TTIP could, for example, make it near-impossible to close a well-known loophole in EU rules on car emissions that allows emission levels on the road to be much higher than what is declared by carmakers. Even if you dismiss emissions from cars when they are driven or when they are produced, the increase in the transatlantic car trade generated by TTIP could add 900,000 tonnes of CO2 emissions just from the shipping of vehicles across the Atlantic.
The chemicals industry claims that Europe’s protection against toxic chemicals – for example through the REACH directive (the EU’s premier regulation to register and restrict toxic substances) or the pesticides regulation – is the largest trade barrier for US manufacturing. The US government has maintained this position for a long time, saying in 2014 that the EU’s laws “are discriminatory, lack a legitimate rationale, and pose unnecessary obstacles to trade”.
REACH requires companies that want to market a chemical in the EU to prove that it is safe (or to use alternatives). The default approach under US law is that all chemicals are safe, unless proven otherwise. The EU bans thousands of chemicals that are harmful to the environment or health in cleaning products, cosmetics, paints, clothes, and electrical appliances. The US is much more lax, with only a handful of chemicals banned.
TTIP negotiations are already having a ‘chilling effect’ on efforts in Europe to regulate a new category of chemicals, endocrine disrupting chemicals (EDCs), which can cause cancer and reproductive diseases, and are particularly harmful to children. EU regulation of EDCs has been repeatedly delayed, despite clear evidence of harm. Several EU countries have criticised the Commission for its lack of action. In December 2015, the European Court of Justice ruled that the Commission had in fact “breached EU law” by failing to act.
Food, pesticides and GM crops One of the fundamental threats from TTIP in Europe is that the burden of proof on whether a product is safe or not could be shifted to fall on public authorities, not on those who seek to sell it. This is the general approach in the US. Under such a system, a pesticide that is scientifically linked to cancer could still be approved, unless there is a 100 per cent consensus on its harmful effects. TTIP would make it very hard to apply precautionary measures to safeguard public health and the environment.
In practical terms, TTIP could allow a lot more GM food into Europe and reverse EU policies on food labelling. (US biotech multinationals – major supporters of a TTIP treaty – are currently engaged in a lobbying offensive to ensure that a new range of GMOs are excluded from safety regulations and labelling obligations for GM crops.) With TTIP, Europeans could soon be eating fruit and vegetables with much higher pesticide residues and meat from pigs and cattle treated with growth hormones. TTIP also has implications for animal welfare, which is largely less regulated in the US.
Another area of concern is the use of antibiotics for farm animals. This practice is common to industrial livestock farming on both sides of the Atlantic, but is particularly prevalent in the US. It is a major cause of resistance to antibiotics among humans.
In 2015, as part of US efforts to fight climate change, Obama decided to halt the construction of the Keystone pipeline that is meant to transport oil from the Canadian tar sands (one of the world’s most polluting fuels). The company exporting the oil has challenged the US government before an ISDS tribunal under the NAFTA trade agreement, which covers Canada, the US and Mexico. In Europe, Swedish energy company Vattenfall has sued the German state under the Energy Charter Treaty (an international treaty that protects energy investments) for its decision to phase out nuclear energy.
The Commission’s proposal also fails to address many of the fundamental concerns raised by the European Parliament in its resolution of 8 July 2015, where it says it wants “to replace the ISDS system with a new system for resolving disputes between investors and states”.
ICS preserves preferential treatment for foreign investors over local businesses. The ICS court is not a real court and the judges are not real judges – they are not permanently assigned to the court and can still act as lawyers for corporate clients, raising serious conflict of interest concerns. ICS also flouts democratic principles and the right for governments and institutions to adopt and enforce laws. The court would have the power to force a state to compensate investors whose profits it believes are constrained by regulation. An indirect ‘chilling effect’ would be to discourage public authorities from enforcing public interest safeguards for fear that they could be challenged.
Firstly, TTIP would enable ‘regulatory cooperation’, which would tackle differences between EU and US rules and regulations. The Commission has itself tabled aproposal that would allow any of the partners to the agreement to call into question existing or future regulations or standards. TTIP would also establish several ‘joint bodies and committees’, which could unilaterally change parts of the agreement, without any democratic scrutiny by the European Parliament, national European parliaments or the US Congress. The establishment of these bodies under TTIP could mean that environmental standards can still be changed after the deal is signed. These decisions would be binding under international law.[LV1]
Secondly: the establishment under TTIP of special courts – known as ISDS or ICS [see questions 5 and 6] – allowing challenges to environmental standards means there can be no guarantees on the integrity of regulation. Foreign corporate investors could use these courts to sue democratic governments over what they consider to be unfair barriers to their investments.
