Opinion: TTIP and the inversion of the Free Trade debate

The Trans-Atlantic Trade and Investment Partnership provides an interesting case study as to how the very meaning of ‘Free Trade’ is changing. The treaty itself is on the rocks with increasing opposition from France and Germany alongside a powerful combination of unions and anti-globalisation advocacy groups. Nothing about that is particularly unusual but a crucial difference is the arguments these groups are making. For the first time they are talking about consumers.

Traditionally trade deals meant hitting producers to help consumers with the abolition of tariffs, subsidies and protectionist legislation. Although there is an element of this in the TTIP the majority of it is actually about the harmonization of consumer standards and it is this which flips the traditional free trade debate so firmly on its head.

Harmonising regulation carries huge benefits for producers through the enablement of shared supply chains and increased economies of scales. However the potential costs all fall on the consumer with the threat of lower standards in the health, safety and quality of consumer goods regulated under this new framework.

As a result opponents to globalisation are able to claim that TTIP will put chlorine in your chicken, pollutants in your fuel and make your cars less safe to drive. Notwithstanding threats to sovereignty on issues like nationalisation and corporate adjudication, TTIP is portrayed as the complete corporate takeover of government. The sad thing is the EU and US hasn’t exactly helped matters.

Regulatory harmonization carries substantial benefits and the EU should be honest about what it is selling here. Instead the EU is pretending this is just another trade deal and, rightly or wrongly, conducting the negotiations in secret. To add to this it is implying that all EU and US regulation can be harmonised in a little over a year through these negotiations alone. This is rather rich coming from an institution that has spent nearly 30 years going through lengthy, complex, interstate regulatory harmonisation itself where standards for hairdressers alone can take over 10 years to fully formulate.

As a result the anti-globalisation movement is currently winning the argument and with consumers on their side it is hard to see how this treaty could gain unanimous EU state approval. How to reverse this? My view is the US and EU should to be open about what TTIP is, if you’re dealing with consumer protection you have to have transparency or else people will assume the worst. You need to acknowledge that this is not a single treaty but an agreement to a new process that will carry on indefinitely. There also needs to be two simple understandable principles when dealing with regulatory harmonisation.

  1. High standard supremacy: the highest regulatory standard always supersedes the other.
  2. Immutability: if no agreement can be reached differing national standards remain unchanged.

TTIP is fundamentally a good idea at heart, easing access between two markets of over 600 million first world consumers. If however the EU and US continues to pretend that TTIP is not what it actually is then this could become another failed treaty biting the dust amidst a combination of bureaucratic cowardice, dishonesty and incompetence. I hope this is not the case.

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49 Comments

  • The US government is pretty much owned by large corporate interests. So increasingly are we. The idea they are going to adopt Eurorpean ‘standards’ in all sorts of areas strikes me as unlikely. We appear to be wasting our time with this.

  • Toby Fenwick 20th Nov '14 - 2:40pm

    Great post. Agree entirely.

  • Daniel Henry 20th Nov '14 - 5:27pm

    This might be the most level headed post I’ve ever read on the TTIP.

    I agree that the US and EU need to be more honest and transparent if they want European democracies to accept this.

  • Jenny Barnes 20th Nov '14 - 5:51pm

    “TTIP is fundamentally a good idea at heart,” No it isn’t. It’s designed to give corporates the ability to sue governments in secret courts if they pass any legislation that is, or might be “harmful to their profits” Eg a tax on sugar – or de privatising the NHS in some respect…

  • Nick Collins 20th Nov '14 - 7:22pm

    Well said, Jenny Barnes. TTIP is the negation of democracy and anyone who describes themself as a liberal or a democrat should have nothing to do with it. Perhaps the “Liberal Democrats” should change their name.

    Does that make me part of “the anti-globalisation movement” : whatever that is?

  • Julian Tisi 20th Nov '14 - 7:54pm

    I agree with Toby and Daniel – I think this is an incredibly level headed article on TTIP and I agree entirely. I think your two principles of High standard supremacy and Immutability are very sensible and would deal very well with some of the more legitimate TTIP concerns out there.

    To those like Jenny and Nick who are utterly opposed and others who see TTIP as some corporate conspiracy I would simply say that in essence it’s about breaking down trade barriers which should stimulate trade and in turn growth on both sides of the Atlantic. To consumers it should mean cheaper goods and services. Essentially the same arguments in favour of the EU single market could be used about TTIP. Yes there are genuine concerns but please let’s not allow conspiracy to dominate reason.

  • I must agree with Jenny and Nick here. I’m all for trade agreements, but the objections here are about agreeing to giving corporations power over our governments – this is massively undemocratic and surely against the principles of our party.

  • Thanks for the positive comments! To those stating that this is part of a corporate takeover, well that depends on the negotiations and this is where the EU has really shot itself in the foot. There are real concerns about corporate adjudication and regulation on public sector contracting/nationalisation and these are best dealt with through transparency. If the EU were to be transparent on these issues then it wouldn’t allow people to automatically assume the worse. At the moment you are largely free to assume the worse even if there is no evidence for it because none of us have much of an idea about what’s currently included (although I believe nationalisation regulation isn’t exactly top priority). Regulatory harmonisation between the EU and US does contain significant benefits and would remove significantly more barriers to entry than even total tariff abolition. The adjudication process (although I get the concerns) isn’t quite as big a deal as some have made out, NAFTA for instance has not exactly destroyed environmental protection in North America. You may not be a part of the anti-globalisation movement but be perhaps a little more sceptical before repeating their propaganda. What I am simply arguing for is transparency and clear principles in free trade.

  • Absolutely on the benefits of low prices Joe, on the supremacy principle an interesting example is chlorine cleaned chicken, Europeans think its unsafe whilst the Americans would consider non chlorine cleaned chicken terribly unhygienic. On that issue immutability would be preferable due to cultural difference, where the supremacy principle comes into play is on things like car regulations and aerospace design (relatively uncontroversial whilst there has already been a good deal of progress). Its these sort of areas where TTIP presents a golden opportunity for trade.

  • Good question from Nick Collins —
    “…. Does that make me part of “the anti-globalisation movement” ?”

    My answer to Nick, which I think he may agree with, is that it depends on what is being globalised.
    I am very much in favour of “globalising” human rights, democracy, freedom, peace, health.

