A briefing for Rosa Luxemburg Foundation (excerpts)

1. What is TTIP?

Business groups on both sides of the Atlantic have long harboured the dream of a pro-corporate trade and investment agreement between the EU and USA. The TransAtlantic Business Dialogue, an invitation-only group of chief executives from the most powerful US and European companies, was set up in 1995 to lobby for the removal of regulations affecting transnational corporations operating in the EU and USA, and has consistently advocated a far-reaching agreement to realise that goal. Note 1. The creation of the Transatlantic Economic Council in 2007 provided a new opportunity for the TransAtlantic Business Dialogue to press for a free trade area based on the deregulation of markets in both the EU and USA.

Responding to this pressure, European Commission and US officials announced in November 2011 that they would be setting up a high-level working group to “identify and assess options for strengthening the US-EU trade and investment relationship”. Shortly afterwards, the European Commission embarked upon a series of over 100 closed meetings with individual companies and business lobbyists in order to develop their negotiating position – meetings that were kept secret until the Commission was forced to reveal their existence under a freedom of information challenge. Note 2. The TransAtlantic Business Dialogue joined with the US Business Roundtable and European Round Table of Industrialists to call for an ambitious trade and investment partnership between the EU and USA. Note 3.

US President Barack Obama duly announced the launch of negotiations towards a comprehensive Transatlantic Trade and Investment Partnership (TTIP) in his State of the Union address of February 2013. The first round of talks was held in July 2013, with the stated hope on both sides that the negotiations might be rushed through within two years (thus avoiding the start of campaigning towards the next US presidential elections, which will begin in earnest during 2015). Given the election of a new European Parliament and formation of a new European Commission in 2014, the intention to complete such a complex and controversial set of negotiations on ‘one tank of gas’ (as US negotiators have put it) is reckless in the extreme.

TTIP is not a traditional trade agreement designed primarily to reduce tariffs on imports between trading partners, as tariffs between the EU and USA are already at minimal levels. Officials from both sides acknowledge that the main aim of TTIP is instead to remove regulatory ‘barriers’ which restrict the potential profits to be made by transnational corporations in US and EU markets. This includes the removal or downgrading of key social standards and environmental regulations such as labour rights, food safety rules (including restrictions on GMOs), regulations on the use of toxic chemicals, data protection laws and new banking safeguards introduced to prevent a repeat of the 2008 financial crisis. The European Commission’s negotiating mandate (classified as confidential under EU rules, and thus only available as a leaked document) identifies the elimination of regulatory obstacles as one of its top priorities for TTIP, thus belying the European Commission’s subsequent claims that deregulation is not on the agenda. Note 4. The US government has also identified key EU regulations and standards for removal in the negotiations, as detailed in the rest of this briefing.

TTIP also seeks to create new markets by opening up public services and government procurement contracts to competition from transnational corporations, threatening to introduce a further wave of privatisations in key sectors such as health and education. UK government officials have confirmed that one of their top three goals for TTIP is to “complete the single market” within the EU itself, particularly by opening up public service and procurement contracts to private companies in other EU member states. Note 5. Most worrying of all, TTIP seeks to grant foreign investors a new right to sue sovereign governments before ad hoc arbitration tribunals for loss of profits resulting from public policy decisions. This ‘investor-state dispute settlement’ mechanism effectively elevates transnational capital to a status equivalent to the nation state itself, and threatens to undermine the most basic principles of democracy in the EU and USA alike.

TTIP is correctly understood not as a negotiation between two competing trading partners, but as an assault on European and US societies by transnational corporations seeking to remove regulatory barriers to their activities on both sides of the Atlantic. In an internal paper leaked and published in December 2013, the European Commission confirmed that the types of regulation at risk from TTIP would include primary EU legislation (both regulations and directives), implementing measures, delegated acts and also regulations introduced by EU member states; and, on the US side, bills passed by Congress, federal rules and also regulations adopted by individual US states. Note 6. Former EU Trade Commissioner Karel de Gucht has confirmed that the purpose of TTIP is to remove regulations on both sides of the Atlantic so that business has a free hand to operate: “Regulatory barriers are more complicated to remove than traditional trade barriers… It will not be easy but it will be worth it.” Note 7.

