Duplicates Secretive Trans-Pacific Trade Pact

by Pete Dolack, Systemic Disorder

Neoliberalism knows no borders, so perhaps it should not come as a bolt out of the blue that the United States and European Union are set to negotiate a "Transatlantic Trade and Investment Partnership."

It might be thought that the Obama administration would have its hands full with the ongoing, top-secret Trans-Pacific Partnership talks, but it seems that much can be done in the absence of any pesky oversight. It might be thought that European Union officials would have their hands full with their series of financial crises, but it appears this is an irresistible opportunity to safeguard austerity.

This project is sponsored by the usual corporate organizations. The trans-Atlantic trade agreement evaded all radar until US President Barack Obama's announcement in his State of the Union address but had been in the works for more than a year. To the applause of business groups on both sides of the Atlantic.

No details of any kind have emerged about the trans-Atlantic trade agreement, only generalities. It would seem that holding two sets of negotiations among dozens of countries would be difficult, but then it is remembered that the Trans-Pacific Partnership is designed to be "scalable"—a euphemism meaning that the terms will be final. Any countries not among the present negotiators can join at any time but must accept that no terms already agreed upon are negotiable. Could this be the model for the Trans-Atlantic pact?

Big Business already cheering on the negotiators
A US-EU High Level Working Group on Jobs and Growth was created at a United States-European Union summit meeting in November 2011, tasked with "identifying policies and measures to increase US-EU trade and investment to support mutually beneficial job creation, economic growth, and international competitiveness," according to the Office of the United States Trade Representative.

It is unknown who sat on the "high-level" group, but it is chaired by European Trade Commissioner Karel De Gucht and US Trade Representative Ron Kirk. Early in February 2013—this seems to account for President Obama's timing—the group said talks should go ahead.

Although it is impossible to be specific about the influences on the working group, the corporate interests that promote and benefit from "free-trade" agreements were not likely absent from the room. Eurochambres, a regional network of European chambers of commerce, published the paper it presented to the working group online. Eurochambres calls for "harmonization" of regulations, elimination of all tariffs and "the highest possible standards of protection for investors."

That last wish should set off alarm bells. In pursuit of "protection for investors," Eurochambres advocates that trade negotiators "Build on the Joint Statement of Principles on the Treatment of Foreign Investment elaborated by business organization on both sides of the Atlantic." Those "principles" include:

[T]he rule of law, transparency and predictability in government administration, regulatory fairness, the sanctity of contracts and private property, respect for intellectual property rights, and sound macro-economic policies... This general approach should apply to the widest possible definition of investments, including all forms of assets and tangible and intangible property; property rights such as leases, mortgages, liens and pledges; intellectual property rights; rights conferred by law or contract, such as licenses and permits; business enterprises and equity and other forms of participation in them; claims to money and to performance; and returns.

On the other side of the Atlantic, the US Chamber of Commerce—a hardline organization that has never seen a regulation it likes or a tax that is justified—has similarly provided its wish list. The Chamber calls for the same things as its European counterpart, including a "highest standard investment agreement." The Chamber did go a bit further (PDF) by demanding an immediate deal, insisting that negotiators:

Complete a bilateral investment agreement between the United States and the 27 EU member countries. An updated and comprehensive bilateral agreement would improve the flow of capital, prevent discrimination against investors, and provide protection from expropriation... The Chamber calls for a swift time frame to avoid delays from election calendars in any participating country.

Trans-Atlantic echoes of the Trans-Pacific Partnership
These demands are staples of "free-trade" agreements, whether bilateral or multi-national. Bland-sounding calls for "equal treatment" for foreign and domestic investors and property rights only thinly mask a thicket of detail-loving devils. These platitudes form the basis of undemocratic, drastically one-sided trade agreements such as the North American Free Trade Agreement, which in turn provides the starting point for the Trans-Pacific Partnership, a negotiation being conducted in secret by 11 countries.

