Most people have still not heard of the Transatlantic Trade and Investment Partnership (TTIP). To be fair to the public, it doesn’t have a catchy name and the technocrats overseeing its creation are hardly shouting about it from the rooftops. Indeed, it had passed my attention until I read George Monbiot’s Guardian feature on the issue.
But while I welcome Monbiot’s efforts to stimulate debate, I consider his arguments to be overblown. Furthermore, the reaction of much of the left (including that of this month’s guest editor) says more about their anti-capitalist and anti-US politics than it does about the reality of TTIP. This is a shame because there is much about the proposed treaty which is worthy of scrutiny.
So what exactly is TTIP? In short, it is potentially the biggest trade deal in history between the world’s two largest trading blocks, the EU and the US. Those in favour of the deal say it’ll be worth €120bn and €95bn to those economies, respectively - it’s a very important treaty.
It’ll achieve these humongous numbers by removing “trade barriers” between the two countries. In some cases, these are tariffs (import taxes) and in other cases they are restrictions or bans on types of products, mostly food. The agreement will also set standards and classifications for manufacturers and producers. This means whenever consumers buy a particular item the label will mean the same either side of the Atlantic.
The effect of the deal is to increase choice, boost competition, which pushes down prices for consumers, and stimulate trade which increases the number of jobs available. So far, not so controversial; well, not quite.
Campaign groups such as Global Justice Now repeatedly refer to TTIP as a “secret deal”, while Wikileaks is demanding its details be released. Indeed, negotiations are closely guarded as there is much at stake - food regulations, environmental protections, industry support, patent law all form part of the proposed deal. Many businesses and investors would like to know the commercially sensitive details of TTIP before anyone else does.
However, the protests over secrecy often stray into the conspiratorial. Businesses, politicians and the general public should, of course, be kept informed and they are being so. But TTIP is not yet agreed, so exactly what details do they want? It is simply not practical nor possible to release all details in real time. Also, the idea that TTIP is a “secret deal” is simply not true. There are many reputable sources explaining what TTIP is all about such as the European Commission’s website and also, I hope, articles such as this.
Investor State Dispute Settlement
One of the other big issues is a process called Investor State Dispute Settlement (ISDS). This is a legal mechanism where corporate lawyers representing a company can take a government to court if it feels its access to a free market has been harmed by a government decision. Trade deals such as TTIP make such actions more likely as they provide a legal framework within which such claims can be made. As the Conservative MEP Ashley Fox argues: “Their purpose is to protect investors from discriminatory treatment from governments. An example would be if a company won a seven-year contract for a rail franchise, invested money in new rolling stock and then after only two years the government cancelled the franchise. This could potentially be a breach of contract and lead to a hearing before an International Court of Arbitration, such as the one in London.”
But academics such as Thomas McDongagh of environmental NGO The Democracy Center says Europeans have much to be concerned about when it come to ISDS. “Europeans don’t have to go far to see this system at work. In Germany, the government changed its policy on nuclear energy following the Fukushima disaster, cancelling some planned nuclear plants. They are now being sued by energy corporation Vattenfall for more than €1bn in an ISDS case,” he says.
TTIP will increase choice, boost competition, which pushes down prices for consumers, and stimulate trade, which increases the number of jobs available.
McDonagh also says there’s been a big rise in ISDS cases in recent years, which greatly inhibits the ability of governments to act on social and environmental issues. “ISDS proponents will say that it’s the norm and that it has been included in trade and investment deals for decades – but use of the ISDS system in cases against governments has only really taken off in recent years. Only 50 cases were launched in the first three decades of ISDS agreements, while 2012 and 2013 have set all-time records for the numbers of new ISDS cases annually - 57 and 58 respectively,” he says.
ISDS can indeed be highly controversial, particularly when it involves highly emotive areas such as nuclear energy and tobacco. But no government starts with a blank slate and cannot enact a “day zero” approach. It has to honour the commitments made by the previous government, it is not above the law. But nonetheless there has been such outcry about ISDS that the European Parliament has voted in favour of it being overhauled before TTIP is agreed.
Also, for British readers, one little fact: ISDS is a feature of many UK trade deals and has been used to take action against the government on many occasions. To date, the UK government has won every single case.
