The Trojan Horse in the Transatlantic Trade and Investment Partnership (TTIP)

Is the EU Commission about to back down over clauses giving multinationals wide ranging powers to challenge democratic decisions?

Under pressure from Germany, and European citizens groups, the Investor State Dispute Settlement mechanism (ISDS) could be withdrawn from negotiations leading towards the proposed EU/US Transatlantic Trade and Investment Partnership (TTIP).

  

As details of the proposed treaty have been revealed, concern has grown among citizens, and some governments, especially about the ISDS clauses. Under other international trade agreements with similar provisions multinational companies have challenged governments for potential loss of profits, because a country in which they have invested, or intend to invest, has more constraining laws, regulations or standards than in their country of origin, and they claim these would have an adverse impact on their potential sales. 

These secret clauses are a neoliberal dream
The current version of the ISDS clauses is still secret, but in early drafts it was proposed that each case would be decided by three arbitrators chosen from a panel of international lawyers.  There could be no appeal. If it won the case, as well as obtaining very substantial financial compensation, a company could also demand that democratically agreed laws be changed. These clauses are similar to those included in the EU-Canada CETA trade treaty, which in turn were based on the World Trade Organisation’s model.

ISDS clauses in the North American Free Trade Agreement NAFTA, have led to many controversial judgements overwhelmingly in favour of US companies. During 20 years of the operation of the NAFTA agreement the government of Canada has had 30 cases brought against it by private US companies and it has lost 30 times. Mexico has had 5 cases against it by US firms and has lost 5 times resulting in compensation payments of $204 million. Canada and Mexico have brought 22 cases against the US and the US has won 22 times.   All together it’s an outstanding record for so-called independent arbitrators and a US neoliberal dream come true.

It's the potential for this kind of assault on European democratic institutions and their decisions which is at the centre of the opposition to these negotiations.

Jean-Claude Juncker

The appointment of Jean-Claude Juncker, the new President of the European Commission, and a group of new Commissioners opens up an opportunity for major changes in the treaty negotiations as the tide of opinion turns against the negotiations lead by the outgoing Trade Commissioner Karel De Gucht.

Timeline of recent developments

January 2014

In January 2014 the negotiation of the section of the treaty dealing with the ISDS mechanism was suspended by Trade Commissioner Karel De Gucht pending the results of a public consultation. This closed on 13^th July 2014, and nearly 150,000 responses were received, 99.62% coming from individuals. A report will be issued in November 2014.

March 2014

Germany announced in March 2014 that they would push for ISDS Clauses to be excluded from the treaty.

July 2014

On 11th July 2014 the new President of the EU Commission, Jean-Claude Juncker expressed his view to a meeting of the European Parliament green parties, that he could see no reason why national judiciary shouldn’t be able to judge arbitration cases brought by multi-national companies when they considered that their treatment in a particular national jurisdiction was unfair.

When asked by Yannick Jadot Green MEP about his stance on the controversial Investor-to-State Dispute Settlement process (ISDS) Juncker stated: 

“I don’t understand why great democracies would not have faith in the judiciary. We have courts which are able to deal with cases that are brought to them, and so I’m not really in favour of what one could call “private courts” or arbitration bodies which may sometimes reach good decisions but don’t always have to justify their decisions.”

He has subsequently been quoted in an article by the Dutch journalist Caroline de Gruyter, writing for NRC Handelsblad, on 15 October 2014 as saying that he now sees ISDS as a "lightning rod" issue for TTIP opponents. Politically, Juncker believes it cannot be won, as those in favour are “not fighting back.”

September 2014

Cecilia Malmström

In written replies leaked before the confirmation hearings of Cecilia Malmström, the proposed new EU Trade Commissioner, Ms Malmström appeared to refute the need for an ISDS procedure, saying:

"No limitation of the jurisdiction of courts in the EU member states will be accepted in this context; this clearly means that no investor-state dispute settlement mechanism will be part of that agreement."

She later retracted the statement, taking to social media to claim that:

"The sentence everybody is so excited about on ISDS / TTIP is not written by me in the final version of my answer to the EP [European Parliament]."

