EU news and policy debates across languages


TTIP: ‘Reform’ of investor dispute settlement clause not enough

Agriculture & Food

TTIP: ‘Reform’ of investor dispute settlement clause not enough

Activists protest a high level debate on ISDS in TTIP, hosted by British Chamber of Commerce in Denmark, Copenhagen.

[The Alternative]

The Transatlantic Trade and Investment Partnership has been flawed from the beginning. It is evident from the process that we need a new direction for our trade policy, write Max Andersson and Rasmus Nordqvist.

Max Andersson is an MEP from the Swedish Greens and Rasmus Nordqvist is member of the Danish Parliament for The Alternative party.

The inclusion of an investor-state dispute settlement (ISDS) mechanism has been the focal point of the debate, and rightly so. At the moment, various environmental measures, from phasing out nuclear power in Germany, to a moratorium on fracking in Canada, are being challenged by foreign investors under similar provisions in other agreements.

This highly controversial and unnecessary mechanism does not belong to a 21st century rule-of-law system. Foreign corporations should hold no greater rights than national firms or any other privileged position that allows them to challenge national legislation outside national courts.

The European Commission has proposed a “reform” of the ISDS system and although this means minor improvements, it is little more than a marketing exercise rebranding old wine in new bottles. There is no argument for giving foreign corporations the opportunity to sue states outside the national courts.

We call for a rejection of this system in TTIP. Moreover, the trade deal with Canada must not include this discriminatory practice either.

No safeguards for environment

From the beginning, we have been promised strong environmental safeguards. However, a recently leaked paper (now made public) shows that this is no more than empty words. While striving to grant foreign investors special privileges, and the ability to challenge environmental measures, no mechanisms are at this point put in place to protect public health or the planet from degradation, although reasonable suggestions have been made by environmental organisations.

With an average tariff rate on EU-US trade in goods at about 3%, TTIP is about regulation. It is about so-called non-tariff barriers – differences in regulations and standards.  We know that the EU strives to sidestep Buy-American clauses, while the US considers the precautionary principle a “trade barrier”, along with fundamental EU regulations regarding chemicals and animal welfare protection.

By harmonising or recognising each other’s standards in various sectors, the deal is supposed to unlock a huge market adding billions of euros and millions of jobs, while setting high standards for the rest of the world to adopt, according to proponents. Sounds too good to be true? Well, it is.

Trade with side-effects

Various economists and reports have diluted the economic arguments and numbers put forward by the European Commission, business lobbyists and the Nordic member states especially. Forecasts are hypothetical and overoptimistic about the effects of TTIP and neglect any negative side-effects to health and environment while ignoring structural adjustment costs (assuming full employment at any given time). We know from, for example, NAFTA that this is not the case.

We are promised that the deal will not lower any standards on health, environment, labour rights or data security, since the negotiation mandate, approved by national parliaments and the European Parliament, states that a deal must not lower any standards. However, we have already seen the opposite. For example, the EU fuel quality directive, aiming to decrease CO2 emissions from transport fuel, has been weakened, allowing for the import of the dirty CO2-intensive tar sands, mainly imported from US and Canada. A great deal of evidence suggests that the weak implementation of this directive was a gesture to accommodate US and Canadian demands to soften the ground in the trade negotiations.

Regulatory deregulation

TTIP in itself may not resolve in EU acceptance of GMOs, hormone-treated beef, chlorinated chicken or the lowering of financial safeguards in the US, however the institutions put in place by TTIP may very well have a deregulatory effect on these so-called “trade-irritants”. Introducing tariff-free US meat on the EU market, produced with antibiotics as growth-promoters and without any animal welfare production standards, could distort competition. EU farmers, forced to follow stricter standards with higher production costs will suffer, risking an internal pressure on EU standards. 

Furthermore, a “regulatory cooperation body”, which shall facilitate cooperation on all existing and future laws, is proposed.  The aim is to minimise trade irritants in future and current legislation, which could delay and/or impede future legislation aimed at prohibiting toxic chemicals, according to the Swedish Chemical Safety Authority (KEMI).

We need a new green alternative

In the light of the flawed negotiations, we must have full transparency. The Commission has taken some steps to increase transparency, but this is, however, only a beginning. Publishing documents, which are already leaked, is not real transparency. 

Citizens have the right to know what is really on the table – both from the EU and US side. We need to be able to see what we risk to trade away.

Since modern trade deals are about everything than can be traded, we cannot pretend that trade deals are only about smoothing out some simple controversies.

We must replace the current path towards ever-increasing volumes of goods and set sail towards a new era where trade is compatible with planetary boundaries and public interest. An era where empty words are replaced by concrete actions and demands. Ratification of ILO-conventions, climate change measures, environmental safeguards, and protection of public health need to play a focal role in trade deals.