Supporter briefing

The transatlantic trade and investment partnership (TTIP), is an EU-US mega trade deal which, if passed will be the biggest trade deal in history. But TTIP is more than just a trade deal. It is an unprecedented transfer of power from democratically elected governments to trans-national corporations. TTIP is a threat to Scotland’s public services, progressive legislation and democracy itself.

How TTIP threatens Scottish democracyWere the Scottish government to pass or improve legislation in a way that US transnational corporations deemed a barrier to free trade and a threat to their current or future profits, then it could be sued under the investor state dispute mechanism (ISDS) - a parallel legal system - in TTIP. Examples of such legislation could include tobacco and alcohol control and climate change legislation.

Legislation in areas devolved to the Scottish parliament, such as environment, food safety, health and workers rights could be deemed barriers to trade and lowered under the ‘regulatory harmonisation’ rules in TTIP. Any aspect of Scottish public services that becomes privatised would be open to tender by US trans-nationals and subject to legal challenge if the Scottish government tried to bring them back into public hands.

Despite the fact that the pro-TTIP lobby claims the deal will lead to job creation and £100 billion of growth across the EU1, academic studies have cast serious doubt on this figure2. Critics point to the example of NAFTA which, despite being preceded by similar promises, is estimated to have cost 870,000 jobs3.

Campaigners across both continents are uniting in opposition to the deal. While TTIP will do a lot of damage in Europe and the US, the deal could also be damaging for poorer countries which will be forced to meet what are likely to become the de facto global trade rules.

TTIP The new EU-US trade deal that puts Scottish democracy in dangerApril 2015

Photo: JPolly Tikkle Productions

No TTIP banner drop between the Scottish parliament and Salisbury Crags in Edinburgh

Restricting Scotland’s democratic powersSince the independence referendum, there has been a lot of debate surrounding what extended powers Scotland will get. But there is little point in Scotland winning more powers from Westminster only to have them effectively taken away again by multinational corporations.

TTIP threatens to undermine the ability of the Scottish government and Scottish parliament to freely exercise the powers devolved to them. From the NHS and the provision of education, to the protection of Scotland’s environment and public health, TTIP could mean that transnational corporations have more and more power over Scottish life.

“We can’t let little countries screw around with big companies like this – companies that have made big investments around the world. “

Unnamed Chevron lobbyist, quoted by Michael Isikoff in Newsweek4

TTIP could also stop the UK government taking decisions that many people in Scotland would support, such as renationalising the Scottish railways or the Post Office. The threat of being sued by energy multinationals through the Investor State Dispute Settlement (ISDS) clause within TTIP could also stop any future Scottish or UK government from freezing energy prices or introducing greater regulation in the energy sector.

TTIP could also grant companies the right to sue governments if those governments make policy decisions which are deemed a threat to company profits. Companies would use ISDS, an international arbitration process that bypasses and overrides states’ domestic judicial systems. The system can only be used by companies suing states, not vice versa. Cases are decided not by judges but by a small group of lawyers paid by the hour, who have a vested interest in encouraging companies to open more cases to increase their own incomes.

The state has to pay the costs of the case even if it wins, and because the compensation to be paid if it loses is so astronomical, even the threat of being taken to arbitration can be enough to persuade governments to abandon plans to introduce regulation.

ISDS exists in other trade agreements around the world and has been used by tobacco giant Philip Morris to challenge Australia’s decision to introduce blank cigarette packaging. In Germany, the Swedish company Vattenfall is suing the

German government, for three billion euros after the country voted to phase out nuclear power following the Fukushima disaster in Japan. The mechanism was also used to extract $1.5 billion from Argentina after it froze utility prices and devalued its currency following its economic crisis in 2001.

Put simply, if TTIP is approved, Scotland’s democratic processes could be seriously undermined by an unelected panel of corporate lawyers.

