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No TTIP: Stop the corporate carve-up

Jubilee Debt Campaign is part of the #noTTIP day of action this Saturday 12 July. Here we explain what the EU-US trade deal means for debt and global finance.

What is TTIP?

NoTTIP flyer democracy-1

The Transatlantic Trade and Investment Partnership (TTIP) is a ‘free trade’ agreement being negotiated between the EU and US. It could have big implications for how various industries are regulated, including making it harder to control banks and prevent debt and financial crises in the future.

As with other ‘free trade’ agreements that have gone before, proponents in government and business are predicting TTIP will increase economic growth, whilst ignoring how trade agreements have increased inequality, cost jobs and made it harder for governments to regulate what companies do.

Just as worrying is that TTIP is largely being negotiated in secret, away from the scrutiny of parliaments and far from the public domain, in an effort to rush through an agreement, without any opposition. Yet the consequences are potentially devastating for people across Europe and the United States.

A race to the bottom

One of many alarming elements of the proposed agreement is the aim to reduce ‘non tariff barriers to trade’. These ‘barriers’ are the very regulations which campaigners have fought hard over many years to obtain, and which mean people have labour rights, food standards and environmental protection to name just a few. The so-called ‘harmonisation’ of regulations will lead to what has been dubbed a ‘race to the bottom’ as countries compete against each other for fear of companies taking their production elsewhere.

Of major concern to the Jubilee Debt Campaign is the risk of creating a new international financial crisis. Rules are being proposed for TTIP that would prevent either the EU or US from bringing in regulations on banks. This includes preventing regulations such as controls on lending and bans on the use of high-risk financial instruments.

In the aftermath of the 2008 crisis the US has actually been more active in re-regulating banks, but there are fears in the US that these new rules might be removed in order to bring the US in line with the weaker standards of the EU.

Corporate power grab

It doesn’t end there though. Further proposals include mandatory consultations with stakeholders (ie, banks and other finance companies) for any financial regulations proposed in the EU and US. This means the financial sector will be able to halt new regulations before any legislation reaches a parliament.

Furthermore, a chapter in the current draft of TTIP includes creating company-to-state dispute settlement mechanisms. Such mechanisms would allow EU and US-based corporations to sue governments at international arbitration tribunals (which in themselves are becoming a lucrative industry encouraging lawyers to fuel disputes) for any potential or future loss of profit or damage to investment, including from the introduction of new regulations. If and when they are successful, companies winning such cases would then come to be owed a debt by the government concerned, as has happened recently for Argentina and Ecuador.

This would essentially hand power over to transnational corporations, giving them free rein to challenge government regulations to protect the environment, public health, and workers’ and consumers’ rights.  As with many of the rules laid out by TTIP, it is hoped that standards such as the state-to-investor dispute settlement systems set by these two economic superpowers will create a model that will be adopted by the rest of the world. This is a frightening prospect.

“TTIP is correctly understood not as a negotiation between two competing trading partners, but as an assault on European and US societies by transnational corporations seeking to remove regulatory barriers to their activities on both sides of the Atlantic.”
– John Hilary, War on Want

Good news for vultures

One consequence of the agreement of particular concern to debt campaigners is that it will tilt the balance of power even further against countries in debt crisis. In the event that a government needed to negotiate to reduce the amount of debt it owed, it would be in a weaker position as creditors would have even more legal ways of suing governments if debts are not paid. This would particularly strengthen the power of vulture funds – financial speculators who buy up cheap debt from governments in crisis.

Vulture funds refuse to take part in necessary debt reductions when governments can’t keep up with their debt payments, then look for ways to sue for full payment of the debt in the courts, which normally represents a huge profit for them. Provisions under TTIP could make it even easier for vulture funds to sue future European governments which are unable to pay all their debts.

People before profit

EU and US negotiators for TTIP seem intent on ignoring lessons to be learned from past financial crises. They are intent on forcing the liberalisation of financial services, a system proven not to work, with disastrous consequences on a global scale.

