New Internationalist

10 reasons to be worried about the trojan treaties

May 2014

Will 2014 be remembered as the year big business went supranational? Hazel Healy looks at two monster US-led deals.

Kathryn Corlett
Kathryn Corlett

Critics have labelled them ‘a huge corporate wish-list’ and a ‘blank cheque for US companies’.

Under the guise of restarting the lagging world economy, two sweeping free-trade treaties are under negotiation that, if agreed, would swing the power balance away from states in favour of big business.

Led by the US, 12 governments in Asia, Oceania and the Americas have spent the past four years mulling over the Trans-Pacific Partnership (TPP). The 11 other potential signatories are Canada, Australia, New Zealand/Aotearoa, Japan, Malaysia, Vietnam, Brunei, Singapore, Chile, Mexico and Peru.

TPP is mirrored by the Transatlantic Trade and Investment Partnership (TTIP), which the US and European Union (EU) have been negotiating since July 2013. Talks are expected to continue for the next two years.

If signed, both deals would be binding. Terms could only be altered by a consensus of all signatory nations.

1 Public in the dark

These deals are being negotiated in extreme secrecy. Elected officials worldwide have complained about being locked out of talks.

Public knowledge of the contents is thanks only to leaks by concerned represent­atives party to the drafts, such as German MEPs in the case of TTIP.

Repeated calls for the text to be released have been ignored. Wikileaks – which has disseminated leaks of TPP to date – is offering a crowdsourced reward for any new information.

By contrast, the US trade delegations have more than 600 corporate advisers with unlimited access to drafts and preparatory texts.1

The democratic deficit is not accidental. The negotiations would be unlikely to survive the glare of public scrutiny.

2 Beefed up IP

The TPP’s leaked ‘Intellectual Property’ (IP) chapter revealed that big digital-content companies are pushing for restrictive controls on the internet, and hefty copyright fines.

Firms want ‘harmonization’ with laxer US privacy laws to get hold of EU citizens’ personal data, while pharmaceutical companies are trying to block access to generic drugs.

3 Want some hormones with that?

TTIP may jeopardize food-safety regula­tions – ‘barriers’ to trade that incur costs and delays. We may see delicacies such as hormone-treated US beef and chlorine-dipped chicken go on sale in Europe, whose stricter laws on animal welfare and pesticides may also be eroded. Biotech firms in the US, where genetically modified (GM) foods are widely grown, want to do away with GM food-labelling laws in the EU.

4 Regulate me? I'll sue your ass

This one could really upset the apple cart. Both treaties are thought to include overweening investor protection clauses, which would allow corporations to sue governments for domestic laws that dent their profits – including future profits.

Companies pleading losses to public-interest policies such as environmental protection or anti-pollution laws could bring claims to special international tribunals.

Run by corporate lawyers, their decision could override a nation’s highest court, order trade sanctions and compensation – with no upper limit.

This is not entirely new. Companies are already suing states under clauses written into country deals called ‘Bilateral Investment Treaties’ (BITs), with around 500 cases filed every year. Tobacco giant Philip Morris, which is using BITs to seek billions of dollars in comp­en­sation from Australia and Uruguay for anti-smoking laws, is a taste of what’s to come.2

TPP and TTIP would take investor-state disputes to a new extreme. TTIP alone would allow 75,000 new companies in the US and the EU to sue governments.

At a minimum cost to governments of nearly $8 million in tribunal fees and legal bills, what­­ever the outcome, fear of arbitration would have a ‘chilling effect’ on attempts at regulation, and leave states powerless when new risks present.1

5 More work for firms like SERCO

Under the treaties, governments may be obliged to open up public services such as health and education to transnational corporations.

People campaigning to keep Britain’s National Health Service (NHS) public are especially concerned that TTIP will help big US health transnationals break in, buy up and stay in.

The tribunals (see Point 4) would make privatization nigh on irreversible, as well as making it harder to defend quality in public services. Canada fell foul of this when the trojans’ free-trade predecessor, the North American Free Trade Agreement (NAFTA), enabled contractors to sue governments for the imposition of environmental duties and performance standards.3

US companies will be able to compete for public contracts on an equal footing with local suppliers, or social enterprises which already struggle to compete. It would open the field to market dominance by a few transnationals, such as G4S and Serco, which have cornered security and some transport services.

