German economy minister says EU-US trade talks have failed | Hacker News Reader

German economy minister says EU-US trade talks have failed

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112 pointspaol74 comments

Only slightly more informative: https://www.theguardian.com/business/2015/jul/03/what-is-tti...

From this article:

>> One of the most controversial elements of the trade proposal is the Investor State Dispute Settlement (ISDS) provision. ISDS provisions have been included in many trade deals since the 1980s, to encourage overseas investment in poorer countries. It means private investors can ask a tribunal of international arbitrators to judge if a government has treated them unfairly – and can get compensation.

That seems like a really bad thing.

If the arbitrators had any democratic oversight, it would be less bad - protecting investments in a fair manner is important - yet the tribunal looks like a private get together - where they can shit on an entire country and no one really has any power to stop it.

I wonder about this. I think the need for oversight of multinational corporations sort of requires an international democratic government then. I'm not sure how else you can have democratic oversight outside of a government that assures that it really is democratic and that those they regulate have full force of a law. Appointments from elected heads (ie., UN) only goes so far, because no one really listens to them anyway. What alternatives do we have[0]?

[0] Honest question, I would like to see opinions on this, because it seems like the eventual result of globalism really is a world government.

I don't know. Poor countries are often poor because of corruption. International courts might aleviate that and reassure foreign investors. Might introduce corruption at a different level though.

The primary problem for poor countries is lack of access to western markets.

European and American companies can sell their products cheaper in Africa than african farmers can in their own countries. African farmers have very little access to western markets because of toll barriers.

Smells like corruption to me. Why allow un-tariffed imports, or not have a trade agreement? Somebody probably has their hand jammed quite tightly in the cookie jar.

Corruption in many african countries is a byproduct of the fact that their countries are depending on aid and NGO and the money from these donors can be used for corruption and straight out fraud.

It's not the African countries that don't want the trade it's the Europeans and Americans who have an interest in keeping their farmers occupied.

> That seems like a really bad thing.

A bad thing for whom? In developing countries, governments regularly treat investors unfairly because of corruption. Not sure about EU countries.

The fear is that this would enable companies to directly lobby against any law that they don't like. For example, Google or Facebook might go against a privacy law being enacted in a country, because that obviously directly lowers their revenue. Or a manufacturing company might go against worker protection laws, because that means that they have to invest more money. Or a fast-food chain might go against a ban on unhealthy ingredients, just because that would cause their prices to raise.

And even if it isn't that simple, and a law really has to be unfair for a specific company, then there are still certain things that need to be done, which are simply unfair. I'm thinking of anti-monopolization measures here. It's certainly not fair to penalize a company, just because it has reached a market share of close to 100%, but you kind of have to do it anyways.

There are many places in the world that are practically impossible to operate a business in without violating the Foreign Corrupt Practices Act (obviously assuming you simultaneously operate in the States).

In those places, there exists a very clear and desperate need for such arbitration.

But European countries would very much like to remain in control of their own markets, especially for agriculture. And they are right to do so: no one in the EU wants to eat the stuff that's sold in the US.

A lot of US food is eaten in Europe and nobody has a problem with more or less low quality junk food. Also Europe has already the cheap low quality US movies and TV series. Only Korea is so far immune against that.

The problem is only the poisonous US food and pesticides that are forbidden in Europe and the fundamental difference between the European precautionary_principle and the US proactionary principle.

... so how does it help when suddenly the EU has to accept the same pesticide ridden stuff?

Such food chains are well labeled and known for their origin though.

It's pretty hard to label right, especially for things like animal feeding (which is already coming from countries outside the EU).

My feeling is that the common fears of binding arbitration in international investment disputes are mostly overblown. The existing arbitration institutions were created by international governments and have spent decades building up trust. They don't seem to be in corporations' pockets.

For example, the case of Philip Morris vs. Uruguay [1] recently ended in a complete vindication of Uruguay's right to restrict tobacco trademarks, and Philip Morris was ordered to pay Uruguay's legal fees.

