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22 September 2015

The fatal flaw in TTIP’s ‘gold standard’

Proponents claim TTIP will ‘level up’ standards for global trade, but is there any evidence?

Simon McKeagney, Editor

On September 17, politico.eu hosted a series of TTIP debates in Brussels, one of which discussed the issue of the health sector in TTIP. Monique Goyens, Director General of BEUC lamented the fact that safety pre-clearance for medical devices was off the table in the on-going negotiations. Noting the flawed notification system for medical devices here in Europe, whereby items like breast or hip-implants do not require safety pre-clearance before use, Goyens said that European consumers could gain a lot from importing the stronger safety measures the US has for medical devices. But it’s off the table. 

‘European consumers are often treated as ‘guinea pigs’ for medical devices, in comparison to those in the US. Many European market products are never approved in the US as they are considered dangerous and ineffective.’ she said in a blog post on the issue last year.

When asked why ‘upward harmonisation’ on medical devices was not being considered as part of the TTIP envisioned free-trade area, Goyens suggested that the introduction of safety pre-clearances for medical devices would inevitably delay products coming to the market in Europe, which the European medical industry would disfavour. Despite recent medical device scandals and the obvious benefits to European consumers in raising our standard to that of the Americans, TTIP will not move to ‘level up’ the standard in this sector. So, so much for a new “gold standard”? 

Going for bronze

This small example raises a larger question, and potentially a fatal flaw in the claim that TTIP will create a ‘gold standard’ for global trade. EU and US negotiators say that TTIP is a once-in-a-lifetime chance to set the bar high on global standards. After all, the rest of the world is catching up with us, they say, and soon we won’t be able to write the rules at all. TTIP can become the ‘blueprint’ or the ‘gold standard’ for future deals, and we can impose those ‘high standards’ around the world, to places who care less about the environment, health and safety, and consumer protection.

So the story goes. But at the same time the stated aim of TTIP, as based on the Commission funded CEPR study of 2013, is that 80% of the gains in TTIP will come not from removal conventional tariffs, but from the removal of  ‘actionable non-tariff barriers to trade’ (NTBs). Many of these ‘barriers’, as the CEPR study accurately points out, represent the legitimate policy choices of countries, governments and states in Europe and the US:

‘…there are many different sources of NTBs and thus removing them may require constitutional changes, unrealistic legislative changes, or unrealistic technical changes. Removing NTBs may also be difficult politically, e.g. because there is a lack of sufficient economic benefit to support the effort; because the set of regulations is too broad; because of consumer preferences, language and geography; or due to other political sensitivities.’ (p19, CEPR 2013)

Those ‘political sensitivities’ may represent different national or regional policy goals that could have more to do with health and safety or environmental protection than trade, but they may also mean a cost for businesses trading across borders. We call it regulation. Industry calls it “red tape”. TTIP as a result, is directly targeting the very standards it claims to want to improve. 

Downward, not upward, pressure.

This is where the contradiction is displayed most clearly for all to see: far from being the gold standard, TTIP’s impact is to reduce, not enhance the progressive standards that are good for people but not great for industry’s wallets.

We all love seeing ‘red tape’ cut, but no one (not even President Juncker) wants to see any European standard “sacrificed at the alter of free trade”. It’s an interesting paradox; on the one hand we’re told TTIP will change everything- it will be a big boost to growth, a jobs bonanza, sweep away all of those pesky non-tariff barriers to transatlantic trade. On the other hand, we’re reassured that nothing will change at all- every standard, regulation and law will remain fully intact, there’ll be no compromise on anything, anywhere, by anyone. It is not clear how negotiators will reach a deal that promises huge gains, without any pain.  

While industry salivates at the thought of streamlining regulations with ‘harmonisation’, ’regulatory convergence’  or ‘mutual recognition’, opponents look on in dismay. There’s a lot of hope by industry here and in the US that TTIP will reduce regulations or remove them entirely. For critics, such as the hundreds of public interest NGOs that have warned of such moves, there’s no difference to this and the deregulatory agenda that is already choking progressive policy making in areas as diverse as climate policy, quality public services, data protection or healthy food- all of which are touched by TTIP.

So can TTIP raise standards, while slashing them at the same time? Or is there any proof that TTIP will facilitate higher standards across the board that will be to the benefit people and the planet in the future?

During Q&A I put the following question to Goyens, and other members of the panel, which included UK Labour MEP Jude Kirton-Darling, and Jean-Pierre Kempeneers, Senior Director of European Affairs at Philips:  “Has anyone on the panel identified any industry or sector willing to ‘level up’ or take on new regulations or standards as a result of TTIP?”

No one could identify any company, industry or sector, willing to raise their standards to a higher level as part of a TTIP deal, despite the clear benefits to citizens and the environment by choosing the best of the best on offer from here and the US. This flies in the face of the often-touted idea that TTIP is about going for gold.  

TTIP's fatal flaw: no talk of raising standards

In fact, the only concern industries seem to have is that their own standards could be weakened. According to Kirton-Darling, she hasn’t come across any company willing to boost their own standards, but she had met with sector representatives who wanted to defend their standards from being eroded. 

In reality, the term ‘gold standard’ has become a covert way of avoiding admitting that standards will not be raised. Because although there is a lot of talk about reducing regulatory ‘burdens’ (which others might call deregulation) there is virtually no discussion about ensuring industry adopt higher standards. If TTIP ensured that companies were obliged to ban the use of dangerous pesticides for instance, or phase out harmful food processes (such as growth hormones in cattle production or chlorinated chicken), reduce carbon emissions, or ban animal testing in cosmetics, this would present an ‘upward harmonisation’ of standards and a real ‘gold standard’ for international trade that we could all be proud of. But it would also result in costs for the sectors involved- which is in direct conflict with end goal of TTIP. Simply put, by it’s inherent design, TTIP cannot raise standards. It can only reduce them.

Read more on this subject: 

  • TTIP will mean higher standards for financial services? The opposite is true, Philippe Lamberts, TTIP blog.
  • Should TTIP rewrite our laws? Business groups think so, TTIP blog
  • Lobby letter emphasises importance of eliminating EU bans on hormones, TTIP blog
  • Japan’s 5 sacred cows: a lesson for EU’s TTIP approach, TTIP blog
  • TTIP's 'Regulatory Cooperation' would force down standards in US and EU, the Ecologist
  • “TTIP won’t lower standards” – Well then let’s break down how, Monique Goyens, BEUC

 

 

 

 

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Meri Koivusalo

The high level of standards might not be what we usually assume them to be, but could also focus on IPR and investment protection standards as well as standards for regulatory cooperation or domestic regulation and "standard setting itself". These can then be imposed to the rest of the world.

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