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03 April 2014

Busting the EPP’s Mythbuster: half-truths are not the full story with TTIP

The EPP and all groups in the European Parliament need to be more cautious and vigilant about the TTIP deal

Simon McKeagney, Editor

Last week the largest group in the European Parliament, the European People’s Party, released an article entitled 'Mythbusting the EU-US free trade agreement’. Instead of interrogating some of the misleading gains the Commission has touted, the EPP simply reinforced many of these mistruths, which we cannot leave unchallenged. Here's what was said:

1) The numbers game

The EPP uncritically supports key numbers identified by the Commission:

The EU's economy could benefit by 119 billion euros a year and the US economy could gain an extra 95 billion a year - with gains of 545 euros for each EU family

‘These gains would be the result of removing tariffs and doing away with unnecessary rules and bureaucratic hurdles that make it difficult to buy and sell across the Atlantic.’

The above figures have been taken from an Impact Assessment Report published by the CEPR on behalf of the Commission, which has provided a helpful sound bite for proponents of the deal. But more recently the figures have been called into question by many as regards their meaning to the real economy. The Commission itself is now less vocal on these numbers in recent months and there is more of a cautious outlook from official sources as to whether TTIP is a realistic solution to our current economic crisis.

It has been debated that numbers are based on a flaw in the CEPR study. The Key Findings page claims that 119 billion euros is a yearly benefit of TTIP for the EU economy. In fact- when you explore the report itself in more detail, this figure relates to the possible change to GDP if we were to have a comprehensive agreement post-2027.

‘Note: estimates to be interpreted as changes relative to a projected 2027 global economy.’

Thus, until 2027, 119 billion euro is likely to be the the accumulative effect of TTIP over many years, not per year. This dramatically lowers the positive impact TTIP will have on resolving the actual economic crisis we face today. Glyn Moody has written another counter-argument to the EPP piece, further pointing out that:

'Put another way, that 545 euros is the total increase in disposable income across 10 years, not the extra disposable income available each year, as the Key Findings erroneously claims. That equates to an average of 60 euros extra, per year, for a family of 4. In other words, even under the most optimistic assumptions, and using the European Commission's own forecasts, the real-life effect of TTIP would be that each month, everyone in the European Union would be able to buy an extra cup of coffee.'

But let's assume that the EPP are simply taking the Commission at its word, and are not purposefully misrepresenting the benefits to garner support for the agreement. Leaving the numbers aside, the piece also looks at the other intended outcomes of TTIP such as regulatory cooperation and the impact on certain sectors.

2) On jobs, the EPP say:

‘The economic growth and increased productivity created by the agreement will benefit workers in the EU and US, both in terms of overall wages and new jobs opportunities for high and low-skilled workers alike.’

In fact- there are no guarantees that benefits will be automatic for workers. Already Europe’s largest trade union has come out against the deal, citing their concerns for workers. In the Commission’s own Impact Assessment Report they admit that TTIP is likely to bring 'prolonged and substantial' dislocation to European workers as a result of this shake up: "..there will be sectors that will be shedding workers and that the reemployment of these workers in the expanding sectors is not automatic..”

There is a claim that TTIP will boost competitiveness in both regions. Competitiveness is measured either by making capital or labour more productive. Europe's economic crisis leaves little room for investment to become more productive, so there is a likelihood that the focus will be on productivity within the labour force- i.e job losses.

TTIP is also as likely to divert trade elsewhere as much as it likely to create new net growth. This was subject to article on our site last week entitled What is a trade deal for if it doesn’t even create trade? which states:

‘In economic sciences it is common to differentiate between ‘trade creation’ and ‘trade diversion’…’trade diversion’ denominates the phenomenon of new trade relations simply substituting the existing ones without achieving a net gain in trade volume. [In TTIP] US-British trade would increase by about 60 percent, US-German trade would gain up to 94 percent. At the same time UK-German trade would decrease by 41 percent and UK-Irish trade would even lose roughly 46 percent.’

So questioning the basis of this ‘growth’ and what a reshuffling of our economies will mean for job-creation in reality might be worth investigating more closely.

3) Will the TTIP automatically trump EU laws?

The EPP says:

‘No, it does not and the EPP Group stresses that the TTIP must not and cannot overrule, repeal or amend EU laws and regulations. Any changes to EU laws have to be approved by the competent Institutions.’

The EPP are right in saying that TTIP will not trump EU law automatically but this is only half of the story. TTIP could fundamentally alter the way in which existing EU law is implemented and how future law is created.

