TTIP - Transatlantic Trade and Investment Partnership
International trade and investment agreements come in various forms: between countries, between groups of countries, and between companies and governments. These treaties are first and foremost supposed to promote trade and investment, protect investors and contribute to economic growth and employment. During economic crises in particular, they are seen as a ‘way out’. Opponents nonetheless stress that these types of agreements give companies too much power, resulting in far-reaching negative consequences for people and the environment. Moreover, the gains expected by proponents are seriously disputed.
Currently, negotiations about what may be the largest trade and investment treaty ever are taking place: the Transatlantic Trade and Investment Partnership (TTIP) between the United States (US) and the European Union (EU). The trade talks between these two parties began in July 2013 in Washington. It is difficult to follow the negotiations and the actual progress made as the negotiations take place behind closed doors. Nevertheless, it has become clear that the proposed treaty will not only have large consequences for people and the environment in the US and EU, but also for the rest of the world. In addition, the treaty is regarded as a standard for future treaties that will also be directly ratified with countries and regions in Africa, Asia, Latin-America and the Caribbean. This makes the entire TTIP debate so much more than a debate about just another treaty; because of this model function, we are changing and shaping global trade of tomorrow.
Because of the direct consequences for developing countries, but also because of the ambition to make TTIP the standard for the future, Both ENDS thinks it is of great importance to contribute to an open discussion about TTIP.
TTIP has definitely been in the center of media attention as of late. Many have heard of it, but that does not answer the question: what is it exactly? And what are its consequences - not only for people and the environment ‘here’, but also – of great importance to Both ENDS – for people and the environment in developing countries?
There have been ten trade talks since the start of the negotiations, the last of which took place on July 15th 2015. The aim is to seal the deal by the end of 2015, but due to disagreements between the two parties it is unclear whether this will even happen at all.
What is clear, though, is that the negotiations are about so much more than just the elimination of trade tariffs. The most prominent topic are the ‘non-tariff’ trade barriers, such as broad regulations between the US and EU. These are supposed to guarantee the safety of products, and to protect labor circumstances and the environment. The aim is to make these identical for both countries, or to at least mutually recognize them. The argument is that this will stimulate trade and thus promote economic growth and employment.
What could possibly be the most controversial part of the proposed TTIP treaty is the inclusion of an ‘investor-to-state’ dispute settlement mechanism, otherwise known as ‘ISDS’. This mechanism, which is already included in over 3000 investment treaties, enables companies to directly sue a national government in the case of (potential) loss of profits as a result of that government’s policy. An ad-hoc tribunal consisting of commercial legal experts then decides whether a claim is legitimate. In this case, it would imply that investors can bypass the jurisdiction of national judges in European countries. Moreover, nearly each new government regulation, such as changes in national environmental law or subsidy rules for sustainable energy, can result in expensive investment claims.
If a state has to take into account possible investment claims each time there is a new regulation, this would certainly have a stronghold on the implementation of new regulation, even if the latter has societal purpose. This is known as ‘regulatory chill’. In other words, because of ISDS, countries possibly will not implement certain regulations in areas like social or environmental protection due to expected damage claims. Also, with ISDS, there is an advantage for international companies not only when it comes to governments, but also when it comes to national companies.This could have negative consequences for local economic actors.
It is not only the proposed ISDS mechanism in TTIP that Both ENDS is concerned about. ISDS claims included in already existing (bilateral) trade agreements have already caused damage in many developing countries. Damage claims filed by international companies cost local governments a tremendous amount of money, while national governments are outcompeted. Many people do not know that the Netherlands is in fact at the forefront in the area of international arbitration. After the US, the Netherlands is the country from which the most ISDS procedures are initiated. This is for the largest part due to the nearly 100 bilateral investment treaties (BITs), including ISDS, that the Netherlands has signed with (developing) countries.
Another reason is the fact that many foreign countries have settled their headquarters – or the so-called ‘letterbox firm’ – in the Netherlands because of Dutch tax advantages. This enables these companies to use the Dutch BITs to sue countries in which they have been investing. The increasing negative consequences of ISDS included in investment treaties is one of the most important reasons why a growing number of developing countries (want to) terminate their existing trade deals with the Netherlands.
ROLE OF BOTH ENDS
For years, Both ENDS has been very critical of the ISDS-system. Not only because of its large influence on and the rights it gives to companies without obligations, but also because of the huge lack of transparency. Both ENDS holds the opinion that the negative experiences with ISDS should function as an example for the TTIP negotiations. Our trade system does not gain anything by enforcing a system such as ISDS – not now, nor in the future.
