TTIP Update: UNCTAD report and a setback in the senate

13 May 2015 Champions of free-trade have just experienced a setback in the US Senate, and the United Nations Conference on Trade and Development’s report on ISDS reflects growing concerns.

15 May 2015| News

13 May 2015

Champions of free-trade have just experienced a setback in the US Senate, and the United Nations Conference on Trade and Development’s report on ISDS reflects growing concerns.

As well as the infamous Trans-Atlantic Trade and Investment Parternship (TTIP), the Obama administration is in the process of signing another historic trade agreement, the Trans-Pacific Partnership (TPP). It attempted to pass a fast-track bill, the Trade Promotion Authority, which would allow the president to sign trade agreements without congressional approval. After the signing, Congress would have an up-or-down vote to reject or approve a trade deal, but would have no powers to amend it.

However, on Tuesday (12 May) Democrats in the senate blocked the fast-track bill, with all but one Democrat voting against it.

The move reflects growing awareness of how negatively TPP will affect US workers, undoubtedly triggering a race-to-the-bottom on wages as cheap international labour is exploited.

Richard Trumka, president of the AFLCIO, America’s federation of labour organisations said; “We appreciate those senators who stood with working people today against a bill that would have led to undemocratic trade deals that lower wages and eliminate jobs.  This vote sends a message loud and clear”.

In a trade deal between the US and EU, like TTIP, it is European workers who will lose out, as US employment rights are even less regulated than our own; only two of the eight ILO core labour standards are recognised.

If TTIP, and CETA (Comprehensive Economic and Trade Agreement, a trade deal between the EU and Canada) go ahead, citizens on both sides of the atlantic will suffer – the only benefit will be to multinational corporations.

A particularly disconcerting component of the free trade agreements is the Investor-State-Dispute-Settlement (ISDS) mechanism. This allows foreign investors to sue for damages if they believe they have suffered financial losses due to a state’s laws and measures, through corporate courts. This effectively rules out any privatised services coming back into the public sector.

The United Nations Conference on Trade and Development (UNCTAD) has released a report on the latest developments in investor-state dispute settlement (ISDS).

The report shows that the ISDS mechanism continues to be popular. 42 known treaty-based ISDS cases were initiated in 2014, bringing the total number to 608.

It states; “The two types of State conduct most commonly challenged by investors in 2014 were cancellations or alleged violations of contracts and revocations or denials of licences. The sectors where most cases were filed in 2014 are the generation and supply of electric energy (at least eleven cases), followed by oil, gas and mining (ten), construction (five) and financial services (three)”.

These figures provide an incredibly worrying insight into what could happen to utilities should TTIP go through.

The Energy Charter Treaty (ECT) is now the most frequently invoked International Investment Agreement, surpassing the North Atlantic Free Trade Agreement (NAFTA).

ISDS tribunals rendered at least 43 decisions in 2014, with only 34 being public. Of the total 356 cases which have been concluded in ISDS courts, 37 percent were decided in favour of the state, 25 percent in favour of the investor and 28 percent of cases settled.

The report points out; “Arbitral decisions adopted in 2014 touch upon a number of important legal issues concerning the scope of treaty coverage, the conditions for bringing ISDS claims, the meaning of substantive treaty protections, the calculation of compensation and others. On a number of issues, tribunals continue to arrive at divergent conclusions.”

“The IIA regime is going through a period of reflection, review and revision. Investment dispute settlement is at the heart of this debate, with a number of countries reassessing their positions. There is a strong case for a systematic reform of ISDS.”

UPDATE: On Thursday (14 May) after lobbying Obama the bill passed through the Senate by 65 to 33. However, resistance is still expected in the House of Representatives.