TTIP - A giant leap for the EU, but does it pose a risk to the public?

Part 6 and the last in our series on the European Parliament

The transatlantic trade and investment partnership (TTIP) is a free trade agreement being negotiated between the European Union and the United States whose ultimate aim is to create economic growth and jobs on both sides of the Atlantic by removing trade barriers, and making it easier to trade between the two continents.

In itself this means removing duties on imports but also finding agreement on standards for goods on both sides, dismantling “unnecessary” regulatory barriers, and setting international standards. 

Customs duties at the US border are relatively low, but given massive trade flows of some €2 billion daily even small reductions in customs duties can have enormous economic leverage. Removing customs duties would instantly pave the way for more EU imports from particularly competitive sectors such as textiles, ceramics and processed agricultural products – which is why TTIP is being mainly geared as beneficial for European SMEs.

The trade agreement could have its biggest effect on growth in the area of standards and regulations, because both sides have different regulatory structures and traditions and this could have an effect of people’s health, safety at work, environment, and the financial stability of firms. The EU claims that bureaucratic hurdles alone are equivalent to customs duties of 10-20 per cent, again mainly affecting small and medium-sized companies (SMEs),which are unable to bear the extra costs. 

The EU says it is only discussing standards and regulations with the US on one strict condition: that is neither gives up nor dilute the levels of protection enjoyed in Europe. That goes for health and the environment as well as for consumer protection. For example, hormone-treated beef is not allowed in the EU, for example, and the planned trade agreement will not change that. Regulatory alignment and mutual recognition will only be possible if real convergence on the required safety and environmental standards is guaranteed. 

Another controversial area in TTIP is that EU firms and American firms will be to take part in calls for tender in the US and the EU respectively. Of course, for EU firms this means considerable scope for expansion.

But for these firms to be treated fairly an investor-to-state dispute settlement (ISDS) will have to be created, and repeated cases have illustrated the shortcomings of existing investment protection agreements when powerful multinationals take governments to task. The European Commission says it wants to use the ongoing negotiations in the TTIP for a root and branch improvement of the system.

The EU says that the EU economy could grow by €119 billion per year, equivalent to about €500 for an average household, and describes TTIP as sort of “growth package without using taxpayers’ money.”

EU countries are major investors in the US. Their combined investments in the US top €1.6 trillion, making the EU the biggest investor in the US. So EU countries have a major interest in ensuring that their investments abroad receive the best possible protection – as is the aim in the TTIP. 

 

Services and public services 

The free trade agreement explicitly rules out liberalisation of public services, but it does concern the equal treatment of foreign and domestic private service providers. 

An important limitation is that which concerns the provision of public services: in the WTO’s Agreement on Services (GATS) and all its other free trade agreements, the EU has kept monopolies for the provision of public services at all administrative levels, including local councils, and also takes into account the issue of concessions. In the case of the trade agreement with Canada, for example, the EU inserted a “carve-out” in the area of water, allowing to give preference to European service providers over their foreign counterparts in the area of public monopolies and concession.

 

Public involvement and democratic oversight 

The text negotiated by the Commission has to be approved by the EU’s Member States in the Council and ratified by the European Parliament. Depending on the policy areas covered in the final agreement the 28 national parliaments of the EU’s Member States might also have to approve the deal.

 

Maltese MEPs not all of the same view

The negotiations, which in July reached their tenth round, are now in an advanced stage. A European Parliament Resolution has forcefully identified priorities and elements of concern to the EU. One of these was the so-called Investor-State Dispute Settlement (ISDS), on which the European Commission issued new proposals. 

“I consider the latest round as ultimately positive,” MEP Roberta Metsola (EPP) told a conference organised by the EP office in Malta in September. “Although there is a realisation that agreement will not be concluded in 2015”. She explained that irrespective of TTIP what is currently of member state competence will remain so. “My position is that as long as there is proper coverage for SMEs and for their concerns, I remain in favour”. 

“Transparency concerns are quite legitimate - lack of information hinders proper decision-making,” said MEP Miriam Dalli (SnD). The European Parliament has emphasised this concern in its resolution. Dalli stressed that any agremeent should not lead to any lowering of standards. She referred to the recent cases where despite the high environment-related standards on paper in Europe, enforcement was somewhat lacking. 

On his part Labour MEP Alfred Sant described TTIP as an agreement that is fuelled by multinationals and built on a neoliberal approach to favour an oligopoly of a few big players. “In this way they can create economies of scale and be more competitive globally”, he said. “Still, if consumers can get better and cheaper goods, there is an element that is beneficial. As things stand today, I would abstain on the decision to go ahead with TTIP”, Sant said.

TTIP vows to simplify EU-US trade but its secrecy has raised supicions

In the area of trade policy the European Commission negotiates on behalf of the EU and its 28 Member States. The Commission works according to guidelines agreed by the EU’s Member States. The Commission’s trade department (Directorate General for Trade) takes the lead in the negotiations while working closely with other Commission departments. The US is represented by the United States Trade Representative (USTR). 

