Why Friends of the Earth England, Wales and Northern ... TTIP is a major proposed free trade agreement between the Europ
August 2014
Stop this Trojan Horse Treaty Why Friends of the Earth England, Wales and Northern Ireland oppose the Transatlantic Trade and Investment Partnership (TTIP). Proponents of TTIP have been keen to stress that it will lead to jobs, growth and prosperity. However, there is very little evidence underlying such assertions.1 Instead it has become apparent that beneath the bluster TTIP is a secretive, business driven2 deregulatory agenda that will whittle down environmental, health and food standards. Additionally, TTIP will increase the control of big business over government whilst reducing the power of citizens to resist corporate excess. As such we are calling for the negotiations to be stopped immediately. No TTIP.
What is TTIP? TTIP is a major proposed free trade agreement between the European Union (EU) and the United States of America (USA). It has the potential to be the largest bilateral trade deal ever. TTIP has the proclaimed purpose of reducing tariffs and removing regulatory barriers between the EU and USA. This, in theory, will make it easier (and cheaper) for firms to trade and do business between the two trading blocs. Proponents claim that TTIP will be of great economic benefit to all involved and will lead to jobs, growth and prosperity. The UK is a major driving force behind the proposals and all three major parties are broadly supportive. The UK was a key instigator of the European Community’s Single Market in the early 1990s, and this is seen as the next logical step towards extending this market further.
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Why we oppose TTIP
1. TTIP will lower EU and UK regulatory standards Over 80% of the predicted gains from TTIP are claimed to come from the removal of regulatory barriers between the EU and USA.3 The US and big industry have made it clear that they consider the EU’s precautionary approach4 to regulating sectors such as food, chemicals and agriculture a significant barrier to trade.5 Anu move to adopt the US’s preferred regulatory approach in these sectors would require a significant weakening of current EU standards. Whilst the European Commission has attempted to dismiss such concerns, there are already examples of the TTIP negotiations exerting negative pressure on EU regulators. In the Environment, Public Health and Food Safety (ENVI) committee of the European Parliament, a resolution against the treatment of meats with lactic acid was scuppered due to intense lobbying by the Commission. MEP D. Roth-Behrendt of the ENVI committee said: “Why can a high public servant of the Commission’s Directorate-General on Trade come to me and urge me, “please, please, please do not reject this law, let it pass because otherwise the US will not trust us and abandon the negotiations.” … That already shows how things will be run from now on.””6 Leaked documents reveal that the European Commission are proposing the creation of an EU-US “Regulatory Council”, which would allow both parties to address their regulatory differences in a continuous process, long after the TTIP agreement has been signed. This would serve to remove regulatory cooperation from the political (and public) sphere and is something that business have been pushing for since 2012. Such an approach, as envisioned, would leave the process wide open to business lobbying and allow weaker regulation for politically sensitive sectors, such as food and chemicals, to be pushed through with little public scrutiny.7
2. TTIP will allow foreign companies to sue governments in private international courts The Investor-State Dispute Settlement mechanism (ISDS), an integral component of TTIP, will allow foreign companies to sue national governments in private international courts (outside of any national judicial system) if a public policy is deemed to impede their ability to make a profit. Such policies may include essential health, environment and consumer protections. Arbitrators charged with ruling on such cases have been found to have a strong pro-investor bias.8 Phillip Morris is using an ISDS mechanism to sue the Australian government for introducing plain packaged cigarettes.9 Additionally, the Swiss energy company, Vattenfall, is currently seeking $3.7 billion in compensation from the German taxpayer following Germany’s decision to phase out nuclear energy.10
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ISDS is roundly considered to have a ‘chilling’ effect on government law making and countries, such as South Africa, are increasingly choosing to renege on trade agreements due to negative experiences with ISDS mechanisms.11 Perversely, ISDS’s inclusion in TTIP is wholeheartedly supported by the UK government, despite a government commissioned report finding “that an EU-US investment treaty would impose costs on the UK to the extent that it prevents the UK government from regulating in the public interest”.12
3. TTIP will undermine EU/UK efforts to combat climate change TTIP is expected to increase greenhouse gas emissions in the EU and USA putting it at odds with any plan to combat anthropogenic climate change.13 Any increase in greenhouse gas emissions is not compatible with the urgent need to curb emissions and keep global warming below two degrees. Leaked draft EU negotiating texts call for the US to export “coal, crude oil, oil products, natural gas, whether liquefied or not, and electrical energy” under TTIP.14 This could serve to lock in fossil fuel dependency on both sides of the Atlantic for the coming decades. In addition, the United States Trade Representative have identified EU environmental policies, such as regulation on fluorinated greenhouse gasses, as potential barriers to trade.15 There are already examples of the TTIP negotiations having a negative impact on EU climate policy. In a concession widely linked to the ongoing trade discussions, the EU’s proposed Fuel Quality Directive looks set to be watered down to remove discriminatory penalties against fuels derived from tar sands (the extraction and processing of which have been found to produce 23% more emissions than the average fuels used in the EU).16 The ISDS mechanism contained within TTIP will allow foreign mining companies to sue member states that chose to ban or regulate the extraction of shale-gas (‘fracking’), limiting a government’s ability to determine its own energy policy. There is international precedence for such an occurrence: Lone Pine Resources are currently suing the government of Quebec, using an ISDS mechanism contained within the North America Free Trade Agreement (NAFTA), for implementing a moratorium on fracking in June 2011.17