Since the financial crisis, it has been acknowledged that financial stability is a public good. The undoing of regulations that maintain it, alongside a massive transfer of power to the financial sector, is therefore deeply concerning. Profit-making should not take priority over jobs, livelihoods, public services and the protection of the environment, and further reform of the financial sector is imperative to ensure that citizens are protected from another financial crisis. If TTIP goes ahead, it will become ever harder for people to stand up against the financial sector and transnational corporations.

What can you do?

  • Saturday 12 July is a national day of action against TTIP around the UK. Find your local protest at www.noTTIP.org.uk
  • Tweet about the TTIP threat using #noTTIP
  • Public meetings are being held in Birmingham, Manchester, and London between the 8-10 July. Find out more >>

You can print and download a fully referenced version of this briefing as printable PDF here >>

 


  • Julian

    Having supported Jubilee since 2000, the TTIP campaign strikes me as either ill considered or poorly presented. The blanket statement that other ‘free trade’ agreements have increased inequality and cost jobs is highly disputable. For example China and Mexico both have trade agreements with the USA that have driven increased employment and reduced income inequality between their populations and that of their richer trade partner. While your use of language (such as “in secret” and “rush through”) appears more manipulative than informative. Trade agreements take years to negotiate. Ensuring that they are thoroughly scrutinised before they are ratified, is the responsibility of parliaments. Campaigning groups such as Jubilee have a vital role in drawing legislators attention to the implications of their possible actions. But that should not require you to whip up poorly argued prejudice against free trade agreements, which for all their faults (most notably the dumping of surplus, subsidised food by the western nations) are amongst the most powerful tools available for raising global living standards and reducing international bloodshed. Perhaps you would consider refocusing and representing your arguments?

    • Tim Jones

      Hi Julian, one of the key things the UK and EU are pushing for in TTIP is including ‘financial services liberalisation’. This would make it illegal under the agreement for current and future UK, EU and US governments to introduce many types of regulations on banks and their lending. With partners around the world, at Jubilee Debt Campaign we are therefore very worried this will prevent governments taking the kind of actions needed to prevent the financial crises’ which have caused such devastation on all continents over the last 30 years. When such regulations did exist in the 1950s and 1960s there were far fewer banking and financial crises.

      Evidence we have seen shows that the US-Canada-Mexico (NAFTA) free trade agreement reduced jobs and increased inequality in both the US and Mexico, eg: http://www.huffingtonpost.com/lori-wallach/nafta-at-20-one-million-u_b_4550207.html

      One key thing to remember is that if governments and parliaments are convinced that certain changes in policies are beneficial, they can make such changes regardless of whether or not a trade agreement exists. What trade agreements such as NAFTA, TTIP and the WTO do is prevent governments from changing policies again in the future.

      This campaign is about trying to increase the scrutiny of trade agreements. Unfortunately parliaments have little role in this. On one previous EU trade agreement I worked on, only a select group of MEPs were allowed access to the EU’s negotiating documents, and they were banned from talking about what they had seen to anyone.

      • Julian

        Hi Tim and thank you for the valuable work that you do. I am pleased to support your campaign for greater scrutiny of trade agreements. But I may have a different take on your other points.

        UK and EU financial services regulation is currently inadequate, but ironically it is punitive regulatory enforcement in the US that appears to be driving the British banks into line.

        The Huffington Post article makes no attempt to distinguish correlation from causation. And while global trade has damaged the earnings of non-graduate Americans, it has arguably had a greater positive effect on Mexican incomes and certainly correlates with a nett rise in global living standards (distribution of wealth within many economies may not be so positive).

        Finally governments seem to be comfortable with flaunting trade agreement obligations during tit-for-tat trade disputes. And sadly in my view are all too ready to impose populist, protectionist measures.

        Anyway those are the views of a small-scale UK entrepreneur who offers what support I can to the reduction of global poverty and improvement of living standards and conditions.

        • Tim Jones

          Thanks Julian – I think we might have another point of agreement. The concern in the US with TTIP is that it would make US financial regulation come into line with that of the EU – and so remove the increased regulation which has been brought in, in the US, since the financial crisis began.

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