As Negotiations Begin, Advocates Decry Secrecy and Substance of U.S.-EU Trade Agreement

On July 8, negotiators from the Office of the U.S. Trade Representative (USTR) and the European Union began meetings on the Trans-Atlantic Free Trade Agreement (TAFTA), also known as the Transatlantic Trade and Investment Partnership. The negotiations are largely focused on reducing so-called "regulatory trade barriers" and "non-tariff issues," meaning they will target important consumer and environmental protections. Citizen groups and consumer advocates continue to warn the public about the threats TAFTA poses to public protections and democratic rights.

Cracks in the Free Trade Coalition

Just a few weeks ago, observers believed the U.S.-EU trade agreement was on a fast track. The treaty was championed in Obama's State of the Union Address, U.S. politicians from both sides of the aisle and EU leaders were ready to negotiate, and business groups from almost every sector had thrown their support behind the agreement.

Today, the future of the agreement is unclear. Since President Obama announced the start of TAFTA negotiations at the G8 Summit in June, consumer protection advocates on both continents have been increasingly critical of the trade deal, and a few European countries are expressing concerns about the treaty.

In the United Kingdom, labor unions have warned that TAFTA could pose a threat to the popular National Health Service, while here in America, President Obama has found his own party steadily siding against his administration's position on free trade. Wall Street watchdog and influential Sen. Elizabeth Warren (D-MA) has openly expressed her concern about the secrecy surrounding the trade negotiations and possible threats TAFTA could pose to crucial financial services regulations required under the Dodd-Frank reform law.

The French government has been the most vocal critic of the agreement. In June, it threatened to veto the entire treaty if there was no "cultural exemption" to protect subsidies for French-made films. The same month, it suggested postponing the start of negotiations after allegations of NSA spying on European diplomats came to light.

These cracks in the TAFTA coalition will allow consumer and environmental advocates time to educate the media and the public about the flaws and threats to national sovereignty hidden in the agreement.

TAFTA Creates Regulatory Ceilings that Hurt Citizens, Infringe on Democratic Rights

Using trade agreements as a way to "harmonize" regulations has been aggressively touted by the Transatlantic Business Council (TCB), an organization whose members include some of the world's largest corporations, including AIG, Pfizer, BP, and Verizon. While "harmonization" sounds innocuous, critics worry that instead of creating a common set of high standards, it will be used to support multinational efforts to set regulatory ceilings that prohibit any country from adopting strong public health and environmental protections.

Environmental and consumer safety regulations will be highly vulnerable to deregulation efforts in the secret trade negotiations. The 2013 Technical Barriers to Trade (TBT), a report from the Office of the U.S. Trade Representative that may become a "deregulatory wish list," suggests that weakening Europe's impressive chemical safety regulations is likely to be a major goal of U.S. chemical companies in the negotiations.

Currently, United States chemical safety standards are dictated by the Toxic Substances Control Act (TSCA), a broken and outdated piece of legislation. Under TSCA, the U.S. Environmental Protection Agency (EPA) bears the burden of proving a chemical is unsafe before it can mandate additional testing or limit the chemical's use. Over the past 37 years since the law has been in place, only 200 out of more than 80,000 chemicals have been tested for safety, and only five have been banned or heavily restricted because of TSCA's shortcomings.

By comparison, the European Union’s Regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) is the most progressive and successful piece of chemical regulation in the world, keeping dangerous pesticides and carcinogenic chemicals out of the marketplace until their manufacturers can prove the chemicals can be used safely.

If REACH is weakened in the secret negotiations, citizens of the EU will lose protections they now enjoy. Moreover, since the law helps to generate substantial data about chemical hazards that would not otherwise be produced, Americans and others across the globe will lose scientific research important to public health.

Investor-State Dispute Resolution Mechanism Undermines Democratic Control

Arguably the most dangerous provision proposed in the trade framework is the Investor-State Dispute Resolution (ISDR) mechanism. The mechanism would allow foreign investors to sue sovereign governments in extra-legal tribunals that function separately from a country's domestic courts. Its tribunals would consist of a small collection of private attorneys who also serve as judges. ISDR was originally included in the North American Free Trade Agreement (NAFTA) as a means of protecting foreign companies should their investments be nationalized or disrupted by a government that does not possess a fair and legitimate legal system. Protecting foreign corporations from such situations is not necessary in TAFTA since European countries obviously have legitimate legal systems.

Given TAFTA's focus on non-tariff regulatory issues, this mechanism could allow any foreign investor to sue a sovereign nation over any standard that imposes "burdens" on the investor. In other words, a European company could sue the U.S. government over prohibitions on dirty production processes or bans on chemicals. This could cost the U.S. government huge sums if important clean air and water rules and lifesaving worker safety standards are deemed "trade barriers," and it could make federal, state, and local governments unable to adopt public protections above the lowest common denominator agreed to by all nations.

Corporations have already taken advantage of investor-state tribunals that exist within NAFTA's framework. In November 2012, Eli Lilly & Company initiated an action against the Canadian government after a court revoked one of Eli Lilly's invalid drug patents on Strattera, a drug used to treat attention deficit hyperactivity disorder. The drug company is currently suing the Canadian taxpayers for $100 million. By including the dispute mechanism in TAFTA, the U.S. and EU are opening all participating nations to these extra-judicial lawsuits that can leave taxpayers on the hook for millions of dollars in damages and legal fees.


By "harmonizing" regulations, the secret corporate-dominated trade negotiations are setting up a way for the business community to give corporations new rights and to weaken the environmental, consumer, and financial protections that have been developed over decades.

Given the serious threats TAFTA poses to standards and safeguards both here and in Europe, negotiators must allow for far more transparency as negotiations continue. Consumer safety advocates and the public on both sides of the Atlantic must also be engaged, letting lawmakers and administration officials know that an agreement negotiated in secret that trades away their health and safety is unacceptable.

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