ISDS: ACTA by the Back Door?

As I noted in my last TTIP update, things are beginning to get moving again on this front. One reflection of the growing interesting in this important trade and investment agreement was the public discussion entitled "Internet, Trade and...

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As I noted in my last TTIP update, things are beginning to get moving again on this front. One reflection of the growing interesting in this important trade and investment agreement was the public discussion entitled "Internet, Trade and Democracy: Transatlantic Relations under the Shadow of Surveillance", held in Berlin, and organised by Internet & Society Collaboratory and the blogger project FutureChallenges.org of the Bertelsmann Stiftung.

I gave a talk there with the title "TAFTA/TTIP - trade, Internet and democracy". My slides can be downloaded, and I've also embedded them below:

There is also a recording of the talk:

Here, I'd like to pull out a few of the key points that I made.

I began by quickly reviewing the history and defeat of ACTA. That's relevant, because there is inevitably a fear that the European Commission might try to use TAFTA/TTIP as a way of sneaking ACTA in through the back door. Actually, the Commissioner responsible for negotiating both ACTA and now TAFTA/TTIP, Karel de Gucht, has explicitly said that won't happen:

“ACTA, one of the nails in my coffin. I’m not going to reopen that discussion. Really, I mean, I am not a masochist. I’m not planning to do that.”

Pretty unequivocal, you might think. Then, less than a month ago, this happened:

The EU and Singapore today release the text of one of the most comprehensive trade agreements they have ever negotiated. It is the first EU deal with a Southeast Asian economy and has the potential to open the door to Free Trade Agreements (FTAs) with other countries from the region. The release of the texts follows their initialling, earlier today in Singapore, by the chief negotiators from the European Commission and Singapore's Government.

Sounds like another (boring) free trade agreement - until you start to read it. Take, for example, Article 11.44, paragraph 2 [.pdf]:

In determining the amount of damages for infringement of intellectual property rights, a Party’s judicial authorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which may include lost profits, the value of the infringed goods or services measured by the market price, or the suggested retail price.

You may notice a certain similarity with this:

In determining the amount of damages for infringement of intellectual property rights, a Party’s judicial authorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which mayinclude lost profits, the value of the infringed goods or services measured by the market price, or the suggested retail price.

That's from Article 9, paragraph 1 of ACTA. Yes, entire paragraphs of ACTA have been cut and paste into the new EU-Singapore FTA.

The new FTA has so far only been "initialled": that means it must be approved by the European Commission, the Council of Ministers - and the European Parliament. So that raises an interesting question: will MEPs now wave through text that is identical to one of the problematic sections of ACTA? And if they do, will the European Commission take that as a sign of weakness - or boredom - and start cutting and pasting other paragraphs from ACTA into TAFTA/TTIP? It's true that Mr De Gucht suggested that wouldn't happen, but if the European Parliament no longer cares, what's the problem....?

As I pointed out in my talk, this isn't the main threat that TAFTA/TTIP represents to the Internet and its users. In my view, that can be found in the proposal on both sides of the negotiations to include investor-state dispute settlement (ISDS). As I've discussed in a previous TTIP update, this is a really extraordinary move to place foreign companies above local law, and to give them the right to sue governments for what they perceive as an "indirect expropriation" of their future profits. Last week I debunked the rather feeble attempt of the European Commission to defend this practice, despite the fact that it is likely to have a chilling effect on health, safety, environmental and labour legislation.

And as I suggested last week in Berlin, it might also cause the European Commission to bring in ACTA-like measures as a defensive move. That would be to ward off threats from US companies that they would invoke ISDS to sue the European Union and its member states for "indirect expropriation" of their future profits by failing to enforce copyright laws sufficiently harshly.

Then's there's the issue of software patents. As I've noted before, once ISDS is in place, any attempt to confirm that software patents are not valid in Europe - that is, to apply Article 52 of the European Patent Convention - is likely to be met with a similar threat of massive ISDS claims.

The "logic" here would be that since the European Patent Office in its deep wisdom has been granting software patents anyway - rebranded as "computer-implemented inventions" - US companies have naturally assumed that the money would be rolling in when they threaten to sue European companies for alleged infringement of those patents. If the EU - or countries like Germany, which is currently contemplating legislating against software patents - did anything to reduce those expected profts, then naturally companies would sue for this "loss".

The last issue that I discussed in my talk was transparency in TAFTA/TTIP - or, rather, the lack of it. When pressed on the subject, here's what Mr De Gucht has to say:

on the subject of openness, I have no problem saying what we are doing and what we want to achieve and, when not speaking in public, how I want to achieve this. But you are all politicians. So you should know - and I think you do know - that you cannot negotiate openly. You do not do that in your parties either; you do not do that in your constituencies. You need to focus - and yes, of course we have to report on what we are doing, explaining why we are doing things and why we are making some concessions; we will have to make concessions in the course of these negotiations. But you need a certain degree of confidentiality in negotiations. You also need it because your counterpart is asking for it; if not, you cannot negotiate.

Let's just consider this point: "you need a certain degree of confidentiality in negotiations". Well, if that's the case, it's rather a pity that the European Commission doesn't have it, as this report in Der Spiegel makes clear:

The classified documents, which SPIEGEL has seen, demonstrate how systematically the Americans target other countries and institutions like the EU, the International Atomic Energy Agency (IAEA) in Vienna and the UN. They show how the NSA infiltrated the Europeans' internal computer network between New York and Washington, used US embassies abroad to intercept communications and eavesdropped on video conferences of UN diplomats.

The simple fact is that the US already has every document relating to TAFTA/TTIP - the European Commission lost its "confidentiality" long ago, assuming it ever had it. Just because we now know how the EU was systematically spied upon doesn't mean that it will now stop: the NSA will simply use one of its many other surveillance systems, which we haven't heard about yet - or come up with a new one.

It is the height of naivety on Mr De Gucht's part if he thinks there is anything that the US does not already know about the European Commission's negotiating position. Moreover, it would be foolish to think that other nations - notably the Chinese and Russians - have not also penetrated the EU's networks and merrily downloaded everything they wanted, including information about TAFTA/TTIP. And don't forget the US government routinely gives direct access to all its negotiating documents to industry insiders.

When you put all that together, it comes down to the fact that the documents that De Gucht wants to keep "confidential", are almost certainly known to everyone - the US, China, Russia, US industry etc. - everyone except the European public. That is, the very people in whose name the negotiations are being conducted, and the ones who pay Mr De Gucht's not-ungenerous salary, are also the only ones to be kept in the dark.

In the age of the Internet, which makes transparency an almost trivial process - enough to publish a document once, to the Web, and you're done - the refusal to treat the European public with enough basic respect as to allow them to know what is going on, and to express their views, is simply scandalous. Above all, it is not democratic, and that represents a huge danger for the European Union at a time when many citizens in member states are calling into question the value of the entire EU project.

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