Two Leaks Reveal How TAFTA/TTIP's Regulatory Co-operation Body Will Undermine Sovereignty And Democracy

from the chilling-effects dept

It has long been evident that TAFTA/TTIP is not a traditional trade agreement — that is, one that seeks to promote trade by removing discriminatory local tariffs on imported goods and services. That’s simply because the tariffs between the US and EU are already very low — under 3% on average. Removing all those will produce very little change in trading patterns. The original justification for TTIP recognized this, and called for “non-tariff barriers” to be removed as well.

Those “non-tariff barriers” include regulations and standards introduced to protect the public — for example, through health and safety laws or environmental regulations. Removing those “barriers” in order to increase trade might be great for companies, but increases the social costs through weakened protection for the environment, or greater health risks. The outcry caused by this prospect has led both negotiating parties to insist that TTIP will not lower standards.

But it’s hard to see how those non-tariff barriers can be harmonized without a race to the bottom in terms of regulations, since no one is calling for a race to the top. Even “mutual recognition,” which would allow both standards to be used, would inevitably see the lower standard becoming the norm because it would be cheaper to implement, and thus offer competitive advantages.

However, a leak back in December 2013 gave a clue about how it might be possible for the US and EU governments to promise that the TAFTA/TTIP agreement would not lower standards, and yet provide a way to dismantle those non-tariff barriers (pdf). This would be achieved after TTIP was ratified, through the creation of a new body called the Regulatory Council, which would play a key role in how future regulations were made. Effectively, it would provide early access to all new regulations proposed by the US and EU, allowing corporations to voice their objections to any measures that they felt would impede transatlantic trade. This regulatory ratchet would push standards downwards and reduce costs for business, but only gradually, and after TTIP had come into force — at which point, nothing could be done about it.

Since then, things have been quiet on the regulatory front, not least because corporate sovereignty in the form of investor-state dispute settlement emerged as the most contentious issue — in Europe, at least — which has rather eclipsed earlier concerns about this supranational regulatory body. But now, in a single week, we have had two important leaks in this area, both confirming those initial ideas sketched out in 2013 are still very much how TAFTA/TTIP aims to bring about the desired regulatory harmonization.

Corporate Europe Observatory obtained a very recent draft copy of the EU’s proposals for the chapter covering regulatory co-operation (pdf), which describes a new transatlantic organization, now called the Regulatory Cooperation Body. Here’s Corporate Europe Observatory’s summary of how it would work:

According to the proposal, as soon as a new regulation is in the pipeline, businesses should be informed through an annual report, and be involved. This is now called “early information on planned acts”, until recently called ?early warning?. Already at the planning stage, “the regulating Party” has to offer business lobbyists who have a stake in a piece of legislation or regulation, an opportunity to ?provide input?. This input “shall be taken into account” when finalising the proposal (article 6). This means businesses, for instance, at an early stage, can try to block rules intended to prevent the food industry from marketing foodstuffs with toxic substances, laws trying to keep energy companies from destroying the climate, or regulations to combat pollution and protect consumers.

Along with this new opportunity for lobbyists to try to shape, slow down or even block new regulations, the EU proposes to hand them a powerful weapon — the impact assessment:

New regulations should undergo an “impact assessment”, which would be made up of three questions (article 7, reduced from seven in the earlier proposal):

– How does the legislative proposal relate to international instruments?
– How have the planned or existing rules of the other Party been taken into account?
– What impact will the new rule have on trade or investment?

Those questions are primarily tilted towards the interests of business, not citizens. Thanks to the ?early information? procedure, businesses can make sure their concerns are included in the report, and should it go against their interests, the report will have to cite a detrimental impact on transatlantic trade.

As Corporate Europe Observatory points out, the only criteria taken into account are impacts on trade or investment. So, for example, new environmental rules might well do wonders for reducing air pollution, but if they have an adverse effect on US or EU companies’ sales or investments, they would be marked as undesirable. This is likely to have a severe chilling effect on bringing in new standards that protect the public but might impose new costs on business.

