TTIP Update XXXVIII

In my last update, I mentioned plans to organise a European Citizens' Initiative, a formal petition against both TTIP and CETA.  I think everyone assumed that the European Commission would just ignore this, but in fact it has done something rather more spectactular - and stupid: it has refused to allow the ECI to go ahead at all.

In its rejection of the ECI, the European Commission claims that the negotiating mandates on TTIP and CETA are not legal acts but internal preparatory acts between EU institutions and therefore not contestable via an ECI.

“The Commission’s view that only acts with an effect on third parties are permissible for an ECI is obviously a legal error. The negotiating mandate of the Commission is a formal decision of the Council and therefore a legal act. If the Commission’s legal opinion had any substance, then in plain English this would mean that Europe’s population is excluded from participation in the development of any kind of international agreements – information that is as frightening as it is scandalous,” according to Efler.

What’s more, the Commission claims that it cannot make negative ratification proposals and therefore cannot comply with the ECI demand not to conclude the CETA and TTIP negotiations. “Contrariwise, this means that citizens can only applaud international negotiations carried out by the Commission, but not criticize them,” said Efler.

The group behind the petition have realised that they don't actually need the European Commission's permission anyway, and so are simply going ahead without it:

We reject the Commission’s attempt to silence us and will carry out our European Citizens’ Initiative anyway, without approval from Brussels. We are currently preparing an online signature gathering tool as well as paper signature forms and will start collection in early October. At the same time, we will challenge the Commission in court by appealing to the European Court of Justice.

In the past couple of weeks our campaign has gathered support from over 240 civil society organisations in 21 EU member states. It is somewhat ironic that the European Commission, which often complains about the “lack of a European public”, is trying to stop this truly European movement in its tracks. We will continue to speak out against the Commission’s total lack of transparency in the negotiations and favouring of corporate interests over the common good. We will stay very public and very European in our opposition to TTIP and CETA!

This refusal even to allow a largely symbolic petition to proceed is indicative of the contempt with which the European Commission regards any expression of the public's view on these matters, which it seems to think are the exclusive domain of bureaucrats and politicians (and lobbyists).  That was underlined even more strongly last week, when the official text of the trade agreement with Canada, CETA, was finally released.  However, at precisely that moment, the European Commission was also "celebrating" the conclusion of the talks, with the implication that no further changes can be made.  So after telling everyone that the public would have its chance to comment on the CETA text later, it turns out that in fact it can only see the document not change it.  The European Commission has an interesting concept of what democracy means.

Interestingly, the meeting between the European Commission and the Canadian government was called a "celebration" rather than a signing because Germany has indicated that it is not happy with the inclusion of the problematic investor-state dispute settlement (ISDS) chapter in CETA.  Since it is likely that CETA is a "mixed agreement" - that is, one that requirements approval from all 28 member states, as well as from the European Parliament - if Germany were to say "no", CETA would be dead.

It turns out that ISDS is only one of the really bad ideas contained in CETA.  That's what emerges from an excellent analysis of CETA from the Canadian Centre for Policy Alternatives, called "Making Sense of the CETA".  It's very clearly written, and I recommend it to anyone who wants to understand what the implications of CETA will be for business or, indeed, for all of us. 

Another key factor influencing both CETA and TTIP is the appointment of a new European Commissioner responsible for trade, and thus trade agreements.  The Commissioner-Designate is Cecilia Malmstrom, and she was involved in yet another storm around ISDS at the weekend.

Jon Worth has all the details in a blog post, but essentially a document from Malmstrom indicated that she was willing to drop ISDS from TTIP.  The S&D group in the European Parliament issued a statement welcoming the move, but then Malmstrom tweeted that she hadn't written the words.  This made her appearance yesterday before the European Parliament as part of the process of confirming her as trade commissioner even more important, since it would clarify what exactly she thought on this matter.

Her statements during that session were unequivocal: she will not take ISDS out of CETA, which she regards as finished.  She claimed she had an open mind on ISDS in TTIP, saying that it might be taken out, but she was unconvincing here.  It seems clear that she wants ISDS in TTIP.  Her justification was very weak.  She kept on saying that ISDS existed in other treaties (true), was problematic there (true), and therefore required a new, improved version to be used in TTIP (false).  She seemed to be under the impression that "improving" ISDS in TTIP would somehow rectify all the deeply-flawed versions elsewhere, when they are completely unrelated.

It's true that there are some EU countries that have bilateral trade agreements with the US that includes ISDS.  These are ex-Soviet countries that clearly signed up to bad deals because they were desperate to escape the clutches of Russia.  But that's not a reason to include ISDS in TTIP, and inflict the same problems on everyone else.  The East European treaties can all be cancelled in due course, and that is what those countries should do.  Adding ISDS to TTIP simply gives new life to the idea. 

