What Is the Problem with TTIP? How Public Services Are Affected by TTIP and What Can Be Done About It

Written by | Monday, April 11th, 2016

Heidrun Maier-de Kruijff and Team (Foundation for European Progressive Studies)

The TTIP agreement between the EU and the US will have a significant effect on the economy on both sides of the Atlantic for decades to come. Its aim is to achieve the liberalization of trade relations between the two players which together account for about a half of the world’s GDP. The agreement is still being worked on, but already now it is possible to estimate its impact, based on the available materials, similar contracts and interests of both parties. The TTIP deals with a wide range of sectors and it will, among others, include also the public services sector. However, this presents a potential problem because the process of liberalization is not in accordance with the principle of the provision of public services. Public services are associated with the state monopoly, state aid and other instruments, ensuring that they are of the adequate quality and availability.

The functioning of public services is dealt with by means of exceptions from TTIP’s individual provisions. It is, however, a number of specific amendments to the individual parts of the agreement rather than a single ‘package’. The so-called ‘negative list’ principle is used, which applies only to all cases, which do not clearly exclude it. This approach brings legal uncertainty and the maintenance of the current status quo. While the companies may try to find technical errors allowing the invalidation of individual amendments, it will not be possible to rid the original text of these shortcomings. It is therefore necessary to find the exact wording since there will otherwise be confusion about the validity of the exceptions. Moreover, these will only take into account the existing public services and will not reflect new needs or interests of the citizens, which are associated with the development of technology and society. There is also a risk that some of the public services will be entirely omitted in the deal.

An important part of the agreement is the principle, according to which the process of liberalization cannot be reversed. This concerns not only sectors covered by TTIP, but also sectors not covered by the agreement that are subject to market forces. The authorities could not learn from their own mistakes and seek other solutions, such as with respect to problems with privatization. One can also talk about a democratic deficit, because the state would lose its ability to decide on the scope of public services provision. However, problems are also connected with the protection of investments, mainly due to some rather vague formulations in the agreement. The danger is that the disputable cases would be brought to a special court and handled case by case, which may lead to uncertainty concerning the real possibilities of the state to provide public services. The states would therefore prefer not to undertake even those steps, which they would otherwise have the right to undertake, just to avoid a possible lawsuit.

  (The study can be downloaded here: http://www.feps-europe.eu/en/ttip)

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