Last week I wrote about an attack on Corporate Europe Observatory (CEO) by the European Commission over a leak concerning TAFTA/TTIP, which CEO had obtained and published. As my lengthy analysis indicated, what was most remarkable about that response is that it failed to answer the points made by CEO. That naturally begs the question: so why did the European Commssion bother?
I think the answer is clear. It was rattled that CEO had revealed its emerging plans to use a new supranational regulatory body to replace gradually the European precautionary system with one that is optimised for corporates. That meant it needed to try to nip this understanding in the bud. More generally, its extremely rapid response shows that the European Commission fears that it is losing control of the TAFTA/TTIP narrative, which is supposed to be all about growth, jobs, profits and happiness sempiternal.
That view is bolstered by the fact that no less a personnage than Karel De Gucht, the European Commissioner for trade, and the person with overall responsibility for the TTIP negotiations, entered into battle to rebut an article by George Monbiot in the Guardian. Monbiot’s piece was entitled "The lies behind this transatlantic trade deal", and it rightly concentrates on the threat posed to national and European sovereignty by investor-state dispute resolution (ISDS), and on the extraordinary and unnecessary secrecy:
Panic spreads through the European commission like ferrets in a rabbit warren. Its plans to create a single market incorporating Europe and the United States, progressing so nicely when hardly anyone knew, have been blown wide open. All over Europe people are asking why this is happening; why we were not consulted; for whom it is being done.
De Gucht did not like this:
George Monbiot, in his article on the negotiations for a Transatlantic Trade and Investment Partnership, claims the European commission has tried to “keep this process quiet” (Chickens in chlorine? It’s what free trade’s about, 3 December). This is laughable. Every step of these negotiations has been publicly announced and widely reported in the press. The commission has regularly consulted a broad range of civil society organisations in writing and in person, and our most recent meeting had 350 participants from trade unions, NGOs and business.
As far as I can tell – and I do follow this area pretty closely – there have been no “regular” consultations with civil society organisations; in fact there have been a vanishingly small number of meetings with them on any basis. As CEO found out (but only by demanding the information under an FOI request), of 130 “meetings with stakeholders” that took place earlier this year, 119 of them were with large corporates and their lobbyists.
And note the clever phrasing: “Every step of these negotiations has been publicly announced and widely reported in the press.” That’s true – the steps have been announced, but we have been told nothing about what was discussed. That’s like claiming that people have been able to read books provided they were told the titles.
Interestingly, the evidence that ISDS is a real danger to democracy is now so strong, that even De Gucht is forced to admit it:
We do understand some of the concerns Monbiot and others have about investor-state dispute settlement. We are well aware of the cases he cites, including the “nuclear company contesting Germany's decision to switch off atomic power” and the fact that “the tobacco company Philip Morris is currently suing Australia [which introduced plain packaging for cigarettes] through the same mechanism in another treaty”. That is why we want the EU-US trade deal to fully enshrine democratic prerogatives.
That’s a pretty big admission, and shows the power of facts to combat empty rhetoric. Alas, the “solution” offered is the usual one:
EU investment agreements will explicitly state that legitimate government public policy decisions – on issues such as the balance between public and private provision of healthcare or “the European ban on chicken carcasses washed with chlorine” - cannot be over-ridden. We will crack down on companies using legal technicalities to build frivolous cases against governments. We will open up investment tribunals to public scrutiny – documents will be public and interested parties, including NGOs, will be able to make submissions. Finally, we will eliminate any conflicts of interest – the arbitrators who decide on EU cases must be above suspicion.
Notice the verb here: “will” - designed to convey absolute certainty. Except that TAFTA/TTIP is a two-sided agreement, and the EU is in no position to demand anything. I don’t doubt that it will indeed ask for all the things listed above in an attempt to address the criticisms of ISDS (not that it will, but at least it is trying); however, I also don’t doubt that the US negotiators will simply refuse, since overcoming “the European ban on chicken carcasses washed with chlorine” is one of their stated aims in TAFTA/TTIP. That’s precisely why they want ISDS in the agreement, and precisely why the European Commission would be insane to agree to its inclusion.
Despite admitting that ISDS is inherently problematic, De Gucht goes on to say:
But we do not take Monbiot’s extreme view that investment protection agreements (IPAs) are “toxic” attempts to put monster corporations in charge of our destinies. His exaggerated fears are no reason to abandon a deal with the US that could create £100bn in new growth for Europe. (Contrary to Monbiot’s claims, the economic impact of free trade agreements has been positive. For example, Europe’s agreement with South Korea has seen our exports rise by 24% in its first two years.)
Readers of this blog will recall my earlier analysis of that £100bn, which is the 119 billion euros that appears in the research carried out for the European Commission. In any case, it represents the best-case outcome of TAFTA/TTIP, and this will only be achieved trhough massive deregulation, with a concomitant lowering of health, food and environmental standards, despite what the Commission claims. So even if TAFTA/TTIP “could” create £100bn in new growth for Europe, that would only be in 2027, and at huge social cost – something that De Gucht naturally omits to mention.
He also fails to note another salient fact when he writes that Europe’s free trade agreement with South Korea saw a 24% rise in exports in its first two years. According to the European Commission’s own Web pages on the agreement:
European companies are the largest investors in South Korea.
That’s relevant to TAFTA/TTIP, because the key argument for including ISDS in the transatlantic deal is that such investor protection is vital if companies are going to invest in Europe and thus create jobs. The interesting thing is that the trade agreement between Europeand South Korea does not have an ISDS chapter, and yet Europeans are happy to invest massively in the latter country. Why on earth would they risk doing that? Simple: because they trust the legal and political systems to act fairly in the case of any disputes over investments.
It is the height of ridiculousness to assert that ISDS is needed in TAFTA/TTIP in order to provide the same guarantees: the legal and political systems in both the EU and US are certainly as well developed as those in South Korea, and so ISDS is completely unnecessary. As George Monbiot in his Guardian article quotes me as saying on the subject: “The benefits are slight and illusory, while the risks are very real.” Accepting large risks for small benefits shows appalling business judgement: if De Gucht can’t see that, and won’t drop ISDS in order to protect Europe from those dangers, perhaps he should hand the job on to someone who does and will.