[1] https://en.wikipedia.org/wiki/Philip_Morris_v._Uruguay

Do you have a link to something that has more data, and not just a single case? I would rather read that... :)

As an aside, what is going in here (HN) today?

Is it that it's Sunday, attracting a different crowd than usual? In this thread and in many others I see many perfectly legit comments - that normally remain untouched by downvotes (and I've been here quite often the last two weeks at least) - got downvoted? For example (to give one in this thread) ComodoHacker's comment - light gray just now - "For whom?..." here. I'm not sure what's downvote-worthy pointing out that developing countries usually have severe issues with their legal system.

I only ask because it's unusual from my recent experience here at least. If it was common I would not bother to mention it or ask. In another thread somebody asked the same question (and that comment was gray - of course).

on HN, people down-vote opinions that dont conform to their own, and I think thats a really negative aspect of the site. The problem only gets exacerbated by the karma system, so people are afraid to say anything anyone might disagree with, or at least repeat what is popular.

I try to avoid looking at the comments section if at all possible, but sometimes I might read them to see if there is more information, as this article didnt go into much detail on the specifics of what the disagreements were over.

Overall, I say the HN comments section is down right poison.

You can see that in a negative light: in some cases--especially polarizing issues, it does sort of send us into our two camps (best example: the brexit threads). However, it also requires that when one suggests something against the grain, the poster must act civilly and present their argument in the least abrasive way possible. Typically, I find that even when people disagree, such posters are voted up anyway, and it ensures that the signal-to-noise ratio remains high, as it does here relative to almost every other comment section on the net.

For whatever it's worth, there seems to be little correlation between a comment's immediate karma (say, within an hour or so posting) and its ultimate karma. I've had plenty of very highly rated comments that were at -1 or -2 15 minutes after I posted them.

My best guess is that people are browsing New and not bothering to check context before downvoting. Once the comment falls off the first few pages of New, more thoughtful readers in the thread itself take over.

The ICSID website has pdfs of their decisions. If you use the search function, and pick Instrument(s) Invoked - Treaty - Other treaties - NAFTA, there are only 25 results, so it should be quite quick to read through and see if you like them or not.

https://icsid.worldbank.org/apps/icsidweb/cases/pages/advanc...

Counter examples: Canada had to pay $150 million dollars since 1994. In the Lone Pine case because the regional government of Quebec forbid fracking, and this company didn't like that a democratic government can overrule the natural pecking order. Cooperations are more important than governments. http://www.italaw.com/cases/documents/1607

More cases see https://en.wikipedia.org/wiki/North_American_Free_Trade_Agre...

I suppose a way to prevent governments from screwing specific companies that they hate for some reason, makes a lot of sense. Allowing such behaviour would enable corruption and nepotism. But if a company feels screwed because the government feels that an entire industry is harmful to the country and needs to be regulated or even blocked, like fracking, then the company should suck it up. That's democracy at work.

should would could

The fact is that the current round of trade deals would enable exactly this kind of abuse of democratic sovereignty by big international corporations. If a provision is there that gives courts this power, then this power will be abused.

How do you propose to mediate trade disputes between companies and states without something like the ISDS?

Imagine this on say the US national level. Apple wants to sell its computers in Alaska, but Alaska has a domestic computing company that gets goverment subsidizes, creating unfair competition. In this case the federal government would step in.

There's an analogous issue with international trade agreements. National governments will enter into those agreements, but their courts are always going to be biased towards their local constituents, so in my example Apple couldn't hope for a fair result by suing in Alaskan courts.

So there needs to be some pan-national body to settle these sort of disputes without turning every little international company v.s. company or company v.s. government issue into a full-on diplomatic dispute between the respective governments involved.

The ISDS in the TTIP seems like such a facility. Why is it unreasonable? I'm not some TTIP proponent or corporate shill, I'm just genuinely curious about this, it just seems to me that a lot of comments on the Internet, including on HN, have knee-jerk negative reactions to every provision in the TTIP without thinking about the real issues those provisions might be solving.

