TTIP: Reasons why the rest of the World should be aware

By Manuel Pérez-Rocha

The Transatlantic Trade and Investment Partnership (TTIP) is a comprehensive free trade and investment treaty currently being negotiated – in secret – between the European Union and the USA with massive implications for people and the environment on both sides of the Atlantic. The stakes couldn´t be higher but not only for European and Americans but also for the rest of the world that would be affected in many different ways by this agreement between the two super powers of trade. In a working paper that will be released shortly¹ we explore why human rights, environmental, consumer advocate and all types of organizations all over the world that are working for a world different from the corporate-led neoliberal dogma, should pay special attention to the TTIP. Some of the main concerns include:

The TTIP seeks to undermine the historic resistance to the US and the EU intentions to impose a global model of free trade and investment

The intention to set up an “economic NATO” or a transatlantic free trade agreement that sets the “gold standard” for investment protections is being resumed. The massive trade agreements currently negotiated under the TTIP are an attempt to revive the failed agenda of deregulation and “free trade” promoted by the US and the EU in the past, but that has failed to a large extent thanks to the opposition of governments in the South and civil society action all over the world. The TTIP negotiations present a new urgency for legal mechanisms that place holistic human and environmental rights considerations above corporate rights.

The EU and the US aim to set global standards on trade and investment and impose them on the world

Seventeen years after civil society and some developing country governments have played a major role in blocking the OECD’s proposed Multilateral Agreement on Investment, many of its proponents see the TTIP as an opportunity to revive this failed effort among rich nations to set global rules that privilege investors over sovereign decision making in favor of the public interest. But the TTIP is not only an opportunity for imposing Investor State Dispute Settlements (ISDS) and other investors’ protection measures in other countries. Other EU and US - led global agreements would find the TTIP as a major enabler and point of leverage for global negotiations.

The EU and the US attempt to establish “common values”, but do they have any?

The TTIP is justified by its promoters not only in terms of economic imperatives but as a means to reassert the supposedly common values shared by Europe and “America”. But the “common values” discussion between the US and Europe and how these values relate to the rest of the world goes beyond issues of democratic governance and into the realm of the vision of the role of the state,  the provision of public services, and the preeminence of human rights over corporate rights. In other words, the neoliberal laissez-faire Anglo-Saxon conservative model and the social democrat model based on guaranteeing basic services to the population are in direct confrontation, and the governments of the world have scrambled in the globalization era to adapt to both of these models. It is far from clear what the “transatlantic values” are.

The TTIP as a response to the emergence of China, the BRICS, and others

Given the global shifts of power with the emergence of new actors, mainly the BRICS countries and in particular China, it is no wonder that questions arise whether the hidden agenda of the TTIP could be part of a broader “West against the Rest” strategy to shore up a US-European alliance against the perceived threat posed by emerging economies in trade and investment negotiations. With this shift of power, the EU and U.S. trade officials have been frustrated by their inability to obtain all of their negotiating objectives at the WTO and other multilateral fora. However, a key question would be how the TTIP would affect developing countries’ standing in multilateral negotiations. The major risk with respect to multilateralism derives from the fact that in an age of an uncertain globalization process and an unclear “new world order,” the TTIP, in its intention to cement the latter based on the two Western economic superpowers, could actually exacerbate the rivalry of economic blocs and thus deepen the present economic and institutional global crisis.

The TTIP as leverage point for the US and EU bilateral and inter - regional negotiations

Some European Union officials have openly acknowledged that a major motivation for including investor-state dispute settlement in the TTIP is to avoid weakening their hands in negotiations with emerging market countries. If not for this broader agenda, it would be difficult for them to justify allowing foreign corporations to bypass their domestic judicial systems, which are considered robust on both sides of the Atlantic. The United States, for their part, are in the early stages of bilateral investment treaty negotiations with China and India. There are also some notions that the US are trying to re-launch an effort to forge a hemisphere-wide Free Trade Area of the Americas, based on the advance it already has made with the free trade deals with Mexico, Colombia, Peru and Chile. For all the biregional and bilateral trade and investment negotiations, the TTIP has the objective to serve as the leverage point for the US and the EU to jointly confront models of self-determination and to continue imposing their model of dependence on Western hegemony.

The TTIP contradicts the EU’s pro development rhetoric and Policy Coherence for Development

The European Union’s trade and investment policies towards third countries contradict its pro-development and human development rhetoric, as well as its discourse of promoting the integration of policy coherence for development (PCD). Also, so far the TTIP has excluded all third countries from the negotiations, and African, Caribbean and Pacific (ACP) and less developed countries are yet to be convinced that the EU and US are still sensitive to their needs, while a closed agreement will only cement the view that developed countries are not supportive of the developmental goals and needs of the global South.

