NGOs fear TTIP clauses will affect EU chemicals regulation


Last week, Trade Commissioner Karel de Gucht said that the Transatlantic Trade and Investment Partnership (TTIP) could include Investor-State Dispute Settlement procedures which will not allow foreign investors to go to court in the US. Green Party observers have called the statement 'astonishing'.

Speaking at a committee meeting in the European Parliament, de Gucht reportedly promised to check whether such settlements would allow lawsuits over health sector privatisations.

Alarm bells have rung for campaigners since last May when it emerged that a ‘fair and equitable treatment’ clause had been inserted into a draft of the Canada-EU Trade Agreement (CETA), outlawing any “breach of legitimate expectations of investors”.

The EU-Canada agreement has since been signed, although its details remain unpublished. Dignitaries at the launch would only field questions from mild-mannered Canadian journalists.

REACH chemicals regulation

Pia Eberhardt, a spokeswoman for Corporate Europe Observatory, a transparency campaign group, told EURACTIV she was concerned that ‘fair and equitable treatment’ was a catch-all term – and that the leaked CETA definition used was particularly broad.

“It even protects what investors consider their ‘legitimate’ expectations from ‘unpredictable’ policy change,” Eberhardt said. “A ban on a chemical found to be harmful to public health could be considered a violation of this provision.”

“Investors will also be enabled to challenge scientific justifications of a policy and ‘arbitrary’ or ‘unreasonable’ relationships between a policy and its objective,” she added. 

The EU’s wide-ranging REACH regulation, which provides the world’s most comprehensive health and environmental regulation of chemical substances, is already in the crosshairs of US industry.  

Last week, the US Society of Chemical Manufacturers and Affiliates testified before the International Trade Commission “about the disproportionate economic impact trade barriers have on small and medium-sized US manufacturers (SMEs) exporting to the European Union,” according to one US newspaper.

Any attempt to challenge such regulations would depend upon the nature of any fair and equitable treatment clause in the final TTIP text.

Regulation-chilling suits

In the US, the use of such clauses in the North American Free Trade Agreement (NAFTA) has led to regulation-chilling suits, such as one $250-million (€191-million) lawsuit challenging a shale drilling moratorium in Quebec.

In the Tecmed vs. Mexico case, a tribunal similarly ruled that Mexico had not acted “free from ambiguity and totally transparently” when a local government decided not to relicense an operating waste treatment plant due to environmental concerns.

Campaigners say that in 74% of the cases where US investors have won in investor-state disputes, tribunals found a fair and equitable treatment violation, and a fear lurks that similar undisclosed passages within TTIP could disfigure Europe’s environmental regulations.

John Clancy, a spokesman for the trade commissioner, played down the significance of the secrecy involved in the talks – and the strategy of diverting concerns about this – telling the Danish EU-critical publication Notat that “we want a high level of transparency but there needs of course to be a confidential aspect as with any negotiation.”

“It is always that way,” he added.

'Growth and jobs'

A report by Clancy’s own trade directorate predicts that Europe’s GDP will increase by between €68 billion and €119 billion in a comprehensive agreement that eliminates non-tariff barrier, and by €23 billion in a tariff liberalisation deal.

EU Commission president José Manuel Barroso’s reliance on the €119 billion figure in speeches this year sparked fears that the EU was ready to negotiate on its environmental, health and social protections.

Barroso did not entirely dispel this notion in a speech to the European American Chamber of Commerce in New York last April, titled 'A new era of good feelings.'

In it, he complained about the costs that non-tariff measures and regulatory issues posed to businesses and consumers.    

Manufacturers often had to comply with two sets of rules when exporting to Europe, such as “raising safety standards and limiting the environmental impact of cars, or increasing health and hygiene standards for food,” he said.  

“We want to cut such unnecessary costs and shorten delays for businesses,” Barroso explained, adding that neither Europe nor the US would compromise on their high environmental, social or health and safety standards.

Negotiations between the US and the EU on the Transatlantic Trade and Investment Partnership (TTIP) started in July.

If successful, the deal would cover more than 40% of global GDP and account for large shares of world trade and foreign direct investment.  The EU-US trade relationship is already the biggest in the world. Traded goods and services are worth €2 billion.

TTIP would be the biggest bilateral trade deal ever negotiated, resulting in millions of euros of savings for companies and creating hundreds of thousands of jobs. It is claimed that average European households would gain an extra €545 annually, and that Europe's economy would be boosted by around 0.5% of GDP, if such a deal was fully implemented.

Brussels and Washington have set an ambitious goal of completing negotiations by the end of 2014.

  • Dec. 2013: Third round of EU-US TTIP negotiations
  • Jan. 2014: Stock-taking exercise with EU Commissioner Karel de Gucht and US Trade representative, Michael B. Froman

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