Bursting the Bubble

Transatlantic Trade and Investment Partnership, A Pact With The Devil

9 September 2013 | by

In times of crisis, eccentric friends are made. And in order to survive, one may rely and do business with people who normally would not be our preference, regardless their flavour.

As it has been announced, the USA and the European Union are undergoing negotiations on a free trade agreement which is predicted to be worth 5 trillion dollars and to foster a GPD growth of 0.5 yearly. Before summer the two major economies of the world started to discuss the labour and social chapters, often treated as non-priority topics in other FTAs. However, with a Trade friendly government in the USA, and a rampant employment crisis in Europe, trade interests on both sides of the Atlantic found a good opportunity to set employment and social rights as a key issue on the agenda to keep the growth in the right track.

These issues gain even more significance since this agreement should eventually serve as the ‘gold standard’ for other investment and trade agreements all over the world. There is no doubt that an agreement, properly designed and implemented, it would be a force for progress. US academic and workers representative, Owen Herrnstadt,  has stated that this may represent a golden opportunity to negotiate a labour chapter that we have never seen before, strengthening labour protection and establishing the basis for new and better social models. Nevertheless,  I should not be blamed for treachery or disclosing national secrets, if I try to warn you that an agreement based purely on economic gains -which is the scenario most likely to take place- will be absolutely pernicious for the overall economy, of both regions, if the social dimension is not properly addressed and rather used as the carrot before the capital hyper-concentration stick.

Juan Keep CalmHello readers, today is my birthday. Good bye crazy 20s with greetings and toasts for the new awesome and cool 30s! As a brand new, interesting, mature man, with several gray hairs (2 or 3), please do not be over dramatic. I present today,“TTIP: A Pact with the Devil”. I would like to dedicate my personal piece of art to a couple of artists – my parents. Thank you so much for these 30 years of not giving up! Special mention deserves the hugest of the true artist, my friend Lolo.  Though the summer has been challenging, I would just like to remind you how leviathanic our love and support is towards you!

I hope you join our celebration today; reading, commenting, discussing and sharing this article. Cheers!

Employment and social rights in the TTIP raises concern in two areas. Firstly, as I see it, eliminating barriers to trade and investment will directly undermine collective bargaining as well as labour and social legislation, shifting production to areas where labour is cheapest. This will have repercussions all over the world.

And secondly, from a legal and judicial perspective, the EU Commission’s proposal for investor-state dispute settlement under the Transatlantic Trade and Investment Partnership (TTIP) would enable US companies investing in Europe to circumvent European and EU MS courts to directly challenge EU governments at international private arbitration, whenever they would find that laws in the area of public health, environmental or social protection interfere with their sacrosanct profits.  EU companies investing abroad would have the same privilege in the US, but since the US has far less restrictive legislation concerning these policy areas, the hot potato is on the EU side. Moreover, if the more aggressive judicial tradition is incorporated into the equation, the arbitration threat will eventually represent an alternative tool for private corporations to push the EU and National policy makers towards even more business friendly laws.

[caption id="attachment_1526" align="alignleft" width="300"]Artwork By Lolo - http://lolofonico.com/post/60087626644/fieras-que-atacan-al-domador-2013-sevilla By Lolo – lologico Flickr[/caption]

I am wondering, when did we sell our souls to the devil, when did we enable not -even slightly- democratically elected legislators to grant business such a powerful tool to overcome the already battered EU and EU MS democracy and EU citizens rights, to entangle sound policies made in the interest of the public?

Citizens and organised civil society, obviously oppose investor-state dispute settlement. According to Transatlantic Consumer Dialogue Forum, TTIP “should not include investor-state dispute resolution. Investors should not be empowered to sue governments to enforce the agreement in secretive private tribunals, and to skirt the well-functioning domestic court systems and robust property rights protections in the United States and European Union.” I completely share this view. Even more so with the EU still struggling to cool down the social turmoil, claiming to promote democracy during the recent North African “revolutions”. Furthermore, and in line with which has been expressed by trade interests on both sides of the Atlantic, given the advanced judicial systems of both the US and EU, investor-state dispute settlement is an unwarranted and volatile risk to domestic policy-making at the local, state and federal levels. This will, under my point of view, put more  non legitimate pressure on policy makers and will undermine social peace. Inter alia, Digital rights activists, environmentalists and health groups have also come out against the threat of an ultimate corporate assault on democracy.

