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TTIP and the threat to European democracy

Submitted by on 31 Mar 2015 – 12:05

The March issue of the Government Gazette features a balanced and evidence-based overview of the Transatlantic Trade and Investment Partnership (TTIP) negotiations, with opinion and analysis from both sides of the debate. Here, John Hilary from War on Want argues that TTIP circumvents the rule of law and transfers excessive power to transnational corporations. 


John Hilary
Photo: War on Want

There are many good reasons to oppose the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated in secret by the European Commission and the US government. The EU’s official impact assessment calculates that it will lead to the direct loss of at least one million jobs in the EU and USA combined. The EU has admitted that health, education, post, rail, water and other essential services are all on the table for negotiation. The environmental consequences of the energy trade liberalisation proposed for the deal are beyond calculation.

Yet the most immediate threat from TTIP comes in the new powers it will give transnational corporations to attack public policies adopted by democratic governments. Firstly, TTIP will establish a standing Regulatory Cooperation Council to check that no future policy choices made on either side of the Atlantic could harm corporate interests. Then the ‘investor state dispute settlement’ (ISDS) mechanism will allow US companies to bypass domestic European courts and claim huge damages in secret arbitration tribunals for loss of profits resulting from public policy decisions that could harm their bottom line.

No domestic companies or individuals have access to these secret tribunals, which threaten to undermine the most basic principles of our democracy. Examples from existing treaties show how companies have already used such powers:

  • US tobacco giant Philip Morris is suing the Australian government for billions of dollars in lost profits for requiring all cigarettes be sold in plain packaging.
  • Swedish energy company Vattenfall is suing the German government for €5 billion over its decision to phase out nuclear power in the wake of the Fukushima disaster.
  • Veolia is suing the Egyptian government for loss of profits as a result of the country’s decision to raise the minimum wage.
  • US energy corporation Lone Pine is suing Canada for $250 million over Quebec’s moratorium on fracking under the St Lawrence river.


Photo: Jess Hurd

Photo: Jess Hurd

The UK will soon be facing a wave of such cases if US corporations are granted ISDS powers by TTIP, according to the assessment commissioned by the coalition government from the London School of Economics. Recent bans on fracking in Wales and Scotland will immediately be open to challenge, and Philip Morris has given notice that it intends to sue over the UK’s decision to introduce its own tobacco packaging law. Ultimately, any public policy that threatens a company’s profits can be challenged, creating a ‘regulatory chill’ as governments shy away from the introduction of future rules.

There has been such outrage at this threat to democracy that the European Commission was forced to suspend negotiations on ISDS at the beginning of 2014 and conduct a public consultation across Europe. A staggering 150,000 responses were received, all but a tiny handful condemning the introduction of ISDS. Yet the European Commission has defied public opinion and continues to keep ISDS within TTIP, just as it has done in the EU-Canada trade deal being prepared for ratification in 2016. All those who believe in democracy and the rule of law should be up in arms.

John Hilary is Executive Director of War on Want, a third-sector human rights organisation. His introductory guide to TTIP has now been published by the Rosa Luxemburg Foundation in nine European languages, and is free to download here.