Many studies have been published on the potential effects of TTIP on the economy. An optimistic economic forecast carried out for the European Commission says an “ambitious and comprehensive” TTIP deal would translate into economic gains of €119 billion for the EU and €95 billion for the US, after ten years. This means €11.9 billion annually, or €54.5 for each European family. The annual GDP increase would be 0.05 per cent. Even these meagre figures rely on a rosy outlook for the European economy. In any case, economists warn that empirical economic analysis of the effects of a future deal, with proper modelling, is almost impossible.
What is more certain than economic forecasts is that TTIP is a major threat to living standards and the environment. Abandoning these standards would carry considerable social and economic costs.
Even members of the European Parliament (who will vote to adopt or reject the final agreement) and national parliamentarians (who are also likely to vote on the final deal) have only limited and strictly restricted access to so-called consolidated negotiating texts in special reading rooms. Every negotiating round takes place behind closed doors and joint EU-US press conferences on TTIP are devoid of real content. Consultations with civil society and stakeholder meetings are little more than content-free formalities.
Any improvement in transparency must fulfil at least the following principles: greater public access to EU and US negotiating documents; more active disclosure of documents; more balanced and transparent public participation throughout the negotiating process.
The global trade regime should shift away from liberalisation to sustainable development. To achieve this, international trading rules should promote environmental, social and human well-being. A redesigned trade system should set the conditions for peace, security and solidarity, protecting the public interest against threats to health, the environment and human rights. It should be democratic and inclusive, and not grant privileged treatment for multinational corporations, but guarantee their accountability through the enforceable protection of human and social rights, and the environment.process.
The European business community is also far from united in backing a deal. A growing number of small and medium-sized businesses (SMEs) – which according to the EU would be the main beneficiaries – are joiningcoalitions opposed to TTIP and raising concerns, in Germany, Austria or the UK, that an agreement would discriminate against SMEs. Mario Ohoven, head of the European SME alliance, has strongly criticised a plan to include a controversial mechanism, known asISDS, allowing foreign investors to sue governments if they feel their investments are unfairly restricted by regulation. He argues that ISDS would unfairly discriminate against small businesses.
The German association of judges has also raised “serious doubts” about whether the EU has the competence to institute an investment court. The judges said special courts allowing firms to sue countries were unnecessary and had “no legal basis”.
Support for TTIP is also falling in the US, although most opposition is focussed on a trade deal between the US and Pacific countries, known as TPP (negotiations have been completed, but the agreement is yet to be ratified). US presidential candidates Hillary Clinton, Bernie Sanders and Donald Trump have all expressed concerns about TTIP, as have Nobel prize-winning economists Joseph Stiglitz and Paul Krugman, and leading free trade and globalisation advocate Jagdish Bhagwati. The National Caucus of State Legislators also raised the alarm about TTIP and TPP in an open letter to party leaders in the US Congress, saying that they “are deeply concerned about public reports of potential provisions in both the TPP and TTIP agreements that would undermine [environmental protection]”. The ALF-CIO, the umbrella federation for U.S. trade unions, has made a list of red lines on TTIP and said: “We will be unable to support any trade agreement unless it is well-balanced, stimulates the creation of good jobs, protects the rights and interests of working people and promotes a healthy environment.”
Secondly, the EU and the US are entangled in a complex web of trade treaties with conflicting provisions and differing timelines. The US has recently signed the Trans-Pacific Partnership (TPP) trade deal, while the EU and Canada are finalising the CETA agreement. Canada is also a party to the TPP agreement. TPP and CETA have been agreed but are yet to be ratified. These treaties include a controversial mechanism known as ISDS, allowing foreign corporations to sue sovereign national governments if they believe their investments are unfairly restricted by regulations. For TTIP, the EU is backing an alternative mechanism – but which raises similar concerns – known as the Investment Court System (ICS). The EU would like to include this new system in the CETA agreement. This would leave Canadian investors with different mechanism in different treaties. The US has so far rejected ICS. The European Parliament – who will have to sign off the agreement – has instead demanded a system to replace ISDS.
