The EU-US Free Trade Agreement must be opposed – for the sake of the NHS and more.
‘This week marks the first round of negotiations for a far-reaching transatlantic trade deal. In the face of growing opposition to plans for expanded corporate powers in the proposed pact, the European Commission is trying to dispel concerns with propaganda. See through the rosy PR with Corporate Europe Observatory’s guide to investor-state dispute settlement – Unravelling the spin: a guide to corporate rights in the EU-US trade deal published by The Corporate European Observatory (re-posted in full below)
If realisation that the National Health Service is to be privatised by the Coalition government did not dawn on many until it was too late, then the implication of the EU-US trade deal on privatised public services still is not fully appreciated. There is no doubt that privatisation of the NHS is a most unpopular policy, even among Conservative voters and so the cloak of deception woven by the Coalition was the only way this was going to be achieved.
Open Democracy explains how the real reason for the Health Care Act was the EU/US Trade Agreement. The Act is all part of a corporate-interest Trade Agreement. It has nothing to do with the health and well being of UK citizens, nothing to do with the will of the people, and absolutely nothing to do with democracy.
Summary and suggested action (Open Democracy) – It is in health that the effects of ‘harmonising’, towards this Free Trade Agreement, are already manifest. The fact that the NHS has been prepared for transnational investors as part of a planned US/EU free trade agreement should be made public
– The similar threat to other areas should also be public.
– The activities of the EU Trade Commission on our behalf should be an important part of the debate about EU membership
– There is a job to be done on disseminating information and demanding reporting and analysis of the implications of the US/EU Free Trade Agreement, so that it is not just the perspective of transnational capital that is being presented. (The BBC has a Business Unit presenting this perspective but has no such unit for workers or public service users). The nationwide concern about the NHS and established networks of concern could be the means for a strong, clear and concerted public voice on this.
– The juggernaut of the trade deal backed by business voice propaganda is unlikely to be questioned otherwise.
– The lack of public information on this broader context of the NHS changes isgrounds for the Health and Social Care Bill to be repealed. The Opposition Labour Party needs to call for this.
– Raising the issue in relation to health would support information-seeking etc. for other areas which will be affected.
Syzygysue extrapolated to the EU-US FTA, from what is known about the secret negotiations from the Trans Pacific Pact TPP, or Free Trade Agreement, when she posed the question ‘Are we already in the post democratic era?’ (Think Left)
.. Overarching all this is the transfer of sovereignty from nations to private corporate tribunals who will be empowered to compel governments to change their laws or pay unlimited fines. Foreign companies will essentially not be bound by domestic laws.
This begs the question as to how much of the Tory/LD programme and the changes being forced on EZ countries, under the guise of ‘austerity’ were/are, in fact, in preparation for compliance with the proposed EU-US FTA?
Human rights, environmental protection and employment rights could all be contested and overturned by private corporate tribunals. The post-democratic age will have been enshrined in binding legislation… and all of it will be done in secret! ..
( “Are we Already in the Post Democratic Era, Think Left”)
Following the increased support for UKIP, the Conservative Party has been supporting a Referendum on Europe. Meanwhile, President Obama in May warned that if the UK did withdraw from the EU, the trade agreement would be put at risk (Guardian). This reinforces the argument that democracy may be at risk .. if it is not too late already. Indeed Red Labour must address the Elephant in the Room.
The following article from the Corporate European Observatory is reproduced below in full, and examines how propaganda is being woven by the European commission, and provides a guide interpreting what is really behind their spin.
Unravelling the spin: a guide to corporate rights in the EU-US trade deal
published by The Corporate European Observatory
“This week marks the first round of negotiations for a far-reaching transatlantic trade deal. In the face of growing opposition to plans for expanded corporate powers in the proposed pact, the European Commission is trying to dispel concerns with propaganda. See through the rosy PR with Corporate Europe Observatory’s guide to investor-state dispute settlement.
Consumer groups are opposed to the proposed sweeping corporate rights. Trade unions, environmentalists and digital rights activists, too. All (centre-)left groups in the European Parliament have voted against it. Some EU member states have raised concerns. Media reports have started sounding the alarm. But according to its leaked negotiating mandate, the European Commission still wants to enshrine extreme powers for corporations in the controversial EU-US trade deal.
So-called investor-state dispute settlement provisions would enable US companies investing in Europe to challenge EU governments directly at international tribunals, whenever they find that laws in the area of public health, consumer, environmental or social protection interfere with their profits. EU companies investing abroad would have the same privilege in the US. (See our briefing A transatlantic corporate bill of rights.)
This is an attack on democracy and legislation in the public interest. The companies can claim compensation if governments create regulations that go against the corporate interest. One only has to look at corporate claims against governments based on similar prior agreements to get a taste of what’s to come: tobacco giant Philip Morris has sued Uruguay and Australia over health warnings on cigarette packets; multinational polluter Vattenfall is seeking $3.7 billion from Germany following a democratic decision to phase out nuclear energy; and US-company Lone Pine is suing Canada for US$250 million after the country imposed a moratorium on shale gas extraction (fracking) in Quebec over environmental concerns. According to the UN, last year, investor-state tribunals decided 70% of such disputes in favour of the investor, ordering taxpayers to pay billions of dollars in compensation.