Equally, the view that ISDS can be "improved" sufficiently to make it acceptable is wrong: it is just not needed between the EU and US, both of which have well-functioning legal systems.  Creating new rights for corporates that allow them to challenge national regulations outside the legal system is just anti-democratic and bad policy. 

Finally, it was clear that Malmstrom laboured under the delusion that we "need" this ISDS in TTIP so that we can demand that China accepts it in a trade agreement that is currently under discussion.  What this overlooks is the painful fact that soon China will be investing more in Europe than Europe invests in China, such is the strength of the China's economy, and the size of its reserves.  This means that ISDS will be chiefly a weapon that can be used by Chinese companies *against* the EU, not for EU companies to use in China.  Not only will ISDS by harmful in TTIP, it will be actively dangerous in any agreement with China.

Although it was clear from the meeting yesterday that Malmstrom is not another Karel De Gucht, who was far more abrasive and arrogant than she is, equally she will not be deviating much from his policy, even if she dresses it up differently.  She made vague but essentially empty promises about increasing transparency, but ignored the real issue: that we do not have access to negotiating documents. 

Some claim that such documents must be secret, otherwise the EU negotiators will lose the advantage; this is demonstrably not true, since for WIPO talks, all the documents are open by default without problem.  But even were it true, the solution is simple: make available all those documents once they are *tabled*.  At that point, there is no negotiating advantage in keeping them secret, since the US side has already seen them.  That's also true for the lobbyists that have routine access to these documents.  The only group that suffers is - of course - the public, that never has any means of seeing what is supposedly being done in its name.  Instead, as the CETA fiasco shows, at the end of the process we are presented with a fait accompli, and told simply to like it or lump it.

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TTIP Update XXXVII

In my last TTIP column, I discussed the CETA negotiations with Canada, which started before those of TTIP, but have continued in parallel with them.  That's because what happens with CETA has a massive effect on TTIP, in part because it acts as a template for the TTIP, but also because Canada's economy is tightly integrated with that of the US in many ways, and so CETA is already a kind of shadow agreement with the US.  Once again, the area where that probably matters the most is for the investor-state dispute settlement chapter included in CETA.

To see why, consider what happens if ISDS is not included in TTIP, but is present in CETA.   Philip Morris is suing Australia over the latter's strict laws aimed at reducing tobacco consumption, even though the trade agreement between the US and Australia does not contain any ISDS mechanism, by invoking an agreement between Australia and Hong Kong, using its subsidiary in the latter.  Similarly, any US company that wanted to sue the European Union would not be greatly inconvenienced if there is no ISDS in TTIP: it will simply use a Canadian subsidiary, which are pretty common given the integration between the economies in north America, to sue using CETA.

That means even before fighting ISDS in TTIP, we must fight it in CETA. But time is running out.  As I mentioned in Update XXXVI, CETA seems "finished" in some undefined sense - at least finished enough that both sides are getting ready to sign something later this month.  Since there is no way that the results of the ISDS consultation conducted by the European Commission earlier this year will be ready then, this effectively means that the intention is to ignore the 150,000 comments, most of which were strongly against including ISDS in TTIP, and enshrine it in CETA.  If that happens, then US companies will in any case have a large and convenient back-door for suing the EU even if ISDS is dropped from TTIP.

We have every reason to fear that ISDS will indeed be in CETA because of remarks made by the Italian vice-minister for trade to the European Parliament's international trade committee, INTA.  Here's how the Canadian title Embassy reported his comments:

The controversial investment protection chapter of the Canada-European Union trade deal should not be reopened, Italy’s vice minister of trade said on Sept. 3, putting his comments at odds with those of other EU countries—and raising further questions about the approval process of the much-awaited deal.

“We [member states] gave the [European] Commission the mandate to negotiate the investor-state dispute settlement agreement. Now that negotiations are finished, it is difficult to say we changed [our mind] and let’s re-discuss,” Carlo Calenda, Italy’s vice-minister of trade, told members of the European Parliament during a meeting of the parliament’s international trade committee. “If we move in this way, we will have to open up all the chapters and waste a lot of time.”

That's pretty extraordinary.  He's arguing that allowing the European public, in whose name these negotiations are supposedly being conducted, to express their opinions on the text before it is fixed for ever, would "waste a lot of time".  That reveals why the European Commission's assurance that the people would have an opportunity on to be heard later on was always a completely worthless, since at point the text would be frozen.  The Italian minister's comments confirm that there is no intention of changing anything that was agreed in secret behind closed doors, whatever the EU public thinks.

