Transatlantic trade deal faces an uphill battle in the US

As the US Senate moves to vote on so called fast-track authority, the fate of President Obama's world-encompassing trade agenda hangs in the balance. Fast track would empower the White House to negotiate final deals with Europe and the Pacific Rim nations, which Congress would then approve or reject in up or down votes without amendments.

The House of Representatives would also have to give its approval to fast-track. If this authority is approved and Congress ultimately ratifies both trade deals, roughly 80 percent of the world's economic output would be covered. But opposition has been fierce and it's unclear how Congress will vote.

In a twist of political irony, President Obama has won the support of many conservative Republicans, but faces fierce opposition from Democrats and liberal constituencies such as labor unions and environmentalists. Opposition to the Trans Pacific Partnership has focused on concerns that a deal with lower wage countries could lead to a further outsourcing of jobs to Asia.

But tensions are also simmering below the surface over the potential deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP). Critics, such as Jean Halloran with the Consumers Union advocacy group, have slammed the secrecy shrouding the negotiations.

“The US has this system of advisors,” Halloran told DW. “Because of the secrecy you must have a top secret clearance to see any of these negotiating documents.”

President Obama has 600 industry representatives advising him and just one from the consumer advocacy world, according to Halloran. That single non-industry advisor is the former president of the Consumers Union, Rhoda Karpatkin.

'Chilling effect on legislation'

Halloran and others also oppose the inclusion of provisions creating international arbitration tribunals, known in technical speech as Investor-State Dispute Settlement (ISDS) mechanisms. Multinational corporations could sue the United States government in these tribunals for policies that cut into profits or jeopardize property.

Critics cite the North American Free Trade Agreement, negotiated and ratified in the 1990s, as an example of how trade agreements can undermine the legislative process.

“ISDS clauses in NAFTA and other trade agreements have been used repeatedly to attack efforts to protect the environment and public health,” the National Caucus of Environmental Legislators claims.

“Even unsuccessful challenges take years to resolve, cost millions to defend, and have a chilling effect on the development of new legislation.”

Citing the provisions of NAFTA, the Virginia-based Ethyl Corporation sued the Canadian government for $251 milllion in 1997 over a ban on the import and transport of a toxic gasoline additive known as MMT. Canada ultimately had to ditch the ban and pay Ethyl around $13 million for damages.

Least common denominator?

While the NCEL acknowledges that EU regulations are often stronger, it points out that many US states have very strong environmental and health protections as well. The group and critics like Halloran have expressed concern that efforts to harmonize EU-US regulations would favor multinational corporations and weaken protections that are stronger in America.

Toys in the US, for example, are subject to third-party testing to ensure safety standards for potential dangers like lead in paint, Halloran said. Europe on the other hand only has a self-certification program.

“The concern is that we will go to the least common denominator,” Halloran continued. “If the goal would be to accept the most stringent or most restrictive standard that existed on either side of the Atlantic, we might even be for this agreement. But that is absolutely not the way they talk about it.”

'Criticisms overblown'

The Center for Strategic and International Studies (CSIS) argues that much of the opposition is unfounded, particularly when it comes to the arbitration tribunals. These bodies represent a major advancement in peacefully resolving disputes and treating foreign nationals fairly, according to CSIS.

“Many of the criticisms of ISDS are overblown,” the Washington-based think tank claimed in its report on the issue. “Some claim that ISDS gives investors 'special rights.' Yet most treaty protections are identical to universal civil rights accorded most citizens.”

“Finally, conflating ISDS with 'big corporations' ignores the fact that the majority of US investors who have filed investment arbitration claims are firms with fewer than 500 employees,” the report continued.

European investors have actually filed more than half of the claims before such tribunals worldwide, according to the report. US companies in comparison have filed about 22 percent of the claims. This is because Europe is responsible for more foreign direct investment.

Most claims worldwide have been filed in industry sectors that already have a high-level of government intervention: Oil, gas, mining and power generation. Overall, states win arbitration disputes twice as often as investors, according to the CSIS report.

But Halloran points to US country of origin labels for beef, poultry and pork as an example. On behalf their domestic industries, Canada and Mexico challenged these labels at the World Trade Organization, which ruled in their favor. Now Congress is moving to do away with the US law requiring these labels. Though not an example of intervention by an ISDS tribunal, Halloran believes the challenge to country of origin labels is a cautionary tale.

“Obama made the statement that people who say consumer and environmental protections are at risk are making things up,” Halloran said. “We're not making things up – we're about to lose our country of original labeling because of an international trade agreement.”