Apple was a bad example. What you should have gone with was a utility company or a bank. Those are necessary in every society and the "level playing field" of "reformed" economies desired by the West for trade agreements only really creates David-and-Goliath situations where David's slingshot was determined to be unfair domestic subsidization by the World Bank, IMF, etc.

Is it really a bad example? The typical scare story about trade agreements seems to be that they're going to result in some big scary multinational shutting off the water supply or something.

Is that really the common case or even all that plausible? Or is it just going to be normal businesses like Apple colliding with some country's protectionist policies that are counter to the trade agreement?

Besides, if these supposed kangaroo courts are really so unfair the aggrieved countries could just leave the TTIP.

That seems to be another detail that's glossed over, that somehow these pan-national arbitration bodies are going to be corrupt, but not quite so corrupt that the trade agreement isn't an overall improvement for the countries involved, because otherwise they'd be pulling out of it, right?

Or you could use a toothpaste example, where california bans microbeads. Under TTPA the US gov could be sued under these disputes process.

>>...without turning every little international company v.s. company or company v.s. government issue into a full-on diplomatic dispute between the respective governments involved.

The thing is that "full-on diplomatic dispute" is the only fair way to settle that, because governments are chosen by people, so they are legal representatives of them. ISDS on the other hand is some shady institution without any democratic control, and probably sponsored by the very corporations they are supposed to judge.

If you put things in perspective you can see what this TTIP deal is all about: big international corporations like Apple or Google don't like the fact that governments can create laws that they are obliged to respect.

What corporations hate even more is every country having it's own set of laws to follow. So, the whole idea of TTIP is to strip governments (with possible exception of US government) of power over corporations.

> because governments are chosen by people

In some parts of the World...

We're discussing the TTIP here, which is exclusively a deal between western democracies. You may be confusing it with the TPP which e.g. includes Singapore.

I think you're fundamentally misunderstanding representative democracies. Nothing about them says the can't enter into an agreement to create a pan-national body to settle trade disputes, as opposed to escalating every incident to a diplomatic dispute.

If people don't like that they'll make in an election issue, and either it'll be re-negotiated after the next election or the nation will leave the trade agreement. That's the democratic process at work.

How is that a better option anyway? So now instead of some court that has to be seen to be fair to the entire trade block deciding things, you want to have n^2 potential dispute mechanisms in place between the n countries that are part of the agreement?

    > big international corporations [...] don't like the fact that
    > governments can create laws that they are obliged to respect.

Or you could look at this from the flip side of that argument, which is that it's detrimental to international trade if companies can't make international investments without being at risk to domastic political whimsy that runs counter to the spirit of the trade deal that was initially agreed upon.

> I think you're fundamentally misunderstanding representative democracies. Nothing about them says the can't enter into an agreement to create a pan-national body to settle trade disputes, as opposed to escalating every incident to a diplomatic dispute. If people don't like that they'll make in an election issue, and either it'll be re-negotiated after the next election or the nation will leave the trade agreement. That's the democratic process at work.

Quite. Is someone proposing that we do otherwise? If not, I'm not sure what point you're trying to make.

> Or you could look at this from the flip side of that argument, which is that it's detrimental to international trade if companies can't make international investments without being at risk to domastic political whimsy that runs counter to the spirit of the trade deal that was initially agreed upon.

I'm not sure why governments should be more concerned about promoting international trade than about protecting their citizens. See e.g. the fracking thing upthread.

When investing in a country, what businesses want are predictable laws and consistent enforcement of them. Then they can decide if it is worthwhile to invest.

An anathema to investment are arbitrary and capricious laws and enforcement. Countries with such a legal system tend to remain poor because few are willing to risk investing in their economies.

'there needs to be some pan-national body to settle [...] disputes without turning every little international [trade] issue into a full-on diplomatic dispute'

Exactly.

Suddenly it's ok, if we have arbitration courts with "lesser" countries, but not so much if we feel we could be playing the role that usually a third world country plays.

Some topics are just scapegoat-ish. It becomes impossible to reason with people who are convinced <inser-here> is evil, will be the end of all whats sacred.