This represents a betrayal that is exacerbated by the fact that the public has forcefully let the European Commission know that it does not want ISDS, even if the detailed results of the consultation have not yet been released.  Instead, the Commission is pretending those 150,000 responses never happened, and that it is at liberty to push through its own anti-democratic agenda.

What makes things even more ridiculous is that in the same Embassy article, the EU's chief negotiator for CETA, Mauro Petriccione, is reported as saying that it was impossible to address all the issues that were likely to arise:

“The debate isn’t finished,” he added. “I cannot promise you that this text answers concerns that are still being debated or which may arise in the future.”

In fact, as I explained in a column back in March, we know that a previous massive flaw in the text was only discovered because a copy was leaked that allowed independent experts to check it.  Freezing CETA's text without allowing more such scrutiny to be applied is just folly, and almost guarantees that there will be problems later on.

That meeting before the European Parliament's INTA committee drew an another, even more significant comment from the Italian politicians present, as Yanick Jadot, an MEP on INTA explained in a perceptive article:

In one of Italy’s first appearances in the European Parliament since it assumed the Council Presidency in July, Carlo Calenda, the minister charged with overseeing TTIP for the Council, announced to the INTA committee the possibility of concluding an “interim agreement” for TTIP in light of lack of progress to date.

The announcement is politically significant. It is both a clear indication that a thorough TTIP reevaluation is underway at the highest levels in Brussels, and that a comprehensive agreement may be too controversial and substantial to swallow in one go. The minister noted that a “profound reflection on the negotiation strategy” was now needed and that a decision to go for an interim agreement could take place after the US mid-term elections in November, with an aim to conclude it in 2015.

As Jadot rightly notes, this is a clear sign that TTIP is in trouble, and the European Council and Commission are desperately trying to find some way to conjure up at least half an agreement to save face.  Whether that can then be converted into an "ambitious" one, as the Commission has been insisting is necessary, is another matter. 

As well as this unexpected signal from deep within the political machine that even its supporters know that TTIP is going nowhere, this suggestion for an "interim" agreement is an important development because the US is totally against the idea:

Anthony Gardner, the new US Ambassador to the EU, immediately refuted Italy’s interim suggestion at the same INTA meeting, aggressively defending a comprehensive deal:

“There are many geopolitical and economic reasons to conclude an ambitious agreement, and I say ambitious because we continue to believe, like our Commission colleagues, that only a comprehensive agreement would yield the significant results our leaders want. Yes I know our friend Carlo Calenda believes an interim agreement should be considered but we continue to believe that only a comprehensive agreement will work.”

While Mr. Gardner said he would look forward to “a regular, open and honest dialogue”, he went on to attack those who have raised issues of concern, such as chlorine washed chicken. Such issues he claimed were “peripheral” and amounted to “scaremongering”. So much for an open and honest dialogue. He then warned those who “refuse to believe” the assurances of both sides: “do not prejudge the results, wait until we have advanced texts before you make up your mind.”

Of course, that's precisely what we, the public, can't do: no texts will be released to us until it is too late to do anything about - exactly with CETA.  So telling people to wait until we have "advanced texts" is just another kick in the teeth.  No wonder, then, that the resistance to ISDS and TTIP is growing.  Here's what's happening in the UK:

British trade unions are this week expected to lend their support to a growing campaign opposed to a new international trade deal which critics claim threatens to make the privatisation of the health service irreversible.

Three of the UK's biggest unions have tabled motions at the Trade Union Congress in Liverpool outlining their opposition to the transatlantic trade and investment partnership (TTIP), a huge trade deal being negotiated behind closed doors at the European commission between EU bureaucrats and delegates from the US.

Meanwhile, Europe-wide initiatives are springing up.  For example, there's the European Citizens’ Initiative, an official petition:

An alliance of more than 200 civil society organisations from all across Europe has launched 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 ECI was registered with the European Commission on 15 July. The collection of signatures is due to start in mid September 2014.

Here's how that will work:

One million signatures must be gathered within one year. Additionally, in seven EU states a specific minimum of supporters must be achieved, e.g. 72,000 signatures in Germany, 55,500 in France, or 54,750 in the United Kingdom. If the initiative succeeds in doing this, then the EU Commission organises a hearing in the EU Parliament, and concerns itself with the matter. The ECI citizen’s committee then finally receives a written response from the Commission. If the Commission decides to present a legal act, then this is is passed on to the European Council and to the European Parliament.