The other leak, obtained by the Greens MEP Michel Reimon, concerns regulatory co-operation in the field of finance (pdf). This is a contentious area: the US is reluctant to harmonize financial regulations through TAFTA/TTIP because Europe’s are weaker; for the same reason, the European finance industry is keen to use TAFTA/TTIP as a way of undermining America’s more stringent rules. The leak is of note for the following section:

The Joint EU/US Financial Regulatory Forum shall agree on detailed guidelines on mutual reliance adapted for each specific area of financial regulation no later than one year from the entry into force of this agreement.

That is, the European Commission wants the US to sign up to TTIP without any specification of exactly how the new Financial Regulatory Forum will work, or what powers it will have. This seems a clear effort to sneak in elements later that the US is currently resisting.

What these important leaks confirm is that the regulatory co-operation that lies at the heart of TAFTA/TTIP would undermine sovereignty on both sides of the Atlantic. The Regulatory Cooperation Body would provide an important new forum for corporate lobbyists to intervene even earlier in the life of proposed rules and regulations than they do now — and long before lawmakers have a chance to express their views. The end-result is likely to be an impoverishment not just of public policy-making, but of democracy itself.

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Comments on “Two Leaks Reveal How TAFTA/TTIP's Regulatory Co-operation Body Will Undermine Sovereignty And Democracy”

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That One Guy (profile) says:

Only one fitting option remains

The more I learn about just what’s being discussed and proposed in these ‘trade’ agreements, the more I come to believe that the only acceptable outcome would be for both of them, and any ‘agreement’ like them, to be killed off, completely.

Don’t just trim out some parts, because those parts won’t be removed, they’ll just be shifted elsewhere in the document, reject the entire thing, every last part of it.

‘Agreements’ like this are a blatant attack on the public in two ways, first by completely bypassing the democratic process by intentionally keeping the public, and often their representatives, in the dark until it’s too late, and second by introducing new rules and/or laws intended to increase corporate profits, at the cost of public protections and rights. As such they deserve nothing less than complete rejections.

Anonymous Coward says:

Only business lobbyists?

If I understand it correctly then this annual report about planned regulations would also be sent to the US or EU governments and they can voice concerns too. Which basicly means to me that the US can make laws in the EU and the EU in the US.
I didn’t vote for the US government and you US guys didn’t vote for anyone in the EU. Doesn’t that kind of defeat the whole voting thing in a democracy?

David says:

Re: Only business lobbyists?

Doesn’t that kind of defeat the whole voting thing in a democracy?

Uh, that’s the whole point. To make business relations independent from the local whim of voters anywhere.

Which is a quite understandable goal from the point of the view of business. But incompatible with the principles of democracy. Maybe we can send them to another planet so that they can create their own political systems based on the flow of money instead of corrupting ours.

Cal (profile) says:

Re: Only business lobbyists?

“Doesn’t that kind of defeat the whole voting thing in a democracy?”

First, Election Fraud already defeats the “whole voting thing” at least here in the USA, and I bet also there in the EU.

Second, and most important, although the USA has some features that uses democratic processes we are NOT a democracy, we are a Constitutional Republic, and there is a huge difference between the two.

Here the TAFTA/TTIP so it is NOT Lawful no matter what person in whatever position who serves within our government signs it. Does that mean they will not enforce it, sure, at the barrel of a gun, and they will use what used to be our US Military and by governmental professional law enforcement – state and federal – who did not learn about Nuremberg, Germany, etc and so will NOT say “NO” to their unlawful orders (but was given to the UN as their MILITARY by Obama, Dempsey, and Panetta so our family members put their lives on the line NOT for the USA, but for the NWO which IS treason).

Basically, it matters not if it is here or there, ALL people must stand AGAINST these corrupt soulless scum working to be the rulers of the world (old name for it, but same concept for the NWO, One World Government – new names for it, but same old Bull—-).

Richard (profile) says:

Re: Re:

Ironic how the fall of Communism has landed us in Corporatism…

Like those two were really different to start with.

In Communism a group of large organisations that you can’t control dictate what you can buy, where you can live, where you can go to school, where you can work, what healthcare you can get etc etc.

whereas is corporatism…you can insert the words “afford to” in front of some of those lines.

John Fenderson (profile) says:

Re: Re: Re:4 Re:

Perhaps so! I do try to be very literal here, because I see so much misunderstanding caused by people being imprecise and I’m trying to achieve understanding. If this is an example of that, then I admit that I totally don’t understand the point TOG was trying to make.