6 Labour rights nosedive

Europe’s labour laws are seen as a block on US investment, and an inconvenience in austerity-hit Europe. Unions fear TTIP will see European labour law reformed in line with US standards, and European workers losing the right to organize.

Critics of TPP have yet to establish whether standards based on International Labour Organization conventions will be included, and if so, how they will be enforced.

7 Enchanté, les frackeurs

Companies are using TTIP to push for ‘regulatory convergence’ around the lowest standards of environmental protection. So while EU food exporters are targeting US marine mammal protection legislation, US Airlines for America would like to dismantle the EU emissions trading scheme for posing ‘unfair’ barriers to trade; standards governing chemicals and toxins could also be driven down.

Special tribunals (Point 4 again) mean states moving to limit environmental damage will be more likely to be sued. This may lead to more cases like that of Costa Rica, which thanks to a BIT is facing a claim from a Canadian mining firm. Infinito Gold wants $1 billion in compensation for ‘lost income’ after courts rejected its plans for an open-cast goldmine in a rainforest when 75 per cent of the public opposed it. Or the claim by Swedish energy giant Vattenfall, currently suing Germany – under the Energy Charter Treaty – for €700 million for introducing regulations that would have made its planned coal-fired power plant ‘uneconomical’.

And under our old friend NAFTA, a company is suing Canada for $250 million after Quebec province banned fracking.

8 (Even) less regulation of finance

Finance powerhouse the City of London is one of the strongest lobbyists for TTIP. It’s hoping to reverse regulatory reforms such as the US Dodd-Frank Act and the EU’s limits on food commodity speculation. And you can forget about the Tobin Tax on financial transactions while you’re at it.

9 False promises

Both treaties are being sold as the silver bullet that will reinvigorate the world economy. But the gains – projected at over $100 billion for the EU, $5.6 billion for New Zealand – are highly disputed. The vast majority of these upbeat predictions flow from pro-free trade institutions and business organizations. In contrast, an independent study by academics at Manchester University described this predicted cash bonanza as ‘vastly overblown and deeply flawed’, while the European Commission has suggested TTIP will cause ‘job losses and entrench European inequality’.4

Previous agreements such as NAFTA cost 870,000 US jobs when it was supposed to generate 200,000. (The TPP has been described as ‘NAFTA on steroids’.)5

These big packages are really about finding a new way to push the pro-market agenda since negotiations at the World Trade Organization got deadlocked.

10 Blueprint for the world

The trojans are being hailed as the new ‘gold standard’ for all future trade agreements; TPP is being described as a ‘docking station’ for other nations in Asia and the Pacific.

Post-ratification, it will be near impossible for countries in the Global South to insist on a different, more sustainable development model without losing trade from the US, EU and others.

Take action

The treaties pose a threat that is easy to rally round. Everyone from organic farmers in Germany to public-sector unions in Malaysia is pissed off. These things can be stopped. A similar treaty called the Multilateral Agreement on Investment (MAI) was derailed by a wave of protest back in 1996. The EU is already backtracking on TTIP; Pacific states’ negotiations are bogged down.

There is still time. Let your representatives know that you oppose this deal, spread the word.

Read up

Jane Kelsey, Hidden Agendas. What We Need to Know about the TPPA. Bridget Williams Books, 2013.

Michael Goodwin, Comic Guide to TPP, 2014.

‘Unfair, unsustainable and under the radar’, Democracy Center, 2013.

‘A brave new transatlantic partnership’, Corporate Europe, October 2013.

Lori M Wallach, ‘The corporation invasion’, Le Monde Diplomatique, December 2013.

  1. Lori M Wallach ‘The corporation invasion’, Le Monde Diplomatique, December 2013.

  2. Investor Treaty News.

  3. ‘Transatlantic Trade and Investment Partnership – a threat to UK education,’ University College London briefing, March 2014.

  4. ‘EU-US trade deal claims “vastly overblown”’, Manchester University.

  5. Economic Policy Institute

Front cover of New Internationalist magazine, issue 472 This feature was published in the May 2014 issue of New Internationalist. To read more, buy this issue or subscribe.

Comments on 10 reasons to be worried about the trojan treaties

Leave your comment