Some organisations argue that TTIP is being made only in the interests of big businesses and won’t benefit smaller firms. However, while none of us should think that large corporations are essentially self-interested - they definitely are, particularly if they are publicly owned - it does not tally that small businesses will not benefit.
Firstly, many small businesses do trade with the US and would benefit from an even playing field. Secondly, businesses that export often grow into much larger companies as a result; it is often seen as key to growth. Thirdly, smaller companies are often suppliers to and partners of larger businesses, so even if US trade were to mostly help big companies there would be a knock-on effect on the supply chain.
Despite dramatically improved living standards and life expectancy across the western world in the post-war era, there are some who are still convinced that free trade and capitalism are making the world poorer. In part, this is due to a misreading of history that suggests the improvement of UK living standards since 1945 has been as a direct result of the creation of the welfare state.
Despite dramatically improved living standards and life expectancy across the western world in the post-war era, some are still convinced that free trade and capitalism are making the world poorer.
For those holding on to this view I’d suggest the work of Professor Carlotta Perez. Perez’s view does not discount welfare entirely; however, it places rather more emphasis on the technological innovations of the early 20th century that led to enormous job creation, the eradication of many awful diseases and an overall improvement in living standards that elevated many working class people out of poverty.
For those determined to hold on to the view that the Attlee government was the greatest of all time, I’d pose a question. How come living standards improved across the whole Western world, including the US, which had many different welfare systems?
If there is one big block to TTIP being signed it is surely food standards and protections. Americans produce their food in a way that both environmentalists and a good section of the general public are unhappy about. US food producers wash chicken carcasses with chlorinated water, plant genetically modified (GM) crops, use hormones to beef up their cows, have a very different approach to pesticides. Ostensibly, the industry focuses on production at all costs.
In Europe, chemical washing of meat is banned, as are growth hormones; many US pesticides are also banned and GM is hardly used. Campaigners say TTIP will lower food production standards to US levels and therefore should be stopped. For instance, chlorine consumption is linked to health problems such as cancer, birth defects and asthma and therefore chicken washed in chlorinated water is dangerous.
But before we shriek with horror at the thought of a US chicken burger invading this land we should understand one of the key differences between EU and US food standards. In Europe we work on the “precautionary principle”, where food production techniques have to be proven safe before they are permitted. In the US the onus is the other way around; you have to prove they are dangerous before they are banned.
The European Food Safety Authority has looked into the effect of chemical washing and has so far found no evidence that it is dangerous to human health. However, it is still unlikely that the EU is about to permit chemically washed chicken or hormone-treated beef as a result of TTIP.
“EU officials have said these are red line issues and they have said it so many times that it will be quite hard for them to be able to backtrack,” says Max Green, meat and livestock reporter at Agra Europe, which analyses developments in the food and agricultural industries.
Green also says that there a number of US food practices that are banned not only in Europe, but in other major markets such as China and Russia. For instance, the use of ractopamine in pork production is common in the US but banned in China, as well as the EU. He suggests it might have to be the US food industry that changes its ways. “In terms of numbers of pigs the ban affects the majority, as China produces half of all pigs in the world,” he says.
TTIP will be a horse trade, as all big deals are. But it’s a horse trade between the US and 28 countries under an EU flag. The interests of the various lobbies and different countries will all be added to the pot. Following this, there will be a lot of voting as it will have to be ratified by legislators on both sides of the Atlantic - a process that will take years.
I do think we should keep a close eye on issues such as ISDS and food standards. It is by no means alarmist to suggest that corporations will trample over the democratic will and public safety in pursuit of profits. But I also recommend those involved in such debates arm themselves with facts, not hyperbole.
On this side of the pond, before TTIP becomes law it will have to be approved by both the European Parliament and the EU Council. At this point, we should all perhaps feel nervousness. Do you know the name of your MEP? Or what they think about TTIP? Or how you might be able to influence their decisions? TTIP is not the problem in itself - it’s the lack of connection Europeans have with their elected representatives. On this point, I agree with George Monbiot that there is a powder keg under our democracy. But I wonder whether it is TTIP or the EU itself?
Image courtesy of KROMKRATHOG at FreeDigitalPhotos.net