International Free Trade Agreements (CETA, TiSA, TTIP)

1. International Free Trade Agreements (CETA, TiSA, TTIP) Meeting of the Executive Committee Brussels, 14.03.2015 Alexander Kraake, EAPN Germany

2. Content • Introduction • General Critizism • Impact on Economy and Employment • Investment Protection • Regulatory Cooperation • Social Services of General Interest • Additional concerns • EAPN Germany Activities • Other EAPN members activities • Possible EAPN Activities

3. Introduction International Free Trade Agreements • EU-Canada: CETA (Comprehensive Economic and Trade Agreement); negotiations completed, wording published in September 2014 (1650 pages!) • EU-USA: TTIP (Transatlantic Trade and Investment Partnership), also calledTAFTA (Trans-Atlantic Free Trade Agreement); negotiations since July 2013, aim to complete until end 2015 • 23 members of the World Trade Organisation (WTO): TiSA (Trade in Services Agreement); negotiations since 2012 • European Commissiongotthemandatetoleadthenegociationsfor EU memberStates from European Council

4. General Criticism • Free Trade Agreements are part of international law which is superior to national law (and EU secondary law); obligations in CETA, TTIP or TiSA could lead to adoptions in national/European law; concerns free trade norms dominate the norms of European social-ecological market economy • Negotiations in secret lead to loss of legitimacy and refusal in public; European Commission (EC) starts Civil Society Dialogue and publishes general negociation status, proposals and papers but not the final wording of the treaty; it is planned to publish the treaty texts only after the completion of the negotiations • TTIP has no cancellation clause and thus unlimited validity; changes have to be approved by all treaty partners

5. General Criticism • Adoption only by EC, European Parliament and European Council is not a sufficient legitimation, even if trade policy is exclusively transferred to the EU; free trade agreements require that all national governments and parliaments of EU Member States discuss and adopt the treaties; for CETA, the adoption of all EU national parliaments was decided recently • The EC decision to disapprove the European Citizens' Initiative "Stop TTIP" for legal concerns strengthened the democratic deficit and the doubts of many citizens and NGOs

6. Impact on Economy and Employment • The EC argues that TTIP could bring 2 million extra jobs to the EU and “significant economic gains as a whole for the EU (€119 billion a year) and the US (€95 billion a year) once the agreement is fully implemented. This translates on average to an extra €545 in disposable income each year for a family of four in the EU.” • However, there is a growing number of critical analyzes doubting that TTIP will have significant employment and growth effects and, on the contrary, TTIP could bring dislocation of European employment, as companies might source jobs to the USA where labour standards are lower and trade union rights are non-existent

7. Impact on Economy and Employment • The North American Free Trade Agreement (NAFTA) between the USA, Canada and Mexico caused the net loss of over one million US jobs and a significant decline of wages • There are also concerns that TTIP could lead to a downgrading of any labour standards identified as ‘barriers’ to trade, such as collective labour agreements; the USA has refused to ratify ILO Conventions on core labour standards such as collective bargaining, freedom of association and the right to organize • Critics see TTIP as an opportunity to relocate production to where wages and workers’ rights are lowest, in order to reduce labour costs and increase corporate profits

8. Investment Protection • CETA has - like many other free trade agreements - clauses on investment protection, which are also foreseen for TTIP • Especially the Investor-state dispute settlement (ISDS) is controversial; ISDS includes the implementation of private international arbitration tribunals which could be able to decide on compensation claims of companies against the future contractual states - without the possibility of an independent judicial review • Gateway for such suits are clauses such as "fair and reasonable treatment", "non-discrimination", "investment" etc. (included in investment protection agreements) which are open to wide interpretation

9. Investment Protection • As a result, an investor would have the option to sue a state for compensation if an expected investment environment changes by e.g. policy making • Legal amendments in environmental protection, consumer protection, health, labour and social affairs could be classified as trade barriers and become the object of investment protection suits • In addition, the appointment of private arbitrators is controversial because of their own economic interests and assumed pro-corporate bias; due to lack of transparency, conflicts of interest, lack of involvement of third parties etc. a fair trial can not be guaranteed

10. Investment Protection • ISDS creates a parallel private legal system besides the existing ordinary jurisdiction; its added value for the contractual states is not evident; there are legitimate concerns that the capacity of policy decision-making and thus the democratic sovereignty of contractual states could be restricted by excessive levels of corporate compensations; most likely, negative impact for the income and living conditions for most deprived persons because the public has to pay compensation • This negative assessment was confirmed by the results of the EU consultation on investment protection in TTIP which were published in early 2015; the analysis of 150,000 contributions resulted in a rejection of 97 %