The Commission has a legal obligation to consult the Council on all aspects of the TTIP-negotiations. This occurs in various formats and at different levels. Since the start of the TTIP process the Commission has had more than 45 meetings with the EU’s Member States, including at ministerial level. On top of this there are numerous bilateral and other meetings. 

The European Parliament is similarly consulted and informed. In addition to the European Parliament’s Trade Committee, a specially set up Monitoring Group and a group of high-ranking MEPs around the Parliament’s president also work on the TTIP. Since the beginning of the talks, representatives of the Commission have appeared in the 15 meetings of the European Parliament and many more informal meetings to brief MEPs and answer their questions. So far, the Commission has sent more than 65 important TTIP documents to the European Parliament and answered over 80 parliamentary questions. The Parliament has welcomed this openness and transparency on several occasions. 

What is TTIP about?

The TTIP talks are in three parts: market access, regulatory cooperation, and trade rules.

Market access deals with the removal of trade barriers such as import duties between the EU and the US, which should allow a wider range of goods to be sold from Europe to the USA but also enables American companies to bid for public contracts in the EU.

Regulatory cooperation means harmonizing rules on standards – from the production of cars to chemicals – and this has opened questions on food safety due to the production of genetically modified food in the USA that could be exported to the EU.

Finally trade rules that can promote labour rights, help SMEs, promote free competition, and more controversially, setting up up a dispute settlement system for resolving disputes between governments.

All this has created a huge split between corporate supporters of TTIP, and a grassroots campaign that has rallied millions to tell governments and MEPs to scrap the agreement which they say only facilitates large multinational players seeking easier trade between the USA and the EU.

Transparency issues

This is a major sticking point for campaigners: the talks are being held in secret. While diplomats will say that such negotiations cannot be carried out in the open, campaigners want to have transparency on such an important trade agreement that can affect the lives and health of millions of consumers in the EU.

The European Commission says it is doing all it can to make TTIP negotiations transparent. “That’s why in TTIP we’ve now gone further than in talks in any previous bilateral EU trade negotiation – by publishing EU negotiating texts. These are documents we give our US counterparts during week-long rounds of face-to-face talks. Our texts and theirs are the basis of our discussions,” the EC says. 

These include textual proposals –the European Union’s proposals for legal text on topics in TTIP. They are tabled for discussion with the US in negotiating rounds. The actual text in the final agreement will be a result of negotiations between the EU and US. 

And then there are position papers setting out out and describing the EU’s general approach on topics in the TTIP negotiations. They are tabled for discussion with the US in negotiating rounds. 

However, the documents negotiating on market access will remain confidential, because the EU says it wants to reach the best possible final deal for everyone in the EU. “To do that we need to strike the right balance between what each side wants. And that means offering concessions to each other at different stages in the talks; being able to do so in confidence.”

The EU says that discussions in TTIP are mostly based on the Comprehensive Economic and Trade Agreement (CETA) where the EU recently concluded negotiations with Canada and that this gives a fair idea of what it is negotiating on market access in TTIP – even if the outcome may well be different. 

In terms of regulatory co-operation, the second pillar of the TTIP, the EU has provided detailed proposals on trade barriers and ensuring food safety and the health of animals and plants.

For trade rules, all the textual proposals prepared so far, as well as a number of position papers for various chapters, have been published.

All MEPs to have access to all confidential TTIP documents

All MEPs will have access to all categories of confidential TTIP docs after 11 months of negotiations with the Commission. MEPs will be able to read the “consolidated texts” in a secure reading room, take handwritten notes and use the information as a basis for their political actions.

Inform yourself

The European Commission says it is negotiating TTIP as openly as possible.

You can find factsheets in plain language as well as negotiating texts, EU textual proposals and EU position papers at this link here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1230

Critics say TTIP agreement threatens public services

A report by freelance writer Thomas Fritz and published by unions Association Internationale de Techniciens, Experts et Chercheurs (AITEC), Corporate Europe Observatory (CEO), European Federation of Public Services Unions (EPSU), Instytut Globalnej Odpowiedzialności (IGO), Transnational Institute (TNI), Vienna Chamber of Labour (AK Vienna), and War on Want says that TTIP will target public services for corporate profits.

Here are the key takeaways:

1. TTIP and CETA are influenced by the same corporate lobby groups such as the EU’s most powerful corporate lobby group BusinessEurope and the European Services Forum, a lobby outfit banding together business associations as well as major companies such as British Telecommunications and Deutsche Bank.

2. The business lobby has achieved a huge success as CETA is set to become the first EU agreement with the ‘negative list’ approach for services commitments. This means that all services are subject to liberalisation unless an explicit exception is made. It marks a radical departure from the positive lists used so far in EU trade deals which contain only those services which governments have agreed to liberalise, leaving other sectors unaffected. The same could happen in TTIP where the Commission is pressuring EU member states to accept the same, risky approach, meeting the demands of the business lobby.

