The launch of the negotiations on the Transatlantic Trade and Investment Partnership TTIP has triggered off an intensive public debate on the goals and direction of the European Union's trade policy. The intensity of the debate took the European Commission as well as the Member States' governments who had anonymously mandated the Commission to negotiate this agreement by surprise. For almost twenty years, since the debate on the Multilateral Agreement on Investment, trade issues have hardly ever reached the headlines of EU media.
But this time, many journalists and civil society organisations have realised that TTIP, if concluded, would be an agreement of game-changing importance. This mega-deal between two of the three largest powers in world trade would have an impact on the way EU citizens produce and consume. It puts in question the value of European achievements in social, environmental and animal protection. It has a decisive influence on whether Europe's precautionary principle will prevail over the U.S. American risk based approaches.
If TTIP was only about reducing tariffs, it would already have significant consequences for agricultural production in the European Union, as well as for several other economic sectors in Europe operating at higher costs due to stricter regulation established as a democratic political choice. This concerns farming, or egg production as much as for instance energy intensive industries.
But TTIP strives for even much more: the issue at core is "regulatory cooperation", as TTIP is aiming at creating a real "new common Transatlantic market". The negotiators have been given the task to identify and abolish wherever possible divergent regulations, which are seen as barriers to free trade across the Atlantic. Take the REACH regulation in the EU as an example, which protects citizens from hazardous chemicals, but was bitterly fought by chemical industry in the U.S. and the EU from the very beginning.
Germany tried out this formula to protect its exports
In addition, proposals are on the table to establish within this binding agreement institutions with the task to evaluate any future legislation or regulation based on its impact on trade and investment, and to prevent new obstacles to free trade that could emerge. Such a procedure would have an enormous effect on legal initiatives of the EU Commission, and would change the text already before the proposal is discussed by the co-legislators European Parliament and European Council. Large corporations, by a notice and comment procedure, would be given the opportunity to influence new legislation long before parliamentarians even get to see the proposal. It should not surprise that consumer protection organisations on both sides of the Atlantic, along with trade unions are deeply concerned by the intended change to the rules of the established legislative procedures and today's (already unequal) opportunities for consultation and influencing the outcome of deliberations.
TTIP shall furthermore serve as an agreement fostering the use of investor-to-state dispute settlement (ISDS) mechanisms. Over the past two decades we have witnessed a gold rush for specialised law firms, trying to sue governments for democratically established new legislation, mostly in the context of environmental protection or nature preservation. Too often they argue successfully in front of private arbitration panels that the profit expectations of their client have been negatively impacted by a policy decision and deserve compensation. This procedure explicitly challenges the right to regulate of democratic governments,.
ISDS had once been invented in Germany as a tool to protect German companies' investment in newly independent countries with less established judicial proceedings. It is an instrument of the past Century, which we should not include in modern agreements any longer. In particular, in the case of an agreement between the USA and the EU and its Member States, there should be sufficient trust in the competence of our established court systems. Giving foreign investors a special treatment in comparison to local citizens and local companies undermines justice. Courts balance interests regarding compensation claims based on the full complexity of constitutions, and not just based on the far less comprehensive complexity of bilateral trade agreements.