Europe’s fragmentation endangers vital TTIP pact

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Second of three parts

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Opposition arises. The trade pact has yet to materialize because numerous hindrances have emerged that have complicated negotiations. The NSA spying scandal in June 2013 created mistrust between Berlin and Washington at an unfortunate moment, and various protest groups have been effective in gathering opposition to the pact. Environmental and civil society groups have warned that the agreement would undermine environmental and food safety standards, while British demonstrators have been mobilized over fears that the TTIP might undermine the sacred National Health Service — a threat guaranteed to raise emotions in the United Kingdom. Anti-TTIP demonstrations were held Oct. 11 in several cities around Europe, though they were more notable for their number than their size.

The strongest resistance has centered on the investor state dispute settlement clause, which allows an investor company to take a host country to international arbitration if it feels it has been treated unjustly. The clause has raised objections particularly in Germany, where Vice Chancellor Sigmar Gabriel told the Reichstag that the clause would give multinationals unfair advantages. Ironically, Germany was the first country to use an investor state dispute settlement clause in a trade agreement, when West Germany signed the world’s first bilateral investment treaty with Pakistan in 1959. In fact, EU countries have many more bilateral investment treaties that include this clause than does the United States. Moreover, EU investors (particularly from Germany, the Netherlands and the United Kingdom) represent more than half of the complaints registered at international investment tribunals in the past decade. However, a case in which a Swedish energy company is suing the German people following Germany’s decision to discontinue using nuclear energy after Japan’s Fukushima disaster has created public antipathy toward such clauses.

Some 55 percent of German respondents to a recent poll still backed the TTIP, with only 25 percent against, but the volume of the anti-pact movement’s complaints has been deafening. Outgoing European Trade Commissioner Karel de Gucht has been muttering about Berlin and Washington’s failure to take political leadership over negotiations. De Gucht has suggested that this failure could lead to the agreement’s collapse and has been quoted as saying that without the investor state dispute settlement clause, the TTIP will fail. Initially, hopes were that the negotiations would conclude by the end of 2014, but it looks more like talks will continue into late 2015, if the project survives that long.

While TTIP negotiations have continued, Europe’s economic situation has deteriorated further. During the crisis of 2012, there was a clear sense that the end of the eurozone could come any day, taking the entire European project with it. Slow atrophy has followed 2012’s urgency, with Europe’s growth and inflation levels slipping inexorably downward and an artificially low bond yield environment sedating politicians and the public into complacency and bickering. Slowed German production and exports in August suggested that even the great giant at Europe’s center was tottering. Moreover, low prices for energy and food prices caused by low global prices and Russian sanctions have pushed Europe very close to outright deflation. That the new crisis lacks the fervency of the last one makes it no less deadly for the eurozone. In fact, this crisis is hard to combat, because its slow nature makes it difficult to focus on the problem and take cohesive action.

To be continued

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