to understand complicated things like numbers just touching?  Thank you Mr Ambassador, you're a gent....

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TTIP Update XXVIII

The big news this week is an important leak detailing what the European Commission will offer the US in the fields of services and investments.  It's super fresh: the document is currently being circulated to the governments of the EU's Member States, and comments remain open until 30 June, so we are gaining important insights into real-time discussions that have hitherto been completely hidden from us. 

That makes this leak doubly important: not just for its content, but for the fact that it took place at all.  It shows that despite the European Commission's attempt to keep key negotiating documents out of the public debate, the Brave New World of leaking whistleblowers means that we will get to see some of them anyway.  The only difference is that the Commission looks arrogant and high-handed by refusing to release them officially.

The leak takes the form of three PDF files [.< ahref="https://data.awp.is/filtrala/2014/06/13/4.html">pdf

] - unfortunately they are scans, not searchable documents.  They were leaked to the European Federation of Public Service Unions, which apparently represents some 265 unions and 8 million public service workers.  Here's what it has to say about the content:

There is no general exclusion of public services and waste water services are committed for market opening. "Such an EU liberalisation agenda should be publicly debated at national and EU level, including the guarantees and rights that would accompany this agenda. Any discussion on water and sanitation services should include the realisation of the UN human right for water and sanitation in legislation, as demanded by the first successful European Citizens’ Initiative Right2Water and in which 1.9 million Europeans said no to inclusion of water and sanitation services in trade agreements. It is not clear if the national parliaments have agreed. The EP has not agreed the offers which apparently are also discussed with Canada and with other OECD countries (TISA)".

As that points out, services like water and sanitation are not excluded, and that's deeply problematic given the growing recognition that it makes no sense to privatise these natural monopolies.  That's because such critical monopolies allow companies to charge pretty much any price they like, since (a) we can't do without their services (b) we can't go simply turn to some rival provider.  That's led to a number of moves to put water services back into public hands, running them as the commons they obviously are.  The refusal of TAFTA/TTIP to recognise this issue is another reason why it is a poor fit for the realities of 21st-century European life.

The other important point to note from the comment quoted above is the mention of a mysterious TISA.  To my shame, I only heard about this about a month ago, and yet it has been around for a year.  The reason for the discrepancy is that TISA - which stands for "Trade in Services Agreement" - is yet another set of secret negotiations that are being conducted in our name, but about which we are not allowed to know anything important.

It turns out that TISA forms a kind of unholy trinity together with TTIP and the Trans-Pacific Partnership agreement (TPP).  Between the three of them, they aim to define the terms for world trade for the coming years: TTIP covers transatlantic trade and investment, TPP the transpacific trade, and TISA global trade in services.  TISA involves pretty much all the countries of TPP plus the European Union.  What TTIP, TPP and TISA have in common is the US, which seeks to use these three treaties to cement its position as they key player in trade and services.  The idea is obviously to set the terms for those before China takes over as the world's biggest economy.

If you're interested in finding out more about TISA - and you definitely should be - I've put together what little we know about in a post over on Techdirt.  The newly-leaked documents are important not least for the following statement:

As far as services are concerned, the attached draft offer mirrors the offer submitted by the EU in TiSA negotiations in November 2013 both in terms of format and substance

That confirms the extremely close relationship between TTIP and TISA, to the extent that TISA is pretty much being mirrored in TTIP.  Although we don't know much about TISA, and the levels of secrecy surrounding it are even greater than for TTIP, I expect that to change as more people wake up to what is going on, and whistleblowers start coming forward here too.

I'd like to finish this update with a couple of separate developments, which though small in themselves, give a sense of the growing problems for TTIP.  First, in France, where the French bank BNP is accused by the US authorities of breaking sanctions against Iran, Sudan and Cuba, and therefore liable to a huge fine - £6 billion is being mentioned.  Here's the TTIP angle:

Michel Barnier, the EU's internal markets commissioner, said any penalty on the giant French bank must be "fair and objective".

There are reports that the US may hit BNP with a fine of $10bn (£6bn) for allegedly violating sanctions rules.

France has expressed alarm at the fine, warning that it could hurt trade talks.

That makes sense, because the benefit that France will obtain each year from TTIP is likely to be far smaller than £6 billion, even under the most optimistic forecasts.  That means that fighting this fine is a far better use of its politicians' time than bothering with a trade agreement that may or may not bring any long-term benefits.

The other TTIP story comes from Germany, where the US Embassy in Berlin tweeted about a revealing little project it is running.  The original tweet is in German, and roughly translated reads thus:

Are you for #TTIP and annoyed over the negative coverage? Send us your idea and we will support you.

Here's the kind of idea and support the US Embassy has in mind:

The U.S. Mission to Germany Public Affairs Section (PAS) is soliciting proposals from not-for-profit, non-governmental organizations, think tanks, and academic institutions that focus on the Transatlantic Trade and Investment Partnership (T-TIP).  The goal is to keep our publics informed about the negotiations and offer meaningful opportunities to shape the respective negotiating objectives.

What are the facts behind T-TIP, and how will it impact you? What are some of the concerns in the European Union and the United States?  What are some of the benefits? What impact will T-TIP have everyday life?  Facts and figures are needed, and we look forward to working with partner institutions to develop a final product which informs about the agreement and which combats misinformation.

The activities funded with a Federal Assistance Award (Grant) ranging from $5000 to $20,000

Given its tweet calling for those "annoyed over the negative coverage" to get in touch, and the requirement that the "final product...combats misinformation," I don't somehow think the US Embassy will be funding anyone with serious doubts about TTIP.  In other words, this is a desperate attempt to buy some "independent" support for a treaty that nobody is willing to support because they genuinely believe in it.

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