    I am very much against the globalisation of anonymous, unaccountable corporate capitalism which can over-ride democratically elected governments in the way described by Jenny Barnes.

    I can understand Geoffrey Payne’s frustration that so much about TTIP has been kept secret from ordinary citizens on both sides of the Atlantic.
    But I think we can draw legitimate conclusions from just who is lobbying for TTIP. If the lobbyists of Big Tobacco are in favour of something – that is usually a good guide to those of us interested in the public good, we should be against it.

    As Dan Ellis says — this is “..surely against the principles of our party.”

  • So will private healthcare firms from the US be able to sue the UK government if they are not considered to provide services in place of the NHS? Is this true or not?

  • Tsar Nicolas 20th Nov '14 - 10:37pm

    IF TTIP is so good, why has it been largely hidden from public view? Where is the public debate, as there was over joining Europe in the 1970s?

    It’s not there because the political elites don’t want it to be there – as New Labour used to say when they were pushing for ID cards, ‘If you have nothing to hide, you have nothing to fear.’

  • @Jim Barnes – of course that’s not even remotely true. ISDS relates to governments that break existing contracts.

  • >What I am simply arguing for is transparency and clear principles in free trade.

    From the leaked draft and the circumstances surrounding its negotiation, you won’t get these from TTIP. For transparency and clear principles there are other international organisations better suited to the task. But even then will the US really open its markets to the rest of the world? you only need to see the out-and-out fear of Asia and China and the protectionist actions they have taken to see that the US has a long way to go before it lets go of its neo-colonial tendencies.

  • @JimHughes We don’t know but if you could get odds on it not being the case I would put down your house on it. The EU/President Obama do not have a sooper secret plan to dismantle the NHS or any other nationalised industry. What may be included is regulation as to what state contractors should be compensated if a contract is broken. That’s a different matter that we already regulate for domestic and EU corporations.
    @Tsar Nicolas the theory behind secret negotiations is that it enhances you negotiating position. Although there’s truth in that I believe the costs to both sides in terms of speculation and damage to the treaty itself outweigh that case. People care about consumer protection, it has to be transparent.
    @Roland I think you’ll find China the most neo-colonial power out there (whatever that means), the US does open its markets to the outside world whether through NAFTA or previous treaties with the EU (see the recent one on aviation).

  • I’m sure that the EU and US governments aren’t secretly conspiring to dismantle and privatise the NHS. The UK government, I’m not so sure about. After “No more top-down reorganisation of the NHS” and “Absolutely no plans of NHS privatisation”, * I’m less than confident about trusting the coalition over this.

    *(Which has now morphed from “No privatisation” to “Oh, it doesn’t matter WHO provides the services or sets up the contracts, therefore selling off whole sections doesn’t count as privatising…”

  • Andrew Colman 21st Nov '14 - 12:17pm

    Big problem with TTIP is the secrecy and obvious lack of trust of the electorate by politicians and businesses, otherwise, why the secrecy?

    TTIP needs proper public scrutiny, line by line, word by word, (like Scottish independence plans) and should be subject to a referendum (as it will effect the power of elected authorities or governments to implement legislation).
    If the Lisbon treaty needs a referendum, TTIP certainly does!

    I firmly believe if this happened, the bad bits of TTIP would go and we would have a win win situation

  • Andrew Colman 21st Nov '14 - 12:25pm

    Should remember no parliament can restrict a future parliament

    My hope would be if the worse came to the worse and some American corporations tried to prevent the renationalisation of NHS though the TTIP courts, the British Government would just ignore TTIP and “kick ass” to the Americans

  • Are we not missing the main point of people’s objections, which is the ISDS ?
    If only the negotiations were not in secret, then there could be a proper public debate about the good and bad parts of the proposals. The bottom line for me is that we should not allow corporations to use any deal to gain advantage over democratic governing by inserting clauses in the deal which are not really part of the proposed harmonisation of regulatory standards. Neither should they be allowed to bend the regulations in such a way that smaller companies cannot compete and grow in the future.

  • “My hope would be if the worse came to the worse and some American corporations tried to prevent the renationalisation of NHS though the TTIP courts, the British Government would just ignore TTIP and “kick ass” to the Americans”

    That seems kinda optimistic. For example, if MPs have a financial interest in the firms bidding for the contracts (which many do), and the inherent costs involved in fighting such a case in the courts. Plus the point that various ministers have written about how the NHS must be broken up because “competition”, and the outright contempt the electorate were held in regarding the claims of “No more top-down reorganisations of the NHS” during the last election. Or the refusal to release the risk register regarding the Lansley bill.

    And if no previous parliament can restrict a future parliament, have PFI contracts been renegotiated? That’s a huge saving right there, unless of course the legal costs of doing so make it prohibitive. Especially if the political will to even try isn’t there.

    I’d love to vote for a party who would take up such an issue, and actually hold fast against the sale of all national assets, especially the health service. If anyone can recommend such a party, please let me know.

  • “For carrying-on an undertaking of great advantage but no-one to know what it is.”

    That was the pitch for investment made by one of the companies involved in the South Sea Bubble in 1720 and we all know how that turned out. Of course the TTIP and its twin the Transpacific Partnership are not entirely secret, only from elected legislators and public interest groups. In contrast hundreds of corporate lobbyists are deeply involved – virtually dictating terms to the politicians. For example see this Huff Post report:

    http://www.huffingtonpost.com/2013/06/18/alan-grayson-trans-pacific-partnership_n_3456167.html

    From that report: “They maintain that the text is classified information. And I get clearance because I’m a member of Congress, but now they tell me that they don’t want me to talk to anybody about it because if I did, I’d be releasing classified information.”

    “What I saw was nothing that could possibly justify the secrecy that surrounds it,” Grayson said, referring to the draft Trans-Pacific deal. “It is ironic in a way that the government thinks it’s alright to have a record of every single call that an American makes, but not alright for an American citizen to know what sovereign powers the government is negotiating away.”

    The only interpretation I can put on this is that it represents an attempted putsch by the corporate interests that have captured political power in the US and now want to go fully global with the hope of a number of (to borrow Lenin’s term for such people) ‘useful idiots’.

