TTIP and CETA: the trade deals threatening British democracy

“Constitution” was the buzzword of the new Cameron government’s first week in office. But in fact, the ratification of the Transatlantic Trade and Investment Partnership (TTIP) or the Comprehensive Economic and Trade Agreement (CETA) would have a far more significant impact on the UK constitution than, say, scrapping the Human Rights Act or further devolution.

The Conservatives have entered office promising a whirlwind of constitutional change: from English votes for English laws to a “British Bill of Rights”, and possibly even reform of the House of Lords. These are all important issues. But, in the long term, they pale into insignificance next to the potential impact of TTIP and CETA. The reason is simple: the impact of any legislation passed by the Cameron government can be repealed by the next government. TTIP and CETA will effectively abolish this power.

American Scotch?

Much has been written about TTIP, but its sister agreement, CETA, has passed largely unnoticed. Yet both of these treaties will involve measures which fundamentally alter the face of the UK law and constitution. TTIP in particular is likely to remove legal protections for geographical indicators (like “Scotch Whisky” or “Cornish Pasty”). This would allow American firms to claim that their products are, for example “Highland Whisky” even if it is made in Nebraska.

It is almost certain that TTIP and CETA will allow private investors to sue elected governments, if public policy compromises their profits or expectations of future profits. Disputes will be adjudicated, not in domestic courts, but international tribunals composed largely of corporate lawyers. TTIP remains under negotiation, but CETA has been finalised. The UK can ratify it whenever it chooses.

TTIP talks continue.Olivier Hoslet/EPA

Opponents of TTIP argue that elected governments will be constrained by the whims of international courts. But (as TTIP’s supporters point out) it would be by no means the first treaty to do this. The Lisbon Treaty (which governs the EU), the European Convention on Human Rights and numerous other bilateral investment treaties have the same effect.

So is opposition to TTIP simply a matter of not liking foreign investors? For the past three months I have been working with Mishcon de Reya to answer this question. My conclusion is that ratifying TTIP and CETA would fundamentally undermine the UK’s democratic constitution.

A constitutional crisis

Democracy is the first principle of the UK’s unwritten constitution, and many constitutional principles exist largely to safeguard democracy. One of the most important is the sovereignty of parliament.

Parliament represents the will of the people. Therefore it can make or unmake any law it wants. But there’s a caveat: parliament can’t make a law that would bind future parliaments. To do so would be undemocratic. The laws of one generation are often inappropriate for the next. Parliament must embody the will of the people at the time. When two ordinary laws conflict, the courts will always apply the one passed most recently. When an ordinary law conflicts with a constitutional principle, the courts may resolve the conflict in favour of the latter. Parliament can repeal constitutional principles, but must be explicit about its intention to do so.

CETA contains – and TTIP is likely to contain – a clause mandating that, even if a state withdraws from the treaty, the investment protection provisions will still have effect for a further 20 years. The impact of this is staggering. A significant number of the promises in the manifestos of the major parties would be untenable. Labour’s pledge of access to a GP within 48 hours, and most promises relating to green energy, could have provoked fines of such magnitude as to make them prohibitively expensive. This would be the case even if the UK chose to leave TTIP. For example, in Ethyl v. Canada, the Canadian government were compelled to reverse a policy aimed at preventing the transport of dangerous substances, because the magnitude of the damages they would have been compelled to pay made continuing with the programme impossible.

This makes TTIP and CETA fundamentally different from other treaties. The UK can leave the ECHR and (after some negotiation) or the Lisbon Treaty if it chooses to do so. But if it leaves TTIP, it will still be bound for a further 20 years. Unlike an ordinary bilateral investment treaty, parliament can’t simply choose to renegotiate the terms, because it would first have to gain the consent of every other state in the EU. It doesn’t take a seasoned diplomat to realise that while convincing one state to vary a treaty is difficult but doable, convincing 28 to renegotiate on your behalf is virtually impossible.

If democracy is to remain the fundamental tenet of our constitution then TTIP must not be ratified. At the very least we must derogate from the 20-year clause. Living under a government you don’t like is the risk you take in a democracy, but being forced to live by rules agreed 20 years ago is fundamentally undemocratic.

Sam Fowles received funding from Mishcon de Reya (the 2015 Mishcon Academy Grant) when conducting this research.