[A2k] FT: Petitioners’ fears over EU-US trade deal well-grounded

Thiru Balasubramaniam thiru at keionline.org
Wed Feb 4 01:06:42 PST 2015


http://www.ft.com/intl/cms/s/0/4dd84f4c-aada-11e4-81bc-00144feab7de.html#axzz3QlUE3lX7

February 3, 2015 5:33 pm
Petitioners’ fears over EU-US trade deal well-grounded

John Kay

In the past decade large, mostly American, companies have claimed rights
under ISDS

More than 1m people in Europe have signed petitions against the Transatlantic
Trade and Investment Partnership
<http://www.ft.com/cms/s/0/49b45c04-9cbf-11e4-a730-00144feabdc0.html>. In
Britain, a YouGov poll
<http://www.ft.com/cms/s/0/29f1f7f2-31d3-11e4-b377-00144feabdc0.html> showed
that those who thought the plan would be bad for Britain outnumbered those
who thought it would be beneficial by three to one. YouGov did not go on to
ask: “Do you have the faintest idea what the previous question was about?”
(To be fair, one-third of those questioned had the sense to say they did
not know.)


TTIP, currently being negotiated between America and the EU
<http://www.ft.com/topics/organisations/European_Union>, is an ambitious
attempt to create a north Atlantic free trade area. With no tariffs and
harmonised regulation, businesses could compete (and products could move
freely) from California to Croatia. My instinct is to approve. But the
protesters might have a point.

Serious bargaining incorporates an element of bluff, and too much
transparency can prove an obstacle to necessary compromises. Some degree of
privacy is indispensable. But Brussels and Washington, where most of the
negotiations are being conducted, are the lobbying capitals of the world —
places where large corporations spend lavishly in the finest restaurants.
In the absence of a more open process it is very difficult to refute the
general allegation that the TTIP agenda is driven by big business
interests; or specific claims that Europe might — for example — find itself
moving towards a US-style patent system, which is increasingly a licence to
litigate rather than a spur to innovation.

The problem is aggravated by Europe’s “democratic deficit”, which
undermines confidence that agreements will be the product of the legitimate
legislative scrutiny of the kind that happens in at least some national
parliaments. The European Commission, recognising that reticence is a
problem, has recently published draft texts of its position in a number of
contentious areas.


But the principal focus of popular concern
<http://video.ft.com/4006885376001/Trade-takes-centre-stage-at-Davos/world> is
the potential inclusion in the deal of provisions for what is drily
called “investor-state
dispute settlement
<http://www.ft.com/cms/s/0/671841da-44c1-11e4-bce8-00144feabdc0.html>”.
>From the 1980s, this process became a standard element of trade deals
between the US and less developed countries, and was adopted in other
bilateral agreements between developed and emerging economies. ISDS
<http://trade.ec.europa.eu/doclib/docs/2014/march/tradoc_152280.pdf> requires
that, when investors claim their property has been expropriated by
signatory states, the dispute must be adjudicated in an international
forum. Poor countries often lacked independent judicial systems and were in
urgent need of investment from abroad. This submission to international
arbitration was a way to protect local populations as well as foreign
investors from short-sighted policies and corrupt leaders.


Similar provisions soon found their way into agreements between developed
nations. ISDS was incorporated into the North Atlantic Free Trade
Agreement, although it is hard to argue that the Canadian legal system is
inadequate for the protection of foreign investors. In the past decade some
large — predominantly American — companies have aggressively claimed rights
under ISDS. Tobacco company Philip Morris
<http://www.ft.com/cms/s/0/27b8740e-48ce-11e4-9f63-00144feab7de.html?siteedition=uk>,
for example, has used bilateral investment agreements between Hong Kong and
Australia to claim that restrictions on tobacco promotion represent
deprival of its property.


Protesters say that ISDS might be used to attack Britain’s National Health
Service
<http://www.ft.com/cms/s/0/5c1e528a-a653-11e4-89e5-00144feab7de.html>, and
indeed a case on public provision of healthcare was brought against Canada
in 2008. Even if that and similar claims lack merit, the mere threat of
litigation can have a chilling effect on policy — the Australian litigation
has led New Zealand to defer anti-tobacco measures. It would be much easier
to sell TTIP to a sceptical European public if ISDS were no longer part of
it.


johnkay at johnkay.com



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