    Do I not remember that ‘transparency’ was what Lib Dems used to promise? Does anyone think transparency is an unimportant optional extra rather than foundational? Does anyone think that the undebated decision to serve corporate interests instead of electors’ interests might have something to do with the Party’s worst ever election result?

  • There are indeed potential benefits for consumers of harmonising regulations as John Dixon says but there has been a tendency to use ‘Free Trade’ as a polite wrapper for treaties that are anything but; which are, in fact, highly damaging. For example NAFTA has been devastating for Mexican agriculture:

    http://triplecrisis.com/?p=9053#more-9053

    From that post: “Mexico’s three million small-scale corn farmers saw prices for their crops fall 66 percent, largely because the United States increased corn exports by 400 percent, exporting at prices 19 percent below even U.S. farmers’ costs of production. (See my earlier study.) Call it the Age of Agricultural Dumping.”

    Get that! What was actually facilitated was not ‘Free Trade’ but agricultural dumping. Many of the displaced Mexican peasant farmers wound up unemployed or in the drugs trade. Despite that the econometric model the EU relies on to calculate the benefits assumes zero unemployment. Don’t believe models involving implausible assumptions.

    The conclusion I draw is that we should use all our critical faculties. ‘Free Trade’ may be just that but very often it’s just a convenient cover story for something darkly abusive as for example the Opium Wars which were prosecuted by Britain at the height of its support for Free Trade.

    Harmonisation can indeed be fairly painless when done as new technologies emerge but is immensely difficult after the event and there are some regulations that should NOT be harmonized – it is NOT always a case of one-size-fits-all. That is why it has taken the EU decades to make even limited progress – accompanied all the while by endless stories of ‘straight bananas’ and the rest.

    So how do the TTIP and its twin the TPP propose to solve this problem that has so vexed the EU all this time? It’s scarily simply; the treaties will simply adopt the lowest regulation going, in effect giving large corporations (the cost of arbitration is such that smaller companies will not be able to ‘play’ in this game) the right to do whatever they want. And don’t assume that that means EU standards; it could just as well mean US ones like the ‘Halliburton Loophole’ (See criticism heading in Wikipedia article) that excludes fracking companies from various environmental laws including the Safe Drinking Water Act! And it entirely possible that this would mean that fracking in Surrey or Lancashire could be conducted under the same rules as the thinly populated prairie of North Dakota. Of course, the government could stop this happening but would then, according to some sources, have to compensate the company involved for the loss if its EXPECTED profits.

    https://www.techdirt.com/articles/20131004/07500724750/canada-hit-with-another-massive-investor-state-dispute-settlement-demand.shtml

  • I am afraid I cannot agree with the relaxed attitude over TTIP and ISDS being taken by some here.

    The fact that TTIP is a bilateral investment treaty and most likely based on the 2012US bilateral investment treaty model, makes it overwhelmingly likely that ISDS is a part of it. To my knowledge the only bilateral investment treaty that does not include an ISDS clause is one between USA and Australia.

    That has not prevented Australia being sued via ISDS by an American cigarette company, because a subsidiary in a different country for which a bilateral investment treaty exists (for Australia) containing an ISDS clause can be used as a kind of by-pass. Given that CETA contains an ISDS clause, if that gets ratified – although that seems unlikely but we must remain vigilant – it probably won’t matter if TTIP (by some miracle) has ISDS removed.

    That’s before we consider the 95 or so other bilateral investment treaties that the UK is already signed up to.
    I have sometimes come across the following argument in response: – if ISDS is so dangerous why haven’t we been taken to the cleaners because of these 95 other treaties then?

    The answer, for anyone that cares, is quite simple: the majority are with poor countries that either don’t have powerful corporations, perhaps have lots of state owned companies, are largely invested in by the UK rather than conversely (that’s before we get to foreign aid) and the minority of nations that don’t fall into these categories are simply not meaningful comparisons with the USA (being formerly communist countries and/or concerned with sectors that are largely liberalised already in the UK – so ISDS doesn’t arise anyway).

    Some stats: roughly 1/3 are with nations that were ranked 100 or worse by nominal GDP (2013 figures)
    roughly 4/5 are with nations ranked 40 or worse (Egypt was 40 if that helps illustrate)
    only 7 were in the top 20: Turkey, Indonesia, India, South Korea, Russia, China, Mexico

    This is a universe away from the USA with it’s large numbers of predatory corporations looking to feast on our public services like vampires. A more plausible indication, or rather a taster, for what would happen to the UK is to look at the arbitration cases taken against Canada as a result of the NAFTA agreement; both because the USA is part of that one and because of the similarities in how advanced the legal systems of UK and Canada are.

    A report by the LSE for the Department of Business, Investment and Skills, available from the following link:

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/260380/bis-13-1284-costs-and-benefits-of-an-eu-usa-investment-protection-treaty.pdf

    gives some info on the arbitration cases launched against Canada. (readers might be interested in the conclusion of the report which didn’t exactly paint a rosy picture of the consequences for the UK of the sort of agreement that TTIP would fall under) I have summarized the stats here. Please note that these are from April 2013, I do not have more up to date figures to hand – my apologies:

    33 arbitration cases are noted in the report:

    > 7 filed in 2010-12 were still pending, combined minimum damages sought of over 3 billion CDN.
    > 1 filled in 2008, was still pending, minimum damages sought of 188,000,000 USD
    > 2 concluded with investors awarded combined 6,408,000 USD
    > 2 were settled with combined payments of 150,000,000 CDN
    > 1 resulted in award for investor, but amount not known at time of report.

    • 9 cases were classified as inactive
    • 5 were withdrawn
    • 1 settled with no compensation paid
    • 4 were rejected on merits or otherwise dismissed
    • 1 rejected due to lack of jurisdiction

    It is also worth noting the nature of some of the disputes:

    • Imposition of performance requirements
    • Environmental assessment and ban on certain pesticides
    • Invalidation of pharmaceutical patent
    • Regulation in the energy sector

    Quite a few of these concern me greatly if TTIP is supposed to be at least as wide ranging as NAFTA, particularly since NAFTA will have given corporations in the USA experience of taking on and defeating a legally advanced country.

    Moreover many seem to believe that the UK simply doesn’t get taken to arbitration. I am afraid contrary to popular belief, the UK has been taken to arbitration, Raytheon was awarded over 200 million over the e-borders thing. The government is ‘appealing’ the decision but I won’t hold my breath.