Why would you grant business such a powerful tool to rein in democracy and curb sound policies made in the interest of the public? Why would you give foreign investors more rights in your legal system than your domestic investors, let alone communities and citizens?
To head off concerns amongst an increasingly concerned European public, the Commission has begun a misleading propaganda drive. Let us guide you through some of its key claims:
Spin #1: EU member states have not been sued in previous investor disputes
On its Q&A website on the transatlantic trade deal, the Commission claims that “the EU’s Member States have been regulating for years and have not been challenged” in investor-state disputes under similar treaties.
This is selective blindness. What about the afore-mentioned lawsuit by energy giant Vattenfall against Germany, challenging the country’s phase-out of nuclear energy? And the ongoing claim by Chinese financial company Ping An against Belgium over the bailout of the Fortis Bank? What about the recent award of €22 million that a Dutch insurer won against the Slovak Republic because the country had reversed health privatisation policies? At least 15 different EU member states have faced investor-state challenges. With 20 known claims, the Czech Republic is the fifth most sued country in the world.
Is the Commission ignorant of this evidence? Or is it just telling blatant lies to dispel pesky concerns?
Spin #2: Legislation is not at risk
The Commission also claims that “including measures to protect investors does not prevent governments from passing laws, nor does it lead to laws being repealed. At most it can lead to compensation being paid”.
In fact, this mild-sounding “at most” scenario where a government has to compensate the company can mean quite a raid on public budgets. Last year, the highest known damages to date, US$1.77 billion, were awarded to US oil company Occidental against Ecuador – for the termination of an oil production site in the Amazon. In 2003, the Czech Republic had to compensate a media corporation with US$ 354 million – the equivalent of the country’s entire health budget.
Just the threat of a multi-million-dollar lawsuit can be enough for legislation to be abandoned or watered down. In the Philip Morris claim against health warning labels on cigarette packs in Uruguay, the country gave into pressure before the arbitration even began, and reduced the size of the labels. Canada also withdrew proposals for mandatory plain-packaging for cigarettes after Big Tobacco threatened investor claims.
On top of that, investment arbitration tribunals do absolutely have the power to order the repeal of a government measure. According to leaked texts from the EU’s ongoing trade negotiations with Canada the Commission itself has proposed that the “repeal of the measure concerned” – meaning: the cancellation of a law or government act – should be an option if a tribunal finds that it violates the agreement. Canada will be the first country which far-reaching EU-wide investor rights will be agreed with, likely to serve as a template for the pact with the US.
If that does not put legislation at risk, what does?
Spin #3: Investor-state dispute settlement promotes growth
In a factsheet on investor-state dispute settlement, the Commission states that “investment protection plays a fundamental role in promoting and securing economic growth in the EU” – because it reduces the risk of investing.
In the real word, this is not always the case. Qualitative research suggests that investment treaties are not a decisive factor in whether investors go abroad. And while some econometric studies find that the treaties do attract investment, others find no effect at all. People who think otherwise might want to read Lauge Poulsson’s review of the existing research.
Some governments are also realising that the promise of foreign investment is not being fulfilled. In the words of a South African government official: “We do not receive significant inflows of FDI [foreign direct investment] from many partners with whom we have BITs [bilateral investment treaties], and at the same time, we continue to receive investment from jurisdictions with which we have no BITs. In short, BITs are not decisive in attracting investment.” Due to the lack of economic benefits alongside enormous political and budgetary risks, South Africa has recently stopped renewing certain investment treaties.
So, what evidence exactly is the Commission referring to when it claims that investor-state dispute settlement promotes growth?
Spin #4: The EU is formulating investor rights that safeguard public policy
In public debates and on its website the Commission also claims that it is clarifying and thereby limiting some of the excessive investor rights “to ensure that genuine regulatory action cannot be successfully challenged”. In a media comment, European Commission Spokesman for Trade, John Clancy stated: “The EU is at the vanguard of international efforts to make sure that companies cannot abuse ISDS [investor state dispute settlement], and we will be pushing for safeguard clauses against frivolous claims.”
Oh really? According to the Commission’s negotiating mandate for the transatlantic trade deal investment protection “should be without prejudice to the right […] to adopt and enforce […] measures necessary to pursue legitimate public policy objectives” (emphasis added). This creates a necessity test that places a big burden of proof on governments to justify their actions. Is Australia’s plain packaging law for cigarette packs necessary to protect public health? Was Germany’s exit from nuclear energy necessary? Might there not have been other, more effective measures? It would be up to an offshore tribunal of unaccountable private lawyers to decide.
Second, a safeguard clause against frivolous claims as proposed by the Commission would not have led to the dismissal of any of the controversial attacks on sound public policies that Vattenfall, Philip Morris and the like have launched – because they are based on allegations of real violations of investment treaties whose terms tend to be very broad. Claims are only considered frivolous when there is a complete lack of legal merit. Under existing rules, states can already ask arbitrators to dispose swiftly of frivolous claims, but not a single such case is known.