These agreements use the same language as that of the Big Business pressure groups quoted just above. It is not unreasonable to speculate that the Transatlantic Trade and Investment Partnership will contain rules mirroring those proposed for the Trans-Pacific Partnership. The TPP goes beyond NAFTA in several ways, via rules granting additional "rights" to multi-national corporations and further expanding the definition of "investor," while containing no rules concerning labor, the environment, public health or safety.

For example, the TPP, if ratified, would overturn the policies of countries like Australia and New Zealand that force lower prices on medicines, significantly tighten corporate control of the Internet, and require that speculators be paid the full face value of a government bond even if bought at a deep discount from a third party.

The TPP would require disputes be judged in the International Centre for Settlement of Investor Disputes (ICSID)—a secretive tribunal closed to the public that is an arm of the World Bank. ICSID and similar tribunals are bodies that adjudicate disputes between investors and governments, but the judges are often corporate lawyers who specialize in representing investors in disputes with authorities. These tribunals issue a steady stream of rulings favoring corporate interests, and these decisions then become the standards to which future trade agreements will be held, building a floor for subsequent decisions that will be still more harsh.

The rules governing the TPP, if enacted, would require that maximizing corporate profits be the highest priority for governments, by law. Measures to reign in financial speculation, even during economic crises, would be illegal, and rules safeguarding workplace safety or the environment would be struck down as interference with corporate profits.

It is difficult to imagine that the corporations goading on the trans-Atlantic governments intend to settle for anything less. And also at risk for Europeans are laws blocking genetically modified foods—US agribusinesses have sought to eliminate EU rules safeguarding food safety, and the Transatlantic Trade and Investment Partnership may well be their route. "Harmonizing" rules ordinarily means "harmonizing" at the lowest level, and in this case that would mean the weaker safety regulations, and lackadaisical enforcement, of the US.

No Trans-Pacific Partnership text has ever been made available; the little that is publicly known is due to leaks published on the Internet by consumer organizations like Citizens Trade Campaign (PDF). The White House TPP page offers no substance. In its report on the most recent negotiation round, the White House provides this less than scintillating summary:

Trans-Pacific Partnership (TPP) negotiators were pleased to report further solid steps forward in closing the remaining gaps between them during the 15th round of negotiations... [T]he Leaders reaffirmed their mutual priority of concluding a state-of-the-art, comprehensive agreement as quickly as possible.

The next round of TPP talks in Singapore from March 4 to 13 only produced similarly vague communiqués. Once again, it must be asked: What is being hidden?

Different ocean, same concept
Information on the details of the Trans-Atlantic agreement are thus likely to be as scarce. Nonetheless, European leaders are mostly lining up in support. German Chancellor Angela Merkel and British Prime Minister David Cameron, for example, are pushing the idea. The corporate media is also lining up behind it, with "resistance" to an agreement portrayed as "interest groups" stubbornly clinging to parochial concerns. An excellent specimen of corporate ideology at work is provided by the centrist German newsmagazine Der Spiegel, which is presented not to single it out but rather because it is typical. Der Spiegel writes of potential opposition:

Some interest groups have refused to budge. The powerful US agrarian lobby, for example, insists on unlimited access to European markets, including such products as genetically modified produce, which is controversial on the Continent. European companies, for their part, refuse to accept the diktats of US regulatory authorities regarding whether and how they can pursue state contracts... Furthermore, promoting a trans-Atlantic agreement would allow Obama—on the eve of his planned visit to Berlin in June—to address European concerns that the US has turned away from the Continent in favor of Asia... But in his Tuesday evening speech, Obama still lauded the benefits of a trans-Pacific trade agreement with Australia and Asian countries before he mentioned the trans-Atlantic deal.

