TTIP and TPP: Arc of the Neoliberal Order
The global crisis of 2008-2009 revealed the contradictions between the world's economies and light was shed upon the vulnerability of some alliances. Thus, in order to guarantee the integrity of the European Union, its leaders decided, along with its US partners, to start negotiations to establish the Transatlantic Trade and Investment Partnership (TTIP) at the EU Summit in 2013. On 13-17 July 2015, the tenth round of negotiations took place in Brussels. In a parallel event, in October an agreement was signed among 12 Pacific Rim nations including the US and Japan, establishing the Trans-Pacific Partnership (TPP). Both the TTIP and TPP have sparked heated debates, as they are seen as the products of a neoliberal agenda on a world-wide scale that could pose a serious threat to jobs, public services and the environment in the countries involved.
Background of the TTIP
The decision to create the TTIP didn't come out of the blue; it was anticipated by a set of successive steps. In 1995, the Transatlantic Business Dialogue (TABD) was created - a pressure group uniting businesses on both sides of the Atlantic. The main goal of the organization was stated as improving US-EU trade and investment by jointly developing trade policy recommendations. The 1990s in EU-US relations were characterized by the multi-national mobilization and interaction of business structures. So, the creation of TABD had shown that private firms had become the most important interlocutors with respect to transatlantic trade negotiations. Initially governments introduced the idea of creating the organization, but this initiative was later taken over by industry. Nowadays TABD is a well-organized business organization with a substantial budget that is run by transatlantic directors. It is widely acknowledged that TABD has played a significant role in shaping domestic-level support for transatlantic trade discussions within its member states.
The next step was taken in 2007, when the Transatlantic Economic Council (TEC) was organized at the behest of the White House, President of the European Council Angela Merkel (also German Chancellor) and EU Commission President José Manuel Barroso. It is intended to serve as a tool for the stabilization and normalization of trade between the two parties. As the US Department of State notes on its website, TEC "seeks to deepen cooperation between the United States and the European Union by promoting economic growth through increased trade and job creation." The creation of the TEC was a logical step towards the formation of the Transatlantic Common Market that is in process at the moment.
The essence of the TTIP
The creation of TTIP, as mentioned, was pre-empted by the global economic crisis in 2008. As planned, the transatlantic agreement would stimulate economic growth and the creation of new jobs in the countries involved. Its main aim is to eliminate trade barriers between the US and EU. Its creators hope to achieve this not simply by minimizing tariffs but also by removing technical barriers. In order to do this, a lot of agreements should be reached that are not always easy to achieve. There are several stumbling points hindering the consent of the participating countries.
The US promotes the removal of any barriers in such controversial spheres as the regulation of agriculture, food or data privacy. As the Guardian stated, food safety has become a sticking point at the 10th round of negotiations in Brussels. The European side resists accepting genetically modified products, while the USA is concerned with the delivery of its chlorinated chickens and hormone-treated beef to Europe. The situation is even more complicated due to the fact that the European side would not have any ability to conduct "critical and independent research on the environmental and health risks of GMOs" delivered by the US because of patents protecting GMOs.
Moreover, protectionist policies and the desire of the EU members to retain their identity have also impeded the agreement. For example, Italy insists on preserving its exclusive right to produce such national trade marks as Parmesan cheese; it fears an influx of American imitations on the market.
One more controversial point is its regulations in the sphere of intellectual property, such as the patenting of pharmaceuticals and media-related trademarks in the film and music industries. The official report about the negotiations states that both the EU and the US have "expressed their commitment to keep and advocate a high level of intellectual property protection." The worries are caused by the high possibility that discussions in trade negotiations regarding intellectual property could easily be commandeered by corporate interests, so it will be difficult for smaller local firms to maintain competitiveness.
The issue of investment partnership also serves as grounds for debate. The planned agreements stipulate the broadening of multinational companies’ rights. Within the framework of the Investor State Dispute Settlement (ISDS) provision, it would be possible for American companies investing in Europe to challenge EU governments at international tribunals whenever existing laws pertaining to spheres such as public health, the environment or social protection could be viewed as a hindrance to their commercial activities. An essential point is that the representatives of national European parliaments are excluded from the discussion; it is being conducted behind closed doors. A lot of criticism revolves around this point, as the ISDS is widely viewed as a commonly-used tool "to kill regulations protecting people and the living planet." It is worth mentioning that an investment protection clause had already been included in another trade agreement - the one between the European Union and Canada, called the Comprehensive Economic and Trade Agreement (CETA). The German Economy Minister reacted negatively to that pact, as well as the proposed transatlantic agreement, indicating that they would reject both CETA and TTIP unless the "clause allowing companies to take cross-border legal action against governments is scrapped."
