Of Trojan horses and German Angst: Europe and TTIP – David Zuther, Germany

T-T-I-P. These four letters represent one of the most controversial topics that political Germany has seen in past years. More than 860,000 Germans have signed a petition against it. But when Extra 3, a political comedy show on Germany’s public television channel ARD, visited the parliament (called Bundestag) in late January to ask politicians what the abbreviation stood for, they met a shocking lack of knowledge among our nation’s elected representatives. “Trans-atlantic” – most MP’s were able to name this part of the term, but soon started stuttering.

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To make a long story short, TTIP stands for Transatlantic Trade and Investment Partnership and, just as TiSA (Trade in Services Agreement) and CETA (Comprehensive Economic and Trade Agreement), it is a free trade agreement that is being negotiated right now between the member states of the European Union and, in TTIP’s case, the United States (while CETA is between Canada and the EU).
In November 2014, Pew Research and Eurobarometer conducted a poll among Europeans on their position regarding TTIP. They asked whether the survey participants were in favour of TTIP. In most countries, the majority said yes: 65% in the UK, 58% in Italy, 63% in Spain and even 74% in the Netherland. Only Germans and Austrians were less positive, with both countries having only 39 percent of the people supported the trade deal. These numbers combined with the unexpectedly powerful anti-TTIP movement in Germany led Sigmar Gabriel, the leader of Germany’s social democratic party SPD (that is in a coalition with Christian-democrat CDU at the moment) and secretary for economy, to make this statement at the economic summit in Davos in January: “Germany is a country both rich and hysterical”. So why are Germans so concerned about TTIP? Is this just another case of “German Angst”, the famous English term for typically German paranoia? What could be wrong about free trade and the concept of reducing tariffs and other barriers to international business?
The job-creating miracle machine
At first, the idea behind TTIP, CETA and the other agreements sounds pretty simple and doubtlessly good. By reducing all kinds of barriers to free trade (such as tariffs), the exchange of goods and services between nations becomes easier, thereby creating jobs and economic growth. Truly astonishing numbers have been brought into the public debate by the agreement’s supporters. Under TTIP, they expect a 94 percent increase in German exports to the US. Up to 1.3 million jobs could be created in the EU, according to studies put forward by the pro-TTIP faction.
However, such numbers are not necessarily the most reliable base for arguing. In fact, just as one study suggests TTIP will create 1.3 million jobs EU-wide, there is another study that indicates TTIP will destroy 1.3 million. Critics of TTIP, CETA and TiSA also point to research that appears to show that NAFTA, the US-Mexican-Canadian free trade zone established in 1994, has led to a net loss of hundreds of thousands of jobs; and they expect a similar development with the EU-US negotiations. But once again: you can find studies that say anything you want.
Harmonization
One of the subjects in TTIP that concerns the activists is the so-called “harmonization” of standards and legislation. In the process of removing and reducing trade barriers, TTIP would require that EU laws are adapted to US laws and vice versa. TTIP critics fear that therefore, “harmonization” could result in a downward spiral when it comes to lowering standards and regulation. For example, the European Union’s regulation of Genetically Modified Organisms (GMO’s) in the human food chain is much stricter than the standards set by the US Food and Drug Administration. If TTIP is signed, it could therefore result in a significant lowering of European food safety standards. Not only GMO products are concerned, but also the practice of disinfecting chicken meat by bathing it in chlorine (usual in the US, illegal in the EU) and the use of artificial growth hormones in the beef industry (banned in the EU, normal in the US). Similarly, the more restrictive US legislation on finance market regulation could be at stake.
It is this harmonization rule that has led anti-TTIP activists to create the metaphor of the agreement as a “Trojan horse” designed to facilitate the introduction of controversial products to the European market.
Undue influence?
While CETA negotiations are finished, both TTIP and TiSA agreements are still in the negotiation phase, which means that this is precisely the time where the closed-door fights about the deal are going on. But is the interest of the general public appropriately represented in the negotiations? Since the talks are extremely secretive with not even the location of the negotiations being made public, it is difficult to find out. However, the NGO Corporate Europe Observatory, a watchdog monitoring the activities of lobby groups in European politics, has found out that of 560 encounters the EU trade department (DG Trade) had with interest groups related to TTIP talks, 520 were with representatives of companies or industry lobby associations, while only 26 of the meetings involved non-governmental organizations or unions.
Shadow courts