11. Regulatory Cooperation • For TTIP, regulatory cooperation and the establishment of a Regulatory Cooperation Council (RCC) is intended; RCC is expected to examine standards and laws of the contractual states to its compatibility with TTIP; but mandate, binding power of its decisions, appointment of members etc. are still unclear • EC refers to TTIP as a “Living Agreement" which could indicate that the negotiating partners agree on a general framework and continue to advance the implementation and application in the RCC; this could mean that crucial decisions of our community would be shifted to intergovernmental advisory bodies; the establishment of RCC could be a fundamental cut in state sovereignty and democratic rights in the EU and the Member States

12. Regulatory Cooperation • This could result in a delay or prevention of urgently needed regulations and standards, such as environmental and consumer protection; also, it is suspected that business representatives could gain exclusive access to proposed legislation in the RCC and might change on their behalf; in the RCC, regulatory measures could be discussed and decided long before parliaments get to see these proposals

13. Social Services of General Interest • Social and health services, so-called Social Services of General Interest (SSGI), are affected by the Free Trade Agreements • For TTIP and CETA a general liberalization imperative is agreed by EU and US, meaning all economic sectors will be liberalized; only precisely described exceptions are excluded (“negative list approach”); in addition, all new future services would be liberalized per se by this approach • However, for SSGI various definitions exist in the US, EU and its Member States; proposed exceptions, terms and definitions are not always clear; thus, the “negative list approach” for SSGI is problematic, but also generally questionable; the areas to be liberalized should be explicitly and precisely stated in positive lists

14. Social Services of General Interest • If liberalization areas are defined in vague terms, they could become the starting point for further deregulation (by ISDS); the claim in the EC negotiating mandate to try to maintain the high standards of SSGI would be undermined; the return to the previous principle of positive lists is necessary in Free Trade Agreements • Altogether, SSGI – as defined in the Treaty on the Functioning of the European Union – should be excluded from the scope of the agreements (like the cultural exception insisted by French government) but both negotiating partners disagree

15. Social Services of General Interest Exceptional clauses in CETA: • EU level: EC reservation permits to fund, promote and provide tax privilege to SSGI that receive state support of any kind (annex II, p. 1511) ; thus, the non-profit service delivery of SSGI will be possible in future • National level: German reservation allowing national measures in the SSGI system (other member States as well); the organization and structure of service provision by free welfare organizations is not affected

16. Social Services of General Interest • In CETA no market access commitments are included which go beyond the WTO agreement on services (GATS); there are some GATS commitments on market access concerning social and health services in Germany, like hospitals, sanatoria, nursing and retirement homes; these obligations apply for 20 years; Germany accepts no further obligations in CETA; a large part of social services is thus exempt from the requirements of CETA • For TTIP regulation is not known, could follow CETA requirements

17. Additional concerns • Further market-opening in the area of ​​public services (e.g. water supply, education, housing, energy) • Removal of “Regulatory barriers to trade”: deregulation of financial services, weakening of data protection, deregulation of food safety (including restrictions on genetically modified organisms), undermine environmental regulations (e.g. EU ban on Fracking) • Compatibility with European and national constitutions • Impact on global trade and developing countries

18. EAPN Germany Activities In cooperation with German welfare organizations: • National level: EAPN Germany is being informed of the meetings of the TTIP advisory board of the Federal Ministry for Economic Affairs and Energy; joint position paper of the Ministry and welfare organisations • EU level: the office of German welfare organizations in Brussels is informing EAPN Germany about the Civil Society Dialogue of the EC • Effort to impact on the European Parliament recommendations (2014/2228(INI)) to the EC for the negotiations on TTIP; responsible rapporteur: German MEP Bernd Lange, chairman of the Committee on International Trade (INTA)

19. EAPN Germany Activities • Talks and exchange with European and German Parliament members and representatives from German ministries as well as EC • EAPN Germany preparing a short, comprehensible paper; on this basis, it is intended to cooperate with experts (universities etc.) for an extensive analysis

20. Other EAPN members activities • Document by Stephan Backes (EAPN Belgium) based on the presentation at the EXCO meeting in November 2014 • EAPN France Position paper • Other activities?!

21. Possible EAPN Activities Recommendations (i.a. Stephan Backes): • Adopt a position paper outlining basic standpoints that are accordable in EAPN (including impact on employment, revenues, social protection etc. of most deprived persons) • Support and join alliances and actions of civil-society organizations and trade unions and make them more visible; e.g. “Stop TTIP” – a self-organized European Citizens' Initiative collecting signatures Europe-wide • Link the challenges of TTIP to the EAPN work on the Strategy Europe 2020 as they follow the same paradigm • Reflect on private and corporate funding within EAPN

22. Thank you for your attention For questions and suggestions please contact Alexander Kraake, EU Policy Officer at German Red Cross KraakeA@drk.de