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April 12, 2013

Businesses Crowd Corporate-Hosted Government Hearing on Trans-Atlantic "Trade" Deal

As the Obama Administration gets ready to negotiate a Trans-Atlantic "Free Trade" Agreement (TAFTA) with the European Union that takes aim at a host of health, financial, environmental and other regulations, a smorgasbord of corporate representatives (and a sprinkling of consumer groups) voiced their wishes for the pact this week. The occasion was a standing-room-only "stakeholder session," hosted by the administration's Office of Management and Budget and the European Commission, to get input on what TAFTA should or should not entail.  

What neutral territory did the administration choose to consider such a critical question?  Perhaps one of the many government-owned venues in downtown DC?  Nope.  They went with the headquarters of the Chamber of Commerce.  The Chamber's not exactly a disinterested party in a pact that could implicate a wide swath of U.S. regulation used to balance big business's quest for profits with the public's quest for financial stability, a healthy environment, safe products, and affordable medicines.  The venue choice is akin to the Environmental Protection Agency hosting a forum on offshore drilling...on an offshore drill.  

But at least the administration granted public interest groups like us some time to offer input.  As in, a half hour.  Total.  For all consumer groups.  In a 1.5-day-long forum otherwise filled almost exclusively by industry representatives.  If relative allotment of time is indicative of the relative importance the administration attributes to industry views on TAFTA vs. the views of everyone else, big business "stakeholders" hold 76% of the administration's attention, technical standards organizations hold 11%, and the opinions of the rest of us are worth 13%. 

During that half hour, I squashed Public Citizen's initial take on TAFTA, one of the largest "trade" deals proposed to date, into a five-minute statement.  For a nutshell view of what's at stake in TAFTA, here's the statement:

Oral Statement for the U.S.-EU High Level Regulatory Cooperation Forum

April 10, 2013; Public Citizen’s Global Trade Watch; Ben Beachy, Research Director

Public Citizen welcomes the opportunity to comment on regulatory cooperation between the United States and EU in the context of the recent decision to launch negotiations for a Trans-Atlantic Free Trade Agreement, or TAFTA. Public Citizen is a national, nonprofit public interest organization with 150,000 members that champions citizen interests before Congress, executive branch agencies and the courts. Public Citizen believes that advancement of consumer well-being must be the primary goal of any U.S.-EU pact.

We are skeptical that a deal built on regulatory convergence, as proposed for TAFTA, will serve consumer interests. Consumers have different priorities in different countries. Differences in regulatory standards between countries with different constituent priorities should be expected and respected as the legitimate outgrowth of trade between democratic nations, such as those contemplating TAFTA. However, the process leading to the launch of TAFTA negotiations has been characterized by attempts to eliminate regulatory distinctions for the sake of narrow business interests. It is not apparent that any efficiency gains resulting from regulatory convergence would a) significantly accrue to consumers rather than just to those business interests, b) outweigh consumers’ loss of ability to set the regulations that affect them, or c) justify the considerable expenditure of limited government resources to engage in multi-year negotiations between Parties with already low tariffs. Before adopting a regulatory convergence approach, the U.S. and EU should establish a transparent process to study these critical questions.

If TAFTA proceeds with the approach of trying to establish uniform standards, then the established standard should be set as a regulatory floor, not a ceiling. This approach safeguards the ability of a country to establish stronger standards in response to emerging consumer demands or unforeseen policy challenges and crises. Given that trade agreement rules are not easily altered and that negotiators cannot see into the future, such flexibility is essential. A common regulatory floor set at the highest standard of any involved country would still provide efficiency gains without sacrificing consumer protections. The U.S. and EU should exclude from the pact any sector or area where they cannot agree on this floor-not-ceiling framework.

Any standard-setting terms in TAFTA must strengthen consumer protections in critical policy arenas. To ensure food safety, for example, any rules implicating food health standards or labeling must be limited to requiring that policies be applied equally to domestic and foreign goods. Each nation must be allowed to set non-discriminatory standards and labeling policies based on consumer demands and priorities alone. To ensure financial stability, any harmonized standards must set a floor of strong financial regulation based on the most robust post-crisis reregulation efforts of the U.S. and EU. The agreement must explicitly safeguard measures such as non-discriminatory bans on risky products, facially neutral limits on firm size, and capital controls – now officially endorsed by the IMF. Any deal should also establish a more effective exception for prudential measures than seen in the WTO.

To ensure climate security, any agreement must provide policy space for signatory countries to respond to the emerging climate crisis with stronger policies to control greenhouse gas emissions. This includes allowance for feed-in tariffs, emissions-based taxation, and performance standards. Consumers’ access to an open Internet and affordable medicines, meanwhile, should not be implicated by TAFTA. Overreaching patent and copyright provisions in past “trade” agreements, the Stop Online Privacy Act (rejected by the U.S. Congress) and the Anti-Counterfeiting Trade Agreement (rejected by the European Parliament) have threatened such access. The U.S. and EU already provide robust patent and copyright protections without the addition of such sweeping terms. To ensure the protection of these consumer rights, this prospective agreement must exclude intellectual property provisions.

Any agreement must not include the extreme investor-state system included in past U.S. and EU trade and investment deals. The investor-state mechanism uniquely empowers foreign investors to directly challenge sovereign governments over contested public interest policies in tribunals that operate completely outside any domestic legal system. The ostensible premise for such an extreme procedure is that some domestic legal systems are too corrupt, incompetent or ill-equipped to hear foreign investors’ claims. Since neither the U.S. nor any EU member state is likely to assert that this description befits the legal system of any TAFTA nation, the anomalous investor-state system is absolutely unacceptable for TAFTA. So are the open-ended rights provided to foreign investors, but not domestic firms, under this system. Inventive tribunals have imputed, for example, a right of investors to obtain government compensation for any policy that contravenes their expectations. The U.S. government has rightly argued that such broad terms, which have enabled the current surge in costly investor-state cases, would cause the government to lose the right to regulate in the public interest.

Given that TAFTA could implicate a wide swath of domestic non-trade policies, including those named here, the respective legislatures must establish binding goals for the negotiations before talks begin, and should be consulted regularly to ensure those objectives are being fulfilled. Any resulting agreement should not be signed unless and until the U.S. and EU legislatures approve the proposed text through a vote that affirms it has met the established objectives. The process must also be open to the public. Negotiating texts and country submissions for TAFTA must be made publicly available so that stakeholder groups, including those not granted preferential access to official trade advisory committees, can give meaningful input on the critical policy decisions at issue. Negotiators should consult not just with the industry groups that have been disproportionately consulted in past agreements, but with the more diverse array of stakeholders that is required to represent the consumer interests that should stand at the heart of any deal.

Thank you. 

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