The part of TTIP that has most strongly been attacked in recent months, however, has been the so-called Investor-State-Dispute-Resolution mechanisms (ISDR). ISDR basically gives corporations a means of trying to stop legislation that could reduce their profit since such laws could be considered illegitimate trade barriers. The explosive detail is that instead of leaving such investor-state disputes to the jurisdiction of the countries concerned, TTIP could require the creation of arbitration courts. There are decisive differences between regular courts and arbitration tribunals. Arbitration courts often consist of private persons (for example lawyers) appointed by the conflict parties, they meet behind closed doors and in some cases, there is no way of appeal against their rulings. In 2012, according to United Nations data, 70 percent of ISDR decisions worldwide were made in favor of the corporations. What laws could be affected by ISDR mechanisms? There are already examples such as when the tobacco firm Philipp Morris sued Australia and Uruguay because both states tightened restrictions on cigarette advertising. And in 2013, Lone Pine Resources Inc. filed a lawsuit against the Canadian region of Quebec before a NAFTA dispute resolution panel because Quebec had imposed a moratorium on the use of the controversial gas production method fracking. Critics of TTIP have also argued that the increase in such legal conflicts could have a “chilling effect”, impacting even the democratic process that leads to the passing of a law. The anti-TTIP movement points out that lawmakers could already consider the possibility of an investor-state lawsuit and therefore decide not to even try to pass a law.
Now, with public criticism of ISDR on the rise, there is a slight chance that those mechanisms will not be included in TTIP. However, ISDR panels have already been agreed on in CETA, the Canadian-European trade agreement, and it is considered improbable that the US government will settle on less than what the Canadians got.
TiSA – paving the road for unlimited privatization?
The Trade in Services Agreement- TiSA in short – has often been described as TTIP’s less known brother. TiSA is being negotiated between the US, the EU and a number of other nations such as Canada, Japan and Australia. The idea between TiSA is to reduce barriers when it comes to the exchange of services instead of goods. If TiSA is agreed on, it would mean that national governments have significantly less ways of controlling service markets. For example, they could be forced to open all kinds of industries for liberalization, that is, privatization. Now in TiSA, a system of negative lists has been established. If a state wanted to keep a sector or industry out of TiSA’s reach, it would have to name it on such a list. That means that every sector or industry NOT explicitly named on those lists would be on the market. If governments fail to put sectors like water and electricity supply, education or the healthcare system on negative lists, all these sectors could end up in corporate hands. And moreover, TiSA currently includes a so-called “ratchet clause” and a “standstill” one. Under the “standstill” clause, governments would be barred from returning sectors currently open to privatization into public hand. In recent years, governments and communities around the world have, however, done exactly that because they experienced deteriorating quality and rising prices after privatizing certain sectors. The “ratchet” clause would make it impossible for governments to return to a public monopoly anytime in the future if they had once decided to open those sectors up for private investors.
In other words, TiSA would not only make privatization easier, it could also make it almost impossible to return to a system of public monopolies if the private investors fail. This is particularly concerning given cases like the one of the Bolivian people. In 1999, Bolivian authorities sold the water supply of the city of Cochabamba to an international consortium. In the weeks after the deal was made, water prices for the inhabitants doubled or even tripled. After massive protests, the decision to privatize Cochabamba’s water system was reversed. Only six years later, however, the town of El Alto (Bolivia) sold its water supply as well. And soon, the French corporation Suez had cut off water supply for a quarter of El Alto’s 800,000 residents since most of them were unable to pay.
Is this German hysteria?
So, returning to my first question at the beginning of the article – what could be wrong about free trade- there are plenty of points TTIP’s critics have to make. The answer shall be left to every reader personally. My second question was if the anti-TTIP protests are a phenomenon that is typical for the so-called “German Angst”. Firstly, although in most European countries, approval rates for TTIP are higher than in Germany, the grassroots protest movement exists all over Europe as well as in the United States. And secondly, what Britons, French and Americans once used to describe as ridiculous German paranoia has, partly, been proven right by history. In the 1980s, for example, Germany was the only country with a significant opposition to the construction of nuclear power plants (while the French, for example, to this day generate up to 75% of their electricity using nuclear power). And, in light of the nuclear catastrophes of Chernobyl in 1986 and Fukushima in 2011, history seems to have vindicated Germany’s anti-nuclear stance. TTIP, CETA and TiSA are definitely going to have a huge impact on every country in Europe – whatever positive or negative results there might be, we will all share them. This should be reason enough for everyone on this continent to care about the top-secret negotiations.

One response to “Of Trojan horses and German Angst: Europe and TTIP – David Zuther, Germany

  1. Pingback: TTIP: la resa dei conti·

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