June 16, 2014
To understand what’s at stake with a forthcoming trade treaty, we can take a look at a tale from Down Under. The story of Philip Morris Asia Limited v. The Commonwealth of Australia begins in 1993, when the governments of Australia and Hong Kong signed a trade agreement. Fast forward to 2011, when Australia passed the Tobacco Plain Packaging Act, a groundbreaking public health measure that requires all cigarettes to be sold in dull, brown packages, with no company logos. It was the world’s first legislation to remove branding from cigarette boxes. Philip Morris’s response was to calculate the law’s impact on profits and sue for damages. The arbitration with Philip Morris is ongoing.
This story is made possible by the mechanism known as an investor-state dispute settlement, or ISDS. ISDS gives corporations the right to sue a nation for passing laws that impinge on their profits, claiming breach of treaty, and the case is heard in a private tribunal. It’s a key component of the trade agreement now being negotiated between the U.S. and the European Union.
Currently, the Trans-Atlantic Trade and Investment Partnership, known as TTIP (or T-TIP), is being negotiated behind closed doors, but one topic of public debate is whether the ISDS clause should be excluded. People are wringing their hands over it, especially public health advocates: they fear that if the trade agreement is passed, U.S. companies will be able to bully EU nations into lowering their food and agriculture standards to be more compatible with the low bar set by the U.S.
Europeans are not too happy about the negotiations, either. Last month, 500 people gathered in Brussels for an anti-treaty protest. TTIP is also referred to as the Trans-Atlantic Free Trade Agreement, or TAFTA. (According to the Electronic Frontier Foundation, “The governments call it TTIP… Everyone else calls it TAFTA.”)
In these negotiations, “harmonization,” is the holy grail, as tariffs are already low. According to this Washington Post story from last year, “Tariffs aren’t actually the biggest thing in the way of commerce. American and European firms also have to navigate a maze of different rules and compliance standards in order to sell to each other. … In some cases, American industries want the European Union to relax its restrictions on imports of products that don’t meet its high standards, like meat that’s been washed with chemicals.”
Some worry that “harmonization” will translate as a race to the bottom.
“The World Health Organization has said that antibiotic-resistant bacteria have reached every corner of the globe. We need to understand that the regulation of antibiotics in food animals in the European Union is more effective than in the United States,” said Bob Martin, food system policy director at the Johns Hopkins Center for a Livable Future. “Worldwide standards should rise to the effectiveness level of the EU, not be lowered to the U.S. standards.”
“Europe has far more restrictions on genetically modified foods and crops than the United States,” wrote Dean Baker, the director for the Center for Economic and Policy Research last year. “[The industry] will be looking to include provisions in a trade deal that define limits on genetically modified foods and crops as trade barriers.”
In light of what’s going on now in the State of Vermont, the fear that U.S. corporations will bully the EU seems valid. On May 8 of this year, Vermont became the first U.S. state to require that food products containing genetically engineered food be labeled as such. The next day, the Grocery Manufacturers Association (GMA) vowed to sue Vermont over the bill. The GMA is led by Dupont and Monsanto, the world’s largest producer of genetically engineered seed.
It gets scary when you consider antibiotic resistance, which has become a global public health crisis. In a 2013 Threat Report, the Centers for Disease Control and Prevention estimated, conservatively, that every year 23,000 Americans die of infections that doctors are not able to control with antibiotics. Those infections are caused by what some people refer to as superbugs: new, evolved versions of commonplace bacteria like Salmonella and staph. And where we used to combat them successfully with drugs like penicillin, methicillin, and ciprofloxacin, we are now running out of drugs that work. Antibiotic resistance is the result of overusing and misusing antibiotics, both in humans and in animals.
In the EU, countries like Denmark and Sweden have implemented decades’ worth of agricultural policies that protect public health by restricting the use of antibiotics in livestock production. Denmark leads the world in such policies in swine production. In a Congressional briefing last month, Jørgen Schlundt, the director of the National Food Institute of the Technical University of Denmark, attested to the resounding success of policies that limit antibiotic use. “Production is dramatically increasing after the halts to antibiotic use,” he said. “We have more efficient production now.”
Denmark has only 5 million citizens (and 30 million pigs), but it serves as a model and proof of concept that reducing the use of antibiotics is feasible; that it does not hurt profits; and that, in fact, production can become more efficient when fewer antibiotics are used. With DANMAP, a science-based, government-supported data monitoring system that investigates antibiotic use and antibiotic resistance, we have another Danish model for safeguarding public health through agriculture policies.
But it’s not a far leap to imagine that, if TAFTA passes, a U.S. corporation could sue the EU for policies like Denmark’s, claiming lost profits—as Philip Morris did in Australia.
The secrecy around TAFTA is problematic, too. Karen Hansen-Kuhn, a trade analyst from the Institute for Agriculture and Trade Policy who spoke at last week’s Congressional briefing, said, “What’s on the table with the negotiations is not transparent. It’s happening in secret, in a black box. The process is really flawed.”
For some, of course, TAFTA is reminiscent of NAFTA, the North American Free Trade Agreement passed in 1994 by the U.S., Canada, and Mexico. NAFTA came under a great deal of criticism from environmentalists, and in the 20 years since it’s passed, we’ve seen a negative impact in Central American agriculture, especially with regard to biodiversity. “NAFTA dramatically affected agriculture production in Central and South America due to the power of U.S. food companies and consumer demand here,” Martin has said. “For example, because of the demand for potato chips in the United States, traditional varieties of potatoes grown for food in South America have all been displaced by potatoes grown specifically for potato chips in the U.S., which has reduced biodiversity.”
At the end of last year, a coalition of more than 200 organizations sent a letter to the EU’s Trade Commissioner and the U.S. Trade Representative, Ambassador Michael Froman, expressing opposition to the inclusion of an ISDS in TAFTA, and asking for the ISDS to be dropped from the treaty. The letter states, “ISDS forces governments to use taxpayer funds to compensate corporations for public health, environmental, labor and other public interest policies and government actions.”
Trade analysts expect TAFTA to be ratified in 2015. On our side of the Atlantic, the U.S. Senate will be responsible for what happens with it. Much will be hang on whether the Senate decides to fast-track the bill, which would mean an up or down vote, or whether the bill will be debated and amended. In the meantime, each government has issued its own fact sheet, one quite a bit more detailed than the other.