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Society, Politics & Law

'TTIPing' over the democratic edge

Updated Monday, 30th March 2015

Creating a TTIP between the EU and the USA presents a great threat to the national EU member states' sovereignty, says Roger Rees.

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Cartoon of a giant octopus representing the dollar attacking a ship representing democracy Creative commons image Icon Catherine Pain under Creative-Commons license The European Union (EU), originally as the European Common Market, may have fulfilled the objectives of its founders - first to act as an economic and political Cold War model to set against that of the Soviet Union and its satellites; secondly, to ensure France and at least the then Federal Republic of West Germany, never again went to war against each other. The whole venture, unsurprisingly, both encouraged and supported by the USA.

But as the EU came about and enlarged, the lack of thought to how member states’ democratic processes would mesh with internal EU processes and decision-making became more and more critical. The subsequent creation of a European Parliament did little to address this absence. Today, the recent result of the Greek election, deemed ‘irrelevant’ by an EU deferring to Germany’s economic and political leadership, has served to further sharpen the focus on the Union’s ‘democratic deficit’.

And negotiations currently underway between the EU and the USA to create a Transatlantic Trade and Investment Partnership (usually referred to as TTIP) present perhaps the greatest threat yet to national EU member states’ sovereignty and a worrying study in how the Union responds when faced with powerful corporate resources and influence.  

The TTIP threat

So what is TTIP? Firstly, TTIP is much, much more than a trade deal. The TTIP negotiations, between the USA and the EU, go way beyond the free trade mainstay of tariff reductions. They carry implications for environmental standards; further marketisation of public services (including health and higher education); worker rights and wage levels; and strike at the very heart of national democratic processes. If the treaty is passed by the European Parliament and ratified by the House of Commons, very few areas of life in the UK will be unaffected. And it’s all in the interests of multinational business.

“....the greatest single transfer of power to transnational capital that we have seen in a generation.”

John Hilary, War On Want

Stop TTIP protest Copyrighted  image Icon Copyright: Roger Rees Neo-liberal economics, which should have taken a death blow from the 2007-8 financial collapse, is back with a vengeance in TTIP. Consider some of its key elements.

TTIP will promote ‘convergence’. This means, for example, EU food standards, higher than in the USA, can be brought down to American levels. Genetically Modified (GM) food, the un-labeled norm across the Atlantic, is strictly labeled and hence generally absent from EU shelves. Bleached chicken meat and hormone-fed beef, widely sold in US supermarkets, are just two products banned for sale in Europe. If TTIP is ratified, such EU food controls may ‘converge’ to American standards. These products and others, will be imported and consumed or used in European food production. Consumers will have no say in that.

Clearly American food producers and agri-chemical multi-nationals would love to open up Europe to their currently banned or un-labeled products. They will use the TTIP negotiations on ‘convergence’ to achieve that.

In contrast, in the area of finance, it’s generally recognised bank regulation in the USA, since the 2007-8 credit crash, is tougher than that applied to European bank activities in the EU. ‘Convergence’ opens the door for the less-regulated European finance sector, no doubt supported by US banks, to argue American legislation should be watered down to Euro levels.

ISDS tribunals

And they will have a hefty TTIP mechanism on their side - the Investor-State Dispute Settlement (ISDS) system. ISDS will allow any investor, usually a commercial business, to lodge a compensation claim asserting government action has impacted on their profits. Staffed by litigation lawyers and outside all national legal systems, ISDS panels will pass judgment on investors’ claims. And they are there for the use of aggrieved ‘investors’ only. States cannot take companies to ISDS panels.

“There is a strong suspicion that US companies, with their notoriously litigious approach, will use ISDS to put the frighteners on elected governments.”

The Observer business review

TTIP tribunal Copyrighted  image Icon Copyright: Roger Rees The ISDS approach has already been used in bilateral (one nation to another) trade agreements and can challenge the democratically supported actions of elected governments. For example, Philip Morris, the American tobacco giant, is suing Uruguay for $25 million, via an ISDS system, for the health hazard warnings the country has introduced on cigarette packets. The claim comes under a Uruguay-Switzerland bilateral trade treaty. Although headquartered in the US, Philip Morris’s Swiss subsidiary is the aggrieved ‘investor’ here - the company’s ‘Trojan Horse’ against the wishes of an elected government. And to add insult to injury, U.S. senators from tobacco-growing states, have even warned the EU that smoking controls could endanger the drawing up of TTIP!

“If you wanted to convince the public that international trade agreements are a way to let multinational companies get rich at the expense of ordinary people, this is what you would do: give foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever a government passes a law.....”

The Economist magazine

And a great concern in the UK are ISDS panels employed to promote further NHS privatisation. Particularly by US health businesses, if they feel they are not allowed to gain a greater slice of National Health services and budgets. The Royal College of Nursing has consequently expressed “...very real concern ...that this will adversely affect patient care..”.

Likewise ‘convergence’, backed up by the threat of the ISDS system, may lead to lower standards in higher education as American ‘education providers’ seek to extend their UK activities. Threatening compensation claims against government if it sought to limit their operations may be all that would be necessary for them to get their way. This possibility even has its own label -‘regulatory chill’ - where governments fail to legislate for fear of being financially challenged by big business.

Job prospects

And the prospects for job creation and wage levels under TTIP is questionable. An existing bilateral trade treaty has provided the grounds for the Veolia company to sue the Egyptian government for loss of profits. Why? For raising the country’s national minimum wage. Not a reassuring example for the British trades unions Congress.

The Trades Union Congress (TUC) has pointed out the Canada-EU Comprehensive Economic and Trade Agreement, (referred to as CETA), which is proceeding ahead of TTIP, also contains ISDS provisions. CETA’s mechanism for dealing with fundamental breaches of workers’ rights provides only for “...a formal report from a commission of eminent experts”. The TUC concludes that, in contrast to corporations’ right to seek substantial financial compensation via the ISDS system, such ‘formal reports’ are “Not exactly a bankable alternative”.

“UCU believes ...(TTIP) poses a profound threat to public services in general, including education, leaving them wide open not only to greater privatisation but making it harder for any future government to regulate foreign private sector companies operating in our public services”.

Universities and Colleges Union (UCU) briefing paper

The corporate battalions are having a field day in the TTIP negotiations, carried out in secret sessions in Brussels between corporate lobbyists and the un-elected civil servants of the EU Commission. Vast sums are being spent by corporations lobbying the Commission to include provisions in TTIP that will benefit them. The European Parliament, with its elected members (MEPs), will however have a vote on acceptance of the treaty. It has already been surprised by the reaction of its citizens. Opposition is particularly strong from Germany and Austria (both have high food and drink standards) and is also increasing in France and Denmark.

A million citizens’ signatures against TTIP have already been gathered and more are needed. MEPs have been lobbied in Brussels by their constituents, including recently from the UK.

But 2015 will be the critical year for both TTIP and CETA. Both treaties may come before the European Parliament by year end. Both need to be thrown out. Both will strike a blow against environmental standards, worker rights and conditions. Both constitute further means for privatising public services and swelling the power and coffers of trans-national corporations against democratically elected governments. Much is at stake.

What you can do to stop TTIP

  • Sign the European Citizens’ Initiative To Stop TTIP : get the petition up to 2 million signatures:
  • Get involved in campaigns against TTIP by War on Want and Global Justice: 

This blog post is part of Society Matters. The blog seeks to inform, stimulate and challenge our understanding of this changing world and of our humbling role within it. Find out more about the blog and the team.
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Please note: The opinions expressed in Society Matters posts are those of the individual authors, and do not represent the views of The Open University.





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