Obviously, that's a pretty long-term project, and before then, people plan to take to the streets of Europe on 11 October to protest against TTIP.  Many readers will doubtless recall that demonstrations against ACTA in 2012 led to the rapid collapse of support for the agreement, and its eventual rejection by a massive majority in the European Parliament.  It will be interesting to see whether these European marches will similarly signal the beginning of the end for CETA and TTIP.

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TTIP Update XXXVI

As I mentioned in my previous update, the TTIP negotiations are currently on hold, but that does not mean that all activity has stopped.  By an interesting coincidence, the other major EU trade agreement - that with Canada, generally known as CETA - seems to have been "concluded", although quite what that means is not yet clear.  For example, back in October 2013, the EU and Canada announced that they had "reached a political agreement on the key elements" - and yet negotiations have continued until now.  Even assuming that there are not more holdups, the process of ratification is extremely long, requiring all kinds of legal "scrubbing" and then approval by the various parts of the European Union and possibly national governments too (but again, that's not yet clear.)

In theory, we would have to wait until most of that was accomplished before we got to see the text of CETA, but as I noted last time, some public-spirited soul has leaked both the main text [.pdf] and the annexes. I've skimmed through the form, but not felt strong enough to tackle the latter.  I'm hoping that  experts will take a look at sections of interest and publish their thoughts in due course.

The first such analysis has already appeared, and it will probably be of particular interest to Open Enterprise readers.  It comes from the Canadian academic Michael Geist, and looks at a key area: copyright.  As he writes:

the starting point for copyright in CETA as reflected in 2009 leaked document [from Wikileaks] was typical of European demands in its trade agreements. It wanted Canada to extend the term of copyright to life of the author plus 70 years (Canada is currently at the international standard of life plus 50 years), adopt tough new rules for Internet provider liability, create criminal sanctions for some copyright infringement, implement new rights for broadcasters and visual artists, introduce strict digital lock rules with minimal exceptions, and beef up enforcement powers. In other words, it was looking for Canada to mirror its approach on copyright.

And yet the latest leak of the final CETA text shows that all the main European demands have been dropped.  Here's why Geist thinks that happened:

First, the domestic policy situation in both Canada and the EU surely had a significant impact as ACTA protests in Europe and consumer interest in copyright in Canada led to the elimination of the criminal provisions and the adoption of better-balanced, consumer-oriented rules.

The rejection of ACTA by the European Parliament in July 2012 was certainly a pivotal event that has had a major impact on the negotiations of subsequent agreements involving Europe.  Geist's other points - that Canada's copyright laws were compliant with international standards, that they are increasingly being seen as an alternative to the hard-line approach advocated by the EU in CETA, and that copyright was not a priority in CETA for Europe -  are doubtless true, but don't carry over to TTIP.  Importantly, the US will not be fighting any attempt by the EU to introduce stronger copyright rules in TTIP - on the contrary, we know from ACTA that in comparison, the EU is likely to be the moderating force here.

Putting those facts together, we can't therefore hope that TTIP will be as reasonable as CETA as far as copyright is concerned.  Indeed, as I noted in an earlier update, there is strong evidence that the European Commission is looking more than favourably on a "Christmas list" of demands from the copyright industries.

On a different note, the Canadian publication The Tyee has a useful analysis of some of the details revealed about investor-state dispute (ISDS) settlement in CETA.  It points out that ISDS is even more problematic than thought because of the existence of an important CETA commission, whose exact details have not been revealed:

Jan Spangenberg is an associate in Latham & Watkins' international arbitration practice group in Hamburg, Germany, which regularly represents states and investors in investment treaty arbitrations. He acknowledged the more narrow definition of "fair and equitable" treatment in CETA, but points out that the treaty includes a mechanism that could allow for a later modification of the provision by a CETA commission.

"It is unclear how this will work. As a result, significant uncertainty remains," Spangenberg said.

The commission, which does not yet exist, will have the final say in the definition of "fair and equitable" treatment. As of now, nobody can tell what it will decide.

That CETA commission would have another major impact on the implementation of ISDS:

The commission will also be in charge of the right of governments to appeal the decisions of arbitration courts. Here, the same problem arises: nobody knows who will be on that commission, when it will start and finish its work, and what it might decide. Governments will have to vote on CETA before they have the answers.

How appeals will work is especially worrisome for governments, because they are always the subject of lawsuits brought on by investors. Governments, on the contrary, can't sue investors in arbitration courts. This one-sidedness becomes more acute if appeals aren't possible at all or only in limited ways.

That there is no thorough judicial review of arbitrators' decisions worries experts like van Harten: "This is a fundamental problem and makes the adjudicative process non-judicial," he said.