The secrecy of negotiations has prompted a wellspring of suspicion and criticism among the general public, too. For example, the UK mass media has sharply critiqued the fact that deliberations over such an important issue are being made without any possibility for civic participation. It is viewed as a cession of national sovereignty "to some shadowy, undemocratic body" by both the British government and EU as a whole. Such reproaches seem rather logical in light of the recent public debate regarding whether or not the UK should stay in the European Union.
Public concern about the transatlantic agreements has also been caused by the fact that this partnership will apply to e-commerce and transatlantic data flows. This means that European privacy will be threatened by the US corporations. Since data protection is perceived as a fundamental right, there were objections from the EU, which pressured for issues of data protection to be addressed in the trade talks. At the same time, the American side has attempted to push these issues in the discussion between the countries. Since there are currently no comprehensive data protection laws in the USA, multinationals that commonly engage in data-mining have been interested in pressuring the EU to lower its standards in this area. The transference of personal data to third countries remains an issue among Europeans. At the moment there are strict limitations on such transfers throughout Europe, so that personal data may in principle be processed only within the EU with rare exceptions. Such restrictions are regarded by the US representatives as an "illegal trade barrier" that should be eliminated. The TTIP agreements imply the prohibition of any requirements stipulating the localization of service suppliers’ activity. At the same time, Europe at the moment is even more determined to impose stricter limits on transfers of personal data to third countries and re-building its own local independent IT industry due to the recent Snowden revelations. It is an open question whether Europe will continue this line of argument, even in the face of massive pressure by the US in the light of the TTIP agreement, or if it will forgo its own fundamental principles.
Civil society advocates have actively fought for the public rights that could be violated by the transatlantic partnership; they have specifically raised the issue of transparency. Some results have already been achieved in Europe: two investigations were launched into the Council of the EU and the European Commission over the TTIP's lack of transparency by the European Ombudsman. At the same time, America does not willingly countenance public participation in negotiations and has "pretty much made no effort to include public input into the negotiations."
The public is also worried about the inclusion of public services in the TTIP. The TTIP's stated principles call for a free market between the participating countries, implying that any remaining state monopolies must be abolished. Among them are public services that are provided by the state or by a limited number of suppliers, such as health, education and water services. The main concern is that these services could be privatized, a process that would be impossible to reverse. Moreover, if the public services undergo new regulations which are geared at maximizing the profit of corporations, equality standards that are fundamentally important to the maintenance of health and educational services could be substantially lowered. The EU representatives claim that public services will be kept out of the TTIP by analogy with CETA. In the agreement between the EU and Canada, it is stated that the new rules won't affect educational, health and social services "which receive public funding or State support in any form, and are therefore not considered to be privately funded." However, in the TTIP talks, these essential public services have been kept on the table.
The issue of whether or not the trade pact will create new jobs for people is also a controversial one. It has been admitted by the EU that the transatlantic partnership could lead to even more unemployment, as jobs shift to the United States where labor standards are lower and trade union rights are comparatively non-existent. The promises that the potential trade deal will result in massive job creation are not supported by the studies which have been conducted. In fact, the research suggests the opposite, predicting "a trivial growth rate of just 0.01% GDP over the next 10 years and the potential loss of jobs in several economic sectors, including agriculture." There have already been historical examples when similar bi-lateral trade agreements have caused job losses. One is the North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico, which "caused the loss of one million US jobs over 12 years, instead of the hundreds of thousands of extra that were promised."
All in all, the Transatlantic Trade and Investment Partnership has been widely recognized as a threat to democracy and fundamental human rights. The case of NAFTA has already shown how democratic laws, designed for the protection of consumers and the environment, can be challenged by private corporations in the pursuit of more profit. While citizens and civil society-oriented NGOs try to oppose excessive investor rights, there are not many possibilities for them to contribute to negotiations. Civil representation in the discussion is highly restricted, not to mention any possibility for a referendum. For the observes, the TTIP is seen as a "part of the broader geopolitical game plan to weaken Western Europe and divide the European continent by sidelining Russia and drawing Europe away from China."
