Snowden affair overshadows EU-US trade deal but the real secrecy is in Brussels

Anna Sonny, 8 November 2013

The EU-US trade deal, hailed as the biggest bilateral trade agreement in history, and referred to by Obama as the ‘economic NATO’ is facing possible delays after anger in Europe over US mass surveillance. Whistle-blower Edward Snowden leaked information showing that the US was spying on 80 embassies and consulates worldwide, including German government offices and Chancellor Angela Merkel’s personal cell phone. The espionage has sown seeds of mistrust amongst EU leaders, particularly Germany, who is now pushing for data protection standards to be written into the trade agreement with the US.

The trade deal includes tariff reduction and harmonising regulations, which would save both sides a lot of money. For the European economy, which is slowly emerging from recession, the agreement is also a chance to run with tigers and compete with bears; if the EU and the US can harmonise regulations, this could eventually edge out China’s domination of global standards for products.

Cheap American shale gas would also be available to all EU member states; this could reduce dependence on Russian gas, a powerful tool for Moscow, which, as we have seen with Ukraine, is unfortunately often used as leverage in disputes.

But while the secrecy of the Snowden affair is overshadowing the trade deal, there are further secrets that could possibly be embedded in the agreement which are much closer to home and should be discussed. There is criticism surrounding ‘investor-state dispute settlements’ – a mechanism included in trade agreements, which is expected to be part of the EU-US deal. The mechanism gives companies the right to sue governments if they feel the local legislation is discriminatory. Take Phillip Morris, the American global tobacco and cigarette company, which sued the Australian government when it tried to introduce plain-packaging for cigarettes. The case is on-going but the repercussions so far have halted the UK’s plans to do the same, and is evidence that huge companies can undermine democracy and public opinion by going outside national legal systems to interfere with something as important as a health proposal.

The EU argues that investors may not be able to access a country’s local courts and the investor-state dispute settlement provides a place for them to bring a claim when discrimination does take place. But these cases are taken care of in private. The EU, which now has competences in the area of investment policy, should take steps to make sure that these cases are more transparent. As the Snowden affair has shown all too clearly, secrecy undermines trust.