Security exception for TTIP?

Arms are not an ordinary commodity. For that reason, arms trade has been excluded from international trade agreements such as the WTO Treaty and the EU common market. This makes it possible for governments to strengthen their own defence industries in a highly competitive market and keep control of the export of military goods to destinations considered undesirable for strategic, foreign policy or human rights reasons. Arms trade is controlled by a Common Position license system in the EU and by classified US Conventional Arms Transfer Policy in the US. The US system has recently been updated to express the intention that no arms transfer, equipment or training will go to countries that commit genocide, crimes against humanity or violate international humanitarian law. Final decisions fall under the presidency.

It is not likely that the Transatlantic Trade and Investment Partnership TTIP, at present under negotiation between the European Union and the United States, will break with the tradition of 'security exception' in trade treaties. But officially this is still undecided. In answer to questions of the parliament the Dutch minister of Defense Hennis writes that the TTIP negotiations “do not exclude any sector” (apart from the audiovisual industry). “The Council (EU) has given the European Commission a broad mandate to come to an ambitious deal with the US”, according to the minister. “How much TTIP will lead to a more open defense- and security market has to be seen during the negotiations, considering the sensitivity of this sector in both the EU and the US.”

The powerful European lobby of the defense industry ASD welcomes the TTIP negotiations and participates in the Civil Society Dialogue, established by the European Commission as a direct channel of communication between the TTIP negotiators and EU industry. ASD has set up an EU-US Free Trade Agreement Task Force in order to monitor the developments, keep industry informed and provide input to the negotiators whenever the essential interests of European aerospace and defense industry are at stake. The Task Force will “call on the best experts of the ASD community to assist it in this endeavor”. ASD industries could be directly affected by the outcome of negotiations in many of the areas (market access, regulatory coherence and rules of trade) covered by TTIP. Intellectual property rights might be a case for concern. ASD notably sees possibilities for small and medium sized enterprises (SMEs), which are extremely important for the European defense industry in this respect, as they can help open up the US defense markets by providing niche technologies to big dominating American companies. According to ASD TTIP will have “a positive impact on SMEs, as they bring about trade facilitation and reduction of costs”.

What might be that 'positive impact'on trade seen by ASD? The leaked EU draft text for TTIP energy policies, seen by the Huffington Post, gives an idea of what is to come. Amongst others, it reads that "exports of energy goods to the other Party shall be deemed automatically to comply with any conditions and tests foreseen in the Parties’ respective legislation for the granting of export licenses." In other words, what is considered all right by one party will automatically be adopted by the other party. Although this is already often the case between NATO partners, in theory governments can still make exceptions if they want to. This threatened to happen with the export of Czech arms to Egypt, a reason why the Czech governments advises arms industries to export by plane so no transit permits are necessary.  Even amongst EU countries the Common Position is not always implemented in a common way.

An open defence market is not in the interest of the European arms industry. According to Tom Enders, CEO of Airbus and a strong spokesperson for European defence, TTIP will be a “very strong contributor to our (transatlantic) alliance.” However, he could “imagine a TTIP for defense, but not now” because Europe needs to be better equipped and prepared to deal with defense and security issues. In other words, the European defense industry still needs preferential European treatment before it can compete with the US on an equal ground. Clearly it is not democratic control he is worried about. Actually, he believes that “large companies should have the impetus to influence and lead on requirements of militaries. Governments do not tell industry exactly what they need; therefore, industry should lead and let the military know what they will require to meet the challenges of today and tomorrow.” We tell you what to buy, you only need to pay.

Then what is is the ASD lobbying on? Of course, ASD also represent the civil aero- and space industry. TTIP might in the end exclude arms trade from its mandate, it will have an impact on all other sectors. Also, even with a security exception, TTIP will cover the increasingly important sector of dual use products, where legislation is lagging behind anyway. This might cause control problems in the future. According to the Huffinton Post, free trade agreements “bind all of their participants to a specific regulatory regime, hindering the deployment of future regulations in response to new problems.” Once under the TTIP, there will be no possibility for the EU to improve its dual use export policy and/or respond to new developments in arms technology not explicitly listed as strategic goods. Even more because “trade pacts are enforced by international courts, which can issue economic sanctions against countries that violate the deals” as the Huffington Post writes. Under TTIP, the policy space for the EU or national governments to develop human rights based export policy on e.g dual use or catch-all issues will be considerably limited.

 

Wendela de Vries 26/05/2014