    A sign of things to come if TTIP goes ahead I would suspect.

    I am afraid that despite being a Lib Dem voter for 2 general elections and various local ones, you guys have lost my vote forever because of this issue.

    Best Wishes

  • RE: Andrew Colman 21st Nov ’14 – 12:25pm

    Should remember no parliament can restrict a future parliament

    My hope would be if the worse came to the worse and some American corporations tried to prevent the renationalisation of NHS though the TTIP courts, the British Government would just ignore TTIP and “kick ass” to the Americans

    ***************************
    I am afraid this misses the point of what a bilateral investment treaty is. It makes our own law subordinate to an international law when it comes to certain investments. This can include enforcement measures for non-compliance.

    If we refuse an arbitration verdict then the banks that handle Britain’s international debts might be sued (i.e. potentially have their assets seized…) for handling our debts because we are in violation of international law for not paying the arbitration fine. If that happens, we risk defaulting on the debts handled by that international bank as they might refuse to process our debts in order to avoid the legal action. These defaults would be enormous (billions and billions and billions…). If I have misunderstood something here please correct me.

    It is only British public policy that exists before the treaty is signed that matters to my knowledge. After that, if a future parliament tries to bring in and enforce new laws then we can get taken to arbitration via ISDS if a corporation thinks they have a case even if the odds are not great (only a prima facie case is necessary for arbitration according to the WTO Dispute Settlement Understanding to my knowledge).

    This does not mean a corporation is guaranteed to win, but the LSE report I mentioned in my previous post, warns of the possibility of ISDS action being used as a kind of threat/for long-shots due to the possibility of large settlements.

    Part of the reason that such a strategy could be successful is that arbitration decisions over the years have been inconsistent. You see international law can be vague and arbitrators can sometimes use their judgement, and given the secrecy of many proceedings their reasoning cannot be reviewed by just any old legal expert. So inconsistency with previous decisions needn’t be grounds for appeal. Great eh? So governments defending against ISDS would always be at a potential disadvantage here – who could they consult for advice if the nature of ‘precedents’ is secret?

    The academic Susan Frank is a good source of info on that matter.

    To the best of my knowledge the only grounds for appeal against an arbitration decision/refusal of verdict are those suggested by article 5 of the New York Convention. If anyone knows of others please let me know.

    If readers look at article 5 of the New York Convention, they will see that public policy of a country can be grounds provided that the “competent authority” in the country in which damages are sought thinks so (I am guessing that means arbitrators themselves – if I am wrong about that please correct me).

    On what grounds could they think so? Unless I have misunderstood how treaties work it would have to be the grounds under which the UK signed up to TTIP (since, presumably, the whole point of the arbitration provoked by a new law being brought in was that it contradicted the policy at the time of signing), so that would be what our public policy was at the time, not after.

    I suppose if we got taken to arbitration, lost, paid the fine and then changed the law anyway that would then be our public policy???? I am afraid I am not qualified to answer the question of whether we could get taken to arbitration over the same issue again later in spite of that or not. Does anyone else know?

    Moreover it is not automatically the case that the loser of an arbitration decision pays all of the (substantial) legal costs; this can be up to the arbitrators – who are often corporate lawyers (not that they wouldn’t be completely impartial of course.)

    The ‘potential default’ kind of threat would probably only be issued if we refused a very large payout. For smaller ones I think British assets abroad can simply be seized etc. Does anyone else have further info on that?

    Best Wishes

  • Is TTIP going to allow corporations to override national sovereignty?
    Of course it is: there is already strong evidence that it will and its supporters pretend there is.
    Ross (21 November) reminds us that the Australian government is being sued by an American cigarette company under the provisions of a similar agreement for legislation calculated to reduce demand for such poisonous products.
    Have any of the supporters of TTIP contested such statements in detail, or even attempted to dispute their relevance to TTIP?
    No they haven’t: they instead make vague reference to “. . .the corporate bogeymen of anti-TTIP activism, . .”( Tracey Brown , Rules for Harmony, New Scientist, 1 November) and present no evidence whatsoever that TTIP doesn’t carry similar risks
    John Dixon posted on 20 november “At the moment you are largely free to assume the worse even if there is no evidence for it . .”, again, the evidence is there that the worst will happen and he has done nothing to evaluate its relevance.
    OK, a little less posturing and a little more examination of the evidence is in order, and recognising that the evidence in existence shows that TTIP is going to be as disastrous as many people fear.

  • Ross – Thanks for making that point in reply to Andrew Colman which saved me the trouble.

    As Andrew correctly says no Parliament can restrict a future Parliament. Can someone please point this out to the Party’s leaders and policy wonks who appear not to know this most basic of constitutional principles; they have been arguing that levels of overseas aid should be cast in legislative stone and that we should be signed up to ‘legally binding’ carbon targets for decades hence. The ambition may be fine but trying to make it come about by legislation is something that hasn’t been much tried since Canute was king.

    BTW, I forgot to point out earlier that TTIP and its Pacific twin, TPP, specifically EXCLUDE China. That alone should be enough to tell anyone that they are not really about Free Trade but about a political power play that we should have no part of.

    It is surely clear now (to even those with no other knowledge of this topic than what they have learnt on this thread) that TTIP raises MASSIVE constitutional issues involving changing sovereignty to put a favoured group beyond the reach of the law – something that we have not seen in Britain since Charles I lost his head over the issue. So, a party that sort-of specialises in constitutional reform might be expected to be all over this issue and presenting the pros and cons to the membership and wider public and encouraging a proper debate. Yet the first contribution here on LDV AFAIK is this extraordinarily limp puff piece from Sarah Ludford (at the time an MEP) . It’s just four short paragraphs only the first two of which are really about TTIP and which entirely fails to notice the constitutional implications..

    https://www.libdemvoice.org/baroness-sarah-ludford-mep-writesan-euus-trade-deal-would-be-good-for-europe-and-for-britain-34623.html

    What usually seems to happen is that when a plan runs into flak here on LDV the sponsor – and indeed the entire Party official policy community – just goes dark on the issue. If they can’t argue for their thinking here what chance is there in the bear pit of national politics?