An EU official stated that the text released earlier had been in error and would be corrected when the final version of the replies was published.

October 2014

De Gucht warns no TTIP without ISDS

Karel De Gucht

The outgoing European Trade Commissioner Karel De Gucht has warned this month that there will be no free trade agreement between the EU and US without the controversial Investor-State Dispute Settlement (ISDS) clauses.

Speaking to Reuters in Rome, De Gucht – who is to leave his position shortly – said, in reference to the clause's biggest European objector, Germany:

"They should realise there will be no TTIP without an ISDS," adding that neither side would be able to insist on investor protection clauses in other agreements if they didn't include it in the Transatlantic Trade and Investor Partnership (TTIP)."

Is there any point to TTIP without ISDS?

For once he’s right.  The Investor-to-State Dispute Settlement mechanism is the principal means by which non-tariff barriers to trade would be steadily dismantled. The alternative is likely to be a series of never ending bilateral negotiations in which individual states will seek to protect their national interest and will have every opportunity to delay taking any action. Set against that are all the risks involved in handing over power to multi-nationals to challenge democratic decisions in all fields of trans-Atlantic trade.  Unless of course certain areas of trade in goods and services have been specifically excluded by the treaty!

But don’t forget that the EU Commission’s own study predicted, as a result of a treaty including ISDS clauses, an average increase in the growth of EU economies of only 0.5% by 2030. So, if the teeth in the TTIP treaty are to be withdrawn, the hoped for results in terms of economic growth would most likely be nullified and there would be no point in continuing with the negotiations. That is assuming that the US would still want to do so!

So that sounds like good news but what about the deal with Canada?

The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada has gone ahead and been signed.  It now has to be ratified by national governments and the European Parliament. Despite Germany’s objections the Consolidated CETA Text  dated 26^th September 2014 still includes ISDS clauses. (Chapter X, Section 6 pages 134 – 185).

So if CETA is ratified what does this mean?

Any US multinational company with a subsidiary in Canada could, after certain conditions have been satisfied, challenge any EU government in just the same way as if ISDS clauses were included in a US – EU TTIP trade deal!

So the ISDS Trojan horse won’t go away?

And it doesn't matter whether TTIP includes ISDS clauses or not. A route still exists for multinationals to sue European governments. If they can prove to the satisfaction of a group of international lawyers, who are answerable to nobody, that a democratically validated law, regulation or standard is more onerous in the target country than in their own, and could affect their potential profits, they can still overturn it and get paid for doing so.

If you think I'm exaggerating Australia has been sued by Philip Morris Asia in Hong Kong, under a 1993 bilateral trade agreement, over its adoption of a law enforcing plain packaging for cigarettes.  Forty other WTO members have joined the dispute as third parties, a record number. The case is ongoing.

The only way to remove this threat is to halt the TTIP negotiations and not to ratify the CETA treaty!

Please sign the petition which proposes a European Citizens Initiative (ECI) to do this here. http://stop-ttip.org/sign/  they need at least a million signatures and at today’s date (25th November 2014) they have 936,000. They have also announced that they will take the EU Commission to court to challenge their decision that the ECI was not valid.

You can read more about it here. http://johnpreedy.blogspot.fr/2014/10/the-eu-commissions-own-goal.html

The Reasons why I Oppose Neoliberalism are explained here.

The EU Commission’s Own Goal

European Citizens Initiative to halt TTIP (TAFTA) and CETA Trade Deals Rejected

The European Commission has rejected the registration of a European Citizens Initiative (ECI) to stop the secretive negotiations concerning the Transatlantic Trade and Investment Partnership with the USA and also to stop the ratification of the Comprehensive Economic and Trade Agreement with Canada. 

An online petition to support the ECI has attracted more than 600,000 signatures so far and the European Commission’s rejection of the Initiative, with its attendant publicity, is surely  an own goal which will lead to even more public concern and also fuel support for Eurosceptic groups who are attracting more and more votes in many European countries.

