Letter to the Climate Alliance members on the TTIP and CETA free trade agreements
Resolution of the municipal council or local parliament of the members of Climate Alliance on the CETA and TTIP free trade agreements
At this year’s Climate Alliance Annual International Conference in Dresden (23 April 2015) and in the course of the plenary session of Climate Alliance Luxembourg (28 April 2015), it was agreed that the European Secretariat of Climate Alliance would send members a draft resolution on the free trade agreement between the European Union and the United States of America.
What is it about?
Following the breakdown of liberalisation efforts within the World Trade Organization (WTO), the European Union is now negotiating a new generation of free trade agreements, which include the Comprehensive Economic and Trade Agreement (CETA) with Canada as well as the Transatlantic Trade and Investment Partnership (TTIP) with the USA.
These two free trade agreements have one thing in common: the negotiations are not at all transparent and are largely being held behind closed doors, though several negotiation documents have since been made public in the wake of opposition from countless citizens and organisations.
Although the agreements ostensibly aim to remove tariffs, supporters are primarily hoping for a harmonisation of norms and standards.
The supposed advantages of this are highly contentious; indeed, the European Commission has ‘withdrawn’ its prognoses of positive economic implications expected of the agreements (be they economic growth or jobs), and is now only making general promises along the lines of “it will boost economic growth”.
Critics, on the other hand, are convinced that the agreements will only yield benefits for multinational companies – and that at the cost of the constitutional state and general public. As a consequence, large multinationals are consistently attempting to exert pressure behind the scenes to ensure agreements benefitting their own interests are adopted.
While the negotiations on TTIP are still under way (and some worrying negotiation reports have been leaked), those concerning CETA have already been concluded. According to the responsible EU Commissioner for Trade, Cecilia Malmström, besides technical errors, no further changes are to be made to this document. Given that CETA can be seen as a precursor to TTIP, one can easily anticipate how TTIP will end up looking.
The fear is that in its current version, the agreement will mean substantial impingements for municipalities. We will explain the possible repercussions of TTIP and CETA for cities and municipalities in the following:
- Regulatory cooperation is to be introduced, which would de facto block progress on norms, etc. In future, every country would first have to clear national legislation with all member states and the USA. The consequences of this are clear: on the one hand, the countries would scarcely have the “courage” to embark on such an odyssey; on the other, there is the risk that improvements benefitting consumer, environmental protection and social standards are unlikely to be accepted by all parties. This would result in a standstill. All elected parliaments and governments would de facto be divested of their powers.
- One major point of contention is the planned investor-state dispute settlement instrument: this would hand responsibility for settling disputes to private arbitration courts, which would essentially compromise our entire legal system.
- Investor protection would de facto take precedence over the common good: extremely far-reaching investor protection is foreseen. This will go so far that claims can even be made for ‘future profits’ that have not yet been generated if state decisions restrict entrepreneurial activities (e.g. by introducing standards for environmental, social or human rights aspects). To give an example: if a country prohibits fracking but a company had anticipated generating profits through fracking activities in that country, these profits could be claimed before the arbitration courts. Due to the huge compensation demanded, even merely announcing that such proceedings are to be launched could constrain many states, cities and municipalities in their freedom of choice.
- Problematic consequences for countries in the southern hemisphere: diverging analyses exist on the consequences of CETA and TTIP for countries in the southern hemisphere. Environmental and development organisations point out that TTIP will undermine social and economic development in emerging and developing countries.
- Likewise, the extent to which the free trade agreements will prompt a privatisation of public services is particularly important. The risk here is that the autonomy of the local level will be further weakened. In the past, independent and flexible local approaches in the search for possible solutions were the important political argument to emphasise the role of municipalities (e.g. the control possibilities through the municipal utilities and municipal operations as a whole). Whilst promises are currently being made that this is not the case, there are also documents that at least partially prove otherwise (e.g. that public services that have already been outsourced can no longer be returned to municipality responsibility, or that municipalities may have to provide proof that private service providers cannot “do it better”).
- Public procurement will also be affected, with many fearing that the public authorities’ options would be restricted.
- Threat to the energy transition and climate protection: it is also clear that CETA and TTIP pose a significant threat to the energy transition and climate protection. Traditional energy sources and “cheap” gas from America obtained through fracking are the clear winners in the negotiations – not only, but at least in part thanks to investor protection. They constitute a de facto hindrance to the energy transition towards achieving far-reaching climate protection.
- Consumer protection, agriculture, environmental norms: other risks associated with CETA and TTIP are well known. While Europe is familiar with preventive environmental and consumer protection, America is not. It will become considerably more difficult to ban pesticides or impose reduction targets for these; the globalisation of agriculture will be promoted to the detriment of regional agriculture. What’s more, the USA is far more open to genetic engineering than Europe.
There are countless reasons why Climate Alliance members should be extremely sceptical about TTIP and CETA.
A draft resolution text for your council or municipal parliament is attached. Further draft proposals from Cologne, Belgian municipalities and Bergisch Gladbach can be found online:
We ask that you express your scepticism and rejection of such a resolution, and send this to your national government, national members of the European Parliament and the European Parliament.
If your town or municipality has already signed this draft resolution (or a modified version), please also send this to the European Secretariat of Climate Alliance in Frankfurt (Thomas Brose, t.brose(at)klimabuendnis.org). We are gladly accepting further suggestions of action.
Frankfurt, 1 July 2015
– Executive Director –