  • Nigel Cheeseman 22nd Nov '14 - 5:44pm

    The idea that no parliament can restrict a future parliament is, if not a completely dead duck these days, largely irrelevant. Without becoming a pariah state, no government can seriously expect to unilaterally abandon international treaties. Even if there were an ‘out’ vote in an EU referendum it would surely take a lot of doing to unravel all the agreements that have been made over 40 years.
    In the case of TTIP, we will effectively be bound by it permanently. There will no doubt be plenty of unforeseen consequences.

  • Given the far reaching ramifications of TIFF on sovereignty, it is logical given the position of the major parties, including the Libdems, that these parties (in both the EP and Westminster) should demand that it is put to a public vote across Europe and that it needs every country to vote for TIFF before it can become binding…

  • RE: Nigel Cheeseman

    The idea that no parliament can restrict a future parliament is, if not a completely dead duck these days, largely irrelevant. Without becoming a pariah state, no government can seriously expect to unilaterally abandon international treaties. Even if there were an ‘out’ vote in an EU referendum it would surely take a lot of doing to unravel all the agreements that have been made over 40 years.
    In the case of TTIP, we will effectively be bound by it permanently. There will no doubt be plenty of unforeseen consequences.

    ********************************************************
    You are right about TTIP being bad, but I must take issue with some of the rest (although it is possible I have misunderstood you, in which case please correct me).

    We do not need to abandon international treaties per se, but that isn’t really relevant to this; we do not have a bilateral investment treaty with the USA (this being the whole point of TTIP) and yet the mutual investment between UK and USA is already massive (this is one of the reasons why we can know in advance that the alleged benefits of TTIP are either false or exaggerations by and large).

    We also don’t have a bilateral investment treaty with the more advanced EU nations (France, Germany, Italy, Spain….nope, nope, nope, nope). Trade happens if you have goods and services to sell, or money to buy such things, or if you think an investment risk is worth taking.

    Bilateral investment treaties have become a means by which corporations in rich countries can exploit poor ones via threat of arbitration (I am certainly not trying to suggest that this was the original purpose of such treaties, it was not, they were originally a guarantee for investors against the risk of civil war /revolution destroying expensive assets, so they are sometimes appropriate, at least for a short while, when dealing with politically unstable former communist countries for example…..how that applies to UK and USA is anyone’s guess).

    Brazil knows that these BITs are a bad idea in general, which is why it doesn’t have any active BITs with anyone. It is not unsuccessful: ranked 7th in 2013 by nominal GDP.

    Now it is our turn to have ISDS turned against us by another rich country….just like Canada has experienced. By all accounts NAFTA was bad for the nations involved, not good. So rejecting that treaty would have been correct.

    Oh subsequently, we could terminate all but one of our current BITs without penalty quite easily, because the compulsory period has passed for 93 of them if I remember correctly. All we need do is give 12 months notice and in 12 months the treaty is automatically terminated amicably. However we would be required to guarantee pre-existing investments certain rights for several more years.

    The only exception is Mexico – we have to wait until 2017/2018 for that one to be terminable I think.

    Other nations have done this, particularly in poorer regions because they rightly felt hard done by. Put it this way, if we were to go to Argentina and say; look guys, to improve relations lets terminate that 1993 BIT that has ISDS in it (Argentina has been hammered by ISDS several times) and replace it with a fair trade agreement instead, I doubt Argentina would not say no. The same goes for many other countries.

    In fact Argentina has gotten so hacked off with foreign corporations that I think it has seized assets from some of them on behalf of Ecuador (who have suffered arbitration in the past as well) . This hasn’t stopped them reaching the G20 this year.

    For those interested in the Argentina and Ecuador matter, here is a link:

    http://www.golemxiv.co.uk/2012/11/argentina-and-america-of-vulture-funds-and-justice-part-three/

    For readers that would like to read some of our BITs and take a look at what other countries have, here is a link to the UN Investment policy hub page for the UK (you can find the others easily enough with a bit of searching):

    http://investmentpolicyhub.unctad.org/IIA/CountryBits/221#iiaInnerMenu

    Best Wishes

  • Sorry that should have said “I doubt Argentina would say no”. Fudge.

  • Stephen Hesketh 23rd Nov '14 - 8:08am

    I have just read this entire thread and must say I am now much better informed on this topic than before.

    I must also say however that as a preamble Liberal my instinct remains wholly against potentially empowering global corporations to act against national governments.

    As John Tilley says, let us first globalise “human rights, democracy, freedom, peace, health” … the rights to education, food and clean water, personal and religious freedoms, closing the gap between the rich and the poorest etc.

    It may be time to update the preamble to mention and formalise our opposition to the abuse of power by either State or global corporation.

  • If you feel better informed it is perhaps informed with some rather dubious information.
    A few things quickly as there’s a lot up above.
    1. you can’t include China for obvious reasons: no rule of law, total state power in business, corruption, etc. Regulatory harmonization does not work in such circumstances, the same can frankly be said for some more nationalistic countries. Argentina included.
    2. NAFTA has not failed by any means of the imagination bringing significant benefits to both Mexico and Canada, Mexico especially has used it to great advantage and large parts of it have become first world. We forget what a failed state Mexico used to be.
    http://www.iie.com/publications/interstitial.cfm?ResearchID=2703
    3. Like I said, I absolutely believe that on these sort of trade negotiations they have to be conducted transparently in public. Consumer protection is important to the public.
    4. I also have a problem with ISDS as outlined above, it needs quite clear reform for it to be palatable. However 3rd party dispute settlement is not a bad thing, it guarantees businesses against protectionist legislation and maintains the integrity of the treaty. What is required is a more balanced approach.
    5. The benefits of regulatory harmonization are very real as outlined here.
    http://www.voxeu.org/article/ttip-about-regulatory-coherence

  • This is good debate though and perhaps unlike a lot of other areas it isn’t just one side talking to themselves.

  • Oh my godfathers: apologies to all!
    In my post of 21 November I wrote:
    “Is TTIP going to allow corporations to override national sovereignty?
    Of course it is: there is already strong evidence that it will and its supporters pretend there is.”
    I completely scrambled the sense in this introductory statement and should have written “. . . . and its supporters pretend that there isn’t”
    So now that I’ve clearedthat one, where’s the evidence from John Dixon that there’s no risk of similar happenings with TTIP? Of course he’s right in the sense that its formulation should be conducted more openly, but on form so far I suggest he needs to change his position from “[secrecy makes everyone exagerate the worst]” to “[Evidence shows that the worst has already happened under similar agreements elsewhere and there’s no shred of evidence that it won’t happen with TTIP so the secrecy is there to hide the risk]”
    Or did I so confuse everyone with my initial misfire that no-one bothered reading the rest?