The text of the ECI was as follows:

"We invite the European Commission to recommend to the Council to repeal the negotiating mandate for the Transatlantic Trade and Investment Partnership (TTIP) and not to conclude the Comprehensive Economic and Trade Agreement (CETA)"

The application was submitted under the rules established by the Lisbon Treaty in 2012 for a”European Citizens Initiative”.  It was rejected by the EU Commission on the grounds that, although negotiations for these wide ranging trade agreements are proceeding in line with mandates written by the EU Trade Commissioner and agreed by the member states, there was no “act” by the Commission which could be reversed. A second reason was that negative ECI’s are not valid. (See the EU's reasons for rejection here).

Michael Efler, contact person for the ECI, which currently represents almost 230 organizations from 21 EU countries, said:

 “Now the battle really begins. The rejection of the ECI only confirms the Commission’s strategy to exclude citizens and parliaments from the TTIP and CETA negotiations. Instead of paying attention to citizens, it is just lobbyists that are being listened to.”

“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.

This means that the EU Commission, as well as conducting negotiations in secret, wishes to stifle any participation by citizens' groups in such trade negotiations.

“Apparently the Commission is afraid of this ECI, which has the potential to become the most successful citizens’ initiative so far,” said Efler. “If the Brussels bureaucracy thinks that this is how it can stop people’s protests against TTIP and CETA, then it is mistaken. We will not allow the Commission to tie our hands. ”

Prof. Dr. Bernhard Kempen, a German law professor from the University of Cologne, is very clear in his legal opinion on the EU Commission’s ruling, carried out at the request of the proposers of the ECI, and in his conclusions on page 22 his view is completely the opposite to that of the EU Commission.

The TTIP Wooden Horse

If it is not stopped the EU soon intends to sign these two far-reaching trade agreements. The negotiations were based on mandates written by the EU Commission and approved by the Council of Ministers.  

The official line is that this will create jobs and increase economic growth. But the study that was commissioned by the EU itself predicted an increase in economic growth, averaged over the whole of the EU of only 0.5% by 2030.

The real beneficiaries of these agreements, however,will not be citizens but big corporations, who will be given wide ranging rights to challenge democratically validated standards, laws and decisions:

• Investor-State-Dispute Settlement (ISDS): Canadian and US companies would have the right to sue the EU for damages if they believe that they have suffered losses because of government decisions (for instance new laws to protect the environment or consumer rights).
• Improving or even maintaining our standards for food, labour rights, environmental protection and consumer rights will become much harder.
• Liberalisation and privatisation would effectively become irreversible.
• The EU and its member states would come under pressure to allow risky technologies such as fracking or genetic modification.
• CETA and TTIP would increase the power of multinationals at the expense of democracy and the public

Read more about TTIP here.

Please sign the European Citizens Initiative here http://stop-ttip.org/sign/

The Reasons Why I Oppose Neoliberalism

Neoliberalism Ensnares Democracy

NeoLiberalism

Quoted from Wikipedia
"Nowadays the most common use of the term neoliberalism refers to economic reform policies such as "eliminating price controls, deregulating capital markets, lowering trade barriers", and reducing state influence on the economy especially by privatization and fiscal austerity. As an ideology the term is used to denote a conception of freedom as an overarching social value associated with reducing state functions to those of a minimal state.

American professor of political science and Democratic socialist Frances Fox Piven sees neoliberalism as essentially hyper-capitalism."

Rich and Poor
Speaking globally, there is an enormous and growing gap between the rich and the poor. In many countries, particularly in the third world, the ruling elite make sure that they become ever richer at the expense of their compatriots.  Corruption and weak government is the scourge of the under-developed countries of the world, but apart from withholding grants, it’s difficult to see what anyone in the West can do about this, even though I believe it’s the root cause of much of the world’s misery.  

Corrupt leaders are frequently less interested in investment, which leads to development opportunities for their own people, than in grandiose externally financed projects from which they can take their 10% oh sorry I meant 20%.  Furthermore political instability and perceived risk often causes a lack of inward investment.  All of this creates barriers to development and improvement in living standards for the general population of such countries. 

But even though corruption is endemic in many developing countries, during a recent trip to Kenya, somewhere that I hadn't visited since the 1980's,  I was pleasantly surprised by most of the changes that I saw. There is now a significant and growing middle class with money to spend on housing and goods or services. There are small businesses everywhere and a spirit that values work and enterprise.  If benign and effective government can be maintained, improvements for the standard of living of the rest of the population will follow.