Sadly, the US government as well as the European Commission do not share this view, and seem to be determined to use TTIP to consolidate the European Market at the cost of Democracy and Citizens Rights. Enabling foreign investors to bypass local courts, cheat national judicial systems and sue states directly at international private tribunals when democratic decisions impede their expected profits.

[caption id="attachment_1527" align="alignright" width="300"]Artwork By Lolo - http://lolofonico.com/post/35220298464/estampados-kaos By Lolo – lologico Flickr[/caption]

On the economic side, despite  the remote possibility of having pro-worker clauses and agreements in the agreement, homogenizing labour conditions, and opening the markets will drive down labour costs as well as standards. A race to the bottom will start throughout Europe and the US in order to find strategic advantages. The pressures on the labour force will rise, the relocation of production will bring more unemployment to certain areas and low quality employment – similar to what happened in Germany with the so called “mini jobs”. A similar process as the one lived -and suffered- by the European Union during the past 5 years. This lock out will certainly perpetuate the crisis turning it into permanent economic models in peripheral regions. Here is a need to mention that nobody should finish reading this article thinking that employment across the European Union is improving. The reality is that employment and social protection are being attacked and eroded. Europe is still closer to a breakdown than to a new step in the integration process.

Therefore, and concluding, I advocate for an alternative approach. It is that, applying the arbitration dispute settlement system between the two most developed economic, legal and judicial systems, the EU and the United States, will bring no benefit but social unrest. Investors complaints should go through ordinary judicial systems in order to respect social systems; there is no reason for making the citizen pay the costs of market liberalization. Adapt market liberalization to the conditions of each region. Multinational companies should accept the cost of it, and adapt structures to the different systems. Also, as stated by ITUC representative collective agreements should keep, “absolutely at the core, so we get the distributional effects”. Concerning the economic impact, if proper redistributive measures do not accompany the agreement, the wealth that apparently is going to be created, will cushion the pocket of a few.

[caption id="attachment_1528" align="alignleft" width="300"] By Lolo – Lologico Flickr[/caption]

In these hazardous times, prioritizing figures and indicators -and of course the profit of big multinational companies- seems even indecent. Taking the easy way out  rather  than solving the European social and economic crisis will only worsen it, at the risk of transforming it into a structural economic situation feeding the European social unrest, and Europe will still cluster rather than unify. As we say in the south, “every man in their house, and God in all” and even though I don’t know if God exists, I see no reason to fill the gap with the Devil.

5 Comments

  1. It is great to hear the Spanish perspective. Though, I find it particularly interesting due to many assumptions about the US system which you have made – based on your knowledge of Europe, and select quotes from Americans. As someone dealing with TTIP and transatlantic relations, I must said that you should strive to inform yourself about the U.S. systems also. The analysis is logical based upon knowledge of the EU, but it does not account for the U.S. system or standards. That is probably why you ‘logically’ reached the conclusions you did. If you want to really understand TTIP and write about it, you should learn about the systems on both sides, or work with someone who knows the American system as well as you know the European. It is a good effort here, but as a European specializing in US politics – you are missing factors in your analysis.

  2. The American elements (understanding what is in place there) are missing from your analysis, making your conclusion a bit one sided about what could or should occur. I agree with Paul, that if you try to analyse this, you need to understand both systems and how they affect each other – not just relying on quotes to ‘estimate’ what the U.S. system is. I read another couple articles on this site about the TTIP, indicating there are others who may be able to help you understand and predict the interactions between the U.S. and E.U.. These are some of the more complicated discussions we, as politicians, are getting involved in, so knowing both systems is vital – if you want to predict results.

  3. Paul, thanks a lot for your comment. Please, if you have the time, do not hesitate in opening a discussion and complete the analysis with your insights. Your knowledge would be really appreciated, and it will help making more understandable the TIPP from a holistic perspective.

  4. Making business-friendly laws being a threat?! I wonder who makes the economy go around, NGOs government, social actors or actually businesses who innovate, invest, risk, add enormous value and have products an servies that customers actually buy? Big support for the TTIP and I hope it will be as business friendly as humanly possible.

  5. Just in case you wondered why governments are doing this deal in secrecy,in backrooms.
    not for our benefit but for their’s,large corporations and dirty lying corrupt politicians are the ones who profit,
    A back door privatisation of our NHS,
    Non labelling of GMO’s,
    Chlorinated chickens,with contamination that even the chlorine cant kill.
    People need to wake up to this crap.!!!!

What do you think?