  • RE: John Dixon

    2. NAFTA has not failed by any means of the imagination bringing significant benefits to both Mexico and Canada, Mexico especially has used it to great advantage and large parts of it have become first world. We forget what a failed state Mexico used to be.
    *****************************************
    My thanks to Mr. Dixon for his response but I am afraid I must be brutally honest (no offense is intended though).

    Mexico is utterly irrelevant here. The benefits to Mexico came at the expense of the citizens (not to be confused with the corporations) of the USA, as Mexico has cheaper labour etc. So the relevant comparison of TTIP to NAFTA is to consider where the lower worker rights standards and wages are for many jobs: UK or USA….exactly, we would suffer, not benefit.

    As for Canada, I suspect the citizens of Canada would be inclined to disagree with you. But in any event the relevance of Canada in NAFTA to this discussion is the threat of arbitration to the UK and it’s knock on effects regarding public policy. The LSE report outlined this quite clearly, and I also summarised some of it…again quite clearly I think.

    I am afraid Mr. Dixon’s post offers no real assurance at all.

    Subsequently, I am curious as to what would count as the failure of an entire multinational treaty? There are almost always winners and losers in economics and political changes, so you can always point to some success somewhere if you really want to. The whole point about this discussion is: would the UK be a winner or a loser. All evidence clearly tells us that on the whole the citizens of the UK would be clear losers. Assurances to the contrary have been systematically debunked.
    *********************************************
    RE: John Dixon
    Regulatory harmonization does not work in such circumstances, the same can frankly be said for some more nationalistic countries. Argentina included.
    ************************************
    I don’t recall anyone mentioning harmonization regarding Argentina, so I don’t understand the relevance here. In any event we do over a billion pounds worth of bilateral trade with Argentina, so some things must already work for us here. Whether they work as well as a different kind of treaty would for Argentina when it’s citizens keep getting hit with arbitration for taking actions that UK citizens would want their government to take under the similar circumstances is a different matter.
    ************************************************
    RE: John Dixon

    4. I also have a problem with ISDS as outlined above, it needs quite clear reform for it to be palatable. However 3rd party dispute settlement is not a bad thing, it guarantees businesses against protectionist legislation and maintains the integrity of the treaty. What is required is a more balanced approach.

    *********************************************
    If something is not bad then if must either be good or neutral. Preventing governments from bringing in (and actually enforcing rather than huffing and puffing) certain types of new laws for the public interest unless they are willing to pay out potentially billions to multinational corporations in fines is neither neutral nor good unless you are the corporation or the arbitrators getting paid legal costs.

    The corporations lobbying so hard for TTIP are not interested in having their personal kangeroo courts water down Sir. If this is not obvious, I am not sure what evidence could convince you.

    Whether you believe it requires ‘reform’ is irrelevant Sir, it is not going to be reformed in any way that serves UK citizens significantly. The EU commission is not elected by us and the multinational corporations are not accountable to us, nor is the US government; so who exactly amongst the negotiators is going to be super-interested in reforming ISDS so that it is as acceptable to UK citizens and our little people sensibilities?

    There is nothing to prevent US corporations going through national courts for disputes (as I have already said we don’t currently have a bilateral investment treaty with the USA, that is the whole point of TTIP), in fact the LSE report pointed out that the UK is regarded as a very safe place to invest already pretty much everywhere but especially the USA.

    The motive for ISDS in TTIP and CETA is quite straightforward (and this is before we consider TiSA also):

    – prevention of future meaningful regulation of the banking sector
    – prevention of meaningful reform of the pharmaceutical industry
    – prevention of future proper nationalisation of health care…i.e. NHS etc.

    You know…..little thing’s like democratic rights.

    As I said a while back I was a Lib dem voter for over 10 years. You guys have lost my vote over this. The kinds of defense I have seen here of TTIP tells me I have no cause for regretting my decision to go elsewhere.

    If I could convince anyone here of one thing it would be to look at how ISDS has been used against countries such as Peru and Ecuador (and to actually pay attention to what happened to Canada rather than just ignoring it).

    Best Wishes

  • John Dixon – “1. you can’t include China for obvious reasons: no rule of law, total state power in business, corruption, etc.”

    But that is exactly the sort of circumstance that ISDS is supposed to address. The idea is that countries where the rule of law is iffy – stereotypical banana republics for example but others if the cap fits – will be forced to respect rules and regulations deemed appropriate in metropolitan countries whose companies are investing – or else.

    Actually, even this is nonsense. Suppose a dictator agrees a foreign investment then something goes wrong with the original plan; perhaps the dictator is deposed and a democratic government established, perhaps he changes his mind. Whatever … are the people of that country then to be punished?

    “2. NAFTA has not failed by any means of the imagination bringing significant benefits to both Mexico and Canada, Mexico especially has used it to great advantage and large parts of it have become first world. “

    Can I respectfully suggest you brush up on the state of affairs in Mexico. The country is in turmoil. In large parts of the country – by some estimates a clear majority – the police and local government officials now take their orders directly from the drug cartels. Hence the great numbers moving to the US despite the weak economy north of the border.

  • I have just re-read my latest post, and realize that it comes across as aggressive, please assume that this is not intended.

    Also tiny correction: when I say that Mexico was utterly irrelevant I should have clarified that I was referring to the localized benefits in certain areas, not the country as a whole.

    Regards.

  • A lot of supposition and fear on this thread, facts are scant though. Referencing previous agreements is meaningless and we shall have to wait and see what the substance of the proposal really is. It could be a really good thing if it’s well thought out and I don’t feel swayed by either side of this debate.

  • RE: ChrisB 24th Nov ’14 – 12:58pm

    A lot of supposition and fear on this thread, facts are scant though. Referencing previous agreements is meaningless and we shall have to wait and see what the substance of the proposal really is. It could be a really good thing if it’s well thought out and I don’t feel swayed by either side of this debate.
    ***************************************
    Hi Chris. Since it is difficult to communicate tone of voice in this medium I will state in advance that I am not seeking to come across as aggressive.