Now as international treaties go, the sovereign remains the nation.

Imagine the most evil conspired trade-agreement (as the scapegoaters do), only founded to use it's arbitration courts for extortion. Wouldn't it be much wiser to keep your extortion-weapon sharp and thus use the arbitration court's biased-ness only in rare cases, rather than on a daily basis?

I think it's something that free markets can handle pretty well on their own.

Countries that expropriate property will see less investment in the future, that's a pretty strong incentive. Also, in e.g. a US-Europe trade deal there is very little real need for ISDS.

Both countries have court systems dating several hundred years back.

Another market solution is insurance, where a company can simply insure against expropriation or similar.

    > I think it's something that free markets
    > can handle pretty well on their own.

The entire point of these deals is that some random US company in some random US state shouldn't have to worry about dealing with some random EU company in some random EU country, for any value of state/country for the two. There should be unified standards.

Saying that you should just let the free market handle it is the libertarian idea that now every company needs to have expertise in international politics in order to invest or do business, as opposed to just having a well regulated market.

    > Both countries have court systems
    > dating several hundred years back.

Which doesn't mean that those courts are compatible in their decisions, or would treat foreigners fairly, which is what the ISDS addresses.

    > Another market solution is insurance.

I.e. wasted capital because of uncertainty incurred by a lack of free trade guarantees, something a free trade agreement would address. We could just not waste that capital to begin with.

The entire point of a free trade agreement is to remove those hurdles where you don't have to buy insurance or hedge your bets just to sell something to another country.

> There should be unified standards.

Why should the people of Germany be bound by the whims of the people of Delaware?

Bound? The people of Germany, in this example, voted for a government that approved the TTIP. If they don't like it they can vote again and leave the agreement.

If it's not obvious from my comments I'm not advocating for agreements like the TTIP or other agreements that enforce international trade in this comment chain.

I'm just saying that if people want agreements like that in some shape or form that's going to necessarily result in some loss of national sovereignty. Any international trade agreement worth its salt will do that.

As an example. Let's say there's been an agreement between the US and Germany to enforce no tariffs on their trade. Now Germany is massively subsidizing its steel industry and there's a Delaware startup trying to smelt steel to compete with them.

Don't you think there should be a dispute mechanism in place to say "hey guys, we agreed to no tariffs, that really doesn't make sense if you subsidize steel and we don't".?

You can have such dispute mechanisms without ISDS (most trade-agreements have them, long before ISDS existed).

The problem with the TTIP (and similar deals) is that existing law is changed, and the previous rules that governments are able to govern their state are overruled. The court systems and existing law are overruled. This is no market solution (the strongest wins), this is extortion and the loss of the rule of law.

    > existing law is changed

Like every law that's ever been passed has done?

    > previous rules that governments are
    > able to govern their state are overruled

Like every international agreement that's ever been signed? All of whom give up some state sovereignty.

    > Court systems and existing law are overruled.

I wouldn't say "overruled", at this point the state has agreed to cede certain matters to an international tribunal as part of the trade agreement.

So you could say "overruled", you could also say "the parties involved voluntarily decided to change the process". Which doesn't sound that scary, does it?

    > This is no market solution (the strongest wins)

If the strongest was really winning to the detriment of everyone else they could just stop participating in the trade agreement.

    > This is extortion and the loss of the rule of law.

So the rule of law can only exist on the national level, and can't be enforced by an international body that nation-states have agreed to enact? To me that sounds very much like how courts are enacted by states, which most people consider part of the rule of law.

> How do you propose to mediate trade disputes between companies and states without something like the ISDS?

The companies could try accepting the laws of the country they wish to trade in, rather than shopping around for dodgy countries and then trying to export country B's laws to override country A?

My solution to this would be to shrink the governments power in economic affairs so every investor can be sure that it wont retroactively change the rules of the game and punish them for investing in our economies.

This could draw in a lot of investors from around the world.

Foreign governments then can decide between either continuing going down this path that will leave their population impoverished in the long term or they may also choose to open up their economy to investments by signalling that they wont cheat investors whenever they feel like it.