Forcing English-style NHS reform on Scotland?Scotland has so far chosen to resist efforts to introduce greater private sector provision in the NHS. It has also been spared the top-down reorganisation of the NHS that England has seen as a result of the Health and Social Care Act 2012.

However, TTIP could threaten this public sector oriented model. Under TTIP, US companies will be free to bid for NHS contracts where these are offered up for tender, which could lead to the increased entry of giant US health corporations into the UK. Once entrenched, the multi-million pound lobbying and legal clout of these companies could erode the Scottish NHS.

Existing private sector involvement in Scotland’s NHS, through procurement, the provision of services or the Private Finance Initiative (PFI) would become irreversible. Decisions, such as that of the Scottish government to reduce the extent to which private sector providers are used, could lead to the Scottish government being taken to international arbitration by companies.

Danger to Scottish Water?Scottish Water is one of Scotland’s biggest public sector success stories. In 2012/3, it invested more than £487 million into improvements and maintenance5 while keeping average bills lower than privatised companies in England. Last year it announced a real terms cut in water bills, with rates rising at a rate 1 per cent below inflation6.

However, as with the NHS, Scottish Water could be threatened by TTIP. The Water Services (Scotland) Act 2005 allowed private companies limited access to retail services for commercial customers in the Scottish water sector. Private companies have also been involved in infrastructure through PFI. TTIP could encourage greater private sector involvement and will mean that any change to the detriment of the private sector (which could

include any future decision to grant additional public funds to Scottish Water) can be challenged through the ISDS arbitration tribunal by companies seeking to undermine Scotland’s efficient, cheap and public water system.

Any future privatisation of Scottish Water would also be made almost irreversible by the deal.

Threatening Scotland’s environmental heritageScotland’s rich natural heritage is currently protected by a wide range of strict regulations both at EU level and in the form of UK and Scottish legislation. As many environmental issues have been devolved to the Scottish parliament, the

‘regulatory harmonisation’ down to the lowest common denominator threatened by TTIP could seriously limit Scotland’s capacity to protect the country’s natural environment.

Environmental regulations in the USA are weaker in many respects compared to Europe. TTIP may mean that Scotland’s strong regulatory regime could be seriously undermined, and the added threat of companies using ISDS could have a chilling effect on environmental regulations.

Crippling local governmentThe ability of local government to decide who gets contracts to provide goods and services could be affected by TTIP. Local authorities across Scotland could be prevented from choosing local suppliers for environmental or social reasons or from taking control of local services like transport and refuse collection. The recently adopted Procurement Reform (Scotland) 2014 Act, despite being criticised by some for not going far enough, does allow local authorities to promote the environmental and social wellbeing of the area when buying goods or services. It also allows them to facilitate the involvement of small businesses or

charities. TTIP could stop Scottish local authorities from exercising this kind of discretion. Big US companies could also use international arbitration to extract millions of pounds from counties, towns and cities if they change policy to the detriment of their corporate interests.

Bad for farmers, local businesses and the food systemScotland’s farming community could also suffer as they struggle to compete against US agricultural giants. The average size of a farm in the US is 13 times bigger than in Europe and many British farmers already struggle to make a living from their produce. There would also be public health concerns, as ‘harmonising food standards’ between the US and the UK could allow meat processed in the US using methods banned in the EU, such as hormone-injected beef, into the market.

Small scale producers and the small scale experimental projects that are being developed by Scotland’s local food networks, could also be

Anti-fracking campaigners join ‘Mr. Frackhead’ outside the Scottish Parliament

Photo: Colin Hattersley Photography

US company sues Canada over fracking moratoriumFracking is a timely example of how Scottish sovereignty could be undermined by TTIP. The Scottish government recently issued a moratorium on fracking in Scotland, using its powers over planning rules. Under TTIP, if the Scottish government were to extend the moratorium or turn it into a ban then it could risk being sued by fracking companies concerned over loss of profit.