Thirdly, support for TTIP is falling in the EU and the US. US presidential hopefuls Hillary Clinton, Bernie Sanders and Donald Trump are all expressing concerns about the deal. In Europe, a growing number of small and medium-sized businesses (SMEs) – which according to the EU would be the main beneficiaries of TTIP – are joining coalitions opposed to TTIP and raising concerns, in Germany, Austria or the UK, that an agreement would discriminate against SMEs. Mario Ohoven, head of the European SME alliance, has strongly criticised ISDS, which he says would unfairly discriminate against small businesses. The German association of judges has also raised “serious doubts” about whether the EU has the competence to institute an investment court. The judges said special courts allowing firms to sue countries were unnecessary and had “no legal basis”.
Finally, the sheer complexity and sensitivity of a number of issues being considered under a TTIP agreement could easily scupper the chances of a deal. Some of these issues include the treatment of certain food products with special protection in the EU, and protectionist American procurement policies (under the Buy American Act).
TTIP also threatens the powers of US states to regulate independently of the federal government. For example, it would make it more difficult for states to adopt rules on healthy food and farming. TTIP could also cause at least one million job losses in the US and EU combined.
The main concern related to CETA is that it could act as a sort of Trojan horse for TTIP. CETA includes a controversial mechanism, known as ICS, formerly known as ISDS, allowing foreign corporations to sue sovereign national governments if they believe their investments are unfairly restricted by regulations that protect the environment or public health. ICS would create a separate and privileged judicial system to protect the financial interests of corporations. Any US corporation with a national headquarters in Canada could theoretically use ISDS to challenge a European government, even if ISDS or other similar mechanisms are excluded from TTIP.
CETA is also a threat in itself, in particular for food and farming. The agreement could open the door to genetically engineered organisms in Europe, making it impossible for the EU to maintain existing food safety standards, according to a report by TestBiotech. As it stands, CETA includes no genuine consideration for consumer freedom of choice or precautionary measures to protect people and the environment.
Europeans and Americans should be worried about TTIP. Generally speaking, environmental and health standards are higher in the EU than in the US, but in some cases protection is stronger in the US, for example on toxic chemicals in toys, mercury pollution from coal power plants or car pollution.
A UN body, the UNECE World Forum for Harmonisation of Vehicle Regulations (WP.29), is already looking into ways to harmonise rules and specifications. According to Bernd Lange, chair of the international trade committee of the European Parliament, WP.29 and not TTIP is the right forum to discuss car specifications.
TTIP could also lead to a significant increase in carbon emission from the automobile sector. The extra shipping of vehicles across the Atlantic would add 900,000 tonnes in CO2 emissions. Putting more cars on the road would also delay the development of sustainable mobility systems.
So far, Europe has been relatively sheltered from these effects. Public opposition is strong, GMOs are hardly grown in the EU, and their release into the food chain is governed by safety regulations (which are far from perfect). US biotech multinationals – major supporters of a TTIP treaty – are currently engaged in a lobbying offensive to ensure that a new range of GMOs are excluded from safety regulations and labelling obligations for GM crops.
According to a leaked Commission document published by the Huffington Post, the EU wants TTIP to open up EU-US energy markets, including investments in, for example, oil exploration and energy production. However, while encouraging the trade in fossil fuels, the rules foreseen by the Commission would seriously restrict the development of renewable energy. Provisions against “local partnerships” would effectively ban groups of citizens or cooperatives from producing energy for local communities. Measures preventing “local content requirements” could, for example, stop a biogas plant from running on local waste.
If this EU proposal is adopted in the final TTIP deal, it would be impossible to regulate imports or exports of polluting energy, while clean energy production by local producers, communities and associations would be considered a barrier to trade.
In its resolution of 8 July 2015, the European Parliament called on the European Commission not to negotiate “on issues where the EU and the US have very different rules, such as on public healthcare services, [genetically modified organisms], the use of hormones in the bovine sector, [the REACh regulation on chemicals] and its implementation, and the cloning of animals for farming purposes.” Civil society organisations have also demanded the exclusion from the negotiations, for example, of matters regarding agriculture and chemicals.