In my first blog post of the year, I mentioned the ongoing negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States as one of the issues to watch out for, and thought the time was right to dig a little deeper into the question – what would this treaty mean for agriculture and food trade? Does it provide more opportunities or more threats to societal goals related to sustainable and fair food systems? I thought this topic would be good for a Q&A-style post, so sit back and enjoy – and let me know if you have any other questions!
What is this partnership? I thought the EU and the US were already pretty good trading partners?
Indeed. The tariff barriers (the added tax on imported goods from the other region) are already very low compared to other bilateral relations. What this agreement is supposed to “deal with” are non-tariff barriers to trade. These can be laws that unfairly discriminate between imported and local goods, quotas, standardization issues (I remember my dad trying to import a car to Europe and having to change the blinker light color due to weird standardization discrepancies) and other types of policy that makes trading difficult. The goal of the TTIP is “regulatory coherence” between the two regions.
That sounds like a good idea. Too many different regulations would seem to make life difficult.
Yes and no. Clearly, creating coherence where the same values exist and just different systems of implementing these values emerged makes sense. (Why is the “Y” and “Z” switched out on the German keyboard compared to the American one? Whyyy? <- regulatory coherence makes sense). Where I would be more skeptical is when regulatory coherence would lead to a race to the bottom in terms of standards because the easing of one standard in one area is traded for the easing of a different standard in the other. There are good reasons why certain restrictions and legislation exist, related to public health, environmental quality and societal values, and I would be very critical if these kinds of agreements were used to water down such standards.
Are there indications that this will happen?
Ok, here’s the weird thing – these negotiations are happening behind closed doors, so all discussion of them has to be accompanied by “probably” and “based on hear-say”, since there is no official agenda that was published. However, you can extrapolate what will be talked about because a lot of business interest groups have made their hopes and wishes (let’s try and not say ‘demands’) very clear.
Sheesh. Can you give any examples of what is [probably] on the agenda that would affect agriculture trade?
- Food safety: The US and the EU have been fighting over this for years, with the US criticizing EU’s restriction on genetically modified organisms (though this is already easing up), the ban on veterinary growth hormones that exists in some EU member states, and restrictions on hormone-treated beef, the use of growth-promoting hormones like ractopamine, chlorine-washed chicken parts etc. All these regulations might be on the table because – wait for it – they prevent US goods from entering the market and are thus seen as trade-distorting barriers in the free trade perspective. Labeling issues – e.g. for GM-contents – might also be at stake.
- Chemical policy reforms: Here, two principles of governance clash: The EU has its precautionary principle, which means it will only allow things that are proven [at some scientific level of evidence] to be safe. The US, on the other hand, requires proof of a substance’s harmfulness in order to ban it. There might be a battle of wills at work as well.
- Procurement policies and local foods: In the recent renaissance of local food systems, some municipalities with Food Policy Councils or even whole government programs (like the U.S. Farm to School program) aim to restrict procurement to a particular local radius to support particular producers in their vicinity. This practice could come under fire too because they are – wait for it – discriminating against foreign competition and considered “localization barriers to trade.”
- Even the regulation of the financial sector might make an impact on agriculture, as financial and commodity market regulation efforts might be standardized and weakened in that vein.
Huh. But this will all be duly considered, right? With public consultations and such?
Not the way it looks now. Worse, there is another part of the agreement that is called “investor-state dispute resolution (ISDR)’ which gives investors the right to sue governments for compensation over rules that affect their expected profits. This means that even if there are rules agreed and then a government decides to change it again (due to public pressure or new elections), if a company has made investments based on the previous (more lenient) regulatory framework, it can sue the government for its profit shortfalls.
Yeah. That actually already exists today – it’s supposed to protect investors’ rights in situations where nation-states are unlikely to be reliable. It is more debatable why it would be necessary in two countries/regions with well-established legal systems, including property law regimes. According to some advocates, ISDR can be described as “corporate sovereignty” or ” the rise of the corporation as an equal of the nation state”. Examples of this in work include the case of Dow AgroSciences vs. Canada, where the company threatened to use NAFTA arbitration to sue Canada over Quebec’s ban on some lawn pesticides containing a dangerous component. They settled outside of court (meaning, as I understand, that Canada paid Dow for regulating its harmful pesticides. There goes taxpayer money). Other examples can be found here. According to UNCTAD, the number of known dispute settlement cases lies around 514, of which 31% were decided in favor of the corporation, 42% in favor of the state, and 27% reached a settlement. These types of payments can go all the way to $2 billion. And even if governments win, they will have to pay the legal expenses, which amount to around $8 million per case.
Indeed. And another whammy – once the deal is negotiated (behind closed doors), one will need all signatories to agree to any changes to it. This means that even if one country’s population has a referendum and wants to change something, you will have to convince the governments of all 28 EU member states plus the US to amend the treaty. Fun times.
So what can one do about this?
Protest! The amount of public attention the negotiations have gotten have already reached a partial success – EU Trade Commissioner Karel de Gucht on January 21 “announced his decision to consult the public on the investment provisions of a future EU-US trade deal, known as the Transatlantic Trade and Investment Partnership (TTIP). The decision follows unprecedented public interest in the talks. It also reflects the Commissioner’s determination to secure the right balance between protecting European investment interests and upholding governments’ right to regulate in the public interest. In early March, he will publish a proposed EU text for the investment part of the talks which will include sections on investment protection and on investor-to-state dispute settlement, or ISDS. This draft text will be accompanied by clear explanations for the non-expert. People across the EU will then have three months to comment.” So at least part of the draft text will be open for discussion after all. Protesting further might make the negotiations even more transparent.
There are a number of petitions online regarding TTIP, depending on your country and background:
or just google to find another one!
Do you have any more questions regarding the TTIP/TAFTA agreements?