Regional free trade agreements: secrecy, safety and sovereignty

ID-100223935New global trade deals are currently being negotiated, in part arising from the failings of the World Trade Organisation’s Doha Round. Proposals include the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). There are, however, many questions on what these agreements will include and what they will mean for those excluded, particularly poorer, developing countries.

Transatlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement between the European Union and the United States that could be finalised by the end of 2014. On the one hand such an agreement could boost multilateral economic growth while on the other it could increase corporate power perhaps at the expense of public benefit.

Although the EU released a document in July entitled, State of Play of TTIP negotiations ahead of the 6th round of the negotiations, the content of negotiations has been criticised as being opaque and shrouded in secrecy. Governments involved have stated they will not publish draft text. A recent factsheet released by the Office of the US Trade Representative, laid out the US’s objectives with regard to the TTIP, largely revolving around increasing market access, mainstreaming regulations and standards and removing non-tariff trade barriers, for example:

“We seek to eliminate all tariffs and other duties and charges on trade in agricultural, industrial and consumer products between the United States and the EU, with substantial duty elimination on entry into force of the agreement, transition periods where necessary for sensitive products, and appropriate safeguard mechanisms to be applied if and where necessary.”

“We seek to ensure that U.S. investors receive treatment as favorable as that accorded to EU investors or other foreign investors in the EU, and seek to reduce or eliminate artificial or trade-distorting barriers to the establishment and operation of U.S. investment in the EU.”

The TTIP will have impacts across a range of sectors such as energy, agriculture and environment, as well as different rights relating to, for example intellectual property and labour. John Hilary, Executive Director of War on Want, explains what the TTIP is and why it is potentially damaging in this booklet. On the issue of food safety, in aiming to create a framework that allows freer trade, both the US and EU may have to reduce current restrictions. In the EU’s case this may be in relaxing standards on genetically modified organisms, on banned veterinary growth hormones or on other meat and poultry products. For the US, this may mean removing limits on European imported beef in response to Mad Cow Disease. Reluctances to lower food standards, in particular on hormone beef and GM, could in fact threaten the TTIP but if not, many fear countries and its citizens will lose control over what can be grown, how food is produced and how safe it is. Other areas of contention could include the EU’s desire to protect Geographical Indications, foods such as Parma ham or Roquefort cheese, to prevent usage by other producers and differing approaches to agri-environment schemes.

The Institute for Agriculture and Trade Policy also released a report documenting the “Promises and Perils of the TTIP”. Controversial criticisms of the TTIP include the threat it poses to the UK’s National Health Service and the so-called investor-state dispute settlement, which could allow corporations to sue governments outside of domestic courts. Such a mechanism in other trade agreements has allowed, for example, mining companies to sue governments trying to keep them out of protected areas and banks to fight against national financial regulations, as George Monbiot explains in The Guardian.

As more details of the TTIP are coming to light, many of the benefits of such a partnership are being questioned while the risks are seemingly very real. In particular the secrecy of negotiations and large role played by corporations in these negotiations is of concern. The potential risks most talked about are in the EU and US themselves with little said about the broader impacts. The German aid organisation Brot für die Welt, however, warns against an EU-US free trade agreement saying it “will undermine local support for smallholders in developing countries and exacerbate the global food crisis” while others believe the TTIP will do little for environmental sustainability and other global challenges.

Trans-Pacific Partnership

The Trans-Pacific Partnership (TPP) is also a free trade agreement currently being negotiated and will cover twelve countries in the Asia-Pacific region: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Negotiations for what could be the largest regional free trade agreement in history have been ongoing since 2005, and although expected to be concluded in 2012, disagreement around issues such as agriculture, intellectual property, and services and investments have delayed the process.

The TPP aims to “enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs”. As with the TTIP there are many concerns over the agreement and much protest from activists, environmentalists, advocacy groups, and elected officials again in part because of the secrecy surrounding negotiations.

The TPP has been criticised for supporting the expansion of protectionism and for transferring power to corporations, for example, making it easier for pharmaceutical companies to obtain patents, including in developing countries, and restrict access to scientific information. Such provisions were released in a chapter draft on WikiLeaks. As under the TTIP there are also mechanisms which would allow corporations “the right to directly sue governments for regulations that infringe upon their profits or potential profits”. This is different to the WTO where a corporation must present a case to its own government to convince them to sue another country’s government.

The main benefits of such agreements are often touted to be the gains made from increased trade and an increase in jobs. According to “TTIP and the Fifty States: Jobs and Growth from Coast to Coast”, a report launched by the British Embassy Washington, Atlantic Council and Bertelsmann Foundation, the TTIP could lead to more than 740,000 TTIP-related US jobs, a 33% increase in exports to the European Union (EU) on average for each US state, and a gain for EU households of almost $720 each year. But a study by the Peterson Institute of International Economics, indicated the cumulative increase for the US from the TPP would only be 0.13% of GDP by 2025 and much of this gain would be distributed unequally at the top. Jobs promised under other trade agreements have also not materialised. For example, according to the Economic Policy Institute’s study of the first 12 years of the North American Free Trade Agreement (NAFTA), there was a net loss of over one million US jobs and a significant decrease in wages for millions of workers.

Trade agreements in general such as NAFTA and the Dominican Republic – Central America Free Trade Agreement (CAFTA-DR) are criticised for detrimentally impacting local food systems around the world, for tilting the balance of power towards large multinational agribusiness corporations and for furthering income inequality. The Institute for Agriculture and Trade Policy discuss 5 ways the TTP threatens local food.

A recent roundtable hosted by the Center for Global Development discussed these mega-regional trade partnerships and their likely impacts. Kimberley Elliott provides an overview of the workshop here. Harsha Singh, former deputy director general at the World Trade Organization, who led the roundtable discussion, also joined Lawrence MacDonald at the CGD on a Wonkcast to “explain the development implications of these trade deals to interested non-experts, with a particular focus on the impacts of smaller, poorer countries who are unlikely to be included”.

At Agriculture for Impact we try to be as balanced as possible when discussing what are often contentious and controversial topics. Although much of the information out there on free trade agreements is largely critical we’d love to hear your thoughts both supportive, disparaging or balanced on the subject of the TPP and TTIP.

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