2014 05 – Editorial


Much political debate in the UK concerns the repatriation of sovereign powers from the EU back to the UK. Given this concern, one would think that the anti-EU sceptics would be mainly concerned with the protection of national prerogatives at all costs.  However, this is not necessarily the case. The EU is currently negotiating a trade agreement between itself and the US which will seriously compromise national sovereignty. The Eurosceptics do not like this because it is the EU that is doing the negotiating, but there is little evidence that they have much difficulty with the substance of the negotiations, which is about the abolition of much more parliamentary prerogative than the EU has ever attempted. To our knowledge they have never once raised this issue.

In order to understand what is going on, it is necessary first to explain the Transatlantic Trade and Investment Partnership.

The Transatlantic Trade and Investment Partnership (TTIP) is a trade agreement that has been undergoing negotiation since 2013 between the US and the EU to create the largest free trade zone in the world.

There is also the TransPacific Partnership (TPP), between 12 countries —US, Japan, Australia, New Zealand, Canada, Mexico, Brunei, Chile, Singapore, Peru, Malaysia and Vietnam— which has been in negotiation since 2011. That has gone through 30 rounds of talks, the TTIP only 4 so far.  If both were signed, the US would have deals with countries accounting for 2/3 of the world’s output.  It is an alternative to the World Trade Organisation negotiations, which involved China and India among other countries not keen on deregulation and total free trade. China is not a party to TPP.

But both these sets of negotiations are stuck at the moment.

The Transpacific Partnership talks started in 2011 and are stuck by disagreement between Japan and the US, Japan insisting on 5 ‘sacred’ areas where it will keep tariffs: rice, meat, wheat, dairy and sugar.  A recent agreement between 2 parties of this proposed free trade zone will give an idea of the size of the objections to free trade in the Pacific area.

In early April 2014 Japan and Australia signed a bilateral trade agreement, where Japan would lower its tariff on beef from 38.5% to 23.5% over 15 years.

Meanwhile, the Transatlantic Treaty negotiations are not brought to the attention of the public, in fact they are conducted very quietly, to avoid opposition.  When Francois Hollande, the French president held a joint press conference with Obama in Washington on 11 February 2014, he recommended accelerating the process, before ‘fears and negative feelings’ held it up, that is,  before people realised what was happening and started to campaign against it. The Financial Times in an editorial on 16 February this year (‘No time to waste on Transatlantic Trade’) also called for speeding up, for fear that the new Commission and European Parliament coming into being in 2014 will be less favourable to free trade and liberalisation.

The brakes on Europe-US trade are not so much tariffs, which are mostly low anyway, but regulations, such legislation on food safety, car safety, and environmental safety.  This regulation will be combated on two fronts: there will be new ‘common regulations’ and investors will be able to sue states if their regulations prove to be obstacles to successful investment, that is to say, profit. This will be conducted in special courts not subject to ordinary judicial process. Jos Dings and Pieter de Pous, members of the EU’s TTIP advisory group of experts, explained in a letter to the Financial Times in response to the pro TTIP editorial of 17 February mentioned earlier:

“First, the European Commission and the US want to include a clause for “investor-state dispute settlement”. This would allow businesses to bypass regular court systems and sue governments directly, in special arbitration panels, for anything they claim not to be “fair and equitable” treatment – typically legislation designed to deliver public benefits. Such panels are deeply flawed. The claimant – business – has a 50 per cent say in who presides over them, and the panels’ decisions are not bound by legal precedent. Arbitration is fine for settling contract disputes; it should not get to judge the validity of laws. Second, the EU and the US also want to set up a new (of course, unelected) body with the power to scrutinise all legislation that one of the two blocs might initiate.”

