Germany Turning Sour on the Transatlantic Trade and Investment Partnership

Yves here. The US media has given considerably more attention to the TransPacific Partnership, the western sister of an ugly multinational-enrichment-scheme-billed-as-a-trade-deal called the Transatlantic Trade and Investment Partnership. The comparative silence about the US-European deal has led many observers to assume that it is more or less on track.

Maybe not.

The most galling feature of these pending pacts is what is called the investor-state dispute settlement mechanism. They are a fixture in recent trade deals, but their power and scope would be increased greatly under the TransPacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Consider this description from a July presentation by Public Citizen:

What is different with TAFTA [now called the TransAtlantic Trade and Invesment Partnership] (and TPP) is the extent of “behind the border” agenda

• Typical boilerplate: “Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.” …

• These rules are enforced by binding dispute resolution via foreign tribunals with ruling enforced by trade indefinite sanctions; No due process; No outside appeal. Countries must gut laws ruled against. Trade sanctions imposed…U.S. taxpayers must compensate foreign corporations.

• Permanence – no changes w/o consensus of all signatory countries. So, no room for progress, responses to emerging problems

• Starkly different from past of international trade between countries. This is diplomatic legislating of behind the border policies – but with trade negotiators not legislators or those who will live with results making the decisions.

• 3 private sector attorneys, unaccountable to any electorate, many of whom rotate between being “judges” & bringing cases for corps. against govts…Creates inherent conflicts of interest….

• Tribunals operate behind closed doors – lack basic due process

• Absolute tribunal discretion to set damages, compound interest, allocate costs

• No limit to amount of money tribunals can order govts to pay corps/investors
• Compound interest starting date if violation new norm ( compound interest ordered by tribunal doubles Occidental v. Ecuador $1.7B award to $3B plus

• Rulings not bound by precedent. No outside appeal. Annulment for limited errors.

Yves again. Germans are particularly aware of the dangers of these foreign investor panels due to payments the German government has been forced to make. Vattenfal, a Swedish company, is a serial trade pact litigant against Germany. In 2011, Der Spiegel reported on how it was suing for expected €1 billion plus losses due to Germany’s program to phase out nuclear power:

According to Handelsblatt, Vattenfall has an advantage in seeking compensation because the company has its headquarters abroad. As a Swedish company, Vattenfall can invoke investment rules under the Energy Charter Treaty (ECT), which protect foreign investors in signatory nations from interference in property rights. That includes, according to the treaty’s text, a “fair and equitable treatment” of investors.

The Swedish company has already filed suit once against the German government at the ICSID. In 2009, Vattenfall sued the federal government over stricter environmental regulations on its coal-fired power plant in Hamburg-Moorburg, seeking €1.4 billion plus interest in damages. The parties settled out of court in August 2010.

What is particularly galling about these agreements is that they give investors the right to sue over lost future profits.

A report in the UK website Vox Political suggests that Germany has figured out what the TTIP is really about and isn’t about to be snookered. Germany’s willingness to defy the US may be part of the fallout of revelations of the amount of “Five Eyes” snooping that goes on in the Eurozone, and may also reflect discomfort with US escalation of hostilities with Russia, when it is not to Germany’s advantage to participate in economic brinksmanship. One writer predicted that the events of the last year had triggered the start of a divorce of Germany from the US, although it will take a generation for it to be completed. Whether or not that forecast proved to be accurate, this diss of the TTIP is proof that Germany is willing to defy the US more openly than in the past.

Key parts of the post:

[Incoming European Commission president] Mr [Jean-Claude] Juncker said the Investor-State Dispute Settlement scheme – a part of the proposed Transatlantic Trade and Investment Partnership agreement that critics say would make it possible for corporations to sue national governments for damages if new legislation was likely to affect their profitability – would be reviewed…

“My Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes. The rule of law and the principle of equality before the law must also apply in this context… There will be nothing that limits for the parties the access to national courts or that will allow secret courts to have the final say in disputes between investors and States.”

He said he had taken control over the ISDS [Investor-State Dispute Settlement] process away from Trade Commissioner Cecilia Malmström and handed it to Frans Timmermans, the incoming, and first, Vice-President in charge of the Rule of Law and the Charter of Fundamental Rights. “There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too,” he said.

