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October 29, 2014
October 29, 2014

Double threat: CETA and TTIP

Author: David Hervás Translator: Alexandra Popartan
Source: Attac  Category: On the crisis
This article is also available in: eles
Double threat: CETA and TTIP

The Transatlantic Trade and Investment Agreement, known by the acronym TTIP [1] is beginning to be known to the public, mainly through the public campaign [2] launched against it and the dissemination of articles [3] and statements [4] from representatives of the parliamentary political left. However, the first mention of the negotiations, dating back to November, 2011, happened during Barack Obama’s State of the Union address [5] on February 12, 2013. In this speech, Obama expressed his intention to promote two regional trade agreements, one with the countries on both sides of the Pacific (TPP or Trans-Pacific Partnership) and one with the European Union.

Immediately after this announcement, several campaigns are launched against both agreements and, already since March 17, 2013, we announced the start of a campaign [6] against the TTIP, which then was still known as TAFTA [7].

Why the TTIP is not a simple Free Trade Agreement?

The TTIP is not only a tariff treaty. If it were, it would be practically useless, since tariffs between the EU and the USA are already very low, with the exception of agriculture where they are higher than the average. The TTIP is called ‘investment treaty’ because it aims to put forward regulations to protect foreign investments that companies make in a country (i.e. to protect the money invested by multinational companies). The TTIP objectives are:

1. To achieve regulatory convergence: the rules of trade and investment from the USA and Europe should be harmonised. Since these rules are considered non-tariff barriers, the aim is to harmonise downwards, to maximise corporate profits. This is what negotiators have asked for:

– The European Union has called for the repeal of the banking regulations, namely the Dodd-Frank Act, which the Obama administration had such a hard time approving and is designed to prevent the abuses that led to the default of Wall Street investment banks in 2008. Those who push the hardest for this are the UK and German governments, acting in defence of the City and Frankfurt respectively. USA has refused so far, despite pressures from Wall Street [8].

– The USA wants to include labour standards in the treaty. Remember that the American labour market is deregulated and that the USA has not signed 6 out of the 8 conventions of the International Labour Organisation. Also, in 24 American States there is the so-called “right to work law”, prohibiting collective labour agreements.

– Moreover, the Americans are pushing for the authorisation of cultivation and human consumption of genetically modified organisms (GMOs) and the removal of the obligation to report their presence on product labels.

– The USA wants to lift these bans, moratoria or restrictions on hydraulic fracturing (fracking). American companies want to revoke the REACH [9] rules on the use of toxic chemicals, as well as the European Precautionary Principle [10], preventing the distribution of products that may be a health threat or proceed with its withdrawal from the market, if the scientific data does not clearly identify the risks to human, animal or plant health or to the environment.

-Big Pharma [11] wants to get Europe to extend the duration of patents, restrict or eliminate the power of governments to set the price of drugs and limit the transparency of clinical trials [12].

– In the agricultural sector, besides the reduction of tariffs, the USA requests the removal of protected designations of origin and protected geographical indications [13] because these designations prevent American companies from producing, for example, Rioja wine or Roquefort cheese [14].

– Certain American practices, currently unacceptable for the food industry in Europe, could become legal in the EU under this “regulatory convergence”: beef from cattle treated with growth hormones (whose consumption is associated with cancer in humans), birds bathed in chlorine (banned in the EU since 1997), food contaminated with pesticides.

– Additionally, European controls on endocrine disruptors [15] that are currently blocking 40% of American food exports [16] are on the table.

2. To consolidate the liberalisation of services markets. This is a euphemism that sounds great, but it starts to sound really bad when you go into the details of what is on the negotiating table:

– Privatisation of water supply, in line with both the interests of European and American multinationals [17].

– The Americans have confirmed their intention to negotiate the opening of public health and education services, taking advantage of the privatisation dementia affecting European governments.

– Not only the Americans want to cash-in but also the EU seeks to eliminate provisions such as Buy American in cities, counties and states across USA, which is currently favouring local jobs.

3. Privacy is threatened as they are trying to pass the ACTA through the ‘back door’. The Trade Agreement Anti-Counterfeiting, known as ACTA [18], was a voluntary multilateral agreement to protect intellectual property, combating counterfeit goods, generic medicines, and Internet piracy. To do so, this agreement would increase border security and force the Internet Service Providers to monitor all data packs uploaded or downloaded from the Internet. The offender could be punished with fines, loss of the right to access the network, or with imprisonment. ACTA was rejected by the European Parliament on July 4, 2012, with 478 votes against and only 39 votes in favour. However, some fear that, in exchange for allowing European operators on the internet market currently dominated by American multinationals, internet privacy may be on the negotiating table, given that, on the American side, the MPAA (Association of Cinematographic Industry) and RIAA (Recording Industry Association) are pressing for their interests. Clearly, the transatlantic trade data is disadvantageous for the Europeans in terms of internet privacy, provided that in the USA the law does not protect data privacy, while the European Data Protection Directive only allows data transfer to a third country on the condition that privacy is ensured.