Such a case has already arisen in Canada under the NAFTA trade agreement. The state of Quebec issued a moratorium on fracking in 2011 because of environmental concerns. This prompted Lone Pine, a company that had been issued with fracking licenses before the moratorium, to sue the Canadian government using the ISDS clause in the NAFTA agreement, for around $230 million dollars7.

Commenting on the case, Ilana Solomon, director of the Sierra Club’s trade program in Washington D.C. said: “If a government is not even allowed to take a time out to study the impact without having to compensate a corporation, it puts a tremendous chill on a governments’ ability to regulate in the public interest.”8

threatened by TTIP. Projects that prioritise local, seasonal and ethically produced food such as the Fife food co-op and local farmers markets could all be regarded by the EU and US as ‘non-tariff barriers to trade’. This could make them illegal under TTIP9.

In fact, any preference given to buying local first could be open to challenge by companies from the US, and vice versa. This would affect the many small businesses currently meeting the demand for local products, or who rely on their customers choosing local suppliers in order to boost the local economy where they are based.

Lindsey Kennedy, from SME Insider argues TTIP will threaten Europe’s small businesses:

“If you’re a small business in Europe that creates products adhering to long-running EU rules, your products are probably going to be more expensive to produce than their US equivalents, which can make greater use of cheap labour as well as, potentially, questionable chemicals and practices. If many of the EU’s regulations are scrapped, many of these cheap US products that were previously banned on the continent are likely to flood in, undercutting your prices.”10

Undermining Scotland’s workersTTIP is a threat to workers rights. The USA has not ratified key International Labour Organisation conventions and union influence has been seriously undermined in some states (particularly in states which have a ‘right to work’ policy). As a result, any harmonisation of regulation endangers higher labour standards that exist in the EU. For example, there could be pressure to dilute key regulatory safeguards in areas such as workplace safety.

Bad for the worldTTIP is being seen as the new gold standard for all future trade agreements. This means that poorer countries will be subject to huge pressure to apply

TTIP standards to avoid losing trade from the US and EU after TTIP is implemented11. Essentially this will mean that highly unfair rules of global trade will have been set by the world’s richest countries without giving the rest of the world any influence12. TTIP is openly being talked about as an ‘economic NATO’13 that will unite the US and EU in order to secure ‘global convergence toward EU-US standards which could then become de facto global standards’.14

So while much of the public discourse on TTIP is focussed on the effect on the EU and US economies, there is a big danger that TTIP will be used to force deregulation and disadvantageous economic policies on poorer countries15.

What you can do to oppose TTIPThere is a growing movement across Scotland, the UK and Europe, as well as in the US, actively calling for TTIP to be scrapped. ‘Scotland Against TTIP’, a coalition of trade unions and NGOs launched in April, and ‘Stop TTIP’ local groups have sprung up across the country.

Sign the petitionThe Europe-wide petition to stop TTIP is heading towards two million signatures. Take two minutes to add yours: www.globaljustice.org.uk/trade

Lobby your MP/MSP/MEPYour MEPs get one vote each on whether or not TTIP should come into force. Tell them to vote no! Your MP and MSP should also be concerned. For ideas about how to do this, go to:globaljustice.org.uk/trade

Campaign locally

Stop TTIP groups exist in Aberdeen, Dundee, Edinburgh, Glasgow, the Highlands and St. Andrews. Find them on facebook or contact the Global Justice Now Scotland office Scotland to find out about your local group.

thornhouse@globaljustice.org.uk or 0131 243 2730

For the fully referenced briefing go to: www.globaljustice.org.uk/danger

Take action To find out how you can help tackle corporate power and become part of a movement for real change visit www.globaljustice.org.uk or call 0131 2432730.

Global Justice Now campaigns for a world where resources are controlled by the many, not the few, and works in solidarity with social movements to fight injustice. We used to be the World Development Movement.Global Justice Now, Thorn House, 5 Rose Street Edinburgh EH2 2PR t: 0131 243 2730 e: thornhouse@globaljustice.org.uk w: www.globaljustice.org.uk