The Financial Times has reported that Juncker made his decision “largely at the behest of Germany, which has turned sour on ISDS”…..

“Germany’s misgivings have in turn fed into a more generalised distemper with global trade across the EU, encompassing the French far right and fringe parties elsewhere. They claim ISDS has morphed into a tool of multinational companies that use the arbitration panels to circumvent, or even alter, national laws at their whim,” the paper reported.

This is exactly what has caused hundreds of thousands of people to complain to the European Commission after details of the TTIP proposals were leaked from secret meetings.

This does not mean the TTIP is dead, but it is a serious blow. And it is important to get the word out in the US, since one of the tricks of negotiators is to create a sense of inevitability to push the various parties into acting. This deal is not near completion and is losing momentum. Alert your Congressman that the Germans and the European Parliament are against the TTIP, and they should oppose it as well.

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  1. vlade

    What fascinates me is how UK screams of EU curtailing its sovreignity but happily walks into TTIP which does it far mor drastically, with far less options to back out once in.

    1. ambrit

      Fascinating, and instructive. It all boils down to just who or what the term U.K. really represents. If we take the acronym U.K. to mean the City, it all makes sense. Then, E.U. meddling does indeed curtail sovereignty, insofar as it limits the rapacity of City businesses. The T.T.I.P. though, by handing arbitration over to capturable entities empowers City evil doing. It’s all a matter of perspective.

      1. not_me

        Sounds like you nailed it.

        As for TINA to the City, there is certainly is. Let’s banks be 100% private with 100% voluntary depositors and we’d rapidly learn that the City and Wall Street are monsters of our own creating ala “Forbidden Planet” but substitute government-backed private credit creation for the Krell machine.

      2. vlade

        Well, EU is not unilateraly bad for City, in fact, if the UK wasn’t in EU it would most likely loose the super-lucrative EUR market (most of UK bank financing say via secured debt is in EUR). The EU rules on the bonuses are dumb, as in fact what it does is provide banks with perfect excuses to up the fixed portions of their mgmg salaries, instead of restricting bonuses.
        I believe most of the banks would hate the UK to leave EU – the regulation would stay more or less the same (B3 is supra-national), and they would lose a massive market.

        Of course, TTIP is something they do like…

      3. gonzomarx

        yeah, reckon that’s it.
        This is why so little is heard of this in the UK and what has been heard has been only from full on grass roots action. (one way to join in )
        Another tell is that UKIP is the dog that hasn’t barked on the TTIP.

  2. supermundane

    I’m tentatively reassured to hear that Germany might be souring on the ISDS arrangements baked into the TPIP. I suspect that the corporations and their representatives realised that their was a limited window of opportunity to surreptitiously insert these laws into bilateral and multilateral arrangements before greater scrutiny of the agreements, precedent and a growing unease with the growing power and reach of multinational corporations began to lead to scrutiny. They wanted these passed before anything noticed and could do anything about it.

    Let’s hope this is true but in the meantime we need to keep up the pressure and warn everyone we know of threat to democratic sovereignty that these dangerous, unprecedented and insidious arrangements pose and how stiffling they will be to democratic representation, accountability, social, environmental and technological progression (taking the Vattenfall example when the company was faced with stiffer environmental laws on its coal-fired power-stations). These laws will enshrine the supremacy of moribund global corporations seeking to preverse the dominance in the face of progressive change.

  3. proximity1

    RE: ambrit’s post–

    Yes, that’s pretty much the point. Once one looks at the ways, means and most likely ends of the one versus the other, much if not all of the mystery evaporates. The distinctions are related importantly to those particular ends to which the TTIP’s terms and conditions are, by far, most likely to be used versus the now-open-record of the E.U. as a positive or negative factor for British trade and industry.

    For David Cameron and his “conservative” cohort, for example, the major appeal of the TTIP is in the opportunities it will afford for use as a hammer against union-produced export-imports while, as far as the E.U. is concerned, ), fairness of workplace dismissals and collective bargaining do not come within the purview of E.U. regulations–so the E.U. is neither a brake nor an accelorator on U.K. conservative aims in labor relations issues–but, it does act importantly as a source of labor migration since it grants E.U. member-states’ nationals so-called free movement to enter or leave any E.U. state in search of work.