4. To introduce a legal framework that undermines the principles of democracy. From the outset, the TTIP provides for the inclusion of a Mechanism for Dispute Resolution, allowing multinationals to sue a sovereign state before a Court of International Arbitration if it considers that a new law hinders their economic interests between Foreign Investors or ISDS [19] in that particular country. These courts, which are outside the European or international justice system and are composed of lawyers from private firms, often condemn countries to pay exorbitant sums for enacting laws –social, health, or environmental– that “harm future profits” [20] of companies. Their decisions are final. States can vote the laws that they wish, even with a constitutional status, but they must compensate foreign investors who hold that they may lose money because of these laws [21]. Often national companies have opened branches in a country that was a signatory to a treaty in order to sue their own government [22]. Therefore, the lawsuits against the states have become a lucrative business for multinationals and also for law firms specialising in this type of litigation [23]. The mechanism aimed at avoiding these lawsuits also undermines the principles of democracy: the Regulatory Cooperation Council. This council would perform a pre-control of the legislation on which Parliaments are to vote, and would consist of one officer representing the Commissioner of Commerce, one representing the US Trade Representative, an American business representative and a European business representative. Its mission is to work towards legal convergence. Given that this generated concern, the European Commission announced in January, 2014 a public consultation on the ISDS, but the experience of other consultations leave little room for hope [24], a suspicion confirmed by the following events:

1. July 23, 2014 the European Parliament ratified the regulation on the financial liability related to court litigation between investors and States, which entered into force on September 17, 2014. This was done to prevent Members States from claiming that the ISDS cannot be introduced in the negotiated agreements because it had not been previously regulated, as is required by the Lisbon Treaty [25].

2. September 10, 2014 the European Commission rejected a petition by the European Citizens’ Initiative against the inclusion of ISDS and regulatory cooperation in the TTIP and other treaties.

Secret negotiations

One of the features of trade agreements negotiated by the European Union is secrecy. In fact, before the announcement by Barack Obama, officials from the European Commission and the US had formed, in November 2011, a working group that has had since then more than 100 secret meetings with company lobbyists and business organisations. Of course, Obama’s announcement and the subsequent announcement of the President of the European Commission, José Manuel Durão Barroso, has not changed this policy at all: the meetings are secret, access to documents is restricted even to officials and representatives of the Member States [26], not even the elected Parliaments of the Member States are allowed to know the intentions of the negotiators of the US affecting their own states [27]. The opacity is higher in the EU than in the US, where the Obama administration submitted, three months before the start of the negotiations, a letter to the Speaker of the House of Representatives [28] reporting in detail on the objectives of the US government. With all this secrecy, are we not missing something? Indeed, there has been a series of treaties under negotiation in secret (i.e. CETA and Tisa) for some time now, but none of them had such a rapid response from society as the TTIP did.

The TTIP negotiations

In charge of the European delegation is the Trade Commissioner Karel De Gucht, who was reported by the Belgian tax administration for tax fraud of 900,000 € [29]. On the American side, we have the Trade Representative of the United States, Michael Froman. In Charles Ferguson’s book “Inside Job”, based on the Oscar winning documentary, we are told that Froman was an executive of Citigroup Alternative Investments, a unit that was deeply involved in the financial crisis of 2008, causing losses of billions dollars. Froman began working on the Obama transition team and was rewarded with a bonus after announcing his inauguration as senior White House representative. Under pressure from the press, a part of it was donated to charity, but he still pocketed around $ 7 million [30].

The CETA: the Trojan Horse

The Comprehensive Economic and Trade Agreement, known by the acronym CETA [31], is a treaty between Canada and the European Union. Negotiations started in 2009 and were concluded on August 1, 2014. The treaty had to be formally presented on September 25, 2014 by the Canadian Prime Minister Stephen Harper and José Manuel Durão Barroso. Despite the secrecy, the public television network ARD leaked the text of the agreement [32] on August 14. The agreement was ready for ratification by the European Parliament and the parliaments of the 28 Member States. In view of the CETA leak, as well as the statements of negotiators and officials from the European Commission or other leaks of documents on the TTIP [33], the CETA is a real Trojan horse of the TTIP since it basically has almost the same content as the TTIP:

– The CETA includes ISDS (Mechanism for Resolving Disputes Between Foreign Investors).

– The capacity of the Government and the Bank of Canada to regulate financial activity is rendered inoperative against European entities that use the ISDS to circumvent rules. Let us remember that Canada did not have a banking crisis in 2008, unlike the United States and Europe precisely due to its banking rules [34].

