Corporate Europe Observatory

Exposing the power of corporate lobbying in the EU

  • Dansk
  • NL
  • EN
  • FI
  • FR
  • DE
  • EL
  • IT
  • NO
  • PL
  • PT
  • RO
  • SL
  • ES
  • SV

Corporate lawsuits under TTIP could block environmental and social policies

Ten European health, transparency and environment NGOs - including Corporate Europe Observatory - have published an open letter in which they lambast the proposed transatlantic trade agreement TTIP, and in particular the proposed investor rights as a "sinister attempt to roll-back environmental and public health laws built up over decades in the name of corporate efficiency." The open letter was published by Euractiv on 13 January.

The European Commission has repeatedly promised civil society that the ongoing Transatlantic Trade and Investment Partnership (TTIP) negotiations with the United States will not lead to a race to the bottom in terms of environmental protection, health and safety standards and consumer rights. The fear has always been that Europe would be forced to lower the bar to create a “level playing field” between the US rules and generally more robust EU regulations. Even the EU’s long established ‘precautionary principle’ enshrined in the Treaties and underpinning European chemicals regulations could be at risk.

Despite reassurances from EU Trade Commissioner Karel De Gucht, the official language in the TTIP talks revolves around the ‘mutual recognition’ of standards or so-called reduction of non-tariff barriers through new mechanisms of regulatory cooperation. In fact, there are very few financial barriers left to be removed. Basically, the US and EU are pushing for so-called barriers to trade, including controversial regulations such as those protecting food products, health, chemicals or data privacy, to be removed as well as the prevention of additional ones.

For the EU, that could mean accepting US standards which in many cases are lower than its own. At the same time this agreement could open the gates for multinationals and investors to sue EU Member States if new environmental or health legislation is introduced that adversely affects their business prospects. There are three main areas of concern with the mechanism called the Investor-State Dispute Settlement (ISDS) that risks becoming part of the TTIP.

The first is that Member States will be afraid to introduce new and effective legislation that may have positive social and environmental impacts but which risks upsetting our trade partners. Companies will be quick to seek arbitration if they believe their commercial interests are compromised. As a consequence of this ‘chilling’ effect, Member States will only introduce legislation if they are sure that they will not be sued.

The second concern is the cost for Member States. The arbitration panels over these disputes may have the ability to levy crippling fines in line with “potential” profit loss. One can easily see how smaller Member States would effectively handover sovereignty to multinationals as fines could be equal to a significant proportion of GDP.

The third concern is why the independent dispute mechanisms are needed in the first place. Existing EU commercial and single market laws are overseen by myriad court jurisdictions, including the European Court of Justice set up under the European Treaties. Why the need for something operating outside these conventional arrangements?

This is not scare mongering from NGOs. Experience has shown that similar mechanisms of arbitration involving “investment loss” have sided against the rights of the broader public or environment interests and with the corporates.

In May 2013 Quebec introduced a ban on fracking, an oil and gas extraction method occurring deep inside the earth’s crust which carries significant environmental and health risks. The US company, Lone Pine Resources Inc. had a contract with the Canadian government, and is now asking the government for USD250 million in financial compensation.

In the pending case of tobacco giant Philip Morris Asia vs Australia, the company claims that Australia is treating them unfairly by requiring plain packaging for cigarettes. It has demanded that the Australian government suspend enforcement of the law and pay billions of dollars of losses in sales. These are only two of the 500 cases against 95 governments in recent years.

The combined impacts of this ISDS, together with new mechanisms for regulatory cooperation that are being negotiated under this trade and investment deal in Europe, are predictable. Europe would most likely lose its position as a global frontrunner on public policies such as water, nature protection, food quality, chemicals and climate and energy. European and national policy would suffer a sclerosis as a new category of impact assessments would need to be undertaken to see which multinationals interests are jeopardised.

The ISDS arrangements in the draft EU-Canada Free Trade Deal which was recently agreed by the European Commission, though not yet approved by the European Parliament and Member States, have still not been made public. How can we be reassured by Commissioner De Gucht that similar provisions in TTIP will pose few problems when we still cannot get access to the details of already negotiated agreements? Civil society groups on both sides of the Atlantic are right to feel uneasy; what is masquerading as a trade deal may be a far more sinister attempt to roll-back environmental and public health laws built up over decades in the name of corporate efficiency.

The letter was signed by: CEE Bankwatch Network, Climate Action Network Europe (CAN), Corporate Observatory Europe (CEO), European Public Health Alliance (EPHA), European Environmental Bureau (EEB), Friends of the Earth Europe (FOEE), Health and Environment Alliance (HEAL), Nature Friends International (NFI), Transport & Environnent (T&E), World Wide Fund for Nature (WWF).