This CETA commission is effectively a backdoor that will allow ISDS to be made even worse than it seems in the text of the treaty.  It's another manifestation of the lack of transparency that robs CETA and TTIP of much of their legitimacy.

In the face of that and many other worries around ISDS in CETA, the following statement from the S&D group in the European Parliament is good news:

The Commission should listen to the concerns voiced by the European Parliament and the S&D Group about the investor-state dispute settlement mechanism (ISDS) in the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.

It will be up to the Parliament – the democratic conscience of EU trade policy – to decide whether or not to ratify CETA.

The CETA agreement, to be initialled at the EU-Canada summit at the end of September, would be a positive agreement and would bring opportunities for growth and jobs on both sides of the Atlantic. It covers various sectors ranging from agricultural and industrial goods to services, intellectual property rights, public procurement and sustainable development.

However, some EU member states, notably Germany, have raised serious concerns regarding the controversial ISDS clause in the agreement that allows multinational companies to bring international arbitration cases against governments. The S&D Group has always opposed the inclusion of this mechanism and we expressed our opposition in letters sent to EU Trade Commissioner De Gucht as far back as 2012. A resolution adopted by the European Parliament in 2011 on EU-Canada trade relations also states the Parliament's preference for traditional state-to-state dispute settlement and the use of local judicial remedies to address investment disputes.

The ISDS mechanism, where applied, has already shown how much power corporations have wielded in the name of profit. It is time the EU followed the Australian example and scrapped ISDS in the CETA and in the EU-US Transatlantic Trade and Investment Partnership (TTIP).

CETA has already been delayed for too long. A trade deal between the EU and Canada has the potential for great economic benefits and it should not be put in jeopardy for the sake of an unnecessary investment clause.

That's significant because putting together the S&D group with the Greens and others opposed to ISDS in the European Parliament brings the total number of MEPs very close to the majority needed to reject CETA - and maybe even TTIP - when it comes to the big vote.  Of course, much could happen between now and then, and it's quite possible that the S&D group will succumb to the promise of "concessions" on ISDS from the European Commission.  But the statement does at least indicate that getting CETA and TTIP through the European Parliament is not going to be easy.

Strangely, the European Commission seems to be going out of its way to make it even harder.  Here's what it announced last week:

The European Union today took an important step towards creating a comprehensive EU investment policy, with the publication of a Regulation setting out a new set of rules to manage disputes under the EU's investment agreements with its trading partners. The rules – set out in the Regulation on financial responsibility under future investor-to-state disputes – are a necessary component of a common EU investment policy.

'This Regulation,' said EU Trade Commissioner Karel De Gucht 'represents another building block in our efforts to develop a transparent, accountable and balanced investor-to state dispute settlement mechanism as part of EU trade and investment policy. '

The rules set up the EU's internal framework for managing future investor-state disputes. They define who is best placed to defend the EU’s and Member States’ interests in the event of any challenge under investor-to-state dispute (ISDS) in EU trade agreements and the Energy Charter Treaty. The rules also establish the principles for allocating any eventual costs or compensation. Member States will defend any challenges to their own measures and the EU will defend measures taken at EU level. In all cases, there will be close cooperation and transparency within the EU and the EU institutions.

Friends of the Earth Europe pointed out:

According to the European Commission, this regulation will come into force on 17 September. This is two months ahead of the intended evaluation of the European Commission's own public consultation on the investor-state dispute settlement mechanism being proposed in the current negotiations for the Trans-Atlantic Trade and Investment Partnership (TTIP).

Commenting on publication of this regulation, Paul de Clerk, trade campaigner at Friends of the Earth Europe said: "Finalising this regulation while the public consultation on investor-state dispute settlement in TTIP is still on-going is completely unacceptable and undemocratic. This not only undermines the 150,000 European citizens and stakeholders who have participated in the public consultation, but also brings into question the credibility of the European Commission about their willingness to listen to the voices of citizens on this important issue."

That's exactly right: this is yet another slap in the face for the European public, and confirms that the so-called "consultation" on ISDS in TTIP was simply window-dressing.  The Commission didn't even have the decency to wait until after the official analysis of those 150,000 submissions, but went straight ahead and published its new ISDS rules now, when it can't possibly take into account what all those people have said.  It is an act of pure contempt for the hundreds of millions or ordinary citizens that pay their not un-generous salaries.

It shows once more that the European Commission is hell-bent on steamrollering ISDS through, both in CETA and TTIP. Since it manifestly doesn't care a hoot about the growing rejection of ISDS by the public and hundreds of civil society organisations, it looks like we will once more have to pin our hopes on the European Parliament to stop this arrogant, high-handed behaviour by doing to CETA and TTIP what it did to ACTA: rejecting them.

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