CETA, TTIP, "Common Rule Book" & all Free Trade Deals

If you look at the fine print of Ms May's Chequers compromise on Brexit, you will see that resolution of disputes may be done through "binding independent arbitration".

This will be the notorious Investor State Dispute Settlement (ISDS) so discredited as part of all Free Trade deals, such as NAFTA, TTIP and CETA. These arbitration decisions undermine democracy and have forced changes in laws that protect the environment and even changes in taxation.

In this article I discuss the dangers of Free Trade Deals like May's "Common Rule Book" proposals, using the example of CETA (Comprehensive Economic Trade Agreement between Canada and the EU currently going through the ratification process, but, in the words of War on Want, "under the EU’s anti-democratic procedures, it has applied most of the content of CETA on a provisional basis already, without worrying about any accountability to the people of Europe".)

There was a vote recently in the House of Commons on the ratification of CETA. There was very little debate and this infamous trade deal was backed by Tories, Lib Dems and Labour MPs, who, frankly, should have known better.

By signing up to CETA, the UK has given away far more sovereignty than was given to the EU.

At this point I must be honest about the debt I owe on this subject to David Malone, the Green candidate for Scarborough. If you haven't seen his talk called "The Death of Democracy" on YouTube, then please see it ASAP. It is three years old, but still relevant as all he says about TTIP applies equally to CETA. Most especially, because, as War on Want also point out, "CETA not only gives rights to EU and Canadian companies but also for any US firms with offices in Canada (which is most of them)."

The biggest threat to the UK from CETA is the threat to our food standards. The EU claim that they have built in safeguards to our food safety standards in CETA; no chlorinated chicken, they claim. But if standards remain, why have a trade agreement? The declared aim of a free trade agreement is to lower mutual tariffs, to gain access to each other's markets and to harmonise regulations.

The corporate lawyers have, time and time again, shown themselves to be more adept at drafting legislation in their own favour. That's why they get paid millions.

The EU itself said that 80% of the benefit of Free Trade deals is from reducing non-trade barriers (i.e. standards).

The heart of a Free Trade Deal (FTD) like CETA and the proposed "Common Rule Book" between the UK and the EU is the Bilateral Investment Treaty (BIT). These treaties always have four main elements and CETA is no exception.

1. Expropriation: to protect the assets of any company trading in the Free Trade Area (FTA). That includes any future profits of that company as was shown when Vattenfall, a Swedish nuclear energy company sued Germany for abandoning nuclear power generation at the International Centre for Settlement of Investment Disputes (ICSID).
Even changes in tax have been successfully stopped as being a form of expropriation.

2. Equal Treatment: Governments are not allowed to stop Companies from bidding for any service, such as the NHS and the BBC. So if you have a Government, as we do, that favours privatisation, it becomes irreversible and as we have seen, companies can sue if they are not awarded contracts in the NHS.

3. A Fair and Equitable clause. This was used to stop the Canadian Government from banning a petrol additive, MMT. The Ethyl case set a precedent where, under NAFTA and similar agreements, a government has to compensate investors when it wishes to regulate them or their products for public health or environmental reasons.

4. Arbitration via the toxic Investor State Dispute Settlement procedure. ISDS is not a court, has no judge and no jury. Traditionally, three corporate lawyers decide the merits of an arbitration dispute. Civil society has no representative; there are no rights to know what evidence was considered or who brought it, no right of appeal and no right to know the reasons for the decision. Worldwide, just 15 corporate lawyers have decided 55% of all disputes.

The EU claim in their document, "CETA, ISDS" that arbitration will be done " in a transparent and impartial manner". Apparently our national courts are not good enough to settle these disputes. Personally, I have no faith that the corporate lawyers will not be too clever for them on this and dominate any permanent investment Tribunal set up by CETA.

In the past this arbitration has been used to overturn laws, moratoria and even taxes.

Defenders of this insane policy argue say that only countries that sign up to this arbitration will receive foreign direct investment (FDI). There have been several studies, however, notably from Yale and the World Bank in 2003 that conclude that there is no correlation between Bilateral Investment Treaties and FDI.

The General Equilibrium economic models that state that CETA will increase UK trade, in common with many of the economic models used by the Treasury, have been shown to be flawed. For instance, the models assume that if any part of our economy shrinks, then another part will automatically expand. So why has the UK developed such a massive trade deficit since joining the Single Market?

In October 2014, the UN policy economic model was used to assess the effects of TTIP (and by implication CETA) and showed that TTIP would result in a loss of net exports, a reduction in GDP, a loss of Government income, an increase in inequality and 800,000 job losses across the EU.

Sources:
David Malone "The Death of Democracy" https://www.youtube.com/watch?v=6fDCbf4O-0s
War on Want: https://waronwant.org/what-ceta
Michelle Sforza and Mark Vallianatos Chemical Firm Uses Trade Pact to Contest Environmental Law April 1997 https://www.globalpolicy.org/component/content/article/212/45381.html
European Commission February 2016 Investment provisions in the EU-Canada free trade agreement (CETA) http://trade.ec.europa.eu/doclib/docs/2013/november/tradoc_151918.pdf