It is well known that the intention of both the US and EU is to establish a Regulatory Cooperation Council which ‘that would allow early intervention by US and EU regulators in each other’s rulemaking processes.’ It is believed that such a council could give multinationals privileged access and influence over proposed EU or US laws before they are even brought to national parliaments. Through the proposed Investor State Dispute Settlement (ISDS) investors would also be able to sue countries for loss of future earnings if laws are passed which impact their profits. Hence, it is believed TTIP will have a “cooling effect” on future EU laws and regulation.

‘Cooling effects' already visible

On an institutional level, we have already seen the negative effect TTIP has had on EU laws. Several proposals have been disrupted, shelved or pushed through as a consequence of the pending agreement.

The Fuel Quality Directive has mysteriously vanished from the Commission’s agenda, which many believe was done so to pave the way for TTIP. In the ENVI committee, a resolution against the treatment of meats with lactic acid, something that in normal circumstances would’ve clearly been supported, failed due to intense and unprecedented lobbying by the Commission.

Last September, the Commission presented its long-awaited proposals on meat from cloned animals. The proposals failed to cover even the simplest labelling requirements, something on which all three institutions had already agreed in principle in spring 2011. It is no secret that DG TRADE has, in order to accommodate the U.S., diluted the proposals by DG SANCO, which already were not too ambitious. And only days ago, the European Food Safety Authority issued an overall positive assessment of peroxyacetic acid solutions as a sanitary wash for poultry carcasses and meat, something which a 2004 EU regulation prohibits, but may now form the basis of allowing such processed meat to be sold here.

The EPP are misleading citizens when they say TTIP will have no impact on our regulations and our laws. It is already having an impact.

Agriculture and Consumer Protection

4) Do I have to worry about existing EU standards of consumer, environment or health protection?

The EPP wishfully asks that the EU does ‘not negotiate on existing levels of protection for the sake of an agreement’ yet they say they also support ‘improvements [that] could and should be made to make our regulations more compatible’.

Critics are highly concerned about regulatory cooperation, because such attempts are unlikely to yield higher standards on both sides of the Atlantic. Given the different approaches between the US and EU there are fears that negotiators will move us toward a lowest common denominator for regulations and standards in a host of sectors. This has the potential to be bad for consumers, and could negatively impact the quality of agricultural produce as examples. Corporations and large industrial lobby groups have had the lion's-share of input into setting the agenda for the talks, and there are many indications that they are using the TTIP negotiations to promote a deregulatory agenda here and in the US.

5) Will the EU be forced to change its laws on Genetically Modified Organisms (GMOs)?

The EPP says: 

'In the European Union’s current system, applications for approval are assessed by the European Food Safety Authority and then sent to Member States for their opinion. This risk-management assessment must not be affected by the negotiations.'

Sustained attacks on the EU's precautionary principal by the biotech and agro-chemical industry, as well as pressure from the US side to allow GMOs to be sold in the EU does not give us confidence that TTIP will not impact our food regulation. It has been something the US has pushed the EU into changing for years and opportunities could arise to do so under TTIP. In the US, it is much more difficult to source what is or isn't a GMO product, as GMO crops are often mixed together with non-GMO products and sold as the same thing. Attempts to introduce or demand labeling for all GMO products would therefore be extremely difficult and the US could argue that such labeling is an "unnecessary" non-tariff barrier to trade (NTB).

6) Will European supermarkets be filled with meat from American animals fed with hormones?  

'The EPP Group considers that the negotiations should not be about compromising the health of our consumers for commercial gain. Meat with hormones should continue to be banned in the EU market.'

It remains an offensive interest of the US to sell the EU agricultural products under TTIP, including beef. Intense lobbying from the US beef industry has ensured that it is being kept firmly on the agenda. Yet, the Commission has assured us that hormone injected beef will not be sold in Europe. From the little information that has been made available to the public, one would gather that it has not yet been removed from the agenda. It has continued to crop up as an issue at stakeholder briefings during each of the 4 negotiation rounds over the last 9 months. We sincerely hope that both sides, not just the EU, will rule out any possibility of such meat being sold in Europe.

The EPP are playing down the negative impacts on agriculture. As long as it remains an offensive interest of the US to sell us agricultural products banned in Europe, parliamentarians must remain vigilant and reject any deal which even hints at the possibility of doing so in the future. José Bové has identified what are the possible risks for agriculture, which include aspects of regulatory cooperation. Furthermore, consumer groups like BEUC have indicated that they will not support a deal that undermines consumer rights or standards, and have criticised the lack of transparency in the negotiation process. 