– In the CETA negotiations, the EU has refused to include enforcement mechanisms (fines, lawsuits) to ensure labour rights.

– In CETA, the autonomy of regional and local governments is restricted by the use of public procurement as a lever of economic development of the regions or cities.

– From CETA’s entry into force, it will be impossible to re-nationalise privatised public services or develop new public services.

– The European Union can import oil extracted from Canadian tar sands, fracking, tight oil and other highly polluting techniques, which have a high impact on global warming.

– It introduces elements of intellectual property regulation inspired by the ACTA provisions [35], precisely the most controversial and repressive ones that led to its rejection by the European Parliament.

And of course any American company can benefit from CETA establishing a branch in Canada, as there is a free trade and investment between the United States, Canada and Mexico since January 1, 1994, known as NAFTA. If the TTIP is not approved and, in exchange the CETA is ratified, the latter will be used as a Trojan horse by American multinationals.

We have come to a revealing situation regarding the secrecy of the negotiations but also with regards to the disorientation of the European civil society: a campaign against TTIP began from the very moment it was officially presented; in turn, even if the CETA negotiations had been announced in the Canada-EU summit held in Prague back in May 2009, the European public did not pay too much attention to it and only recently the anti-TTIP campaign has included an annex to protest against CETA, when it was almost ready to be presented to the parliament for ratification.

The late awakening of the European public’s awareness seems to have caught everyone off guard. For example, the victories of the civil society regarding the fracking moratoria in France, or the ban on fracking in Catalonia will be rendered useless once the CETA is ratified, because the companies involved are Canadian. Then we find out about the interest in reviving the ACTA of a multibillion-dollar industry concentrated in the Canadian province of Quebec: the video games industry [36]. As if this were not enough, environmentalists have reason to be concerned not only by oil, as Canada concentrates the opencast mega-mining sector.

Considering that the CETA can be a means to use Canada as a back door for multinational companies to follow their interest in case the TTIP is not signed eventually, the campaign against CETA should be intensified in order to raise public awareness before its official launch at the next Canada-EU summit, which will take place on September 26 in Ottawa and Toronto.

—–

[1] Acronym for Transatlantic Trade and Investment Partnership

[2] http://noalttip.blogspot.com.es/

[3] Alberto Garzón y Desiderio Cansino, 50 preguntas y respuestas sobre el Tratado de Libre Comercio, http://attaccastello.blogspot.com.es/2014/06/50-preguntas-y-respuestas-sobre-el.html

[4] Declaración de Lola Sánchez Caldentey: http://www.youtube.com/watch?v=MKAza5wMTaw&feature=youtu.be

[5] Mathew Rimmer, The two Treaties: Obama, trade and the State of the Union. The Conversation, February 14, 2013 (includes video of speech) http://theconversation.com/the-two-treaties-obama -trade- and-the -state-of -the -union-2197

[6] http://attaccastello.blogspot.com.es/2013/03/attac-pv-support-the-clear -of-seattle.html

[7] Acronym for Transatlantic Free Trade Area or Free Trade Area. In France it is still called by that name. There have been attempts to promote an acronym from Spanish (ACTI), appearing in the Spanish versions of the official documents of the European Union, but fortunately they were not successful because it may increase the confusion given the proliferation of acronyms.

[8] To see the level of banking and financial opacity of the stock markets of the City of London, Frankfurt and Wall Street, compared to countries considered tax havens, see this report by the Tax Justice Network: http://www.financialsecrecyindex.com/introduction/fsi-2013-results

[9] http://echa.europa.eu/es/regulations/reach/understanding-reach

[10] http://europa.eu/legislation_summaries/consumers/consumer_safety/l32042_es.htm

[11] http://en.wikipedia.org/wiki/Pharmaceutical_lobby

[12] Analysis of Big Pharma in Spanish “letter to Santa Claus” here: http://www.saludyfarmacos.org/lang / en / newsletter- drugs / newsletters / may2014 / p2014330 /

[13] http://www.magrama.gob.es/es/alimentacion/temas/calidad-agroalimentaria/calidad-diferenciada/dop/default.aspx

[14] However, the US is seeking protection for brands (Coca -Cola is produced in the US as a concentrate substance while, outside the US, the distributors only ad water and bottle the product), for patents on transgenic (preventing farmers to produce their own seed) and industrial property (preventing produce cheap generic drugs).