The primary controversy, a reader might be led to believe, centers on a potential lack of resolve in giving corporations what they want. That there might be interests other than that of corporate profits—say, workers' ability to have jobs with good pay and dignity, or a desire not eat food untested and unlabeled, or avoiding environmental damage—are not mentioned. Such matters are immaterial, evidently, at most the concern of "interest groups."

The only clue as to the contents of what a Transatlantic Trade and Investment Partnership might contain are in the final report issued by the High Level Working Group on Jobs and Growth (PDF). Two key passages in the final report's six pages state:

The [High Level Working Group] recommends that a comprehensive US-EU trade agreement should include investment liberalization and protection provisions based on the highest levels of liberalization and highest standards of protection that both sides have negotiated to date... The HLWG recommends that the two sides explore new means of addressing these "behind-the-border" obstacles to trade, including, where possible, through provisions that serve to reduce unnecessary costs and administrative delays stemming from regulation. [page 3]

These provisions could include:

[R]educ[ing] redundant and burdensome testing and certification requirements [and inserting p]rovisions or annexes containing
additional commitments or steps aimed at promoting regulatory compatibility. [page 4]

Stripped of bureaucratic niceties, what the above passages mean is that the most one-sided trade agreements (and tribunal interpretation) will be in force. For now, that arguably means the standards of NAFTA, under which taxation and regulation constitute "indirect expropriation" that require  compensation for corporations. The Trans-Pacific Partnership, however, would supersede NAFTA if implemented, mostly because it would be more draconian but also because Canada and Mexico have formally joined the nine original TPP negotiating countries, making NAFTA superfluous. To add to the complexity, Canada is negotiating its own secret trade pact with the EU and, like the US Congress vis-à-vis the TPP, Canadian members of parliament are being left in the dark.

Market forces demand a race to the bottom
In the High Level Working Group's six-page report, environment and labor safeguards are discussed in one paragraph. Here it is:

The EU and the United States are both committed to high levels of protection for the environment and workers. The HLWG recommends that the two sides explore opportunities to address these important issues, taking in to account work done in the Sustainable Development Chapter of EU trade agreements and the Environment and Labor Chapters of US trade agreements. [page 5]

There are no effective environment or labor chapters in US trade agreements, only boilerplate language that is meaningless. If that is the standard, then labor rights, workplace safety rules and environmental safeguards will be under sustained assault under any Trans-Atlantic trade agreement. Protections for the environment and employees are barriers to corporate profits, and will be treated as such. Regulations will be "harmonized" at the lowest level because
that is what the "market" demands—the market simply being the aggregate interests of the most powerful industrialists and financiers.

In the context of European Union elites sparring over financial policy, Chancellor Merkel is not a stubborn holdout nor obsessed with Weimar-era inflation; she is simply reminding other national political leaders that financial harmonization will conform to the tightest policy among them and Germany so happens to have that tightest policy. Trade harmonization, regardless of where the borders are drawn, will follow a similar dynamic. The United States will seek to impose its looser regulations and weaker labor laws on Europe, and further weaken its own.

That is not because there is something inherently evil about US officials or due to some particular moral failing of the Obama administration, but because the US government, like that of all capitalist countries, reflects the dominant interests within the country. Large industrialists and financiers dominate their societies through control of the mass media and a range of other institutions to the point that their preferred policies become, through heavy repetition, the dominant ideas across society and the ideas adopted by the political leaders who become intellectually and financially dependent on them.

That is a crucial part of the puzzle as to why governments around the world enter into agreements that are so one-sided against themselves. Just another form of "market forces."

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This story first appeared Feb. 27 on the Systemic Disorder blog. 

From our Daily Report:

Quebec fracking ban challenged under NAFTA
World War 4 Report, Nov. 26, 2012

See also:

THE TRANS-PACIFIC PARTNERSHIP TRADE PACT
More Draconian Than NAFTA
by Peter Dolack, Systemic Disorder
World War 4 Report, October 2012

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Reprinted by World War 4 Report, March 25, 2013
Reprinting permissible with attribution