7) Why are the talks not transparent?

Or as the EPP put it:

'Are the negotiations being held in secret and why does a certain level of confidentiality have to be maintained?'

Yes, the negotiations are being held in secret. Neither the public nor their representatives have access to negotiating texts from opposing sides. The EPP Group considers that 'a certain amount of confidentiality should be maintained, so as not to undermine the EU's own position in the negotiations.' This is hotly disputed.

If the deal were solely about tariffs, perhaps some confidentiality would be required to finalise a deal. But this agreement is about our regulations, which have been fought for by citizens for decades. If plans are being made that will impact these regulations, it is essential that it happens in a transparent manner, and that the public and their representatives are fully involved in the process. In contrast, evidence has shown that big business has had privileged access to negotiating teams, both before and during the rounds of talks. This gives us no confidence that the deal will have public interest at its heart, and underlines the reason why full transparency is essential.

CULTURE and AUDIO-VISUAL

8) Will Europe's film industry be killed off by a flood of American films?

The EPP say:

'The majority of the EPP Group has made it clear that the audio-visual sector has to be excluded from the scope of the negotiations. This sector is not part of the Council's mandate and is not negotiated.'

What they are not telling their readers is that it is not clear what this exclusion in the Council mandate will specifically cover. It is hard to imagine that TTIP will contain a chapter on the deregulation of the audio-visual sector. But the issue could well reappear in other chapters, for example in the chapter of e-commerce in services, which could make the trade in audio-visual products easier, or in the chapter on subsidies, which could horizontally ban certain forms of state-aid, which are at the base of the protection of Europe's cultural diversity. We know the US are eager to push Hollywood's interests and has even submitted a proposal on audio-visual services under TTIP, which however we - and the Member States - are not allowed to see. Looking a little closer can reveal a lot more.

INTELLECTUAL PROPERTY RIGHTS, DATA PROTECTION and INVESTMENT PROTECTION

9) Will the TTIP be ACTA through the back door?

ACTA was voted down by the European Parliament, a huge embarrassment for the Commission. It was the first time that the Parliament’s new powers under the Lisbon Treaty impacted a trade agreement. Complaints about secrecy were as vocal then as they are now for TTIP. MEPs have warned the Commission that if they continue on their current path, TTIP is likely to suffer the same fate as ACTA.

The EPP believes that the vote against ACTA 'has to be fully respected and therefore there is no option of getting ACTA through the back door.' Yet they go on to admit that some elements from ACTA have wound up back on the agenda under TTIP. We believe that any attempts to resubmit elements of ACTA under TTIP should be reason enough to vote against the agreement.

10) Will the TTIP mean US data privacy standards prevailing over or undermining EU standards?

The EPP say:

'We believe that both parties should regulate data privacy in a different way and therefore the TTIP is not the right place to address these differences.'

Data protection is considered a human right in the EU, as stated by Commissioner Viviane Reding, and is a ‘red line’ for Europe under TTIP. The US consider data privacy a “barrier to trade” and are pushing to include a section on data-flows, which may have an impact on data protection issues. What is not considered by the EPP is that all proposals for the e-commerce chapter have been produced by the US-side, which will have the most relevant impact on data-protection. Those outside the negotiating rooms have yet to see these proposals, but despite there being no data-privacy chapter as such, there are also no assurances as of yet that it will remain entirely removed from other parts of the agreement.

11) Why is the EU including ‘Investor to State Dispute Settlement’ in the TTIP?

The EPP says:

'It is an issue which has been included in all the previous investment protection treaties negotiated by the Member States with third countries, including the United States. Therefore the EPP Group considers that it should continue to be part of the negotiations, since the possibility of appealing to an international body for arbitration would offer the foreign investor the best guarantee that their investments will be adequately protected.'

The EPP believes that private arbitration courts are the “best guarantee” to ensure investors are protected. This suggests that they believe our normal court systems, available to everyone, are not adequate and that investors deserve extra-constitutional rights above that of national businesses and citizens. We strongly disagree.

Secondly, the EPP is overplaying the extent at which ISDS is currently in use. Only 9 member states have ISDS provisions with the United States. Opening up such a mechanism to all 28 members based on previous-provisions has no basis in argument. The EU and US have approximately 75,000 subsidiaries operating in each other's regions. If ISDS is included in TTIP, it opens up an unprecedented risk for EU countries to be sued for enacting laws that negatively impact the future profits of these multinational corporations.

