Corporation Carte Blanche Will US-EU Trade Become Too Free?
Part 2: A Severe Lack of Transparency
Recently, for example, the Canadian province of Quebec decided to put a halt to controversial fracking practices to extract oil. A US company sued in response for $250 million to compensate it for investments already made in the sector and for lost profits. Multinational tobacco giant Philip Morris also sued Australia for billions of dollars in damages after the government passed a law requiring plain packaging in order to deter consumers from buying cigarettes. The US company didn't even base its case on a US-Australian treaty -- it did so through its Philip Morris Asia subsidiary in Hong Kong, which has a trade deal with Australia.
Even Germany is facing such a lawsuit -- from Swedish energy giant Vattenfall. The company is suing over Berlin's new laws ordering the phase-out of all nuclear power plants and a shift to clean energy. Invoking the Energy Charter Treaty (ECT), an international agreement that provides multilateral framework for energy deals, the company is demanding damages totaling 3.7 billion.
The Vattenfall case seems to have gotten Berlin's attention. Suddenly the government is able to see the flip side of such deals. Should investment protection become part of TTIP, Berlin worries, huge law firms in the US could begin examining each new policy change in EU member states to look for possible effects on the bottom lines of companies back home -- and then sue for damages.
Thus far, Germany has not officially vetoed the ISDS provisions in the trade agreement so as not to endanger the inception of talks nor has it vented publicly. But in a memo attached to its negotiating directives, the country's skepticism of ISDS has been documented in writing. It can be assumed that Berlin will use its substantial leverage to negotiate ISDS out of the free trade treaty. As such, critics of the provisions have a surprising and powerful ally.
The European Commission is aware of the rapidly growing opposition to its prestige project and EU leaders are becoming uneasy. Four months before the European Parliament election, they are concerned that the debate could result in numerous free-trade opponents landing seats in Brussels.
EU leaders are well aware of just how quickly public opinion can shift, particularly in the wake of the successful fight against the anti-piracy treaty ACTA in the summer of 2012. Not long before the deal was set to be signed, a negotiation paper came to light which noted that Internet providers would be able to store and scan user data to filter out instances of copyright violation. Public outcry was immediate, resulting in a large majority of European Parliament voting against the pact.
A similar fate could await TTIP. Within just a few weeks, some 316,000 people signed an anti-free trade appeal on the petition website campact.de -- roughly double the number who joined a call for Germany to provide asylum for NSA whistleblower Edward Snowden.
It is no wonder, then, that the European Commission is doing everything it can this time to keep growing opposition under control. The press team of Trade Commissioner Karel De Gucht, for example, counters public criticism almost immediately and has been eager to meet with both journalists and NGOs. It has also been tirelessly repeating its message that the trans-Atlantic trade deal will not lead to a watering down of existing European laws, such as those banning hormone-treated meat and chlorine-washed chicken as well as mandatory labeling for genetically modified food.
The problem is that nobody believes them.
First of all, ACTA showed that the Commission was prepared to sacrifice the interests of European citizens to those of industry. And secondly, what does the EU intend to offer the US to get Washington to weaken its much stronger financial regulations?
'Faux Consultation Process'
The manner in which TTIP is being negotiated is also not exactly increasing faith in the process. Everything related to the talks is being kept highly classified. Even though the deal will affect the futures and interests of 500 million EU citizens, member states agreed to keep them in the dark about TTIP negotiations. All papers, documents, emails and negotiating minutes have been marked secret. Only the senior-most party members in the European Parliament's International Trade Committee are allowed to see documentation relating to the negotiations and they are forbidden from discussing what they see. Not even the negotiating mandate, upon which the talks are based, has been made public.
In addition, the US has forbidden the EU from passing along American position papers, even to members of the European Council and European Parliament -- despite the fact that these same papers have been shared with 600 industrial lobbyists in the US.
The Commission has sought to counter accusations that the talks lack transparency with an unprecedented number of briefings and discussions with NGOs, parliamentarians and member state representatives. An advisory council made up of seven NGO representatives and seven business leaders was even established. The teams hold stake-holder meetings during the negotiating rounds and listen closely to the brief presentations made by industry and NGO representatives.
Martin Häusling, a European Parliamentarian from the Green Party, calls it a "faux consultation process." A member of the Agriculture and Rural Development Committee, he says that the briefs they receive rarely go beyond the tenor of the talks, with details being rare. "What is really being negotiated remains unclear," he says. He doesn't accept the argument that the talks must remain confidential for strategic reasons. "Even the World Trade Organization makes its negotiation papers public," he says.
With good reason. Anyone who has ever been involved in the drawing up of a delicate contract knows that every comma and every clause is vital. "Without the exact text, nobody can determine exactly what is at stake," says Pia Eberhard of CEO.
Particularly when it comes to promises that the deal will create a broad increase in prosperity. Other free-trade agreements have shown that, while they may trigger growth, not everybody benefits. Twenty years after the signing of the North American Free Trade Agreement, for example, it has become apparent that the consequences have not been universally positive for the signatory states of Canada, US and Mexico. Millions of industrial jobs have been lost in the US since the treaty came into effect and thousands of Mexican corn farmers have lost their livelihoods due to highly subsidized maize coming from the US, to name just two examples. Trade has increased dramatically, but it has been the bottom lines of large firms that have benefitted the most.
With TTIP, it remains totally unclear how many jobs might be created by the deal -- and how many might be lost. It has been forecast that free trade across the Atlantic would create additional economic growth worth 120 billion for Europe, which is a mere 0.5 percent of the EU's GDP. And that is the most optimistic scenario.
Commissioner De Gucht has promised that the free trade pact would bring every family in the EU an additional 545 per year. But even if the benefits of the deal were to be felt beyond companies' bottom lines, it will be difficult to explain to European voters why it is worth giving up control over economic policy.
Translated from the German by Charles Hawley and Daryl Lindsey
- Part 1: Will US-EU Trade Become Too Free?
- Part 2: A Severe Lack of Transparency