    UKIP (United Kingdom Independence Party), while also politically quite conservative in nearly all respects, is far less sanguine about TTIP. UKIP regards–rightly, in my opinion–TTIP as a serious threat to the health and well-being of the U.K.’s National Health Service, already fallen into a disgraceful state of inadequacy after years of neo-liberal influence and financial neglect.

    1. gonzomarx

      UKIP’s position on TTIP has been all over the shop.
      Contused and contradicting comment(s) are only ever given when pushed for one and they only tried to cobble a position together after the anti democratic sections had been pointed out to them enough times to be something their supposedly fighting in the EU.

  4. Fair Economist

    The Euro disaster has shown us how catastrophic it can be to have countries bound by these effectively unchangeable and irrevocable pacts. It’s interesting that the Germans, one of the few Euro countries which has *not* been directly hurt by the Euro compacts, is pushing to keep the Euro compacts as is, even as they resist the imposition of new and different irrevocable compacts.

  5. Banger

    Comments disappearing–bad! Disintegrating international structures–good! Neoliberalism/Imperial project–bad! Good dose of anarchy and self-organizing systems to replace imperialism and running dogs thereof–good!

    This is an effort to keep things short and sweet–maybe comments will show up?

      1. Banger

        No that doesn’t ever work, I don’t know what happens. I used to often get the message that comments were being moderated now they disappear forever–could be something peculiar to the software they’re using here, good old kludgy WordPress–I’m sure it isn’t intentional on anyone’s part. At any rate, it only seems to happen with longer comments and I like to take things as they come and use it as a way to discipline my tendency to be long-winded.

      1. Banger

        I’m well aware of that–but they are disappearing forever. I’m not a complete fool–I know my way around IT pretty well–I’ve fought with WordPress before—an interesting challenge–I assume you’re still using it. At any rate, as the I Ching says, “no fault” (see my comment above).

  6. steviefinn

    I was initially cheered by the news of Juncker seeming to have grown a pair, but this was the reaction from David Malone of the Golem XIV blog ( ) who knows a hell of a lot more about it than me :

    “Well I am certainly glad junker sees the danger of the ISDS and sees how it does indeed make a mockery of equality before the law – by giving corporations their own law and own a private ‘court’. BUT if they remove the ISDS clause from the TTIP I do not think it will not change much, because the UK, for example, has already signed over 80 other Bilateral Investment Treaties all of which contain ISDS clauses. So an unhappy corporation could well use any of those to sue a European nation over something covered in the TTIP. The ISDS does’t need to be in the TTIP itself”.

    We live in hope.

  7. Ulysses

    “Alert your Congressman that the Germans and the European Parliament are against the TTIP, and they should oppose it as well. ” Yes!!

    Our Congresscritters have a perfectly selfish motive for opposing fast-track and the passage of these deals, so toxic to national and popular sovereignty. Once the principle is established that the maximum extraction of wealth– for the benefit of the transnational kleptocrats– overrides any considerations of public health, civil rights, etc. then there is no longer any use for politicians. Once the extant de facto control by kleptocrats has been transformed into de jure control, then the need to continue the charade of representative politics evaporates. No other interest but the bottom line of huge multinationals will any longer have any legitimacy.

    All of these politicians who have enriched themselves, by throwing the rest of us under the bus, will soon find that they are completely expendable! Why bother paying off people. on an environmental or health committee? You can just sue whatever remnant of a national government exists, for lost future profits, if said government presumes to thwart your looting and wealth extraction in any way!! And the outcome of the suit will be decided by your own cherry-picked, secret, and completely unaccountable board of corporate lawyers!!

    I encourage everyone to bring up the TAFTA and TPP monstrosities every time some politician promises to raise the minimum wage, or preserve national parks, etc. Ask this follow up question: “So of course you are firmly opposed to TPP/TAFTA which would take away your ability to make good on these promises?”

    We need to make any hint of approving fast-track for these deals politically toxic!

