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Trans-Atlantic trade

Michael Knigge
July 8, 2013

Negotiations for a US-EU trade pact are underway, overshadowed by the NSA spying scandal. However, civil society groups are more concerned about a deal they say would undermine public protections.

(Photo by Donald Miralle/Getty Images)
Image: Getty Images

1. Regulatory compatibility

The economic backbone of the so-called Trans-Atlantic Trade and Investment Partnership (TTIP) deal is to tackle the different rules and regulations in the EU and the US. Creating a common set of rules and regulations would make it much easier and cheaper for American and European companies to operate across the pond.

So far the EU, with the exception of air quality and fisheries, is generally seen to have stronger environmental, privacy, consumer and labor protections, while the US's new financial regulations are regarded as tougher than those of the EU.

But according to the latest leaked EU mandate for the negotiations dated May 21, the aim of the TTIP is to reach "an ambitious level of regulatory compatibility for goods and services, including through mutual recognition, harmonization and through enhanced cooperation between regulators."

For civil society advocates on both sides of the Atlantic that sounds like a threat.

"They talk about something called regulatory convergence and that is synonym for saying we want to take away stronger public protections and go with the worst or least and prevent the countries or trading partners, the US or EU or any individual countries or US states from enacting stronger laws in the future," says Ed Mierzwinski, the US Chair of Trans Atlantic Consumers Dialogue (TACD), a forum of the largest European and American consumer groups, and consumer program director of the US Public Interest Research Group (USPIRG), a Washington-based watchdog organization.

Hamburg/ ARCHIV: Container stehen an einem Verladeterminal der Hamburger Hafen und Logistik AG (HHLA) im Hafen von Hamburg (Foto vom 14.01.08). Der deutsche Handelsueberschuss ist im November 2011 dank steigender Ausfuhren gestiegen. Bereinigt um saisonale und kalenderbedingte Einfluesse betrug der Saldo mehr als 15 Milliarden Euro, wie das Statistische Bundesamt am Montag (09.01.12) mitteilte. (zu dapd-Text) Foto: Fabian Bimmer/AP/dapd
The TTIP would create the world's biggest marketImage: dapd

Bernadette Ségol, general secretary of European Trade Union Confederation (ETUC), representing some 60 million members in 36 countries, is concerned that regulatory compatibility is just a euphemism to "hide a deregulation agenda: deregulation of labor, environment and consumer standards."

Civil society advocates fear that the negotiations will amount to a race to the bottom, i.e. that new rules or regulations will converge on the lowest common denominator not on the highest standard or best practice from in either the EU or the US.

"There is of course a theoretical opportunity for a sort of upwards harmonization of standards as part of these talks," notes Pieter Depous, policy director of the European Environmental Bureau (EEB), a federation of more than 140 European green groups. “That would be a very good thing. But our concern is that it would be the opposite, it would be going downwards."

2. Investor-state dispute settlement

This the legal backbone of the planned TTIP. Its goal is to protect investments against undue regulations. The investor-state dispute settlement essentially enables companies to sue governments outside the established court systems. Instead of filing claims before regular courts in the US or EU, disputes are brought before and decided by an extralegal arbitration panel. These decisions are usually binding and cannot be challenged in court.

"Both parties are advanced economies and democracies and they have a developed domestic legal system which is perfectly capable of securing investor protection," says Ségol. She adds that the ETUC believes that these arbitrations are increasingly used to challenge the political room to maneuver of governments. "It undermines democracy and leads to diminished environmental and worker protection. For us there is no justification to give multinational companies privileged access to supranational investment arbitration."

epa03083397 US Trade Representative Ron Kirk (L) and EU Trade Commissioner Karel De Gucht (R)attend a panel session at the 42nd Annual Meeting of the World Economic Forum, WEF, in Davos, Switzerland, 28 January 2012. The overarching theme of the meeting, which will take place from 25 to 29 January, is 'The Great Transformation: Shaping New Models'. EPA/LAURENT GILLIERON +++(c) dpa - Bildfunk+++
The US and EU trade chiefs prepared the TTIP launchImage: picture-alliance/dpa

For Mierzwinski it simply isn't right to set up a legal loophole that would allow some of the biggest companies in the world to bypass the court system and take their cases through a secretive set of tribunals. "It is simply an attempt for companies to challenge things that they don't like without going through the courts and without doing it in public. And it's outrageous that it would even be considered."

As a practical example Depous explains that companies could simply go to the arbitration process to stifle new laws that would tighten environmental regulations and hurt their business. "So after off-shore finance we are now introducing off-shore tribunals. That doesn't sound like a very good idea."

3. Precautionary principle

The precautionary principle is a pinnacle of EU policy making, particularly as it relates to environmental and consumer protection, and a key target for the US agribusiness and food industry. The precautionary principle stipulates that health and environmental risks should be mitigated or eliminated by preventative decision-making.

Probably the most well-known example of its application is the EU ban of genetically modified organisms (GMOs). The principle allows preventive action if a product or process is considered to be potentially dangerous even if this has not yet been fully scientifically proven.

In response to the EU Parliament's recent resolution on the TTIP demanding that the precautionary principle should not be undermined, 47 US agriculture and food lobby groups wrote a letter to the US Trade Representative labeling the precautionary principle a form of unacceptable protectionism.

The precautionary principle has proven that it is very useful and does not block innovation, says Depous and points to a recent study by the European Environmental Agency. “It can prevent a lot of harm from happening and it doesn't stop any useful innovations from going ahead. The Americans have a very different approach to that. On that fundamental level we would have some very serious disagreements."

European consumers should be very concerned about the motives of the US corporations who are driving this trade pact, says Mierzwinski. "The US corporations want to sell genetically modified food in Europe and they don't want to label it. The US corporations want to get rid of the strong European chemical safety law, known as REACH, that is based on the precautionary principle."

Mierzwinski argues that there is a myth being "perpetrated by the US Chamber of Commerce and its PR firms that US consumers don't want the same strong protections that Europe has. But we are with the Europeans on your strong laws. And US consumers want the same strong privacy laws, the same strong GMO laws, the same strong chemical safety laws that Europe has. But we are concerned that you may lose your protections as part of a deal."

WASHINGTON, DC - MAY 02: U.S. President Barack Obama announces that he will nominate Chicago business executive Penny Pritzker (R) for Commerce Secretary and economic adviser Mike Froman for trade representative in the Rose Garden at the White House May 2, 2013 in Washington, DC. If approved by the Senate, the two appointments will round out the administration's economic team for Obama's second term. (Photo by Chip Somodevilla/Getty Images)
Mike Froman (left) is slated to become new US trade chiefImage: GettyImages

4. Secrecy

Most of the details of the planned trade deal have not been made public by the EU or the US, but stem from leaked documents posted on the Internet.

"We get the documents only from the side and we don't have clear documents on which we are being consulted," says ETUC general secretary Ségol. "We think there is a lack of democratic transparency in these negotiations. We really believe that we need to be consulted and involved."

"If the governments want to have the support of citizens and the public and from workers the negotiations have to be made public and we have to know what's happening. This secretive approach is not acceptable these days and certainly not in the age of the Internet."