Workers take to Capitol Hill to stop trade deals. Photo: ALF-CIO / Flikr.
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26th November 2013
The US is busy negotiating two sprawling new trade deals, with the European Union and 11 Pacific Rim nations, and progressives are up in arms. Ben Whitford asks: Just how bad are the deals?
The trade deals allow companies to undermine or sidestep virtually any local restrictions that are tougher than the laxest rules.
It's impossible to say for sure: the talks have been shrouded in secrecy, and while hundreds of corporate bigwigs have been included in the negotiating process, potential critics - and even some U.S. lawmakers - have been denied access to the draft treaties.
Leaked fragments make one thing clear, though: the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) aren't just about trade. Rather, they're an attempt to impose regulatory uniformity across the free-trade zones, making environmental, health and safety rules interchangeable among member nations.
Trade negotiators say that would strengthen regulatory protections, but activists aren't convinced. "It's difficult to see how you can have mutual recognition unless it's a race-to-the-bottom approach," Friends of the Earth Europe director Magda Stoczkiewicz told Reuters.
The TTIP and TPP would also give corporations an astonishingly powerful tool with which to further erode environmental protections: offshore tribunals, presided over by private lawyers, where firms would be able to sue governments for damages over any rules or laws that impacted their profitability.
To see what that means in practice, look to Ecuador, where Occidental Petroleum sued under an existing trade agreement when the government terminated its oil concession. Arbitrators last year awarded the energy giant a staggering $1.77 billion in damages - despite agreeing that Ecuador had been entirely within its contractual rights to end the deal.
Similar cases are now underway in Germany, where Swedish energy firm Vattenfall is seeking around €3.5 billion in damages over the country's decision to phase out nuclear power stations, and in Canada, where a US energy company is suing for $250 million over a Quebecois moratorium on fracking.
Corporations filed at least 514 such cases last year, up from just 38 in 1998, according to a TNI report, with firms winning about 30% of their lawsuits outright, and securing private settlements - often including big payouts - in hundreds more.
With governments facing an average of $8 million in legal fees to defend each case, it's feared that the expanded arbitration system envisioned under the TPP and TTIP could lead governments to preemptively water down environmental regulations rather than risk costly legal battles.
In Europe, in particular, the sanding away of national and regional environmental protections could have serious consequences. Details are hazy, but it's reasonable to expect:
- A dramatic increase in shale-gas production, due both to the overthrow of European moratoria on fracking, and to the lifting of US restrictions on gas exports.
- The opening of EU markets to American GM food products, hormone-treated beef and pork, and chlorine-sterilised chicken, likely without clear labelling.
- A flood of cheap U.S. agricultural products, making it harder for more stringently regulated European farmers to stay in business.
- The easing of European standards requiring manufacturers to demonstrate their products' safety, and the spread of the US system, which punishes firms post-facto for the harm their products cause.
- An attempt to scrap REACH, Europe's chemical-safety rulebook, and the erosion of the European Chemical Agency's ability to regulate dangerous chemicals.
- A challenge to the EU's Renewable Energy Directive, which currently bars US ethanol manufacturers from claiming tax incentives on environmental grounds.
It's not all one-way traffic: European businesses would love to take a bite out of America's safety standards for drugs and medical devices, and also to undermine U.S. financial regulations.
And that's the problem: the trade deals allow companies to undermine or sidestep virtually any local restrictions that are tougher than the laxest rules on the books anywhere else in the free-trade zones.
That's just as big a deal as it sounds - but thanks to the secrecy surrounding the negotiating process, there's been remarkably little public outcry. In the US, however, that's slowly changing, with three quarters of House Democrats signing a letter blasting the lack of transparency surrounding the deals.
Crucially, Democrats have been joined in their protest by a smaller group of Tea Party lawmakers, who see the showdown as an opportunity to embarrass President Obama and to reassert Congress's right to oversee trade negotiations.
The Tea Party faction's position is based, like much of their ideology, on a pretty shaky reading of the US Constitution. But that's hardly the point: what matters is that with the Tea Party's backing, House Democrats might be able to scrape together enough votes to deny "fast-track" authority to the White House's trade negotiators.
Without that authority, any trade deal would have to be submitted to Congress for a full debate, rather than a simple up-or-down vote. And as the recent shutdown showed, getting even the most urgent legislation through Congress in a timely manner is virtually impossible.
For Obama and his allies, attempting to shepherd a pair of controversial trade treaties through America's legislative sausage-factory without fast-track powers would be a thankless task.
European leaders, though mostly staunch supporters of the trade deal, would also have their patience - already worn thin in the aftermath of the NSA spying scandal - sorely tested by the rebellion. Thrashing out a trade deal is tough at the best of times; suddenly learning that a painstakingly negotiated agreement could be torn to pieces by the US Congress might prove too much to stomach.
Even if the deal went ahead, the brouhaha would help raise public awareness, in the US and elsewhere, and would increase the pressure on trade negotiators to be more up-front about the treaties they're drafting. That could only be a good thing: the more the public finds out about these deals, the less they're going to like them.
How bad, then, are these trade deals? Bad enough to make the Tea Party look like attractive bedfellows. And bad enough to make America's congressional gridlock seem like a blessing rather than a curse. And that's really saying something.
- Stop TPP - http://stoptpp.org
- Public Citizen's Global Trade Watch - http://www.citizen.org/trade/
- Seattle to Brussels Network - http://www.s2bnetwork.org
- Transnational Institute - http://www.tni.org/work-area/trade-investment
- Friends of the Earth Europe - http://www.foeeurope.org/trading-away-our-future-071013
Ben Whitford is the Ecologist’s US correspondent. He can be reached at email@example.com.
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