Is the EU its own worst enemy in trade and investment agreements?

By Aleksandra Terzieva, International Trade Campaign Consultant
By Aleksandra Terzieva, International Trade Campaign Consultant

This week, the latest round of the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations are underway in New York. More than three years into negotiations of TTIP, the European Union and the United States have hit a wall.

Some are blaming this on the demagogic demands of activists. Others say it is a result of unrealistic US demands. However, there is third, less talked about, possibility: that the European Commission has become its own worst enemy in negotiating trade and investment agreements like TTIP, which include provisions likely to be illegal under EU law and which goes against the recommendations and red lines established by the European Parliament.

EU makes a U-turn on toxic protections

A few years ago, the EU was praised for its precautionary chemical policies that were codified under the flagship EU chemicals law REACH, which protects our health and the environment and drives innovation in the chemicals market.

These policies have served as a blueprint for stronger toxic chemicals legislation across the globe, including in China and South Korea.

Such progressive policies are a stark contrast to the proposals on the table for TTIP, which could slow down, stop, or reverse the progress made so far.

The legality of EU’s TTIP proposals in question

Last month, hundreds of thousands of people took to the streets in Germany to protest against the trade and investment agreement. Nearly 60% of Germans oppose it, and this figure reaches to 70% in Austria (see the latest official European Union public opinion poll).

In response to years of criticism and protest, European negotiators have reformed some of their proposals for TTIP. Nevertheless, the latest EU proposals still includes elements that may be illegal under EU law.

In particular, the EU has proposed a mechanism that would allow investors to sue the EU and individual countries in the EU. This mechanism would undermine the autonomy of the EU legal system and the powers of the EU courts.

In practice, this would grant corporations legal rights that ordinary people do not have.

For example, while I — as an EU citizen — might like to take the European Commission to court should it fail to enact timely legislation to protect the public good, I don’t have the right to do so.

Instead, what the European Commission has proposed in TTIP is exactly the opposite: to expand the rights of corporations so they can sue the European Commission and EU Member States, should they enact legislation that protects the public good.

While it is legitimate to protect investors against illegal expropriation in the absence of an independent legal and judicial system, the inclusion of an investment protection mechanism in trade and investment agreements between trading partners with well established legal systems serves as a way to circumvent existing legal provisions and provides an undue advantage to investors over stakeholders (including regulators and citizens).

European Commission has overstepped its powers

Interestingly, the most recent European Commission proposals ignore a number of “red lines” that the European Parliament has set out to ensure that the agreement would not negatively impact our food and environmental standards. By ignoring the red lines identified by the only EU institution whose members have been directly elected, the European Commission is undermining democratic governance.

Cutting off a hydra’s head

With TTIP looking like it’s dead in the water, a parallel trade and investment agreement about to be signed between the EU and Canada, CETA, has crossed some of the very same “red lines” established by the European Parliament on TTIP.

Indeed, the provisions for investor dispute resolution in CETA threaten to undermine the regulatory and the legal framework in Europe, including EU laws aiming to protect public health and the environment. It also includes elements that can be found illegal under EU law.

Why does this sound familiar?

In the 1990’s, the countries that were members the Organisation for Economic Co-operation and Development (OECD) attempted to negotiate an investment agreement that included a type of a dispute settlement mechanism very similar to the one in TTIP. It was called the Multilateral Agreement on Investment.

In 1998, these negotiations failed after an intense global campaign.

Then, there was a political push to introduce similar investment provisions through the World Trade Organization (WTO). In 1999, global public pressure managed to stop this, and by 2001, it became evident that the WTO would not be able to push this investment agenda any further.

Instead, these unpopular investment provisions have found a hold through more than 3 000 bilateral trade and investment policies (and counting).


Lamenting the Europeans’ unwillingness to cooperate with the US, Germany’s economy minister Sigmar Gabriel said in late August, “the negotiations with the USA have de facto failed because we Europeans did not want to subject ourselves to American demands.”

In late September, the liberal Member of the European Parliament Enrique Calvet Chambon wrote that governments are abandoning TTIP “due to fear of being rejected or to satisfy the campaigns of demagogic activist or anti-system outsiders.”

But until the EU trade and investment policies are effectively directed at improving the quality of life of European citizens rather than facilitating transnational corporations operations at the expense of our environment, health, and labor standards, hundreds of thousands of people will continue protesting against unfair trade agreements and demanding a fairer trade agenda that respects their health and environment.

Because in the end, this is what democracy is about: Citizens organizing to demand transparency and to exercise their right to participate in decisions that impact their futures — not secret negotiations that trade public health for private profits.


Originally posted October 6, 2016