Even more secrecy with TPP
Alongside the TTIP, the USA is holding negotiations about another secretive trade pact: the Trans-Pacific Partnership (TPP). It is a free trade area comprising some of the largest economies of the Pacific region: the USA, Japan, Australia, Singapore, Malaysia, Taiwan, Canada, Mexico, and others. It is anticipated to be the largest international trade and economic association, as the countries involved account for about 40 percent of global gross domestic product.
According to the US government, the TPP is considered to be the companion agreement to the TTIP; however, the Trans-Pacific Partnership is even more secretive in nature than the TTIP. The pact has been under negotiation for seven years and could be viewed as a logical sequel to the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) signed by Brunei, Chile, New Zealand, and Singapore in 2006. Once again, free and open trade and investment were stated as the main goals of the pact, which pertains to spheres including commerce, economics, finance, scientific exploration and technology. In 2008 the discussion was broadened as more countries joined it: Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam.
According to a well-known proverb, “If you cannot stop the revolution, you must lead it.”
The United States joined negotiations for a trans-Pacific regional trade agreement in March 2008. By that point, there had been more than 20 rounds of secretive negotiations. Although the proposed text of the deal has been leaked several times, the citizens of potential member countries have otherwise remained excluded from the debate. The process has become even more closed, as stakeholder forums have been replaced with “stakeholder tables” – a "table staffed by interested stakeholders to which negotiators may or may not go." Meanwhile, the White House has touted the TPP, claiming that it will allow the US to "rewrite the rules of trade to benefit America’s middle class."
The Trans-Pacific Partnership, like its transatlantic counterpart, embraces a number of controversial issues that provoke public anxiety and distrust. First of all, its lack of transparency has raised alarm bells among public policy watchdogs on both sides of the Pacific. Since the beginning of the discussion, the 12 TTP countries have not published any texts or made their negotiating positions known. One of the important provisions of the Trans-Pacific agreement is its Intellectual Property Charter, which would restrict "users’ freedom of expression, right to privacy and due process, and hinder peoples." The leaked IP chapter includes some details about more constraints in the domain of intellectual property, including:
• Expanding copyright terms (the TPP proposes implementing copyright protections for a minimum of 120 years for corporate-created content);
• Escalating protections for digital locks (known as digital rights management, or DRM), even if users intend to make legitimate and non-infringing use of the protected work, such as via Linux;
• Threatening journalists and whistle-blowers (there is a vague text on the misuse of trade secrets that could be used to charge anyone who reveals or even accesses information through an allegedly confidential computer system).
All of the aforementioned points and others included in the TPP agreements are viewed as a threat to one of the most fundamental human rights - access to knowledge and information. Moreover, it is oriented towards US interests in this sphere; other participating nations have almost no right to develop policies and laws that best meet their own domestic priorities.
One of the main problems with TPP is the fact that it deals not only with trade issues, despite this being the pact's stated priority. Only five of the TPP’s 29 draft chapters relate to trade issues. Other issues it addresses include electronic commerce, labor rights, state-owned enterprises, the environment, public services and workers' rights.
Regarding the trade-related issues, the situation is also controversial. According to J.E. Stiglitz and A.S. Hersh, "the TPP would advance an agenda that actually runs counter to free trade" by restraining open competition in different spheres of production, thus raising prices for the consumers. The Trans-Pacific Partnership, as well as TTIP, involve Investor-State Dispute Settlement (ISDS), which extends the international corporations’ rights and abilities to a very high level. Instead of governments being able to punish those who produce harmful products, the governments "would have had to pay the manufacturers not to kill their citizens." Due to ISDS, individual foreign firms would gain equal status with sovereign nations in their ability to challenge national policies which were established in the interests of ordinary people.