5. Environmental deregulation

The European Commission has openly acknowledged that TTIP will further intensify pressure on the environment, as “every scenario” for future EU-US trade under TTIP will increase the production, consumption and international transfer of goods. The Commission’s own impact assessment goes on to note that this increase in production will in turn create “dangers for both natural resources and the preservation of biodiversity”. Note 33 In respect of greenhouse gas emissions, the Commission states that its preferred outcome from TTIP will add an extra 11 million metric tons of CO2 to the atmosphere, challenging the EU’s own emission reduction commitments under the Kyoto Protocol. Note 34. Yet none of these observations have caused the Commission to rethink its support for TTIP.

Most immediately, TTIP threatens to undermine key environmental regulations within the EU which are known to guarantee far higher safety levels than in the USA. Foremost among these are the EU’s REACH regulations on chemicals, introduced in 2007 in order to protect human health and the environment from hazardous substances used by companies in manufacturing or other processes. Note 35. REACH is based on the precautionary principle outlined in the previous section, and requires industry to prove that a chemical is safe before it can be certified for commercial use. By contrast, the USA’s 1976 Toxic Substances Control Act (TSCA) requires the public regulator to prove that a chemical is unsafe before its use can be restricted, and further limits any restriction to the ‘least burdensome’ measure possible. Under the TSCA, the US Environmental Protection Agency has succeeded in introducing controls on just six of the 84,000 chemicals that have been in commercial use in the USA since 1976. Note 36. Such a lax regime has immediate consequences for public exposure to health risks: while the EU bans 1,200 substances from use in cosmetics, for example, the US prohibits just a dozen. Note 37.

Environmental and public interest groups in the USA have long campaigned for the TSCA to be replaced with new regulations along the lines of REACH. Note 38. Business lobby groups, on the other hand, have vigorously opposed the EU’s safety requirements and are seeking to use the deregulatory framework of TTIP to ‘harmonise’ REACH with the weaker US regulations. The European Commission recognises the fundamental incompatibility between the EU and US approaches, but is still seeking possible “regulatory convergence and recognition in the chemicals sector” on behalf of its industry partners. Note 39. European companies are happy to join forces in using TTIP to remove environmental regulations that they claim put them at an unfair disadvantage in relation to their global competitors.

A number of other important environmental regulations are under threat from TTIP’s deregulation programme. Sustainability requirements under the EU’s Renewable Energy Directive have been targeted by US agrofuel producers keen to ‘harmonise’ the EU regulations with the lower standards of the USA. The US government is also using TTIP to undermine the EU’s Fuel Quality Directive so as to make it easier for US refineries to export oil to Europe that has been extracted from the Canadian tar sands, with devastating environmental consequences. Note 40. In addition, TTIP would open the door to the mass export of US shale gas to Europe, leading to an expansion of hydraulic fracturing (fracking) in the USA as well as allowing US companies to challenge bans on fracking in Europe – just as the US energy company Lone Pine Resources is now using NAFTA rules to sue the government of Canada over the moratorium on fracking in Québec. Note 41.

Notes

Section 1. What Is TTIP?

1. Mark A. Pollack, The Political Economy of the Transatlantic Partnership, Fiesole: European University Institute, June 2003

2. ‘European Commission preparing for EU-US trade talks: 119 meetings with industry lobbyists’, Brussels: Corporate Europe Observatory, 4 September 2013

3. ‘Forging a Transatlantic Partnership for the 21st Century’, Joint Statement by US Business Roundtable, the TransAtlantic Business Dialogue and the European Round Table of Industrialists, 18 April 2012

4. ‘Directives for the negotiation on the Transatlantic Trade and Investment Partnership between the European Union and the United States of America’, Brussels: Council of the European Union, 17 June 2013; a call to make the mandate a public document was rejected by the European Council of Ministers at its 18 October 2013 meeting in Luxembourg.