3. Big business has successfully lobbied against the exemption of public services from CETA and TTIP as both agreements apply to virtually all services. A very limited general exemption only exists for services “supplied in the exercise of governmental authority”. But to qualify for this exemption, a service has to be carried out “neither on a commercial basis nor in competition with one or more economic operators”. Yet nowadays, in virtually all traditional public sectors, private companies exist alongside public suppliers – often resulting in fierce competition between the two. This effectively limits the governmental authority exemption to a few core sovereign functions such as law enforcement, the judiciary, or the services of a central bank. 

4. Probably the biggest threat to public services comes from the far-reaching investment protection provisions enshrined in CETA and also foreseen for TTIP. Under a system called investor-state dispute settlement (ISDS), thousands of US and Canadian corporations (as well as EU-headquartered multinationals structuring their investments through subsidiaries on the other side of the Atlantic) could sue the EU and its member states over regulatory changes in the services sector diminishing corporate profits, potentially leading to multi-billion euro payouts in compensation. Policies regulating public services – from capping the price for water to reversed privatisations – have already been targets of ISDS claims.

5. The different reservations and exemptions in CETA and TTIP are inadequate to effectively protect the public sector and democratic decision-making over how to organise it. This is particularly true as the exceptions generally do not apply to the most dangerous investment protection standards and ISDS, making regulations in sensitive public service sectors such as education, water, health, social welfare, and pensions prone to all kinds of investor attacks.

6. The European Commission follows industry demands to lock in present and future liberalisations and privatisations of public services. This could threaten the growing trend of remunicipalisation of water services (in France, Germany, Italy, Spain, Sweden, and Hungary), energy grids (in Germany and Finland), and transport services (in the UK and France). A roll-back of some of the failed privatisations of the UK’s National Health Service (NHS) to strengthen non-profit healthcare providers might be seen as violations of CETA/TTIP – as might nationalisations and re-regulations in the financial sector such as those seen during the economic crisis.

7. Giving in to corporate demands for unfettered access to government procurement could restrict governments’ ability to support local and not-for-profit providers and foster the outsourcing of public sector jobs to private firms, where staff are often forced to do the same work with worse pay and working conditions. In CETA, governments have already signed up several sectors to mandatory transatlantic competitive tendering when they want to purchase supplies and services – an effective means for privatisation by gradually transferring public services to for-profit providers. 

8. Both CETA and TTIP threaten to liberalise health and social care, making it difficult to adopt new regulations in the sector. The UK’s TTIP services offer explicitly includes hospital services. In the CETA text and recent TTIP drafts no less than 11 EU member States liberalise long-term care such as residential care for the elderly (Belgium, Cyprus, Denmark, France, Germany, Greece, Ireland, Italy, Portugal, Spain, and the UK). 9. The EU’s most recent draft TTIP services text severely restricts the use of universal service obligations (USOs) and curbs competition by public postal operators, mirroring the wishes of big courier companies such as UPS or FedEx. USOs such as daily delivery of mail to remote areas without extra charges aim at guaranteeing universal access to basic services at affordable prices.

9. TTIP and CETA threaten to limit the freedom of public utilities to produce and distribute energy according to public interest goals, for example, by supporting renewables to combat climate change. Very few EU member states have explicitly reserved their right to adopt certain measures with regard to the production of electricity (only Belgium, Portugal, and Slovakia) and local energy distribution networks (amongst them Belgium, Bulgaria, Hungary and Slovakia) in the trade deals.

10. The US is eyeing the opening up of the education market via TTIP – from management training, and language courses, to high school admission tests. US education firms on the European market such as Laureate Education, the Apollo Group, and the Kaplan Group could benefit as much as German media conglomerate Bertelsmann, which has recently bought a stake in US-based online education provider Udacity. The European Commission has asked EU member states for their “potential flexibilities” on the US request relating to education services.

11. The US film industry wants TTIP to remove European content quotas and other support schemes for the local film industry (for example, in Poland, France, Spain, and Italy). Lobby groups like the Motion Picture Association of America (MPPA) and the US government have therefore opposed the exclusion of audiovisual services from the EU’s TTIP mandate, fought for by the French Government. They are now trying to limit the exception as much as possible, for example, by excluding broadcasting from the concept of audiovisual services – seemingly with the support of EU industry groups like BusinessEurope and the European Commission.

12. US services companies are also lobbying for TTIP to tackle ‘trade barriers’ such as labour regulations. For example, US company Home Instead, a leading provider of home care services for seniors operating franchises in several EU member states, wants TTIP to address “inflexible labour laws” which oblige the firm to offer its part-time employees “extensive benefits including paid vacations” which it claims “unnecessarily inflate the costs of home care”.

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