    I am at a loss why you think the previous agreements have no bearing here. The fact that TTIP is a bilateral investment treaty automatically entails that it will have certain features with very high probability. This is compounded by what can be known a priori about the potential benefits for both sides given the current levels of mutual investment and liberalization in major sectors on both sides under the contrary assumptions of ISDS inclusion or exclusion. What is meaningless about this?

    What do you think the LSE based their report on? Why are people not reading an analysis by a world leading institution famous for it’s high quality consultancy work, that was asked by the government to do this?

    What has happened to other countries under ISDS is a matter of public record (when not censored for corporate privacy reasons) and reflects the (rather cruddy) status of international law regarding these matters. In particular human rights considerations don’t have to be given serious consideration by an arbitration tribunal. That’s not my opinion, that has been indicated by arbitrators themselves. See for example the following YouTube video of an interview with a UK arbitrator… by the LSE:

    https://www.youtube.com/watch?v=bJaoADpICjs

    Out of curiosity Sir, what potential benefits do you think it might bring to the citizens of the UK itself? Hypothetically I mean. And what price are you personally willing to pay for these (or to allow others to pay for you to have these)?

    Best Wishes

  • >it will have certain features with very high probability.
    >This is compounded by what can be known a priori

    I think you said it all with that, you’re pulling stuff out of thin air. Your best evidence is a document that’s 19 months old that speculates what might happen if we signed a trade agreement that’s similar to Canadas, not the agreement in question, which we haven’t seen and has been produced in full knowledge of these prior assessments.

    >what potential benefits do you think it might bring to the citizens of the UK itself?

    I import/export a lot of goods to and from America. It’s costly and time consuming having Customs open packages for tax purposes, then slap arbitrary fees on top. A decent trade agreement could make my everyday life an awful lot simpler, a bad one, of course could make things a lot worse. Obviously, I don’t want American companies to be able to sue me. When there’s an agreement in front of me to read and decide upon I’ll choose whether to support it or not, until then I find this debate odd because it’s divorced of substantive evidence. You seem to think the LSE report has been ignored and unread, whereas I feel confident that the people negotiating this treaty have read it, understand its points and what you’re trying to say. I consider the likelihood of TTIP being produced with Investor Protection provisions/ISDS low, because the UK won’t agree to it. If you’re right we’ll be the first in line to fight it, but you’ve based everything off suppositions and that makes your points fantastical constructs until you can substantiate them.

    None of this negates the opportunity for trade liberalisation.

  • No worries Ross, its a good debate to have! I would argue perhaps that the debate we have in our own party on this issue is a superior position to that of the Greens who just flatly oppose nearly all trade agreements or that of the Labour and conservative parties who have been particularly silent on these matters. What I was trying to point to is a way forward for both the EU and US on this matter whilst outlining some good simple principles for regulatory harmonization. We’ll continue to disagree on NAFTA I’m afraid although I have a lot of sympathy with you on the current state of ISDS. There’ll be more to say if TTIP get’s to the point of being fully outlined and we don’t have to speculate, although I am perhaps a little cynical that it will ever get to that point via the current process.

  • Sorry for the delay in responding guys, will do later.

    Regards

  • RESPONSE TO CHRISB: PART 1 OF 2

    Rough Overview of LSE Report and an update on CETA

    This is a crude overview of what the LSE report involved for the benefit of those who might be interested in reading it.

    I have also remarked on an update regarding CETA which confirms that it will allow American companies to use Canadian subsidiaries to use ISDS against the UK. This information is based on the release of the final form of the agreement. So the question of ISDS exclusion from TTIP is now less relevant to assessing its costs .

    Regardless please note that it would NOT be an acceptable summary of the LSE report to say :’ look what happened to Canada under NAFTA’.

    Page 1 – 3 – general introduction (purpose of report, some assumptions used etc.)

    Page 3 – 6 – overview of relevant US and UK investment

    Page 7 – Plausibility of 2012US BIT model being starting point for negotiations
    Likely similarity of CETA to NAFTA (better confirmed since this report was written)

    Page 8 – Differences between US model and EU models

    Page 9 – Possible overlaps and diversions from UK BIT model

    Page 10 – Assumption of Inclusion of ISDS and a note on pre-liberalization conditions.

    Page 11/12 – Brief discussion of Most Favored Nation Clauses and relationship to ISDS

    Page 13 – Brief discussion of corporate structuring issues i.e [the issue of subsidiaries being used]

    • Here it is worth noting that the possible effect of CETA on this issue within TTIP is not considered by the LSE report. Since the report was written, the details of CETA are now known. In particular it is now known (I have discovered today) that CETA will allow American companies to use Canadian subsidiaries to initiate ISDS against the UK. Therefore the possibility of exclusion of ISDS from TTIP itself is now a moot point.

    https://stop-ttip.org/blog/democratic-accountability-outlawed-ceta-investor-protection-rules/

    http://corporateeurope.org/sites/default/files/trading-away-democracy.pdf
    (see page 9-10)

    Page 14-18 – Regarding impact of US investment to UK in an EU-US Investment Protection Treaty

    • At this point it should be noted that for important parts of the assessment it is not always necessary to assume that NAFTA is being mirrored, sometimes all that matters is that a typical BIT model is being used. But CETA resembles NAFTA in important ways and the EU negotiators have already agreed to CETA. Therefore the plausibility of similar EU position of acceptance of such conditions within TTIP is hardly implausible. (‘pulled out of thin air’ indeed!! Hmph : -) )

    • It should also be noted that the LSE reports includes part of the USA Government’s own assessment of how safe a place the UK is for foreign investors ALREADY. This is very Important to their assessment. This info is hardly out of date. This has NOTHING to do with NAFTA.

    • It should also be noted that the LSE report does consider the effect that past protection chapters have had on US investment in developed countries – virtually nill

    Pages 19 -21 – Regarding additional protection of UK investors in US.
    [assuming ISDS, not non-existent but not really significant, and not of interest to UK citizens outside of corporations]

    Page 21 – 31 – Potential economic costs and political risks of arbitration.