Finally, this detailed analysis of a leaked text from the EU’s trade negotiations with Canada (dated May 31, 2013) concludes that the EU has failed to “introduce any major novel changes meant to address the problems that have come to light in investor-state dispute settlement.” The text is likely to be a template for the EU-US pact.
Investor rights – European Commission style – as a way to safeguard public policy? Wishful thinking – at best!
Spin #5: Cultural diversity will not be compromised
On its Q&A website on the transatlantic trade deal, the Commission promises to “not compromise” Europe’s “cultural diversity, for example in film production and television programming” – adding that the audiovisual sector “is not part of the negotiations dealing with services and the right to establishment.”
This careful wording follows France’s adamant insistence to exclude audiovisuals from the EU’s negotiating mandate, to protect its film industry from Hollywood. But what it means in reality is that the cultural sector would still be governed by the investment protection rules of a potential deal, including investor-state dispute settlement. According to German public television providers, “the potential for challenges by multinational firms in the entertainment business would be great.”
Spin #6: European investors face problems in courts elsewhere
In a recent media comment, Commission spokesman John Clancy stated: “The fact that a country has a strong legal system does not always guarantee that foreign investors will be adequately protected.” In its factsheet, the Commission argues that investors need to be able to bypass judicial systems in other countries through a parallel system of investment arbitration because domestic courts suffer from “bias or lack of independence”. It also claims that there are “examples of cases where states have expropriated foreign investors […] and deprived them of any access to local courts”.
Which examples exactly? MEPs have repeatedly asked the Commission to provide evidence of access to local courts being denied in Canada. The Commission gave two weak examples where companies did not even try to go to local courts. Asked specifically about problems faced by European investors, it admitted: “There is little publicly available information available in this context”. Neither has the Commission given any proof of discrimination against foreign firms in US courts.
On the other hand, the Commission remains completely silent on the rampant corporate bias and vested interests at play in private investment arbitration tribunals. Last year, our Profiting from Injustice report uncovered how a small club of lawyers riddled with conflicts of interest is securing investor-friendly interpretations of the law and sustains a continuous flow of multi-million dollar lawsuits.
So, while the Commission has yet to prove that there is anti-foreign-investor behaviour in US courts, there is an enormous weight of evidence of the corporate bias in the parallel legal system it is proposing instead.
Spin #7: The EU will guarantee the independence of the arbitrators
Responding to widespread concerns about conflicts of interest among the private lawyer panels which ultimately decide investor-state disputes, the Commission is proposing a code of conduct – “to make sure that those who are called in to rule on our cases are also the right people”.
A leaked version of this code of conduct indeed contains bans that, if implemented strictly, could tackle some of the conflicts of interest at the heart of the arbitration system. For example, arbitrators “shall not be influenced by self-interest, outside pressure, political considerations, public clamour” etc. Also, an arbitrator “may not use his or her position on the arbitral tribunal to advance any personal or private interests” and “must avoid […] acquiring any financial interest that is likely to affect him or her impartiality or that might reasonably create an appearance of impropriety or bias.”
Taking these words seriously would require banning the global elite club of arbitrators – many of them European – who have decided the majority of all investor-state claims thus far. Unlike judges, arbitrators have no flat salary but earn more the more cases they rule on. Any arbitrator earning significant income from these disputes faces an incentive to pave the way for more business in the future with their rulings. This observation was also made by the Singaporean attorney general who noted that it is “in the interest of the entrepreneurial arbitrator to rule expansively on his own jurisdiction and then in favour of the investor on the merits because this increases the prospect of future claims and is thereby business-generating.”
Whether the EU will really kick out these ‘entrepreneurial arbitrators’ remains to be seen, considering the absence of monitoring and enforcement mechanisms from the proposed code of conduct. Just claiming arbitrator independence and putting in place a ‘tick box’ exercise clearly won’t be enough.
Spin #8: Some of the investor privileges cannot be enforced in domestic courts
In its factsheet, the Commission explains that the investor rights which it wants to incorporate in the EU’s future international investment agreements “are not necessarily incorporated into the domestic system” of the signatory states. The investor needs a parallel legal system – investment arbitration – to enforce these rights. Thus the need for investor state dispute settlement.
Finally some honesty! This is exactly what the Commission’s corporate agenda is about: granting multinationals far greater property rights than any domestic firm, any community, any individual is granted by any constitution in the world. And creating an overreaching legal system by which these superior rights can be enforced.
Beyond the rosy PR: a corporate power grab
So, here’s what investor-state dispute settlement in the proposed EU-US trade deal is really about: exacerbating the imbalance between corporations and the 99% by granting a powerful weapon to fight regulation of some of the world’s most powerful multinationals. They will use that weapon to enshrine existing inequalities and launch a toxic attack on democracy, both in the EU and the US.
Don’t be fooled by the European Commission’s spin. Don’t let its rosy stories distort public debate about this looming transatlantic corporate bill of rights.”
References and Further Reading
From Think Left: