stakeholder forum

The ninth round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP) agreement took place this week in New York City. During the stakeholder forum on 23 April 2015, Jean Halloran delivered a presentation to US and EU negotiators, outlining the views held by Consumers Union and TACD on various aspects of the TTIP agreement.

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I appreciate the chance to provide input on the Transatlantic Trade and Investment Partnership (TTIP) negotiations. I speak today on behalf of Consumers Union, the policy and advocacy arm of Consumer Reports, which has 8 million paid print and online subscribers. The views I am presenting also reflect those of the Transatlantic Consumer Dialogue, which has 75 member organisations, including all the major consumer organisations in the EU and US.

Transparency Lacking

The TTIP’s primary goal is to address differences in regulation – including pharmaceutical approvals, car safety, medical device safety, pesticide reviews, cosmetic standards, and privacy and data protection – in order to facilitate trade between the EU and US. The fact that these negotiations are being conducted in secret this week here in New York City, remains a fundamental and profound problem, especially in light of these goals. This is the ninth negotiating round, and we know as little of what is being discussed as we know of the previous eight. Responsible representatives of organisations like mine, some of whom represent millions of people and who work on these issues on a daily basis, are being forced to rely on leaks, rumours, guesses, and reading tea leaves, in trying to provide negotiators with meaningful input. This is not acceptable.

We strongly commend the EU for making a strong and very helpful step toward transparency by publishing its specific negotiation positions prior to discussion. This excellent step could easily be matched by the US Trade Representative (USTR), who has released no such documents. Neither side, however, has made available the draft texts in progress, which are really needed for meaningful input.

I have heard USTR make two basic arguments about why it must work in secret. Neither holds water. First, USTR frequently says it doesn’t need to release its draft positions because they are available to members of its advisory committees, which are much more extensive than in Europe. USTR often says that it consults members of industry, environmentalists, labour leaders and consumer leaders via these committees. It certainly does consult industry representatives, of which there are about 600. However, there are only a small handful of environmental and labour leaders. And I would respectfully request that in the future Ambassador Froman refer to consumer representatives in the singular, i.e. USTR gets input from a consumer leader, because the number of consumer leaders appointed to these advisory committees is exactly one. With all due respect, we do not think this is balanced representation, or the best way to get essential input on deeply important public policy affecting all citizens, not just certain businesses. Policy on drug safety, for example, should not be determined only by the pharmaceutical industry, policy on pesticide safety is not just a matter for chemical companies.

Second, USTR sometimes suggests that if the public saw the text as the negotiations went along, and it could be amended in Congress, special interests would rally to defeat one or another provision, and the deal would never pass. Admittedly, if drafts were public, USTR would have to subject itself to much more of the rough and tumble of the political process than it currently experiences. I am sure it is much more comfortable to talk here behind closed doors at the New York Hilton than to sell these proposals to consumer, labour and environmental groups and members of Congress. Democracy is never easy. But under normal circumstances Congress at least publishes a copy of a bill when it is introduced, and then again after Committee markup, and again before floor votes in the House and Senate. In the case of TTIP, the current proposal is to reveal the draft only when the closed-door work is finished, and then allow no changes whatsoever, just an up or down vote in Congress. This allows no opportunity for democratic processes to work, or even to correct small mistakes. Bottom line, to quote Senator Elizabeth Warren: “If transparency would lead to widespread public opposition to a trade agreement, then that trade agreement should not be the policy of the United States.”

Investor-State Dispute Resolution

One particular concern of TACD, Consumers Union and all consumer groups, is investor-state dispute resolution (ISDS), which we feel should not be a part of any final TTIP agreement. ISDS clauses were originally developed to address situations where foreign businesses invested in countries with poor court systems, and needed a mechanism to potentially recover their investment if a facility was, for example, nationalised.

Neither the EU nor the US can be described as having poorly developed legal systems. There is thus no need for such mechanisms. But more important, we are concerned that they will create a kind of “super court” system that will have the ability to dip into US taxpayers pockets and hand over cash to foreign corporations. ISDS tribunals, as proposed, will be able to award damages to foreign investors if our government takes an entirely appropriate public health or public welfare action that reduces the investor’s profits. Cases could be brought for example if the Food and Drug Administration (FDA) required new warning labels on liquor or cigarettes, and the US government could be required to pay damages to a European company (though not a US company) that lost sales as a result. We urge you to read and review the TACD resolution on ISDS.

Regulatory Cooperation

We and other consumer organisations are also greatly concerned about the proposals on regulatory cooperation, which seem in many ways to be designed to paralyse the work of existing consumer and environmental agencies. Proposals have been floated to require trade impact assessments, in addition to the current environmental and economic impact assessments now required for US regulation. New regulations would also have to go for further review at the Office of Management and Budget (OMB), which would be a point agency for a new EU-US Regulatory Council.

This would create a new bureaucratic layer at a time when many feel we have too much bureaucracy. It is also duplicative; existing economic impact statements should already include trade impact if relevant.

Our recent experience with OMB in developing regulations implementing the Food Safety Modernization Act (FSMA) – passed because of deaths from eating contaminated peanut butter and spinach – does not bode well for these proposals. After FSMA was passed, FDA developed implementing regulations in about a year. However, OMB then held them up for an additional two years while they reconsidered economic impact. Now TTIP would create yet another body, an EU-US Regulatory Council, to review what FDA is doing after OMB is done. To us this seems a blueprint for paralysis. We urge you to review and consider the recent TACD resolution on TTIP and regulatory cooperation.

We would also like to comment on one specific proposal on food regulation put forward by the EU, namely that in the future the EU and US should agree always to adopt the food safety standards of the Codex Alimentarius Commission, a United Nations body that sets international standards for pesticide residues, contaminants such as arsenic and aflatoxin, additives, food labelling, dietary supplements, and standards of identity for products like fish sticks. Codex standards are ultimately established by its Commission, where its 185 member countries vote, on a one country, one vote basis. We find it surprising that EU and presumably US negotiators are seriously considering a scheme to essentially abandon all current FDA and EPA standard-setting procedures, and turn over all future food standards to a United Nations body that decides standards by majority vote, where the US has just one vote and the US and EU member states together constitute only a small minority. Can TTIP negotiators seriously be considering having our food standards set by several dozen Asian, Latin American or African countries who may not be too keen on tough limits? Or who, in another situation, might want much stricter limits than exist in the US? We hope this proposal will be abandoned.

A frequently heard mantra of these trade negotiations is that both the EU and US have high standards of consumer and environmental protection so, the implication is, it doesn’t matter whose standards are in effect, it is all good. But this generalisation cannot bear close scrutiny. Everything isn’t just fine all the time. Thousands of General Motors cars have been recalled this year for safety defects, some of which killed drivers. We have 48 million illness and 3000 deaths every year from foodborne illness. Europe has had different but serious food problems, including horsemeat sold in many countries as other types of meat, and many illness and deaths resulting from contaminated sprouts. Several years ago we found many dangerous toys coming into the US from China, and passed a requirement that toys get third party certification that they meet US standards. But Europe has no such requirement. While our regulatory systems are impressive and far superior to those in many parts of the world, they are not perfect, nor interchangeable, and our cultures and conditions are not identical. We cannot pursue mutual recognition or equivalence willy nilly, and we shouldn’t develop an agreement that in any way might require the EU to take faulty General Motors cars, or stop labelling genetically engineered crops, or that might result in unlabeled horsemeat or allow uncertified toys in US stores.

While we strongly favour communication and information sharing among regulators and believe that can be improved, and would even favour an open process to harmonise certain standards to the highest levels in effect, with a caveat that either side could improve further, the current proposals as we see them so far appear designed to slow down and prevent new action to address consumer and environmental problems. We urge the parties to reconsider the direction of their work.