[15] An endocrine or hormonal disruptor, also called endocrine or hormonal switch, is capable of altering the hormonal balance of organisms of a species, i.e. generating or interrupting physiological processes controlled by hormones, or generating a response of greater or lesser extent than usual. For their effects on humans and the biosphere, you can consult the following report of the World Health Organisation: http://www.who.int/ceh/publications/endocrine/en/#

[16] This is the employer’s account of American agricultural chemistry Crop Life America on November 21, 2013, complaining of European regulation: http://www.croplifeamerica.org/news/cla/US-Agricultural-Exports-Threatened-EU-Pesticide-Regulation

[17] There is no doubt that we talk about a multinational company if it is a company in California that bids for a contract of maintenance of sidewalks or street furniture in a Spanish city. The same is true vice versa: a Spanish company that aspires to a contract with Chicago for example

[18] Acronyms Anti-Counterfeiting Trade Agreement. While ACTA was being negotiated, the Obama administration tried to pass two bills that would also affect the privacy of Internet, the SOPA and PIPA legislation, were paralysed by the US Congress on January 14 and 20, 2012 respectively.

[19] Abbreviation for Investor-State Dispute Settlement

[20] In the jargon of international trade law there is the concept of “indirect expropriation” that allows investors to claim compensation as a result of regulation, law, policy, decision or other governmental action that has the effect of reducing or eliminating opportunities to obtain profit.

[21] There are many examples of these claims against the United Multinational Enterprises: a) The tobacco Philip Morris multimillion dollar compensation claim against two States that had imposed measures against smoking (limitations on advertising and warnings on packs): Australia and Uruguay. b) The Swedish utility Vattenfall claims 3.7 € billion from Germany for abandoning nuclear energy: http://www.tni.org/sites/www.tni.org/files/download/vattenfall-icsid-case_oct2013.pdf

[22] The most famous cases are:

a) The Canadian oil company ‘Lone Pine Resourses’ is using a subsidiary company in the US (namely in the State of Delaware which is a fiscal haven) to claim 250 million Canadian dollars from Canada in the framework of NAFTA, for the moratoria on fracking approved by the Quebec Province: http://www.italaw.com/sites/default/files/case-documents/italaw1596.pdf

b) The Canadian paper company ‘Abitibi Bowater’ used a subsidiary in the US to sue Canada for the expropriation of its assets by the Province of Newfoundland and Labrador y managed to a remuneration of 130 million Canadian dollars: http://www.thecourt.ca/2010/08/27/canada-settles-abitibibowaters-nafta-claim/

[23] Cecilia Olivet and Pia Eberhardt, Cuando la injusticia es negocio Cómo las firmas de abogados, árbitros y financiadores alimentan el auge del arbitraje de inversione : Corporate Europe Observatory and Transnational Institute, 2012. Available here: http://www.tni.org/sites/www.tni.org/files/download/cuando_la_injusticia_es_negocio-web.pdf

[24] Leo Nolleti, The referendum as a smokescreen, Le Monde Diplomatique, July 2014, p. 22.

[25] Article 3, paragraph 1, letter e) of the Lisbon Treaty states that the Union shall have exclusive competence in the field of the common commercial policy and may be a party to international agreements containing provisions on FDI.

[26] These are permitted only reading guarded rooms in which it is forbidden to take or copy documents.

[27] John Hilary, The Transatlantic Trade and Investment Agreement, Rosa Luxemburg Stiftung , Brussels, May 2014: http://rosalux-europa.info/userfiles/file/TTIP_ES.pdf

[28] http://www.ustr.gov/sites/default/files/03202013%20TTIP%20Notification%20Letter.PDF

[29] Belgium reported the EU Trade Commissioner for 900,000 € for tax fraud. Europa Press, November 8, 2013: http://www.europapress.es/economia/fiscal-00347/noticia-economia-ampl-belgica-reclama-tribunales-comisario-europeo-comercio-900000-euros-fraude-fiscal-20131108124300.html

[30] Charles Ferguson, Inside Job, One world, 2012, page 303. He also has money in tax havens: Jonathan Weisman, US Cate Nominee Has $ 490,000 in Cayman Fund, The New York Times, June 4, 2013: http://www.nytimes.com/2013/06/05/us/politics/trade-nominee-has-500000-in-cayman-islands.html?_r=0

[31] Abbreviation for Comprehensive Economic and Trade Agreement. In Quebec it is known by AECG: Global Accord Economique et Commerciale.

[32] http://www.tagesschau.de/wirtschaft/ceta – dokument – 101.pdf

[33] http://keionline.org/node/1984

[34] Les Whitington. EU trade pact could weaken Ottawa’s power to regulate banks. Toronto Star.07/09/2014: http://www.thestar.com/news/canada/2014/09/07/eu_trade_pact_could_weaken_ottawas_power_to_regulate_banks.html

[35] Comparativa del ACTA y del CETA https://wiki.laquadrature.net/Comparison_ACTA_CETA

[36] Ulysse Bergeron y Jean -François Nadeau.En Canadá, unaindustriaque se sientecomo en casa. Le Monde Diplomatique en español.December -2013.

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