An international trade deal is being negotiated that could – in theory – give large international banks an opportunity to sue governments that implement monetary reform. Peter Verity, coordinator of the Sheffield Positive Money group, considers whether this might be a threat to Positive Money.
TTIP & ISDS – although these acronyms sound like something to do with your internet connection, they actually represent major international deals which are currently being negotiated in secret. They could seriously threaten democracy, and lead to further deregulation of the financial sector.
So what is TTIP?
TTIP, or the ‘Transatlantic Trade and Investment Partnership’, is a deal currently being negotiated between the EU and the USA, described as the world’s biggest trade and investment deal outside the WTO. A key element is ‘reducing non-tariff barriers to trade (eg. labour rights, environmental and food regulations, privacy laws, banking regulations etc).
The treaty is supposed to harmonise regulations between Europe and the USA, but it will also create the legal right to rip the heart out of any Government policies or laws which big businesses decide are not in the interests of their shareholders.
It has been dubbed the Big BAD Law (Business Against Democracy).
An important part of TTIP is the ISDS (Investor-State Dispute Settlement) chapter which grants transnational companies the right to sue governments if their profits are threatened. There have been over 500 cases brought to date, predominately by developed countries against developing countries, with over 50% either settled or found in favour of the claimant1. ISDS has been used to block plain packaging for cigarettes in Australia, it is being used by a nuclear company contesting Germany’s decision to switch off atomic power, and it cost Argentina billions in damages when they tried to freeze energy prices, adding to its sovereign debt crisis.
Should we be concerned?
Yes! The City of London is one of the strongest lobbyists for TTIP. It is not hard to see why, as one of the key things they are pushing for is to include ‘financial services liberalisation’ in TTIP. The US currently has stricter banking controls than the EU, and the City of London has its eyes on the prizes it could get in the US. TTIP may mean that current and future UK, EU and US governments who introduce many types of regulations on banks and their lending could face legal challenges in international courts.
TTIP could potentially mean a complete reversal of all the hard won regulatory reforms achieved since the onset of the financial crisis. Despite the fact that ‘light touch’ regulation of the financial sector contributed to the biggest economic crisis in living memory, banks and financial speculators are keen to get rid of even the small steps taken since then to rein in big finance.
And since ISDS would grant corporations the right to sue governments if they take decisions which reduce profits, there is little doubt that the banks would attempt to use the legal process to challenge even the smallest banking reform, and certainly the fundamental reforms proposed by Positive Money.
What can we do about it?
Find out more about TTIP and ISDS here > WDM briefing on TTIP
Then join one of the campaigns that are mobilising against TTIP. They include