Since summer 2013, the European Union (EU) has been negotiating the Transatlantic Trade and Investment Partnership (TTIP) agreement with the United States (US). Normally, the idea of this kind of agreement is to improve the flows of goods, services and investment between trade partners by reducing custom duties. But, on average, those duties are already quite low between the EU and the US.
The goal of TTIP is therefore to reduce the obstacles that come after the border. Such obstacles are, for example, double inspections of plants, different testing requirements, or other administrative processes that complicate the lives of companies. But, sometimes, complicated requirements for companies can also be genuine consumer protection measures. Europeans need to be aware that TTIP is more than a trade agreement. It is a geopolitical tool that both parties intend to use in order to shape global rules and influence other trade partners. Another justification for TTIP is that it would boost growth and create jobs, which remains to be proven by hard data.
Why does TTIP matter for consumers?
A well designed TTIP will mean that consumers can be offered a wider variety of products at lower prices. An ideal TTIP for consumers will promote concrete benefits in their daily life, such as a more consumer-friendly, cheaper telecom market. These concrete benefits can also take the form of a transatlantic rapid alert system for food safety. Or it could be an online dispute resolution platform which EU consumers can use when confronted with problems after purchasing a good or a service from the US (and vice-versa). However, the idea of aligning rules to reduce obstacles to trade could also undermine current and future levels of consumer protection if the final agreement is not carefully written. To understand why, let’s analyse the current content of the deal.
State of play of the TTIP talks: still a long way to go
So, what is the proposed content of TTIP? The draft text is currently divided into three pillars and 24 chapters. As a consumer organisation we only have access to what the EU is proposing, because the US refuses to disclose their demands. The three pillars are about giving better access to each other’s markets, about creating a dialogue between regulators (to reduce trade obstacles) and about creating common rules to improve trade flows. To give you concrete examples, TTIP will deal with issues ranging from custom duties to food safety, e-commerce, telecoms and financial services rules. It also aims to improve the cooperation between EU and US regulators on chemicals, cosmetics, car safety, medicines, medical devices and investment protection rules.
After almost three years of negotiations, the EU and US would like to conclude their discussions this year. But elections will be held this autumn in the US and a new administration will replace the Obama White House at the beginning of next year. This means that if TTIP is not concluded by then, US negotiators will change leading to a lot of delay before negotiations can resume. Not to mention that the new US government might not have the same vision on TTIP as the present one. The political momentum the EU and US have struggled to build may be lost.
Even with all the political will in the world, we don’t see how TTIP can be realistically concluded this year. Discussions on the actual content of many TTIP chapters haven’t even started. Other sensitive sectors, such as public procurement (Public procurement means that public authorities contract companies for projects such as building a state school) and agriculture, will need time to be solved. And there will also be very sensitive political points to resolve.
Investment protection: a stalemate in progress
For instance, the EU recently proposed to reform the infamous investor to state dispute settlement system (ISDS). This system allows foreign investors to sue governments if they feel their investments are endangered by a government decision. This can even be the case if the decision in question aims to protect consumers. The reform proposal, called the Investment court system (ICS – it would be included in TTIP and is already included in other trade agreements of the EU such as the ones recently concluded with Canada and Vietnam), is a step in the right direction: it shows that the EU is listening to the concerns of its citizens who don’t want ISDS at all. It is also a response to the European Parliament’s TTIP resolution that was adopted last summer. In this resolution, the Parliament called on the European Commission to propose a fairer and more transparent system.
Nevertheless, the new system doesn’t address the flaws of the original proposal. Yes, the reformed system will be more transparent and looks more like a public judicial system. But foreign investors will still be able to attack governments on proposed consumer protection and other public interest measures. There are also no strong guarantees to avoid conflict of interest of the judges. For example, judges are allowed to work as corporate lawyers before or after a trial.
Most importantly, the system is not even necessary. Foreign investors can already rely on two of the most developed judicial systems of the world to be protected. Why create another one?
The regulatory aspect of TTIP
The second pillar of TTIP was announced to be a way of creating a better dialogue between EU and US regulators to avoid differences in future regulations and standards. It was supposed to focus on technical issues such as the colour of the wires used to produce cars. But as talks evolve, we now see that it will be about all legislations that could impact transatlantic trade and investment. The US are pressuring the EU to follow their approach of letting stakeholders comment on draft laws and make proposals to influence future laws. In theory, this could be a way to make the consumer voice heard. The problem is that consumer organisations and other public interest organisation will not have the same influence as private businesses.
The risk here is that by establishing a whole range of lobbying opportunities at the earliest stage of law-making, future ambitious measures for consumers might be delayed or even watered down.
The EU and the US are also talking about cooperation in specific sectors that are key for the economy including cars, chemicals, cosmetics, medicines and medical devices. In some of these sectors, the EU and the US have completely divergent views. This is notably the case for chemicals. Consumer organisations oppose the inclusion of chemicals in TTIP. The European Parliament shares our views and expressed it very clearly in their TTIP resolution (mentioned earlier)
The incompatible transatlantic chemistry
Harmful chemicals are found in many everyday products, such as clothes or cosmetics. Altroconsumo and BEUC, its European umbrella organisation, want a future where consumer goods no longer contain dangerous substances. Protecting consumers may however become more difficult if rules to give the US government and businesses greater access to influence EU decisions on chemicals are included in TTIP. This proposed so-called ‘chemicals annex’ to TTIP fails to offer real benefits to consumers and the environment. On the contrary, we see a risk that these proposals will delay – or worse still thwart – progress on reducing consumer exposure to toxic chemicals. Although the Commission at present has ruled out harmonisation for the chemicals sector, various tabled proposals suggest that it could be introduced at a later stage.
What this means is that, as foreseen by the European Commission, critical regulatory processes would occur under little or no public scrutiny. TTIP provisions would therefore create new avenues for U.S. policy makers to aggressively pressure the EU to lower ambitions for consumer safety and environmental protection. In short, the focus on reducing non-tariff barriers raises concerns that TTIP will be used as a backdoor mechanism to reduce protections. In consequence, we insist that chemicals are excluded from TTIP to ensure that the fundamental safety aspects of EU chemicals policy are preserved.
The crucial role of consumer organisations in the TTIP debate
Altroconsumo and BEUC are defending the consumer interest in TTIP. We are making a difference because we have direct access to the TTIP negotiators and constantly remind them that TTIP needs to benefit consumers and not undermine their protection. We are directly feeding recommendations into the negotiation process in order to influence TTIP proposals. For instance, following our recommendations, the European Commission modified some of its proposals just before sending them to the US. The proposals now include stronger safeguards to make sure that consumers will not see their levels of protection reduced. We will continue to protect consumers and scrutinise the negotiations.
