TTIP: A race to the bottom?

KettleMag, Kirstie Keate, Business, TTIP, Transatlantic Trade and Industry Partnership
Written by kirstiekeate

Last week, leaders at the G7 reaffirmed their determination to see the controversial Transatlantic Trade and Investment Partnership (TTIP) deal pushed through as soon as possible. Currently, the end of the year being mooted as the target date to have it signed sealed and delivered, even in the face of its contentious content.

What is it?

Essentially the TTIP is an international trade agreement much like any other, agreeing to reduce tariffs for imports and exports and ease trading channels between the EU and the US. Trade becomes easier, faster and cheaper and the optimistic estimates say it could add as much as €119bn to Europe’s economy annually and €95bn to the US economy. However, its far reaching content of is causing plenty of concerns.

Why the controversy?

Many reasons. But the biggest is what many people see as a race to the bottom on employee and consumer rights and protections, animal welfare, food, and environmental standards, amongst others, because of the ‘investor-state dispute settlement’, ISDS, clause.

What on earth is ISDS?

This clause essentially allows companies to sue governments where local legislation negatively impacts their profits.

This sounds fairly innocuous, but the reality is that for many years, the EU has worked towards ensuring Europe has some of the highest standards in food, animal welfare and health and safety at work in the world. But the consequence is that the costs of keeping to those standards are higher and, there’s no denying, it costs business more. The ISDS means, theoretically, a US firm, could sue the local government if they feel the higher standards locally are reducing their profits.

Take for example, the much maligned Health and Safety at work legislation. Much as we may mock it, the figures speak for themselves. In the UK in 2013/14, according to the Health and Safety Executive (HSE), there were 133 workers fatally injured, that’s 0.44 workplace deaths per 100,000 employees in the UK. Now, compare that to the US, where their equivalent to our HSE, the Occupational Safety and Health Administration, report that in 2013 there were 3.3 workers fatally injured per 100,000. To put it another way, the lower standards in the US mean you’re nearly 8 times more likely to die from a fatal accident at work there than the UK.

And it doesn’t stop there. Our minimum wage could be under threat, carbon emissions standards, even something as simple as plain cigarette packaging is potentially going to be swept aside because it infringes on the ability to make a profit.

Isn’t this all a bit over dramatic?

Not really. It’s already happening elsewhere in the world. US tobacco giant, Philip Morris, sued the Australian government for compensation for lost profits because of their plain packaging laws because of an ISDS provision in a trade treaty, and New Zealand have put their own plans to introduce plain packaging on hold because of this.

So why have the clause?

The idea of the ISDS is sound. It encourages investors by giving them an assurance of stable trading conditions and taxes and, therefore, essentially a general assurance of profitability. However, Brazil, currently one of the world’s largest recipients of overseas investment, has refused to sign up to any ISDS equivalents with no impact on inward investment, calling into question whether it’s actually needed or if it’s just another example of the needs of business being put before those of the public.

What’s this about the NHS being sold as part of it?

The NHS technically won’t be sold as part of any deal. However, with the ISDS clause meaning corporations can sue governments where local laws are deemed to be curtailing their trading rights, it’s easy to see how privatisation might slip in through the back door. ISDS could in theory allow private firms running NHS services to sue the government if they decided to return them to the state sector. Although, the NHS could easily be made exempt from the TTIP, as has been done with sectors such as the French film industry. 

But there’s a referendum, what if we vote to leave the EU?

This is an interesting point. Those in favour of the UK leaving the EU have always cited our fantastic existing trading relationship with the US, and the ease at which we could negotiate a new trade agreement with the EU as a reason why we don’t need to be part of it. But if the EU and the US already have this trade agreement in place, creating the biggest trading zone in the world, how willing do you think they will be to negotiate and bend to the will of the comparatively tiny UK economy? Particularly when we’ve just voted to leave the very marketplace we now wished to rejoin. How much negotiating power would we really have, and what sort of deal would we really end up with?

TTIP is, on the face of it, a standard trade agreement. But with the ISDS clause and the UK’s potential exit from the EU, the future it could offer of corporation needs usurping the protection of citizens, is something far different to that of previous trade agreements, and far more worrying.

What are your thoughts on TTIP? Let us know in the comments below!