“I think that’s a particularly bad agreement and let me say why… it’s not about trade : trade barriers and tariffs between Europe and America are already come down. It’s not about property rights. […] This is not about being attractive for foreign investment. It’s about stopping the European Parliament and the US Congress from passing regulations that would protect our economy, our people, our health … this is an attempt to increase the power of corporations, to run our economies, our societies. To me, this is at the heart of democracy. It’s not a trade agreement [1] ”
Joseph Stiglitz
It is with these words, during an interview held in October 2015 for an association of scholars, that Joseph Stiglitz [2] describes the TTIP, one of the new generation treaties that have been negotiated in recent years. In fact, many bilateral treaties, with difficult acronyms, have begun to be negotiated over the years: TTIP, CETA, EUSFTA, ASEAN, JFTA [3]. The latter are free trade agreements that the European Union wants to conclude with certain countries of the world.
These « new generation » treaties are distinguished by traditional agreements signed between EU and third countries because they do not just aim to reduce tariffs, but they try to break down any barriers to trade. Thus, they allow the European Union to increase trade and compete with the world’s major economic powers, such as China and the United States.
The CETA (Comprehensive Economic and Trade Agreement) was one of the earliest treaties that the European Union has negotiated. It represents a new agreement model that aims to become universal. One of the causes of the creation of this agreement is the economic and financial crisis of 2008. People no longer had the same purchasing power, thus countries began to understand the importance of exports. The EU has understood the prominence of extending and strengthening trading relations in order to get out of the crisis.
However, it must be remembered that these agreements do not only take into account the commercial facet of relationships between countries, but also much more complex and delicate aspects. This type of treaty developed following the halting in 2008 of the Doha Round multilateral negotiations in the World Trade Organization, which aimed to intensify global trade.
What issues around these new generation agreements?
The first discontentment on these treaties concerns the lack of transparency of the negotiations, widely perceived as fundamentally undemocratic. Indeed, the text of these documents is negotiated in an absolute reserve. The article 218 of the Treaty on the Functioning of the European Union (TFEU) gives to the Commission the power to negotiate any commercial agreement “on behalf of the Members States”. Behind the scenes in the European Commission, business lobbyists have been dominating the preparation of the negotiations, at the expenses of trade unions, environmental and consumer groups [4].
New generation agreements also tend toward the harmonisation of national regulations in sanitary, social, technical and environmental matters. Regulatory cooperation under TTIP and CETA can perhaps be described as a process seeking to establish procedural frameworks on how governments can regulate. In many areas industries are no longer local and interest promoted at EU level will be similar to those in USA. It is clear that common regulatory process and requirement standards set under influence of multinational actors can be against public interest and the interest of citizens of European Union Members States and citizens of United States. For instance, the TTIP risks bringing in Europe food and substances (pesticides or GMO, for example) that are forbidden in the European Union but allowed in the United States [5].
The dispute settlement mechanism between investors and States (ISDS – Investor-State Dispute Settlement) represents another novelty of the new generation treaties. It is a system of supranational courts that judge controversies between states and companies when they consider themselves spoiled by a decision of the State [6]. Trade agreements aim to make it easier for enterprises to invest in the partner country and this mechanism allows companies to sue the foreign State if they feel cheated by changes in public policies. Strong criticisms have been made to the ISDS. Indeed, it is considered as an asymmetrical Court between investors and states, favouring companies and dissuading states from putting in place policies that could damage them or benefit citizens.
The fourth novelty (found in CETA, for instance) is
the « principle of liberalization by negative lists »: rather than cite
the sectors they want to liberalise, the States assume that all services are
liberalized, except for the sectors they have protected. This reverse mechanism
implies the need for the State to specify beforehand its strategy of privatization
and liberalization and a danger for the future, because it will not be possible
to determine which public services will not be subject to the market in a later
time.
Flavio Mastrorillo
[1] https://ged-project.de/topics/competitiveness/an-interview-with-nobel-laureate-joseph-stiglitz/
[2] Joseph Stiglitz is one of the leading American economists and a professor at Columbia University. He is chief economist of the World Bank. He was awarded the Nobel Prize for Economics in 2001.
[3] TTIP: commercial treaty between EU-USA ; CETA: trade agreement between EU-Canada ; JFTA: commercial treaty between EU-Japan ; ASEAN: trade agreement between EU-Vietnam/Thailand/Malaysia ; EUSFTA: commercial treaty between EU-Singapore.
[4] https://corporateeurope.org/international-trade/2014/07/who-lobbies-most-ttip
SOURCES
GED. An Interview with Nobel Laureate Joseph Stiglitz https://ged- project.de/topics/competitiveness/an-interview-with-nobel-laureate-joseph-stiglitz/
Corporate Europe Observatory. TTIP reloaded: big business calls the shots on new EU-US trade talks https://corporateeurope.org/international-trade/2019/02/ttip-reloaded-big-business-calls-shots-new-eu-us-trade-talks
Corporate Europe Observatory. Who lobbies most on TTIP? https://corporateeurope.org/international-trade/2014/07/who-lobbies-most-ttip
Toute l’Europe. CETA, TAFTA, JEFTA…Qu’est-ce qu’un accord de libre-échange « nouvelle génération » ? https://www.touteleurope.eu/actualite/ceta-tafta-jefta-qu-est-ce-qu-un-accord-de-libre-echange-nouvelle-generation.html
WTO. The Doha Round https://www.wto.org/english/tratop_e/dda_e/dda_e.htm
Peah. No ordinary Free Trade Agreements – Health and The New Generation Trade Agreements http://www.peah.it/2015/07/no-ordinary-free-trade-agreements-health-and-the-new-generation-trade-agreements/
European Papers. An Investment Court System for the New Generation of EU Trade and Investment Agreements: A Discussion of the Free Trade Agreement with Vietnam and the Comprehensive Economic and Trade Agreement with Canada http://www.europeanpapers.eu/en/europeanforum/investment-court-system-new-generation-eu-trade-and-investment-agreements
Borta L., « CETA – Bilateral Trade Agreement between the EU and Canada », 2014, CES Working, Papers Volume 6 (n* 1), p. 17 – 31
Yencken E., « Lessons from CETA : Its implications for future EU Free Trade Agreements », 2016, OFSE Workshop Programme 1-B