The European Commission has repeatedly promised civil society that the ongoing Transatlantic Trade and Investment Partnership (TTIP) negotiations with the United States will not lead to a race to the bottom in terms of environmental protection, health and safety standards and consumer rights. The fear has always been that Europe would be forced to lower the bar to create a “level playing field” between the US rules and generally more robust EU regulations. Even the EU’s long established ‘precautionary principle’ enshrined in the Treaties and underpinning European chemicals regulations could be at risk.Despite reassurances from EU Trade Commissioner Karel De Gucht, the official language in the TTIP talks revolves around the ‘mutual recognition’ of standards or so-called reduction of non-tariff barriers through new mechanisms of regulatory cooperation. In fact, there are very few financial barriers left to be removed. Basically, the US and EU are pushing for so-called barriers to trade, including controversial regulations such as those protecting food products, health, chemicals or data privacy, to be removed as well as the prevention of additional ones.For the EU, that could mean accepting US standards which in many cases are lower than its own. At the same time this agreement could open the gates for multinationals and investors to sue EU Member States if new environmental or health legislation is introduced that adversely affects their business prospects. There are three main areas of concern with the mechanism called the Investor-State Dispute Settlement (ISDS) that risks becoming part of the TTIP.The first is that Member States will be afraid to introduce new and effective legislation that may have positive social and environmental impacts but which risks upsetting our trade partners. Companies will be quick to seek arbitration if they believe their commercial interests are compromised. As a consequence of this ‘chilling’ effect, Member States will only introduce legislation if they are sure that they will not be sued.The second concern is the cost for Member States. The arbitration panels over these disputes may have the ability to levy crippling fines in line with “potential” profit loss. One can easily see how smaller Member States would effectively handover sovereignty to multinationals as fines could be equal to a significant proportion of GDP.The third concern is why the independent dispute mechanisms are needed in the first place. Existing EU commercial and single market laws are overseen by myriad court jurisdictions, including the European Court of Justice set up under the European Treaties. Why the need for something operating outside these conventional arrangements?This is not scare mongering from NGOs. Experience has shown that similar mechanisms of arbitration involving “investment loss” have sided against the rights of the broader public or environment interests and with the corporates.In May 2013 Quebec introduced a ban on fracking, an oil and gas extraction method occurring deep inside the earth’s crust which carries significant environmental and health risks. The US company, Lone Pine Resources Inc. had a contract with the Canadian government, and is now asking the government for USD250 million in financial compensation.In the pending case of tobacco giant Philip Morris Asia vs Australia, the company claims that Australia is treating them unfairly by requiring plain packaging for cigarettes. It has demanded that the Australian government suspend enforcement of the law and pay billions of dollars of losses in sales. These are only two of the 500 cases against 95 governments in recent years.The combined impacts of this ISDS, together with new mechanisms for regulatory cooperation that are being negotiated under this trade and investment deal in Europe, are predictable. Europe would most likely lose its position as a global frontrunner on public policies such as water, nature protection, food quality, chemicals and climate and energy. European and national policy would suffer a sclerosis as a new category of impact assessments would need to be undertaken to see which multinationals interests are jeopardised.The ISDS arrangements in the draft EU-Canada Free Trade Deal which was recently agreed by the European Commission, though not yet approved by the European Parliament and Member States, have still not been made public. How can we be reassured by Commissioner De Gucht that similar provisions in TTIP will pose few problems when we still cannot get access to the details of already negotiated agreements? Civil society groups on both sides of the Atlantic are right to feel uneasy; what is masquerading as a trade deal may be a far more sinister attempt to roll-back environmental and public health laws built up over decades in the name of corporate efficiency.The letter was signed by: CEE Bankwatch Network, Climate Action Network Europe (CAN), Corporate Observatory Europe (CEO), European Public Health Alliance (EPHA), European Environmental Bureau (EEB), Friends of the Earth Europe (FOEE), Health and Environment Alliance (HEAL), Nature Friends International (NFI), Transport & Environnent (T&E), World Wide Fund for Nature (WWF).
 

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

Dangerous attacks against regulations protecting the public interest & the environment would not be prevented by the Commission’s investment protection proposals for future trade agreements.

Despite growing concerns among the European public, the new EU proposal on regulatory cooperation in TTIP does nothing to address the upcoming democratic threats.

The ''Trade Secrets Protection'' Directive due to be voted on by MEPs on April 14 would give companies new legal ammunition to prosecute journalists and news organisations publishing their documents and information.

45 groups denounce Commission proposal on regulatory cooperation

Corporate Europe Observatory is looking for an experienced campaigner to join our team and strengthen our work on exposing and challenging corporate lobbying capture of EU decision-making. Please respond before Wednesday May 18th 2016. The position is based in Brussels, in our office in the Mundo-B building in Brussels. Starting date July 1st 2016 (a later start date can be discussed).

You would be part of the 'lobbyocracy' team within CEO, covering issues including the corporate capture of advisory groups, lobbying secrecy, etc.

Story

A telling mistake

Ms Barbara Gallani, who will become EFSA's Director for Communications from 1 May was up until late March 2016 working for the largest lobby group for the food and drink industry in the UK, the Food and Drink Federation (FDF).

Splits occur within European Commission, as European Parliament, Ombudsman and NGOs increase the pressure for implementing UN rules for contacts with tobacco industry lobbyists.

The European Commission has shelved a legal opinion confirming that genetically modified organisms (GMOs) produced through gene-editing and other new techniques fall under EU GMO law, following pressure from the US government. A series of internal Commission documents obtained under freedom of information rules reveal intense lobbying by US representatives for the EU to disregard its GMO rules, which require safety testing and labelling.

The corporate lobby tour

Stop the Crop

Alternative Trade Mandate