Partisans of the Partnership argue that such powers to sue already exist in thousands of bilateral trade agreements, and cause no problem. Asked about the current case where Philip Morris Tobacco is suing Australia over blank packaging of cigarettes, they reply hopefully that this type of case would not happen in Europe. Canada cancelled a ban on a toxic additive used by the oil industry to avoid such a court case.  But De Gucht, the EU trade representative on the TTIP negotiations, said that arbitration cases would be heard in public and would pose no challenge to health and safety and other government regulations. However, he brought no evidence for this so it seems to be a hopeful sentiment only. Indeed it is hard to see what the point of the arbitration procedure would be if investors were not able to bring such cases to court. One can see this mentality at work in the EU’s dealings with developing countries. For example EU investors are suing Egypt for increasing the minimum wage, and Peru for introducing limits on toxic emissions; this presumably upsets profit on investment already undertaken.  American business lawyers would do the same to Europe if the TTIP went ahead.

Sigmar Gabriel, the German Economy minister, wants the special arbitration panels removed from the Partnership; Nicole Bricq, the French trade minister, also opposes them. That means that both countries are not against the Partnership as such, as they seem prepared to accept it with some clauses removed.

Legislation for consumer and worker safety should be universal, otherwise consumers and workers in some countries are disadvantaged or even put at risk, and countries with low regulation have an unfair advantage as regards attracting investment. One of the aims of the Partnership is setting common regulatory standards, harmonising environmental, food safety and data privacy standards. The question is, where would the Partnership set the level of regulation?  High or low? Opponents of the Partnership cite cases where the level would be set lower as a result of the Partnership: chlorine disinfected chicken, use of chemicals banned in 160 countries including Russia and China in pig breeding, non labelling of GM foods, no Tobin Tax, airlines not having to pay for carbon emissions etc.  And the Snowden revelations have cast a shadow on ‘harmonising data privacy standards.’  A survey revealed that Germans have no faith at all in American standards, whereas Americans prefer their own standards but have a degree of faith in European standards; a majority of both Germans and Americans favoured the Partnership in principle however.

As with Ukraine, right and left disagree. In France, Copé, leader of the Center-Right Party UMP, Hollande and the Socialist government favour TTIP.  Some trade unions, the Communist Party, the Left Party, the Greens and the National Front are against.  So is Xavier Bertrand, an ex-UMP minister, who sees it as a trap for the EU and for France, because of the USA practice of dumping towards the EU on three fronts:

–       Currency: the US prints dollars, and the dollar is weaker than the euro, making trade unfair.

–       Labour laws; there is no national minimum wage in the US.

–       The environment: the US are not party to the Kyoto agreement.

The US also subsidise their industry and agriculture on a much greater scale than Europe; they favour their own small and medium enterprises through the Small Business Act, where some US States reserve some of their public works and public services to their own small and medium firms. European giants of waste disposal, water, transport and construction want TTIP in order to break into that protected market. The US are protectionist not in words, but in practice.

France has fought to exclude culture from the TTIP negotiations and gained her point.  However, she appears to accept the principles of TTIP despite the damage that it could do to other sectors of the French economy such as agriculture, which could be devastated by American produce.

Taken together the provisions of TTIP have the potential to compel the states of the EU to repeal laws protecting workers’ rights, the environment and public safety to name but three areas. Lawyers from large companies will also be able to head off potential legislation simply by threatening law suits against legislation which they consider will damage their interests. In matters of what they consider to be in their own interests firms will be sovereign over nation states.

Judging by their behaviour so far, nearly everyone in parliament from eurosceptics to nearly all sections of the Labour Party seem to be happy with the negotiations that are taking place. They are quite willing to see parliamentary sovereignty removed in the interest of big business. But they also realise how unpopular this will be with the public, hence their silence. The only question is whether UKIP will burnish its nationalist credentials by raising the issue. As it is, our three liberal parties seem happy to sign away the interests of the British people.

Their behaviour betrays a view of parliamentary democracy that has little concern for the popular will. Last month we pointed out that parliament bowed the knee to the US anti-Russian campaign and did not protest when our Foreign Secretary misled the House about the legitimacy of the Ukrainian putsch regime. It appears again to be in awe of the powerful; the US and corporate interests who are ready to ride roughshod and suppress democratically enacted legislation in the interests of ‘free trade’ and ‘growth’, both slogans that are shorthand for the interests of international capitalism.

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