ISDS endangers European government's right to regulate through the threat of legal action. Recent cases have shown that a state can be liable to pay out billions in compensation to corporations for introducing policies for the public good, such as social or environmental legislation. This is only likely to make states more reluctant to introduce further measures in the future. Is the inclusion of ISDS worth such a risk to our democracy?

PUBLIC SERVICES

12) What about the effect on public services?

The EPP says

'Public services are excluded from the scope of these negotiations. There is therefore no risk of undermining the free choice of EU municipalities on whether or not to liberalise such services.'

What the EPP fails to mention is that there is no exact definition of the term "public services" and hence what this exclusion covers. Moreover, the US has a very different concept of public services. Health, education and transport services, for example, are amply delivered by private service providers in the US.

Both sides have made clear that they want to achieve a high level of service liberalisation through the TTIP, going beyond of what has already taken place today. We know the US have an offensive interest in opening up the market in the education field in Europe, for instance. The US will push for further market access in EU Member States where public services have already been liberalised and are provided both by public and by private service providers. The EU will push for the same at the US state level. This could lock EU Member States and US states into further automated liberalisation of the market for essential services.

The liberalisation of essential services could also become an issue if the TTIP negotiations move further on issues of public procurement. Both sides are seeking greater concessions in the area of services, which they do not want based on "economic needs tests". Once a public service is opened also to private providers, it falls under free market rules, which makes public support and subsidiation much more difficult. This, in turn, results in increasing difficulties to maintain public control on what is supposed to be a public service.

Reassurances by the Commission that public services will not be included in TTIP must therefore be taken with care.

REGULATORY CONVERGENCE

13) Are the EU and US going to harmonise their standards?

The EPP say:

'Harmonisation is not on the agenda of the talks and the EPP Group thinks it should stay that way…Vehicles, pharmaceutical and medical devices are three areas where there is particular scope for regulatory convergence and the EPP Group considers that negotiators should make efforts to reduce such divergences, whenever and wherever it is possible.'

Again here the EPP is deflecting away from the regulatory convergence question by dismissing harmonisation as being 'not on the agenda'. This avoids the discussion we really need to have. The problem is not "harmonisation". We all know it is unrealistic that two very sophisticated legal systems, as we have in the EU and US, could adapt common rules and laws. What is instead at stake in TTIP is the due recognition of our differences, which are the product of citizens preferences and choices. Below the innocent term of "regulatory convergence" is a move to declare rules as equal, which might in practice be vastly different in both regions. What we must be wary of is these so-called "mutual recognition agreements". It is this level below "harmonisation" which will need our utmost attention.

Conclusion

The role of the European Parliament is to critically assess and monitor proposals of the Commission and respond to in kind. It must also reflect the concerns of European citizens, and there are many when it comes to TTIP. Blind trust in the Commission is against the ethos and the role of the Parliament, yet this is demonstrated throughout the EPP’s 'mythbuster' piece, which many might mistake as something written by the Commission itself.

The TTIP negotiations encompasses two of the largest trading partners in the world, accounts for half of all global trade and has the potential to impact the lives of 800 million citizens in the EU and US. The implications are wide and varied, and cannot simply all be positive. We should expect real critiques from our representatives. We need MEPs at the European Parliament to put the interests of the public before that of private concerns. Otherwise, we risk sleepwalking into a trade deal with untold consequences for us all.

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Comments

Theo V

Great work! It's good to unveil what's behind the curtain...

Andre

The EU makes rules for 28 member states, sovereign nations, among them high export nations, former provinces of the Soviet Union, eastern, southern, northern nations, protestant, catholic, orthodox nations, nations with common law, nations with statutory laws, monarchies, republics... All with existing bodies of law, in multiple languages. We don't have a single phone number but we all apply EU rules.

Why can't the US simply adapt their own regulations to our rules when they want to trade with us? Why does it need an exceptionist process high above the ordinary democratic decision taking where we are asked to surrender our achievements? Things like "Buy America" are unacceptable first place under Free Trade agenda, we don't need a TTIP to make the US trade politicians realise that. Surveillance of the European Council is completely unacceptable, we do not have to make concessions to the US to let them stop unlawful actions. Mass surveillance of citizens and business espionage is equally unacceptable and criminal.

Let's face it, Europe is the more advanced regulator and the larger market. Numerous other nations follow our lead, not only Switzerland and Norway. There is no need for an agreement, on bad terms and conditions.

Investment protections, that is what you put in the agreement when you negotiate with a banana state. We trust our rule of law.

The real issue is that the EPP has not yet made the case what we want from the US. What are the European demands?

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