How TTIP Changes the Rules of the Game


What is TTIP? If you’re a worker living in the EU, this is a very important question. But it’s also one that too few of us know the answer to.

TTIP is the Transatlantic Trade and Investment Partnership. It is a comprehensive free trade and investment treaty currently being negotiated – in secret – between the European Union and the USA.

TTIP would cut tariffs and lower regulatory barriers to make trade easier between the two countries. According to The Telegraph, it would be the biggest trade agreement of its kind, affecting one quarter of global trade.

And yet despite this, no one is totally sure of what TTIP will actually do for the EU, because it is such an unusual trade agreement. Not only are the two parties involved exceptionally large, but the nature of the agreement is – according to the CEPS, “more like a wide-ranging regulatory agreement, with some elements of classical trade agreements as well.” So it is difficult to say exactly what the consequences will be.

Those in favour of TTIP argue that it will improve GDP. A study by Joseph Francois and his colleagues found that EU GDP will rise by 0.5% by 2027 relative to a scenario without TTIP.

However in practice that only translates to an increase of €545 ($600 USD) in disposable income for a four person household by 2027, which will have negligible effects upon living standards. The London School of Economics has noted that there is “little reason to think that an EU-US investment chapter will provide the UK with significant economic benefits.”

These are miniscule gains in comparison to the risks of TTIP, one of which is the Investor-State Dispute Settlement (ISDS). The ISDS is a special legal right that only those who invest in a foreign country can use to challenge a law, regulation, judicial or administrative ruling or any other government decision.

ISDS allows the foreign property owner to skip domestic courts, administrative procedures, city hall hearings and the like (all the processes that home-grown property owners use) and sue the host-country government before a panel of private “arbitrators.”

In other words, ISDS is a secret court that allows a private company to sue a government if it feels its profits have been harmed.

The remit of ISDS is increasingly being extended to the extent that it also includes laws which were created to protect public health and the environment. If a private company wins, we as taxpayers bear the costs, and no appeal is possible.

Theoretically, if your government introduces a law calling for better health and safety which could be costly to implement, foreign companies investing in your country could sue your government for loss of profits. If the company wins, your taxes will pay them.

Since the introduction of ISDS to the end of 2012, almost 60 percent of all cases resulted in a government having to make a pay-out.

The campaigning website Stop TTIP cites the example of the Swedish energy giant Vattenfall, which is currently suing the German government over the German withdrawal from nuclear energy, and is claiming €3.7bn ($40bn USD) in damages.

Given many rules and regulations are significantly more relaxed in the US than the EU, the risk of TTIP is therefore obvious. US companies could use ISDS to challenge EU regulations designed to protect the public and the environment to sue European governments and maximise profits.

According to the campaigning website Patients4NHS, 8% of US-owned firms operating in the EU (mainly in Central and Eastern European countries) are covered by ISDS, and have already claimed more than €30bn against EU member states under ISDS.

If ISDS is included in TTIP, the other 92% of US-owned firms would have the right to use ISDS as well.

If TTIP includes ISDS, the treaty will give US based investors the right to claim massive compensation if EU governments introduce initiatives that benefit the public – such as universal public healthcare – but which reduce profit. Indeed in the UK, there is enormous concern that TTIP would effectively privatise the NHS as the deal would open it up to the private market.

War on Want has listed a host of EU “regulatory barriers” that harm profits but protect people, which could be removed by TTIP. These include labour regulations to protect workers, food standards including animal welfare and GM (which are significantly more relaxed in the US), and key environmental legislation. In fact, the US government has explicitly said it will target food standards if TTIP is enacted. This could lead to a massive upsurge in GM foods being sold in the EU.

Although the effects of TTIP will undoubtedly be massive, civil society has been virtually shut out from the negotiation process. On the other hand, transnational corporations have had frequent opportunities to lobby the EU Trade Department. For example, of the 560 meetings that the Trade Department held in preparation for negotiations, 520 were with business lobbyists and only 26 – 4% – were with public interest groups.

What is TTIP? A secret trade deal cooked up by private companies and politicians that will affect everything from the fruit you buy to the doctor who tends to your sickbed.

It’s an act of economic vandalism, and the citizens of the EU must oppose it.

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