What I thought he was saying was that the two are the same because in both cases a small number of people (actual people or corporations) end up owning the property. Did I misunderstand?

My response to that understanding is no — a system where a small number of people end up owning the property is not communism.

Pragmatic says:

Re: Re: Re:5 Re:

The trouble is not with the systems but with the people implementing them, most of whom are principled and have the most noble intentions to begin with. However, I honestly believe that any philosophy or system that relies on a best case scenario and suspension of critical appraisal is inevitably doomed to failure.

Corporatism fails because it pretends that there is such a thing as a free market and that consumers have a real choice despite their anti-competitive practices.

Communism and its little brother Socialism fail because they believe they can control both the supply and the demand sides of the market, and that it’s actually possible to implement a centrally planned economy.

None of those things are true and what annoys me the most is that people keep telling me I have to choose between one philosophical error and another. Hell, no.

We need a new philosophy that takes actual reality into account and bases policies on what happens in a worst case scenario where conditions are dire and people are corrupt, interpreting those as damage and routing around them. The nearest one I can find is Middle-out.

We need sunlight on trade agreements and they need to work for the benefit of the people and the nations involved, not just the corporations.

Anonymous Coward says:

This is a contentious area: the US is reluctant to harmonize financial regulations through TAFTA/TTIP because Europe’s are weaker; for the same reason, the European finance industry is keen to use TAFTA/TTIP as a way of undermining America’s more stringent rules.

Wait, Europe has a less-regulated financial sector? Could have fooled me. Unless you mean in the sense that Europe has fewer regs but they are more airtight…

Anonymous Coward says:

Re: Re:

Europe has more regulations but they’re less airtight.

The US effectively has one, overarching law (Dodd-Frank) that’s driving financial regulation. The EU is regulating on a sector-by-sector basis, meaning that their financial laws are more piecemeal and far less coherent. Also the EU’s regulations seem to get a lot more warped by political expediency and infighting between the EU member nations. It’s simply harder for them to implement effective regulation, in part because they’re trapped in their ongoing debt crisis.

Anonymous Coward says:

– How have the planned or existing rules of the other Party been taken into account?
– What impact will the new rule have on trade or investment?

I don’t give a damn about your trade or investment! If you can’t do business without killing, polluting extensively or being general jerkbags, then I really don’t care about how much money you lose or if you have to sell all your assets and beg on the street!
If this shitty deal goes through, we will have lost whatever small chance we had of cleaning up our act, and not end up killing 1/4, or more, of the planets population in the future.
No, make harsh rules and be steadfast when the big guys complain, because the only way we will ever drag greedy people into a better future, is kicking and screaming like a five year old.

Anonymous Coward says:

Re: Re:

They will get it all eventually, it is only a matter of time. If not from this free trade agreement, than from the next one. They will relentlessly keep chipping away until all the barriers to their excess are gone, and in their wake they will leave a ruined planet where we will all be choking to death on ruined water and poisonous air.

Time marches on trampling everything.

KJ (profile) says:

Isn't the proposal an improvement?

Glyn wrote:
> According to the proposal, as soon as a new regulation is in the pipeline, businesses should be informed through an annual report, and be involved.

But the proposal says:
“Each Party shall make publicly available at least once a year a list of planned regulatory acts …providing information on their respective scope and objectives.”

Isn’t “make publicly available” what TAFTA/TTIP opponents have been asking for? Wouldn’t TAFTA/TTIP be made public under this proposal?

The proposal also says:
“…the regulating Party shall offer a reasonable opportunity for any domestic or foreign natural or legal person that may be potentially affected by a planned regulatory act to provide input through a public consultation process, and shall take into account the contributions received in the finalisation of their regulatory acts.”

Isn’t a public consultation process also a welcome improvement over the current process?

That One Guy (profile) says:

Re: Isn't the proposal an improvement?

If they are showing absolutely zero interest in public consultation and public involvement during the current part of the process, what exactly makes you think they’ll suddenly change their mind after it?

Words are nice, but actions are what really matters, and their actions so far show absolutely no interest in involving the public in any way that isn’t completely superficial.

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