The new “trade” pacts aim to curtail national sovereignty.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
After eight rounds of secret negotiations, Washington and Brussels are still struggling to breathe life into the Transatlantic Trade and Investment Partnership (TTIP). According to current European Union President, Latvia, the chances of the agreement being signed by the year-end target are growing perilously slim.
The potentially game-changing trade deal is aimed at radically reconfiguring the legal and regulatory superstructures of the world’s two largest markets, the United States and the European Union – for the almost exclusive benefit of the world’s biggest multinational corporations.
However, resistance continues to mount on both sides of the Atlantic. In the U.S. Wikileaks’ perfectly timed exposé of the investment chapter of TTIP’s sister treaty, the Trans Pacific Partnership (TPP), could derail White House efforts to gain fast track approval to bulldoze the treaty through Congress. This time, even the mainstream media seems to be paying an interest, with the New York Times in particular publishing a broadly critical report.
On the other side of the Atlantic, things seem to be going from bad to worse — at least for the treaty’s supporters. Even the U.S.’s ever-faithful ally and fellow Five-Eye member, the United Kingdom, is beginning to express reservations about TTIP. Earlier this week an all-party committee of Members of Parliament released a scathing report on the trade agreement. The Business, Innovation and Skills committee said the government needed “stronger evidence” to back up its claim that TTIP would bring a boost of £100bn a year to the UK.
The report also warned that the case had yet to be made for the highly controversial investor-state dispute settlement (ISDS), a provision that elevates individual foreign corporations and investors to equal (or arguably superior) status with a sovereign nation’s government. If signed, it would allow companies to skirt domestic courts and directly “sue” signatory governments for compensation in foreign extrajudicial tribunals.
As I reported in “The Global Corporatocracy is Just a Pen Stroke Away From Completion,” the ISDS provision is what gives the new generation of trade treaties such as TTIP their sharp claws and canine teeth. If allowed to take universal effect, the system will impose above our governments a rigid framework of international corporate law designed to exclusively protect the interests of corporations, relieving them of all financial risk and social and environmental responsibility.
For US trade representatives, ISDS remains a non-negotiable element of both TTIP and the Trans-Pacific Partnership (TPP), as the Washington International Trade Association recently reaffirmed:
U.S. investment protection treaties, which promote international investment while providing for protection of that investment, reflect our constitutional commitment to individual [DQ: corporate] rights, further the resolution of disputes by rule of law, and guard against arbitrary [DQ: public spirited] government conduct. These reciprocal agreements are vital to the rules-based economic system…
A Marriage Made in Corporatist Heaven
Scrape away all the rose-tinted gloss and what you are left with are two glaring reasons why corporate America and the U.S. government both love ISDS.
First, U.S. firms have launched far more ISDS cases than firms from any other country in the world. More than one out of every five ISDS cases in the entire history of the ISDS system has been brought by a U.S. corporation, despite the fact that US firms have fewer ISDS-enforced Bilateral Investment Treaties (BIT) at their disposal than firms in more than 40 other countries. For example, U.S. corporations have launched more than three times as many ISDS cases as German firms, even though Germany has enacted more than three times as many BITs as the United States.
Second, as the Washington International Trade Association and the Office of the United States Trade Representative proudly boast, the US has never lost a single ISDS case.
Perhaps this explains why a growing number of EU nations are beginning to have second thoughts. They include Germany, where a recent opinion poll published by the German pollsters Emnid showed that support for the EU-US trade deal continues to plummet, with just 39% of respondents now willing to describe TTIP as “a good thing,” down from 55% in 2014.
“We won’t accept any pressure for further liberalization, or privatization. We won’t lower any social, environment or consumer protection standards,” says German Economy Minister Sigmar Gabriel. “And we will not – I am completely sure of this – see any privatization of arbitration.”