>Imagine this on say the US national level. Apple wants to sell its computers in Alaska, but Alaska has a domestic computing company that gets goverment subsidizes, creating unfair competition. In this case the federal government would step in.

A prime example of why ISDS is needed is the subsidies American corporations like Tesla, Facebook, and Apple receive in the US, creating unfair competition.

>There's an analogous issue with international trade agreements. National governments will enter into those agreements, but their courts are always going to be biased towards their local constituents, so in my example Apple couldn't hope for a fair result by suing in Alaskan courts.

Agreed. Case in point, Apple's rounded rectangle lawsuit against Samsung, or "Korean Samsung" as Apple's legal prefer it. Apple need to be taken to international court for its abuse of the US legal system, and the US government needs to get told. Someone call the WTO.

This is not the first time Gabriel has expressed anti-TTIP views (https://www.rt.com/news/344785-ttip-germany-bad-deal/).

However, Merkel for example is for the deal, so it's hard to say what the outcome will be. A lot of local politicians want to push the deal through, but talks have stalled and there is some opposition from the public as well.

Interesting to see the final outcome here. Hopefully the obviously bad can be stripped, while retaining any good.

> some opposition from the public

TTIP is highly unpopular in Germany. In recent polls, 70% had unfavorable views about the treaty.

I personally don't know anyone who isn't concerned about it. The concerns I've heard to far were about consumer protection and the investor-state-dispute thing.

Sure, but how many are willing to change their voting preferences or educate others about the dangers of TTIP? Many polls show people to be disgruntled by polticians, yet they keep electing the same people.

And surely it was 70% of the people who took the poll and were consequently made aware of TTIP?

I'm not saying there isn't opposition, most people I know are against it. But other people seem to not even know about it, or find it difficult to see why politicians would do something against their best interests.

I really dislike this argument. When I go to a polling booth, I don't get a list of issues where I could check my position on each one. What I get is one vote to select a person or party which across all issues I care about comes closest to a position I can (or have to) live with.

I've yet to be in situation where I would be in agreement on every important issue with choices on offer. There are always multiple issues on which I have to compromise which doesn't mean they are not important. Individually they may be even at the top of my list, but can cumulatively still lose to others.

Many polls show people to be disgruntled by polticians, yet they keep electing the same people.

My senators are great, it's just the other 98 that I despise.

Gabriel didn't state his anti-TTIP opinion, he made a simple observation that in all the opposing positions between the two sides nothing happened since 2014.

If there's no deal, there will be no deal, simply as that.

"Sigmar Gabriel, who is also Germany's vice chancellor, compared the TTIP negotiations unfavorably with a free trade deal forged between the 28-nation EU and Canada, which he said was fairer for both sides."

Gabriel accused Washington of being "angry" about the deal that the EU struck with Canada, known as CETA, because it contains elements the U.S. doesn't want to see in the TTIP.

What would those elements be?

Very light on investor protections and retains a lot of the EU regulations to be kept. In particular about food safety and similar things.

But why does it matter that these are not part of TTIP? If CETA is signed into law and includes those regulations, then US companies can just route their business with the EU through their Canadian branches and get the same benefits.

(Unless, of course, European parliaments discover some leftover spine in their bodies and vote against CETA.)

The US want their companies to have to adhere to less regulation not more. So essentially there are things in CETA that require Canadian companies to meet more a higher criteria with regard to food safety when trading with the EU. The US doesn't want to meet these higher criteria, a US firm selling to the EU through a Canadian branch would have to meet these higher criteria, which means that the US company would either have to forego selling to the EU or increase food safety standards across the board (they could just do it for export goods but that seems a bit silly) either way the companies costs increase.

Evidently you thought that TTIP was some kind of reasonable deal for all parties however it is mainly beneficial to some large US corporations at the expense of the citizens everywhere.

> Evidently you thought that TTIP was some kind of reasonable deal for all parties however it is mainly beneficial to some large US corporations at the expense of the citizens everywhere.