  8. TedWa

    Globalization appears toxic to national sovereignty and democracy. It’s the kleptocrats benign sounding cover for extraction on a scale they could only dream about in the past. Obama is known as awesomely evil, but how can he be pushing these trade agreements??!! I guess he did learn the Constitution to find ways around it for his corporate buds.

    Nice post Ulysses – it would in fact render Congress useless. Supreme Court too

  9. susan the other

    If military control is one of the basic underlying objectives of TPP and TAFTA, which it looks to be because the TPP is now strangely looking like NATO because it has all the earmarks of John Foster Dulles’ ASEAN accord -whereby he actually wanted to trade some A-bombs to them (really), and TAFTA is sounding just as pig-headed militant, then the Germans will of course be extra vigilant. This stuff from Junker is the modern Germany I know and love. Germany was used and abused by western capitalist interests from the get go. From supplying Hitler’s insane desire to repeat Napoleon’s folly to funding West Germany into a capitalist powerhouse to keep the USSR in check. The Germans are not stupid. Not only did turbo capitalism run aground ignominiously – destroying a too-compliant Deutschebank and others in the process (my guess) – it now wants to destroy everything modern Germany holds dear. And since we in the US are too stupid to hold anything dear, we think everything is OK. The Germans know better. Their future is logically and geographically connected with Russia and even with the old Silk Road. Not the US.

  10. Chauncey Gardiner

    That this transnational bank and corporate-captive administration is attempting to force feed us these secret toxic agreements that materially impinge on our national sovereignty is outrageous. Looks to me like the US Trade Representative is still aggressively seeking to negotiate the TPP and the administration to “Fast Track” it before Congress adjourns for the year. Links:

    [1] ‘Japan, U.S. trade chiefs seek to clinch bilateral TPP deal.’ Source: Mainichi — (Interesting that the negotiating effort is to complete a bilateral deal with Japan as a transitional step toward the TPP.)

    [2] ‘Wikileaks’ free trade documents reveal ‘drastic’ Australian concessions.’ Source: The Guardian

  11. flora

    This comment is most pertinent:
    “Yves again. Germans are particularly aware of the dangers of these foreign investor panels due to payments the German government has been forced to make.”

    Germany’s experience re: WWI reparations payments – which had some bearing on the rise of the NSDAP, and was defaulted on in the 1930s – was paid in full in 2010. So, 90 years to pay a debt imposed by foreign countries. I’d guess debt, imposed by unilateral demand, to foreign entities are probably keenly scrutinized by Germans.

  12. anonymous123

    I just emailed my elected representative to oppose the TTIP, and hope the rest of you did as well! Nothing changes if we don’t take collective action.

  13. Fiver

    I’ve argued for years that the US practice of playing the naturally entitled global hegemon vis a vis enemies and allies alike was clearly creating both ‘external’ rifts, eg., Russia and China, and ‘internal’ rifts (eg., Germany, Japan, Brazil, or Turkey) as US unilateral actions and reactions – post-Soviet fall, post-9/11, post-Great Recession (more to come) have forced all to reconsider their essential interests and options.

    When the ‘leader of the free world’ offers only ‘maybe another 30 years of war’, a lethal-to-sovereignty ‘trade’ bill, and no apparent interest in the quality of the future for the world’s or its own citizens as it will really play out, and you are Angela Merkel, and have already been down the, to paraphrase, “I will not commit national suicide” route only to be simply ignored by Obama and Sarkosy, along with the spying, and now of course, the effort to forcefully separate Germany and Russia over Ukraine and it’s no wonder Germany will not go quietly on this one.

  14. Fíréan

    The TTIP negotiations, which were taking place behind closed doors and not available to the EU Parliament, MEPs, moved towards becaming transparent on october 6th. 2014.
    There has been much criticism by both non government organisations opposed to both the TTIP and ISDS and by the Parliament who, not privy to the negotiations, had bebated need for transparency in an earlier meeting. ( i posted link to video of full debate previous).
    Though there are talks of tranpsarency the new Jean-Claude Juncker Commission is biased
    More on the call for transparency on TTIP negotiations, oct.30th.2014.

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