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How the Biggest Trade Deal in History Could Quietly Change Your Life

From chlorinated chicken to health services, the Transatlantic Trade and Investment Partnership will change the way Europe and the US do business forever. And critics say corporations, not citizens, will be in control.

by Miriam Wells
Feb 27 2015, 6:50pm

Image via Reuters

Somewhere, behind closed doors, government and business representatives are negotiating the biggest trade deal in history.

Some say it will massively boost the European and United States economies, creating millions of jobs and putting extra money into the pockets of consumers.

Others say it will hand over European nations' sovereignty to corporations, putting profits over people in everything from our healthcare to our food and environment.

Whoever you believe, you should know about it. But the latest round of negotiations for the cumbersomely named Trans-Atlantic Trade and Investment Partnership (TTIP) recently passed by with many people still unaware of its existence, despite the one fact all those involved agree on: it will directly affect hundreds of millions of people.

This week, following the private talks, its negotiators took to the road across Europe to try and explain and win support for the agreement. As the protests that met the efforts of Germany's economy minister in Berlin demonstrated, for many, it will take some convincing.

The basics of the TTIP are this: it will formalize a free trade area between the US and Europe, the world's two largest economies, to create the biggest single market in the world.

The need for such an agreement between the US and Europe — whose economies together account for 60 percent of global GDP and are home to 820 million consumers — was first raised more than a decade ago. Formal negotiations to draw up the TTIP finally started in July 2013.

The deal will reduce import and export tariffs for companies on both sides of the Atlantic. More importantly, it aims to reform, reduce and standardize the rules and regulations which affect bilateral trade, so that companies can access and compete in foreign markets more easily.

Medical devices, drugs, food and cars would go through "harmonized" safety testing that would apply everywhere within the trading bloc, for example, instead of having to do duplicate testing or meet different requirements in different countries.

European and US food would be subject to similar regulations regarding ingredients, animal welfare and labelling requirements — regulations that negotiators hope may then become globally-recognized standards.

European companies would be able to bid for major US procurement contracts and vice versa, with governments bound by law to consider bids from national firms and international firms equally.

And — in what has become one of the most controversial elements of the deal — it will also allow for corporations to sue governments over policies or regulations that adversely affect their profits, in unaccountable tribunals outside of national court systems.

The vast range of laws and regulations that need to be unified have meant an exceedingly drawn out and difficult negotiating process, carried out in private, in which dozens of different governments and companies are fighting their corners for the best possible deal. Whether the interests of companies will end up coming before that of citizens is what is being hotly disputed outside the negotiating rooms.

The business community, the European Commission and the British government are very clear — TTIP is long overdue and will being huge benefits to the European economy, its people and its companies.

"A successful and ambitious TTIP could benefit the EU economy by up to £100 billion ($154bn) [about 0.5 per cent of Europe's total gross domestic product] and the UK economy by £10 billion ($15.4bn)," a spokesperson for the UK's Department for Business, Skills and Innovation told VICE News. He pointed to a study by the Center for Economic Policy Research estimating the average British household will be £400 better off per year under TTIP, create millions of jobs and drive prices down.

"Trade is good. It creates jobs, lowers prices, and connects people and ideas around the world," says a report on TTIP by the Confederation of British Industry, which argues small and medium businesses will benefit most from the deal, by gaining millions of new customers while seeing red tape costs slashed. "We need to be guided by fact, not fear."

TTIP opponents meanwhile, argue that there is already free trade between Europe and the US. They say the deal is really about giving big business more freedom and power in a way that will dangerously threaten public services and consumer and environmental protections.

"TTIP really sums up the power that corporations have over society today and how they want even more," said Nick Dearden of NGO Global Justice Now. "It wants us to think about everything in society solely in terms of how it affects free trade. Many of those 'obstacles' to trade it wants to reduce or get rid of are regulations that we have fought hard for, such as food safety or banking regulations."

He pointed to the open admissions by US food producers that they want to make sure TTIP weakens European standards, which are some of the toughest in the world. In a statement published when the negotiations opened, the industry umbrella organization US Poultry Groups said the removal of a European ban on chicken dipped in chlorinated water would be an essential part of TTIP. The bleaching solution is a standard part of US poultry production, but Europe has banned the import of such chickens since 1997 on the grounds that the chlorine could be carcinogenic.

The US government had accepted recommendations that any final TTIP agreement must address this and other "non-science based" prohibitions, said the statement. "When TTIP negotiations are successfully concluded, US poultry producers look forward to marketing over $500 million of products to the EU on an annual basis."

Chlorinated chicken was just one example of a food product allowed in the US but banned in Europe, said Dearden, with growth hormone-treated livestock and genetically-modified crops also potentially heading for our supermarket shelves under TTIP.

Another area of controversy is environmental protections — the claim that bans on certain pesticides or methods of toxic waste disposal will be threatened, for example, or that fracked US gas will be sold in the EU.

The European Commission and the business community say such claims amount to misinformed scaremongering.

