TTIP: Profit Before People

By Max Cohen

The most recent instalment in the phenomenon of globalisation is upon us. The proposed Transatlantic Trade and Investment Partnership (TTIP) is an unprecedented bi-lateral trade and investment agreement between the United States of America (US) and the European Union (EU). In tandem with similar bilateral trade deals proliferating between different regions and states, TTIP is set to entrench the economic relationship between the world’s largest two economies; an objective that has been sought after for around two decades. This historical background is significant as an indicator of the nature of the TTIP and its advocates and adversaries. In the 1990s a similar proposed agreement – this time under a different name, titled the Multilateral Agreement on Investment (MAI) – was halted after being met by vehement opposition in civil society. Dissension amongst grassroots activists, NGOs, unions and more, directed towards the proponents of the deal and globalisation as a whole culminated in the infamous large-scale protests surrounding the WTO Ministerial Conference of 1999 in Seattle. This marked a significant turning point for transnational capital. Subsequently the WTO has ratified zero international trade deals, being sidestepped as a medium by regions, states and multinational corporations who have taken the prerogative to secure inter-national/regional trade and investment deals by their own making, largely bi-laterally.

So what does the TTIP trade deal entail and why is being met with similar opposition today? Primarily, due to tariff barriers already being at minimal levels between the two regions, the planned trading bloc’s primary purpose is to reduce non-tariff barriers. In what proponents attractively call a process of “harmonisation”, differing regulations and standards between the US and EU are synchronised and made compatible so as to ease the flow of trade. What this means is that regulations and standards are watered down or eliminated as interests from all business and political sectors seek to attenuate and remove any remaining barriers hindering investment and trade. Importantly, corporate interests have made up over 90% of the advisors consulted by negotiators and so there is a dangerous absence of any alternative positions wishing to maintain vital regulatory standards.

For example, cherished EU environmental, food, animal welfare and labour regulations and standards are at critical risk of disintegration towards weaker levels seen in the US. Specifically (on top of increased levels of carbon emissions induced by increased flow of trade and increased exports of shale gas from the US to the EU) this means hormone and chlorine treated meats, cloned cattle, genetically engineered foods, certain hazardous chemicals and pesticides all currently banned or under strict restrictions under EU law are looking to be normalised in the constituent economies of the EU at the behest of corporations. Equally, relatively tougher financial regulations imposed after the financial crash in the US risk being diluted in order to harmonise with EU standards. No one, whose memory can at least cast as far back as 2008, needs telling of the disastrous ramifications of such proposals. Further than deregulation, the TTIP also promises to secure liberalisation of services markets, opening public health services up to private firms. Notably here in the UK the infrastructure and legislation for privatisation of the National Health Service (NHS) is already in place by virtue of the Conservative-Lib-Dem government’s Health and Social Care Act of 2012. With the implementation of the TTIP, the NHS, and other treasured public health services around Europe, will be increasingly vulnerable to US corporations seeking to raid public budgets. Admirable grass-root groups, such as the ‘People’s NHS’, are trying to get the NHS an exemption from the treaty to reverse any further steps down the road of privatisation.

Hidden away from the scrutiny of malcontents, the negotiations for TTIP have thus far been behind closed doors. Information on the trade deal has been exposed only via leaks and it has taken the assiduous effort from similar elements of civil society as seen in the 1990s to bring the issue to the forefront of the political agenda (for example the influential local ‘St Andrews TTIP Action Group’ is one collective of a burgeoning transatlantic movement). And yet, the opacity of the secret negotiations goes even further. Elected parliamentarians from each of the EU member states are denied access to papers concerning demands for deregulation from US negotiators. Similarly in the US, members of Congress are denied sight of the demands being made of their states. Evidently, negotiations surrounding what could be the biggest bi-lateral trade deal in history are to be for corporate eyes only, as I will re-stress corporate interests make upover 90% of the advisors consulted in negotiations.

This lack of transparency is the first aspect of why the TTIP has been rightly described by Environmentalist George Monbiot as a “reckless destruction of democratic principles”. The second aspect – ISDS – reaffirms this notion. This inherent clause ‘Investor State Dispute Settlement’ (ISDS) is a mechanism that grants the right to transnational corporations to sue sovereign states for domestic policies that have a negative impact on anticipated profits. These corporations are offered the right to bypass traditional domestic courts and take their cases to ad hoc international arbitration tribunals, which operate unaccountably without basic safe guards such as judicial review and rights of appeal. This is an astonishing provision, and one that is conspicuously undemocratic. Recent and current examples of this procedure in action should put in perspective what ISDS can mean for sovereign states. In response to the Australian and Uruguayan governments introducing plain packaging and health warnings on cigarette packets, the multinational cigarette company, Phillip Morris, is currently suing both respective governments for affected profits. Germany is currently being sued to the tune of $3.7 billion by Swedish energy company Vattenfall due to the state’s decision to phase out its dependence on nuclear energy. On the refusal to grant the mining company OceanaGold a permit to mine for gold, El Salvador is being sued for $300 million, around half of its annual budget. And the list goes on.

The fact that over 500 known cases have been brought to 95 different countries demonstrates that big business has gained confidence to challenge governments who have the audacity to implement policies which ultimately are for the benefit and protection of their citizens. Back at home, adding further concern regarding the NHS, a future progressive government determined to reverse the selling off of public health services to private multinationals may be deterred for risk of being sued as was seen in Slovakia where Dutch firm Achmea has used arbitration tribunals to both attempt to sue the government and block them from implementing a public health insurance scheme.

On the other hand, advocates of the TTIP regard the urgent implementation of the deal as paramount, taking priority over the need for any democratic deliberation and debate (consider PM David Cameron requesting the deal be placed on “rocket boosters”). Consistently, proponents of the TTIP evoke two economic advantages of the agreement in order to silence any resistance: “growth and jobs”.

However, overwhelming evidence to the contrary confirms that the TTIP stands principally to benefit those actors who are pressing for it most – corporations. Consistently, the projections of growth have been found to be either reliant on false premises or overly exaggerated. Political Scientists Dr Gabriel Siles-Brügge and Prof. Dr Ferdi De Ville have argued the projections for growth are “vastly overblown” and premised on “shaky ground”. Concurrently Dean Baker, co-founder of the Center for Economic and Policy Research, has claimed “that the promised pot of gold from this trade deal is illusory” and compared the projected gains to the economy to “finding a quarter on the street”. Perhaps the most striking comprehensive research has been undertaken at Tufts University, Massachusetts, “using the United Nations Global Policy Model, which incorporates more sensible assumptions on macroeconomic adjustment, employment dynamics, and global trade. We project that TTIP will lead to a contraction of GDP, personal incomes and employment. We also project an increase in financial instability and a continuing downward trend in the labor share of GDP”. Negative predictions such as this may not seem so extreme if we look back to the adverse effects of the NAFTA trilateral trade deal from 1994 between the US, Canada and Mexico, which unto 2006 produced a net loss of over one million US jobs and a significant decline in the value of wages for millions more workers, despite the routine bombast with which it was promoted prior to its establishment. In other words, don’t believe the hype.

Criticisms of the TTIP agreement such as this have been readily dismissed as radical polemics, “conspiracy theories” as obstinately suggested by Conservative politician Ken Clarke, and impulsive recalcitrance, resistant to anything associated with corporations and free trade. Yet the disharmony with the TTIP goes beyond mere suspicion and conjecture as attested by the historical and empirical evidence. Not only should citizens, and their elected representatives, be aware of the negative effects of the TTIP deal but they should also be actively angry that in a functioning liberal-democracy profit before people is the political and economic norm.

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