The TTIP would put pressure on other countries against “localization barriers to trade” measures, and weaken policy tools to foster local development

All over the world, communities and nations are developing new ways to rebuild local economies. People are using their rights as citizens to urge local and national governments towards supporting localization. But an unprecedented new proposal in the TTIP seeks to target localization, particularly in emerging economies around the world. This proposal would formally commit the U.S. and the EU governments to work together to pressurize other countries to eliminate rules designed to favor local economic development. A leaked report on the December 2013 round of TTIP negotiations includes a new approach to what it calls “Localization Barriers.” Although it is unclear what a “formal, third country cooperation mechanism” on localization in TTIP would be, the proposal would take this pressure outside of the WTO to a more political – but institutionalized -- level of “advocacy” on the ground with developing country governments. The danger is that if this coordinated attack on localization were formalized in TTIP, along with the broader protections for corporations embedded in provisions on investment, intellectual property rights, and public procurement, it would further tilt the scales in favor of corporate interests. This would create one more obstacle to national or local governments’ efforts to channel economic activity towards broader social goals. However, the proposal for a chapter on localization barriers appears to be at an early stage. The U.S. and EU should discard this dubious proposal. Instead, they should find ways to embrace localization, rather than embarking on this dangerous new path.

The TTIP is a frontal attack on state owned enterprises (SOEs), sovereign wealth funds and other government – controlled entities

One of the fundamental objectives of the US in the TTIP is to constrain the role of states – including those of third parties - in their economies. However, the US intention to see state-owned enterprises (SOEs) constrained and rolled back is a key concern not only within socialist and social democratic traditions in Europe but among third countries that seek to compete globally with US and EU transnationals, with their own self-defined interests, including the degree to which the state and governments – nationally and locally – should foster economic development.

The TTIP could have an enormous economic impact on other countries

There are estimates that countries outside the US-EU bloc stand to lose market share as a result of the TTIP, as U.S. and European corporations gain increased access to each other’s markets. According to a UK Parliament report “all studies concur that removal of non-tariff barriers to trade, particularly through regulatory harmonization, will have the most significant impacts both on parties and non-parties, although the effects are very difficult to measure let alone predict. Some worry that standards will be raised so high that non-parties will be locked out of erstwhile markets”, and along with the uncertainty that the TTIP would bring to third parties in terms of market access to the EU and the US, the aggressive Market Access Strategy of the EU will be reinforced.

The TTIP and global food safety standards

There is little doubt that any food safety and other standards agreed to in TTIP would have enormous influence on global rules. It is not clear how TTIP would affect existing food safety or related standards, but it would likely impede new regulations, including those on the use of emerging technologies like nanotechnology or synthetic biology in foods. More broadly, the danger is that rules established in TTIP on Genetically Modified Organisms (GMOs), antibiotics in meat, dubious food additives such as ractopamine (which is currently banned in 160 countries, but not the U.S.) and other food safety issues would be biased toward promoting trade rather than food safety. Decisions reached by the U.S. and EU in TTIP would almost certainly influence global norms without providing other countries a seat at the table.

Trade of energy in the TTIP endangers efforts to tackle climate change

For proponents of the TTIP “It is in the eminent interest of North America and Europe to see open and liquid energy markets develop across the Atlantic, and eventually in Asia and indeed globally as the best way to fuel economic growth in the future”. According to German Chancellor Angela Merkel the biggest benefit of the TTIP could be facilitating trade in energy, and Obama has said “the United States have already approved licenses for natural gas exports which will increase global supply and benefit partners like Europe […].and TTIP would make it even easier to get licenses to export gas” to the continent. However, this geostrategic scenario to face increasing antagonism with Russia, raises global environmental concerns.

A leaked EU trade document reveals the dangers of the TTIP for people and the struggle on climate change, making it “clear that the EU is looking to use this secretly negotiated trade pact as a back-door channel to get automatic, unfettered access to U.S. fracked gas and oil. If this proposal moves forward, we would see more fracking for oil and gas in the United States, more climate-disrupting pollution globally, and increased dependence on fossil fuels in the EU. So, while oil and gas companies on both sides of the Atlantic rake in profits, everyone else is stuck paying the costs. With respect to third parties, the EU leaked document says that ‘in the future, an energy and raw materials chapter negotiated between the U.S. and the EU could serve as a platform for each party's negotiations with partners relevant for energy and raw materials, such as Mexico for instance.’ So this proposal isn't just for sending unfettered exports of U.S. oil and gas to Europe. An energy chapter is also a dangerous precedent for agreements with other countries like Mexico. “Every country must be able to manage its own energy sources, natural resources, and climate policies. Trade agreements can't stand in the way” (Ilana Solomon, Director, Sierra Club’s Responsible Trade Program)

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