To the contrary. I have attended quite some anti-TTIP rallies myself.

My suspicion is that what we're seeing right now was the strategy all along: The European opposition (both inside and outside the parliaments) focused on TTIP because the US is an easier enemy (with all the latent anti-americanism boiling all over Europe). So the government(s) are now dropping TTIP very loudly, and while the public feels appeased, CETA is silently signed into law.

CETA, as far as I understand, is much less controversial than TTIP mainly because it is somewhat more fair to both sides, as opposed to the lopsidedness of the TTIP in favour of US corporations.

In addition the text is easily available for people to read and review, unlike TTIP. However as I understand it the controversial ISDS remains however this may cause it to not be ratified by some EU nations.

> but why does it matter that these are not part of TTIP? If CETA

The tinfoil hat summary is that the US is trying to push through its own policies worldwide, one dominated by lack of regulation, lack of work protection and lots of protection for investors and people with money.

If they would be able to strick similar deals worldwide, US companies would be able to move production to wherever it is cheap, and no workers right exist, while having the investors money covered in case the corrupt dictatorships screws them over.

Any new deal signed which mandates workers right, environmental protections, and doesn't put investor-money above human lives, is detrimental to this global power-grab effort.

> The tinfoil hat summary is that the US is trying to push through its own policies worldwide

There is no tinfoil hat about that...

Many regulations are introduced with the implicit purpose of disadvantaging foreigners; one example of this would be Chinese restrictions on importations of electronics (similar to European RoHS, but more stringent and only applied to foreigners).

Regulations are often introduced to advantage large, coherent interests such as unions and industries.

I wonder what those elements are?

> Gabriel's comments contrast with those of Chancellor Angela Merkel, who said last month that TTIP was "absolutely in Europe's interest."

Just as the French will someday regret the day they elected both Sarkozy and Hollande, Germans will in time curse the day they elected Merkel.

The reason why ISDS provisions are even discussed is that governments have become so overreaching in regulating economic activity that business owners today have the very real fear that they'll be put out of business because a government passes a law that will (sometimes even retroactively) force them to make gigantic payments.

ISDS provisions are in that sense a solution for a world where we expect that government power over the economy will likely increase even more in the future.

The solution that I prefer is to shrink government so it can't interfere anymore to a degree that turns good and successful investments retroactively into bad investments that cause investors to lose a lot of money and time.

Good

The benefits were much smaller than the drawbacks

In the past he had a different opinion about TTIP [0].

[0] https://www.youtube.com/watch?v=Q7Zb0XxSkxE&t=29

The UK is back of the queue but at least we're still in the queue !

No deal may be better than a bad deal.

The problem for the UK getting quick trade deal is to get good deals.

If it´s only trade deals that the UK wants they just have to accept the first draft of all the deals other government put on the table. Many countries will queue to sign for unrestricted access to the UK market, no string attached. The EU will be the first in line.

i guess its a case of the us not wanting to make any concessions. i think its ok though, america can keep its exceptionalism as we don't need ttip to flood the american market with cheap 'italian' shoes (they are likely products of macedonian or albanian sweatshop labour). we already have ft with canada apparantly and canada is in nafta, so they will pass through canada where they will be traded with the us under nafta free trade regime.

That's great for Europe as they can access the US market however it means the US cannot access the European market. I am sure that selling your products abroad is much more preferable to importing goods.

So the US can't access the EU through:

   US -> Canada -> EU

But somehow the EU can access the US through:

   EU -> Canada -> US

What part af that path doesn't involve a bidirectional free trade agreement that would make it just as easy for the US to access the EU via Canada as the other way around?

the assumption is that the EU-Canada agreement puts more restrictions on products so that everything which is allowed on the second path goes through all of it, but the opposite is not true.

(AFAIK this isn't generally true outside of agro/food but that is a large part of potential US->EU exports being erased while "Italian shoes" and "french wine" still get through in the other direction)

The US should concede nothing. Indeed if I were negotiating for the US, I would exploit the current weaknesses in the EU to impose a deal that makes clear Europe's decline.

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