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TTIP, sovereignty, legislative capacity and democratic regulations

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The Transatlantic Trade and Investment Treaty, known as TTIP, officially began to be negotiated between the US and the EU in June 2013, and aims to create the largest free trade area in the world: eight hundred million consumers, almost half of gross domestic product (GDP), and a third of global trade.

The Transatlantic Trade and Investment Treaty, known as TTIP, officially began to be negotiated between the US and the EU in June 2013, and aims to create the largest free trade area in the world: eight hundred million consumers, almost half of gross domestic product (GDP), and a third of global trade.

In the EU, the ability to negotiate such treaties was delegated to the European Commission by the states through the Treaty of Lisbon.

The explicitly stated objective of this Treaty is the elimination of all tariff and non-tariff barriers between the two economies, but their real focus is on the non-tariff parts, which consist purely and simply in removing obstacles to the profits of large investors who can assume the regulations and laws that regulate and protect our existence and rights.

The tool used to chisel the removal of "obstacles" is called (not without some talent for understatement) "regulatory harmonization", and consists of -basically- going with the lowest protection governing each subject one or other side of the Atlantic and extend it to both. Because of this, the people in general -whether in the EU or USA- lose out; because the worst option for our interests always applies against the interests of transnational corporations.

Besides the structure of these treaties, it gives them a crushing legal certainty where the rights of large investors are clearly and distinctly protected, but their duties are completely imprecise. Mechanisms that have become true checkmates for fundamental democratic principles, undermine the sovereignty, and ultimately dynamite the rule of law and the right of States. Two of them are the clause concerning the resolution of investor state disputes (ISDS), and the proposal for a permanent Regulatory Cooperation Council.

TThe investor-State dispute resolution clause (ISDS)

The clause concerning the resolution of conflicts between investor and state, ISDS, gives investors the power to challenge the laws established in the best interest of each nation, holding proceedings in private arbitration tribunals consisting of three lawyers, where compensation is asked for relating to actual or "potential" losses that investors deem these new laws could lead to. It is, in fact, a system of private justice only for the benefit of transnational corporations, which lacks transparency and very easily makes a mockery of international legal standards, and where there is not even equality before the law because only foreign investors can sue. Its decisions are final and are not accountable to any higher court.

The legal and arbitration costs of a dispute in these courts are an average of 8 million dollars, with extreme ease coming up to 30 or even 58 million dollars, for example, what the defence cost the Philippine government in the long process against German airport operator Fraport.

It is easy to see the consequences of "legislative cooling" that may involve the constant threat of possible suing of states, and how they can be the perfect excuse for the mediocre or timid governments not to take progressive measures in favour of their populations.

Decades ago, this clause was introduced into international trade agreements when it was made with a country that lacked a strong legal system, to avoid cases of abuse. However, these legal procedures have skyrocketed in the last ten years and countries with strong legal systems have been sued; According to ICSID, 38 cases in 1996, and 514 cases in 2013.

This has caused a lucrative "industry" in investment arbitration to proliferate, where the alleged impartiality and independence is completely illusory: lawyers that comprise the legal teams earn on average 1,000 dollars / hour and the salaries received by the arbitrators reach the a million dollars, the laws and legal actions are determined largely by the same firms, arbitrators and even financial speculators who earn astronomical amounts of money in lawsuits. Not surprisingly, 74% of the editorial boards in investment law are occupied by the same lawyers, giving full sense to the popular expression: who makes the law, made the loophole... And there are more interconnections between arbitration and investment speculative finance, and investment funds exist to finance the costs of the dispute in exchange for a percentage of the final compensation. Examples are Buford Capital (USA) and Legal Investments (UK) who spend an average of 8 and 7.5 million dollars respectively on a case and declare a return of between 30% and 50%.

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