To sum up, the TPP and TTIP could be seen as a part of the larger neoliberal free trade agenda that threatens democracy and fundamental human rights. Similar accusations have already been pronounced regarding NAFTA, but this time the issue is more serious, as the scope of the pact is much larger and its aims more ambitious. The partnership is spearheaded by the USA, which has in the past been seen as a promoter of transparency and publicity; this time, however, it has embraced an atmosphere of secrecy and privacy. The essence of the TTIP and TPP is the fact that much is being done to promote corporate interests while workers and trade unions have been left in the dark. So, it is the embodiment of neoliberalism in that it implies "the use of international loans and other mechanisms to suppress unions, squelch regulation, elevate corporate privilege, privatize public services, and protect the holdings of the wealthy." In a review of the Trans-Atlantic and Trans-Pacific agreements, Paul Roberts called the USA a "lie machine for the secret agendas of vested interests" which is trying to turn Europeans and Asians involved in the TTIP and TPP into bought-and-paid-for agents of the US corporations.
Experts from the New York-based Council on Foreign Relations, which has promoted the interests of US multinational corporations since its inception in 1921, have been more forthright in expressing the TPP's agenda. Michael A. Levi, the David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the CFR's Maurice R. Greenberg Center for Geoeconomic Studies has stated that "TPP has been advertised as not just an economic agreement, but a geopolitical one." His colleague Edward Alden noted that "if Congress rejects the TPP, that’s a slap in the face to 11 other countries, including close allies like Mexico, Canada, Japan, Australia, and New Zealand that have made difficult decisions domestically in order to be able to conclude the deal. So the thinking has always been, at the end of the day, Congress is going to be very reluctant to do that." In other words, the TPP is a well-organized trap which has been set in place by the neoliberals' center of power and arranged to reflect their economic agenda.
Commenting in the Financial Times, Alden voiced that the economic data for this deal reflect that the "TPP agreement, which includes a dozen countries accounting for some 40 per cent of global trade, is the most expansive regional deal yet negotiated. It sets new rules for electronic commerce and state-owned enterprises, promises greater regulatory co-operation to improve trade flows, and should do more to boost labor rights than any previous trade agreement. And it includes Japan, the world’s third-largest economy and one long resistant to such ambitious trade opening."
By doing so, the USA is attempting to outweigh potential competitors on the global market, China above all. The TPP will cause a narrowing of China’s export advantages as companies will be more likely to invest in production in TPP member countries. In an endorsement of the TPP, Barack Obama played on America's fears of China as a rival power: "When more than 95% of our potential customers live outside our borders, we can." China, meanwhile, is skeptical at the moment about the TTP's prospects, and there are solid reasons to worry.
India is also averse to joining the TPP due to its discriminatory rules, especially as they relate to the pharmaceutical industry. However, Washington has retaliated step-by-step, developing an engagement mechanism that may destabilize the Indian economy in the future. As an emerging market, India needs more partners abroad and is looking for possible deals. Prime Minister Narendra Modi said following the first US-India Strategic and Commercial Dialogue on September 28 that he looked "forward to work with the US for India’s membership of the Asian Pacific Economic Community." Obama hasn't answered. The neoliberal camp worries about frozen relations between the US and India and would like to develop a more ambitious vision for US economic ties with India. New Delhi is also the focus of US interests because it may be used as a counterweight against growing China. The countries still have territorial disputes and the potential for conflict is rooted in their historical backgrounds (imperial attitudes with ancient cultural traditions). We need to keep our eyes on relations within the China-India-US triangle to understand what happens in the actual geopolitics of the Pacific region. Something positive about BRICS may be relevant here.
Of course, the TTIP and TPP are not the only examples of large international trade and economic agreements, but they are undoubtedly the most devilish ones. The TTIP is aimed at excluding Russia from trade agreements with Europe, while the TPP pushes China out of the Pacific trade zone and it is spearheaded by the USA as a predominant force. As compared to the Eurasian Economic Union (EAEU), the TPP has a similar structure, but the size of the economies of the participating countries is bigger. One important distinction is that the EAEU, unlike the American transoceanic partnership projects, seeks to take the interests of all of the states in the region into account. As stated by Russian President Vladimir Putin, "the absence of two major regional players such as Russia and China in its [Trans-Pacific] composition will not promote the establishment of effective trade and economic cooperation." The main advantage of Russia and the Eurasian Economic Union consist in the fact that this pact does not undermine the sovereignty of the participating countries. The same is true of the Community of Latin America and Caribbean states (CELAC) and the Union of South American Nations (UNASUR) where there are no such pressure mechanisms threatening the member states' national interests and an accent is placed on the issues of justice, solidarity and transparency.