"European Trade Deal Could Undermine Important Regulations Here At Home"
Forthcoming trade negotiations between the U.S. and the European Commission threaten to undermine environmental, workplace, and financial regulations, according to a July 8 letter from a slew of American and European public interest groups sent to President Barack Obama and his European counterparts. The letter includes a demand that documents and transcripts from the negotiations be made public. On a conference call with reporters Monday, representatives from five of the American signatories to the letter said that business interests will use the talks to advance deregulatory schemes that have failed to pass legislatures on either side of the Atlantic.
On financial regulation, the coalition fears a group called the Transatlantic Business Council (TBC) will push to undermine provisions of the landmark Dodd-Frank law of 2010. “No place is the economic downside [of the agreement] more probable than in rolling back important financial regulations,” Public Citizen’s Lori Wallach said. Financial firms on either side of the ocean are aligned, Wallach said, in seeking a system of “mutual recognition” that would allow what she called weaker European regulations to govern multinational bank behavior in America. The industry disputes the notion that it’s seeking to undermine Dodd-Frank, as this Financial Times article notes, but the Obama administration shares Wallach’s concerns.
At least, in part. Wallach went on to explain that the administration has endorsed a proposal that would bar U.S. lawmakers from enacting “five core areas of financial regulation,” including limits on bank size and bans on exotic and risky financial products such as derivatives that benefit investors but not the real economy. Wallach fears those limits on regulation would be enforced through what’s called an “investor-state dispute resolution,” whereby financial firms could sue the government and demand “taxpayer compensation for any financial regulation that they believe undermines what would be extraordinary investor rights” in the agreement, Wallach said. The letter sent to negotiating parties on Monday notes that “investor-state” rules in other treaties have let polluters and tobacco companies undermine public safeguards.
Ilana Solomon, trade representative for the Sierra Club, expressed concerns that the trade agreement might prevent future efforts to combat climate change by constricting legislative options that rely on taxes or regulations to take action on such controversial fuel sources as natural gas produced by “fracking.” AFL-CIO trade specialist Celeste Drake said European business groups “are looking to go after Buy America,” referring to a 1983 law requiring government contracts for transportation infrastructure go to U.S. companies, and worried about a host of other worker protections.
On the question of genetically-modified foods, U.S. companies want to ease Europe’s restrictions on such foods, and Karen Hansen-Kuhn of the Institute for Trade and Agriculture Policy said the agreement is likely “to promote the interests of multinational corporations over those of local communities” by making it easier for companies to avoid distinguishing between modified and natural foods.
There are fewer differences to work out when it comes to taxes or tariffs, so regulations are more likely to take center stage in these talks than in most trade negotiations. The discussions begin this week, but a final agreement could be more than a year away.