Negative consequences for developing countries
The discussion about TTIP has mostly been about its negative consequences for ‘here’. For example, the harmonization or mutual recognition of each other’s regulations will lead to lower standards for safety, environment and health, and exacerbated labor circumstances in Europe. Furthermore, the promised gains will be predominantly benefited from by international businesses. Whether the ‘normal’ population will actually reap the benefits, or whether employment will rise, remains to be seen. And let’s not forget the high costs that come with implementing the treaty. This has hardly been mentioned at all.
Yet, what concerns Both ENDS in particular is the trade agreement’s effects for developing countries. Up until now, this has received very little attention and is something which should actually be taken into account in the negotiations. The fact remains that TTIP will be a serious threat to policy coherency, and this will undermine the agreed upon Sustainable Development Goals.
One direct negative result of the proposed TTIP treaty for developing countries is that trade between developing countries and the US/EU will be (further) distorted. Developing countries will get less access to the American and European markets, and due to positive discrimination of TTIP for ‘local’ products from the US/EU, developing countries will see their export to TTIP-countries plummet.
Besides this directly demonstrable result of TTIP, the weakening of environmental law will not affect the EU and US alone. Weaker environmental standards in the world’s largest power blocks entirely contradict promises and efforts to fight climate change. Climate change is a global problem without boundaries which disproportionately and negatively impacts the world’s poorest. It is also one of the largest drivers of hunger and poverty, and a direct result of our method of food production and our way of doing business. On a fundamental level, we need different rules to effectively tackle climate change.
Human rights experts as well have been critically following the developments in trade. In a letter issued in June 2015, several ‘Special Reporters’ of the UN expressed their concerns. According to them, it is very likely that TTIP (especially due to ISDS) – just like other trade and investment treaties - will impact the most vulnerable groups in developing countries the hardest.
The rights of indigenous groups and international debt negotiations will also be compromised. By prioritizing trade and investment interests, neglecting protection law and undermining new public policy, the realization of the basic right to live, food, water, healthcare, education and housing is under immense pressure. And the right to good employment circumstances, a clean environment and the right to not be subjected to forced evictions will be under increasing threat too.
These rights have all been agreed upon on the international level in different treaties and by different countries. But unfortunately, there is no ‘hard law’ or jurisdiction for such international treaties, as opposed to trade law, which has been formally put into place via ISDS. In other words, we currently have a global legal system which protects the rights of businesses, whereas the protection of human rights lacks such a formal system.
Together with others, Both ENDS is very concerned about the proposed TTIP treaty. We feel that the negative effects it will have on people and the environment on the global scale outweigh the promised and controversial financial benefits. Especially the relation between ‘north’ and ‘south’, and the impact of investment agreements on developing countries, are very important issues to focus on for Both ENDS.
‘To change a BIT is not enough’
Both ENDS views the commotion around TTIP as an opportunity to broaden the scope of the discussion and to focus on the discussion surrounding bilateral investment agreements. Both ENDS has been working on the negative effects of investment agreements on developing countries for a while now, and is especially concerned about ISDS mechanisms in current treaties. Both ENDS works with partners in developing countries on proposals to reform international policy regulations in such a way that these will truly promote international efforts for inclusive and sustainable development. Both ENDS thinks that bilateral investment treaties should be reformed so that they will be of advantage for developing countries. This is also why, in September 2015, Both ENDS published the report ‘To change a BIT is not enough’, in which the far-reaching consequences of ISDS mechanisms in these treaties are demonstrated via several examples.
‘Fair Green and Global’ sounds the alarm against TTIP
Both ENDS is the secretary of the ‘Fair, Green and Global’ alliance (FGG), in which different organizations are actively fighting against TTIP via lobbying, research and action. Apart from providing technical knowledge, we also are continuously in touch with the Dutch Ministry of Foreign Affairs about the lack of policy coherency in the Dutch support for TTIP, for example by the effects that the treaty will have on developing countries and global sustainability. In order to better organize the efforts of the organizations working on TTIP, Both ENDS has founded the ‘Stop TTIP’ organization together with TNI, SOMO and Milieudefensie. Stop TTIP held a demonstration against TTIP in Amsterdam on Saturday October 20th 2015.
Stop TTIP website
Feiten en Fabels – 10 claims over TTIP
UN experts voice concern over adverse impact of free trade and investment agreements on human rights