The European Model
In Europe we are more fortunate that our political systems, whilst not perfect, are more transparent and less corrupt as a result of centuries of history.  We also fundamentally share a belief in social democratic principles; the protection of the most vulnerable, the provision of certain services by the state and an element of re-distribution of wealth.  In the UK even Thatcher did not really change any of that.

There is, in addition, a network of laws, regulations and standards built up during the 19th and 20^th centuries, which protects Europeans from the excesses of unrestrained capitalism.  Whilst we may not always be happy that enough is being done, at least we can express our views to our representatives and decide whether to vote for them or not every five years.

The Downfall of Left Wing Idealism
The communist system, which had at its core a set of idealistic Marxist beliefs in equality and the sharing of wealth, imploded after 72 years.  There were many reasons for this. There was a series of authoritarian leaders, intolerant of dissent, who undermined the movement’s principal ideals.  This was combined with the absence of incentives to work and innovate, which led to economic stagnation.  Finally the burden of the “Star Wars” arms race with the USA pushed the system over the edge.  It was a miracle that there was not a bloodbath as regime after regime collapsed.  During the same period Western democracies delivered better living standards, even after two devastating world wars.

Neoliberalism or Capitalism?
Concerning delocalisation and the rise of third world manufacturing, we all deplore the working conditions in countries like Bangladesh, Vietnam, Cambodia and China, but we still buy the goods that they produce because they are cheaper than we can achieve in Europe.  Is this a result of “unrestrained capitalism” or just human nature?  Europe in the 19^th century had similarly harsh conditions for employees, which slowly improved as a result of unionisation and enlightened legislation.  Do we expect other less developed countries to show more wisdom and compassion at a similar stage of development than we did?  And can’t de-localization of western industries also be seen as giving poorer countries the opportunity to improve their living standards? 

Would Neoliberals Stop Burning Fossil Fuels?
Of all the possible examples of the effects of capitalism and its attendant economic growth, for me the most worrying is climate change.  Without a concerted international response to reduce, or even to stabilize the concentration of atmospheric carbon dioxide, we will be leaving a very different planet to future generations, which will be uninhabitable in many places.  But I am, however, less pessimistic than some and I believe that technological solutions to this issue are possible which, as well as replacing the existing use of fossil fuels, could also accommodate the rapidly growing future energy needs of developing economies like China and India, without adding to atmospheric carbon dioxide.  

But whereas China can mobilise, and pay for, large research teams and resources to direct investment into carbon neutral energy sources, and is rapidly trying to move away from dependence on coal; in the West we are constrained to use slower carrot and stick methods, in the form of subsidies and regulations, to create change.  Because they are so heavily in debt, and suffer from short term political thinking driven by the electoral cycle, western governments are no longer able to carry out long term projects that require major government funding.  Consequently I am of the opinion that in the West we will continue to burn fossil fuels until cleaner methods of generating energy are proved to be cheaper by the Chinese.  These would then attract the necessary investment capital in developed countries to replace gas and above all coal, the most polluting and dangerous fossil fuel. 

The Neoliberal Trojan Horse

The latest neoliberal ploy 

Finally, coming back to Neoliberalism, without the likelihood of making a profit capital investments will not be made, but there still needs to be protection from the excesses of uncontrolled and unregulated private enterprise.  It is, however, precisely this protection that Neoliberals would like to dismantle under the guise of a Trojan horse of worldwide free trade agreements. 

After the financial crisis of 2008, which was a direct result of de-regulation and lack of banking controls, one can only think that Neoliberals must hold their beliefs as a result of irrational faith in “The Market” rather than any logical process.  

Unfortunately by over-stating the potential benefits of free trade agreements in terms of economic growth and employment, the Neoliberals have persuaded EU governments that it’s worth their while to risk giving up many of their powers as well as those things that define European values, like social protection and the precautionary principle.

I hope we can all agree that the Neoliberal agenda is not an acceptable way forward when so much is at stake and we must all do our best to block it at every opportunity.