5. For more detail of the UK government’s goal to ‘complete’ the single market within the EU, see ‘The economic consequences for the UK and the EU of completing the Single Market’, London: Department for Business, Innovation and Skills, February 2011

6. ‘TTIP: Cross-cutting disciplines and Institutional provisions; Position paper – Chapter on Regulatory Coherence’, Brussels: European Commission, 2 December 2013

7. ‘Transatlantic Trade and Investment Partnership (TTIP) – Solving the Regulatory Puzzle’, speech by former European Trade Commissioner Karel de Gucht at the Aspen Institute, Prague, 10 October 2013

Section 5. Environmental deregulation

33. ‘Impact Assessment Report on the future of EU-US trade relations’, Strasbourg: European Commission, 12 March 2013, section 5.8.2

34. ibid, section 5.8.1

35. EU Regulation No 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), 18 December 2006

36. ‘Submission of Centre for International Environmental Law (CIEL) before US Senate Committee on Finance hearing on the Transatlantic Trade and Investment Partnership’, Washington DC: CIEL, 30 October 2013; see also ‘Chemical Regulation: Comparison of US and Recently Enacted European Union Approaches to Protect against the Risks of Toxic Chemicals’, Washington DC: Government Accountability Office, August 2007.

37. Kim Egan, ‘Is Europe the New America?’, Saltbox Consulting, 24 September 2013

38. The new Chemical Safety Improvement Act currently under debate in Congress fails to challenge the TSCA’s ‘risk-based’ approach; see, for example, Karuna Jaggar, ‘The Chemical Safety Improvement Act Falls Short: Open Letter to Congress’, Huffington Post, 12 November 2013

39. ‘Transatlantic Trade and Investment Partnership (TTIP): Note for the attention of the Trade Policy Committee’, Brussels: European Commission, 20 June 2013; Annex II: ‘Chemicals in TTIP’

40. Kate Sheppard, ‘Michael Froman, Top US Trade Official, Sides With Tar Sands Advocates In EU Negotiations’, Huffington Post, 24 September 2013

41. ‘Lone Pine Resources files outrageous NAFTA lawsuit against fracking ban’, joint press release of Sierra Club and Council of Canadians, 2 October 2013

This Commentary is a re-publication of a portion of a booklet: John Hilary, The Transatlantic Trade and Investment Partnership: A Charter for Deregulation, An Attack on Jobs, An End to Democracy (Rosa Luxemburg Stiftung, February 2014). rosalux.gr/sites/default/files/publications/ttip_web.pdf

The Table of Contents for the entire booklet is:

1. What is TTIP?

2. Untransparent, anti-democratic

3. ‘Prolonged and substantial’ threat to jobs

4. Food safety deregulation

5. Environmental deregulation

6. Public services under attack

7. Personal privacy at risk

8. ISDS: a threat to democracy

9. Growing resistance

10. Further Information

You can also see John Hilary in a video discussing the TTIP: “Seminarium om TTIP med John Hilary” (28 Nov 2014) at www.youtube.com/watch?v=ykSvJpyxHDI

John Hilary is Executive Director of War on Want. He has published on a wide range of trade and investment issues over the past 20 years, and in 2013 was appointed Honorary Professor in the School of Politics and International Relations at the University of Nottingham. His new book, The Poverty of Capitalism: Economic Meltdown and the Struggle for What Comes Next, was published by Pluto Press in October 2013.

Rosa Luxemburg Stiftung (Foundation) is one of the largest political education institutions in Germany today and sees itself as part of the intellectual current of democratic socialism. The foundation evolved from a small political group, “Social Analysis and Political Education Association“, founded in 1990 in Berlin into a nationwide political education organisation, a discussion forum for critical thought and political alternatives as well a research facility for progressive social analysis. In 1996 the Rosa Luxemburg Foundation was officially recognised as a nationwide affiliated trust of the Party of Democratic Socialism (PDS), presently known as “DIE LINKE “ (The Left). As such it works closely with DIE LINKE affiliated state foundations and associations nationwide.  www.rosalux.de/english/foundation.html