Hungary’s Prime Minister Victor Orban strikes an even more resolute tone. Notorious for his close ties with Russian premier Vladimir Putin, Orban has repeatedly warned that his government will not flinch from rejecting any trade agreement between the U.S. and the EU that impairs the jurisdiction of Hungarian courts in trade disputes.
The most important issue, beyond how this affects any sector, is whether the free trade agreement results in Hungary relinquishing any part of its sovereignty.
Resistance is also stirring along Europe’s Mediterranean coast. One of the first actions of Greece’s embattled new government was to announce that a Syriza-led parliament “will never ratify TTIP,” while in Spain the anti-austerity party Podemos remains a vociferous critic of the trade agreement. “The proposed agreement is a direct attack against European sovereignty and could be the final nail in the welfare state,” said the party’s leader Pablo Iglesias.
“With Us or Against Us?”
As public and political opposition to TTIP continues to blossom, the European Commission has begun to change its tune. It is now promising much greater transparency, accountability and public consultation — all of which would sound nice, perhaps even comforting, if it weren’t coming from the Commission. In the immortal words of the Commission’s new President (and former tax avoidance guru) Jean-Claude Juncker, when things get serious, you’ve got to lie.
The Commission has also changed its tune on its primary motive for pursuing a transatlantic trade agreement. Rather than talking up the potential economic benefits of TTIP, many of which have been roundly challenged or debunked by independent studies (read… That Hot US-EU Trade Deal? Destroys 600,000 EU Jobs, Study Claims), the Commission has begun touting the geopolitical case for closer economic ties with the U.S.
Trade has become more “foreign-policy oriented” and more “geostrategic,” the European Commissioner for Trade, Cecilia Malmström, recently said:
That will certainly be reflected in the strategy, not to build counter-blocs, but in order to see how we can unite against certain values, to build alliances.
Six months ago, I warned [“Hidden Agenda Behind Free Trade Deals: Everyone but China”] that the new generation of trade agreements are not intended solely to consolidate the corporate makeover and takeover of the political, cultural, economic, financial, agricultural, scientific, digital and public space. They are also meant to serve a subtler, albeit no less vital, purpose: namely to secure Western domination of the global economy and geopolitical landscape for the foreseeable future, primarily by marginalizing or preferably co-opting the West’s most formidable challenger, China.
These suspicions have since been confirmed by the US Ambassador to the EU, Anthony Gardner, who said the following in a speech to the AmCham EU Transatlantic Conference last week (19 March):
The United States remains committed to a comprehensive and ambitious [TTIP] agreement, not only for its beneficial economic impact, but also for important geostrategic reasons.
If the United States and Europe want to strengthen their respective economic power and extend their strategic influence during uncertain times, we must lead together. If we fail, other countries who do not share our values and whose weight in the international trading system is growing fast will set the agenda themselves.
A Dangerous Game
The problem with using trade as a geostrategic weapon is that tensions can very quickly escalate, as Europe has recently learned in its tit-for-tat trade sanctions with Russia. The tactic can also arouse deep resentment among allies, especially given the intrusive and one-sided nature of pacts negotiated with the U.S. As Alan Beattie writes in The Financial Times, the participation of Asian, Australasian or Latin American countries in the Trans-Pacific Partnership (TPP) has less to do with enthusiasm for importing the US economic model than a grudging acceptance that “yet more tribute has to be paid in order to retain access to the US market.”
Negotiating a trade deal with the US is not a particularly pleasant business, and nor is it becoming happier over time. You are essentially presented with a U.S. model agreement that contains a decreasing proportion of actual free trade and an increasing proportion of intellectual property protection, and invited to sign.
The ultimate irony is that as the U.S. government wields the almighty stick of trade exclusion while exacting ever more painful and perhaps even politically suicidal sacrifices from its so-called “partners,” China continues to court and seduce some of the world’s fastest growing emerging economies. To achieve this, all it needs to do is dangle two irresistible carrots before them: cheap credit and a much more laissez-faire approach to trade negotiations. By Don Quijones, Raging Bull-Shit.
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