"We will never negotiate a deal that would lower our high standards on food safety, health or environmental protection," EU Commissioners Cecilia Malmstrom and Jonathan Hill wrote in a Guardian column recently. "Or allow products on to the European market that can't be sold today."

The reduction or reform of regulations under TTIP "does not mean a deregulatory bonanza," said Allie Renison, Europe and trade adviser at the Institute of Directors, which represents more than 30,000 business leaders in the UK. It was simply about stopping duplicate testing and inspections, she told VICE News, which at the moment costs many exporters significant time and money. "The aim of TTIP is to identify areas where standards are similar and allow for mutual recognition of each other's standards so that testing and inspections only have to happen once," said Renison.

The recourse that businesses will have to a private system of justice under TTIP is probably the greatest area of all for concern — or scaremongering, depending on how you look at it.

As is the case with all free trade agreements, the proposed TTIP will allow foreign companies to sue national governments in private tribunals for legislation or policies they believe unfairly impact their profits, under the Investor State Dispute Settlement (ISDS). It is argued this is needed to protect investors by providing a neutral, politics-free zone for disputes to be settled.

The tribunals consist of three arbitrators: one representing the company, one representing the government in question, and a chairperson that the two parties agree on together. If they can't agree, the World Bank appoints the chairperson.

Up until now, their discussions have been private, though under new United Nations rules hearings and documents will be made public, except where confidential information needs to be protected.

Their decisions, which can include the reversal of regulations or the awarding of multimillion-pound damages to businesses, cannot be challenged — except in extreme circumstances, such as when alleged corruption has taken place.

Examples of cases being brought under ISDS in other parts of the world include lawsuits by tobacco manufacturer Phillip Morris against the governments of Uruguay and Australia for increasing health warnings or banning logos on cigarette packaging.

Canada has faced more ISDS lawsuits than any other developed country in the world since signing the North American Free Trade Agreement (NAFTA) in 1994 — 35 and counting, with foreign investors seeking more than CAD$7.3 billion ($5.9bn) in damages.

Cases currently underway include challenges to a ban on fracking by the Quebec government by oil and gas company Lone Pine, and a CAD$625 million ($499m) claim by pharmaceutical company Eli Lilly. It says Canada expropriated its property by invalidating patents on two of its drugs, which allowed generic versions to come on to the market sooner.

The Canadian government has so far more paid out more than CAD$211 million ($168m) following ISDS rulings and spent millions more in legal costs. The US government has never lost an ISDS case.

"ISDS raises fundamental questions about democracy and equality before the law," said Scott Sinclair, an analyst with the left-leaning Canada Center for Policy Alternatives, who recently wrote a report on ISDS under NAFTA. "You have completely unaccountable arbitrators ruling on public policy. Why should foreign corporations be able to bypass a country's national court system?"

Anti-TTIP campaigners say that ISDS poses a major threat to Britain's National Health Service (NHS), giving companies the option to sue any future government who tried to renationalize parts of the service that are currently privately-run.

The British government fiercely denies that, saying the NHS will be protected. "Public services are excluded [from TTIP]," a Department for Business, Skills and Innovation spokersperson told VICE News. "EU Trade Commissioner Cecilia Malmstrom recently wrote to [UK Trade Minister] Lord Livingston making clear TTIP poses no threat to the NHS whatsoever."

But Sinclair said similar claims were made about Canada's public healthcare during NAFTA negotiations, and an exemption included, but there had still been significant disagreements — and lawsuits —- regarding the extent of the exemption.

"The general exclusions for public services are contingent and apply only in narrow circumstances," he told VICE News. "So in a mixed system [where some parts are public but some are privately run, like the NHS], the general exclusion is not effective."

Sinclair also said the thousands of jobs, increased income and general major boost to the Canadian economy promised in the run-up to NAFTA had also failed to materialize. "I would encourage Europeans to be extremely sceptical of what is being said to promote TTIP," he told Vice News. "All the evidence through history shows these big trade deals primarily benefit large corporations, not small businesses or society at large."

Anti-TTIP campaigners say the way negotiations are being carried out prove such fears are warranted. Talks are private and access to negotiating texts is strictly limited, even to members of the European Parliament, while hundreds of corporate advisers have full access.

A freedom of information request made by NGO Corporate Europe Observatory revealed that of 130 meetings the European Commission held with TTIP "stakeholders" between January 1, 2012 and April 19, 2013, more than 93 percent were with large corporations and their lobby groups.

"Given the lack of transparency, citizens are right to suspect that TTIP will benefit corporations at the expense of democracy," said Molly Scott Cato, a member of the European Parliament (MEP) from the UK Green Party. She recently wrote about her experience visiting the "top-secret" library housing TTIP documents, whose contents she is not allowed to disclose.

"I left without any sense of reassurance either that the process of negotiating this trade deal is democratic, or that the negotiators are operating on behalf of citizens," she wrote. "[It] was an interesting reminder of the limitations of democratic accountability in the globalized, corporatized world of 2015, where the citizen is sidelined."

Follow Miriam Wells on Twitter: @miriambcwells