    • Canada is used as an example in the report as it illustrates the behavior of US investors towards a legally advanced country similar to the UK when ISDS is available and in sectors that would be relevant to the UK, but this discussion goes considerably beyond simply saying ‘look at what happened to Canada’ – again it helps to actually read these things. In particular the report briefly discusses some differences between UK domestic law and the law that informs arbitration decisions.

    • It is also worth noting the possibility that the UK could be taken to ISDS for following requirements of EU law and would be liable for the costs itself.

    Pages 31-33 – Risk of Investment Diversion
    [unlikely to be significant]

    Pages 33-36 – Considers risk of UK and USA governments being drawn into disputes involving investors.
    [unlikely to be serious problem due to ‘special relationship’, but more research required]

    Pages 37 – 38 – considers possibility of EU-US treaty strengthening bargaining position of EU with China
    [Further research needed but based on available info Analysts did not find this particularly plausible]

    Page 38 – 42 – Considers likely political costs to the UK (under assumption of ISDS inclusion) concerning decision making
    [significant risk of negative influence on policy decisions was identified given the scale of US investment in UK and past behavior of US investors when ISDS is available]

    Page 42 – 43 – considers likely political costs to UK government regarding public perception (under assumption of ISDS)
    [On balance risk identified due to past behavior of US investors (when ISDS is available) in areas regarded as politically sensitive in the UK – environmental regulation for example].

    As a former Lib Dem voter myself I would add that this should be of serious concern to Liberal Democrats in Particular as the secretive nature of these agreements and their association with the EU Commission will become public quite starkly in these cases and this clearly entails risks for parties that are or have been strongly in favor of the UK remaining in the EU and being bound by its laws and agreements – particularly if they campaigned in favor of TTIP in parliament.

    Page 43 – 44 – considers implementation costs
    [on balance, not significant]

    Page 45 – 49 – conclusion and bibliography

    Please read this for yourselves. The fact that CETA is now known to allow subsidiaries to be used for ISDS actions, refutes the concerns that ChrisB has raised on the relevance of the LSE report (I am certainly not criticizing Chris for not knowing that, I only got verification myself today).

    End of Part 1.

    I will take a short break from responding to Chris and will next challenge the opinion of those who think TTIP is going to be genuinely helpful to UK citizens via the UK economy.

    Best wishes

  • Tony Newton 26th Nov '14 - 7:34pm

    OK Chris B has identified “a lot of fear and suspicion in this thread” – surprise. There has still been a lack of real evidence that TTIP won’t drag the UK into a position similar to Australia’s over restrictions on cigaratte promotion. Whilst Ross has identified, page-by-page, highly informed commentary showing that these risks exist, there has been nothing even approaching similar levels of detail suggesting that these fears are illusory.
    Labelling proper scepticism as fear distracts attention from the core of the debate when there is evidence that this fear is justified and only unspecific assurances that it isn’t, based on a proclaimed ignorance of its contents.
    Again, response please from someone in favour of ITTP who has evidence enough to dispute Ross with any credibility: so far I’ve seen only a climate of fear about missing the boat.

  • Nick Collins 26th Nov '14 - 8:06pm

    I’ve just listened to the clip of David Babbs attempting to give evidence on this to MPS. I’m sorry that I do not have the technical know-how to provide a link, but others who have heard it will no doubt be heartened and reassured to note the “open-minded” attitude of the MPs who “questioned” him and their “courtesy” in “listening so attentively” to his answers.

    Sorry, I cannot put an ironic tone of voice in cold print, so the inverted commas above will have to convey the sense that the words therein should not be taken to mean exactly what they seem to say.

    MPs work hard every day to earn and justify the very low opinion that the public now has of them: and of the “Parliamentary Process”

  • RESPONSE TO CHRIS B – PART 2 OF 2

    Okay guys, the size and frequency of my posts is a bit large, so I will skip giving a post devoted to economic criticism and will conclude my response to ChrisB. I have also shortened this post somewhat and this will probably be my last post longer than a few lines unless there is a lot more response from defenders of TTIP (and CETA?) here.

    RE:
    I consider the likelihood of TTIP being produced with Investor Protection provisions/ISDS low, because the UK won’t agree to it. If you’re right we’ll be the first in line to fight it, but you’ve based everything off suppositions and that makes your points fantastical constructs until you can substantiate them.
    ***************************************
    Parts of the negotiating positions have been seen, because documents were leaked (more than once), for both TTIP and CETA.

    You may be interested to know about some action undertaken by an alliance of around 290 European groups against the EU Commission regarding an ECI concerning these agreements. You are welcome to look at the legal reasoning involved on the site below. This was not done on a whim Sir:

    https://stop-ttip.org/lawsuit-ecj/

    OK, regarding the stance of the UK government so far on ISDS. Putting CETA aside, it was suggested that ISDS be removed from TTIP by the president of the EU commission some time ago. The response of the British government to this suggestion was for a minister to write to the EU Commission to urge for it to be kept in. This was reported in numerous places including the Financial Times and the openDemocracy website.

    https://www.opendemocracy.net/ournhs/jurgen-maier/trade-ministers-beg-brussels-to-remove-more-national-sovereignty

    So the notion that the British Parliament is currently inclined to rage against the machine on this one doesn’t sound likely to me.

    Will it do so in future? Tricky. Even if national parliaments do get a vote on it (it has been argued that CETA is for the EU politicians to vote on alone rather than national parliaments, but this is disputed), the extent to which TTIP is being talked up as an economic boost whilst we also get given predictions of bad economic times ahead, makes me sceptcial of it being rejected by Westminster even with ISDS in CETA.

    The safest approach is to lobby the EU Parliament to reject it before it gets to that stage I think.

    I cannot agree with optimistic economic impact assessments of TTIP, (briefly) on the grounds that the UK current account deficit is large due to imports being much higher than exports in our case, combined with energy being one of our largest import sectors (and food). Regardless of anything else TTIP seems to be strongly promoting access to further imports, especially American shale gas, whereas decreasing energy imports significantly requires a much stronger commitment to renewables. So I fail to see why TTIP would be expected to help significantly.

    END

    My thanks to everyone for the discussion. My thanks to John Dixon for starting this (alas we will indeed continue to disagree about NAFTA) and for Lib Dem Voice for letting me post here. It’s nice to know one of the three main parties still cares about free speech.

    Best Wishes

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