4. The effect of TTIP on Gross Domestic Product (GDP) and jobs has been oversold TTIP advocates proclaim that it will be of great benefit to the UK economy, potentially growing GDP by an extra £10bn per annum.18 However, this claim is misleading. The extra £10bn per annum, or additional 0.4% growth in GDP, figure is expected from 2027 onwards. Economists generally struggle to estimate what the economy will look like next month, never mind in 13 years’ time.19 The real impact of TTIP on UK GDP will conceivably be even lower. The £10bn per annum figure is the result of an ‘ambitious’ scenario, which factors in a degree of regulatory
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convergence between the US and UK that is far beyond anything currently proposed in the TTIP negotiations. A ‘modest’ scenario, by comparison, predicts eventual GDP gains as low as 0.14%, per annum. Even this may be too optimistic. Both the ‘ambitious’ and the ‘modest’ forecasts assume that all sectors of the economy will be included within a TTIP deal. This is despite the fact that the US have repeatedly stated that financial services will not be included.20 Additionally, no attempt has been made to factor in the implicit environmental and health costs associated with any weakening of UK regulation. In any case, increasing GDP alone is hardly a valid reason for placing hard fought environmental, food and health standards at risk. The same study forecasts massive labour displacement across the EU and US, with an additional 1.3 million EU workers and 715,000 US workers displaced (losing their job). 21 The Centre for Economic Policy Research model assumes that all workers losing their job in one sector will be able to find alternative employment in other sectors of the economy. However, a separate impact assessment produced by the European Commission concedes there are ‘legitimate ‘concerns’ that those who lose their job as a result of TTIP will be unable to find other work and even suggests that national governments draw on EU structural funds to help mitigate the damage.22 (Apparently it is pretty difficult to leave your job as a farmer, and walk straight into a new one as a stock broker). For more information, and to signal your support for our campaign against TTIP, contact Samuel Lowe, Friends of the Earth:
[email protected], @SamuelMarcLowe See: http://www.foe.co.uk/page/secret-eu-us-trade-deal
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‘Why is it so acceptable to lie to promote trade deals’, Dean baker, 30 May 2014 ‘Who lobbies most on TTIP?’, Corporate Europe Observatory, 8 July 2014 3 ‘Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment’, London: Centre for Economic Policy Research, March 2013. 4 ‘Asbestos anyone? In defence of the precautionary principle’. Friends of the Earth, 2014 5 ‘U.S. says science should settle farm debates in trade deal with EU’, Reuters, 17 June 2014 6 ‘The Fairytale of the Job Miracle’, Monitor, 30 January 2014 7 ‘Regulation – none of our business?’, Corporate Europe Observatory, 16 December 2013 8 ‘How law firms, arbitrators and financiers are fuelling an investment arbitration boom’, The Transnational Institute, November 2012 9 ‘Philip Morris sue Australia over cigarette packaging’, BBC News, 21 November 2011 10‘Vattenfall says suing Germany over nuclear exit’, Global Energy World, 12 July 2012 11 ‘Still not loving ISDS: 10 reasons to oppose investors’ super-rights in EU trade deal’, Corporate Europe Observatory, 16 April 2014 12 Lauge N Skovsgaard Poulsen, Jonathan Bonnitcha, Jason Webb Yackee, ‘Costs and Benefits of an EU-US investment protection treaty’: a report for BIS on behalf of LSE Enterprise, April 2013, pg. 37 13 ‘TTIP and fossil fuel subsidies: using international policy processes as entry points for reform in the EU and USA’, Heinrich Böll Stiftung, March 2014. pg. 15 14 ‘TTIP – non papers on raw materials and energy’, DG Trade, 20 September 2013. 15 ‘2014 report on technical barriers to trade’, USTR. 2014 16 ‘Dirty deals: How trade talks threaten to undermine EU climate policiesand bring tar sands to Europe’, Friends of the Earth Europe, July 2014 17 ‘No fracking way: how the EU-US trade agreement risks expanding fracking’, Friends of the Earth, 2014 18 ‘This EU-US trade deal is no ‘assault on democracy’, Ken Clarke writing in The Guardian, 11 November 2013 19 ‘Estimating the economic impact on the UK of a Transatlantic Trade and Investment Partnership (TTIP) Agreement between the European Union and the United States’, London: Centre for Economic Policy Research, March 2013. The CEPR study estimates that TTIP will have benefited the UK by £100bn by the year 2027, an increase of 0.35% on a baseline forecast of the UK economy minus TTIP. 20 ‘EU-US clash over financial services in TTIP’, EurActive, 15 May 2014 21 ‘Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment’, London: Centre for Economic Policy Research, March 2013, section 5.2.3. In all cases cited here, we have used the lower (more skilled) figures for the two scenarios given in Table 38 and applied them across the EU labour force of 243.2 million (2013 figure) and US labour force of 155.6 million (May 2014 figure). Weighting to include the figures for less skilled workers would give even higher figures for the number of jobs to be displaced under TTIP. 22 ‘Impact Assessment Report on the Future of EU-US trade relations’, Strasbourg: European Commission, 12 March 2013, section 5.9.2 2
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