Trade laws undo local progress on food systems

Posted November 20, 2015 by     Sharon Treat

TradeTPPFree trade agreements

Used under creative commons license from rusty_clark.

So much of trade policy involves searching through legal texts and leaked documents for clues about what’s coming next. Careful examination of the recently released text for the Trans Pacific Partnership (TPP) is already revealing new risks for our food system. Those findings also tell us what to watch out for in the other big pending trade deal—the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. Unlike earlier trade agreements focused primarily on reducing tariffs to open up markets, these agreements are likely to include extensive provisions intended to reduce or eliminate state and federal regulations viewed as “trade irritants.” The focus on state and local rules and programs is one of the “innovations” in recent trade deals.

First, the good news. Sort of. Farm to School programs funded by the U.S. Department of Agriculture (USDA) that provide bidding preferences for healthy, locally grown foods have been kept out of federal procurement commitments in TPP. And, for the time being at least, state and local procurement is off the table. The bad news is that the text directs that “No later than three years after the date of entry into force of this Agreement, the Parties shall commence negotiations with a view to achieving expanded coverage, including sub-central coverage.” No word on how that would be decided or who would be consulted, but it indicates the clear intention to include programs by states, counties and perhaps even public universities or hospitals, at some point in the future. In that case, our clue comes from the TTIP negotiations, where leaked meeting reports indicate that the EU is seeking such commitments from the U.S. for all goods and all sectors.

Much of the progress in reforming our food system is happening at the local level. Nearly 300 food labeling bills were introduced in state legislatures in 2014 and 2015, including nutrition disclosures, sugary drinks warnings, identification of local products such as olive oil and seafood and disclosure of GMO ingredients. Those programs could be at risk under both TPP and TTIP. States’ Leadership on Healthy Food and Farm Systems at Risk under Proposed Trade Deals explains how provisions in both trade deals could undo decades of work by local activists and legislators. Some highlights from that report:

  • State food labeling laws are vulnerable to challenge as “technical barriers to trade.” Both the TPP and the TTIP will have a chapter on “technical barriers to trade” (TBT). TBT provisions are already in effect under World Trade Organization (WTO) rules and have been successfully invoked to overturn federal food labeling standards, including Country of Origin Labeling for meat. Regional trade deals like TPP and TTIP are required to be “WTO plus,” meaning their rules must be at least as stringent as those in the WTO, likely posing even greater threats to domestic food policy. A draft TBT chapter for TTIP seeks to harmonize technical requirements so that goods could be marketed across the country on “the basis of a single authorisation, approval or certificate of conformity.” Labeling rules are specifically targeted. The TBT chapter would also impose a “necessity test” such that labeling requirements “should be limited as far as possible to what is essential and to what is the least trade restrictive to achieve the legitimate objective pursued.”

    The TPP includes a first-time TBT chapter annex on “Proprietary Formulas for Prepackaged Foods and Food Additives” that imposes that same “necessity test” and additional confidentiality protections on government regulators seeking information to regulate food ingredients. These provisions could hinder the timely development of stronger federal standards relating to junk food warnings, GMO labeling and detailed information about “proprietary” food additive formulas.

    State food labeling laws are clearly vulnerable under these provisions. State standards that differ from federal rules could be challenged, even if U.S. law allows for those differences. Would Vermont’s GMO labels, for example, meet the “necessity test,” when U.S. federal regulatory agencies have established no disclosure requirements? Legal scholars suggest that U.S. states should be concerned about how such a necessity test would operate.

    Health warnings are also at risk. In 2015, bills were introduced in three states—California, New York and Vermont—to require safety warnings on sugary drinks. The U.S. Trade Representative (USTR) has opposed such laws in other countries, objecting to Chilean nutrition warning labels because they might discourage consumption of imported processed foods. Business groups have openly stated their interest in using these trade agreements to thwart state regulations. The U.S. Council for International Business testified that “[s]ubsidiary political units, such as EU Member States or U.S. States should be prohibited from seeking to impose separate requirements for approval or local restrictions on sale or use,” and the U.S. National Confectioners Association has stated that “U.S. industry also would like to see the US-EU FTA achieve progress in removing mandatory GMO labeling and traceability requirements.”

  • Rules on regulatory cooperation create new obstacles to state action. Nothing illustrates the scope of these international agreements better than the EU’s proposal for a Regulatory Cooperation chapter in TTIP. This far-reaching proposal seeks to “reduce unnecessarily burdensome, duplicative or divergent regulatory requirements affecting trade or investment.” A U.S. federal agency would be charged with collecting information about proposed and pending federal and state legislation and regulations on virtually any subject, including advance notice of bills and impact assessments intended to determine whether the policies are more “trade restrictive” than necessary. Foreign governments’ concerns would be injected into domestic policies, and procedures intended to “harmonize” standards could result in setting federal and international minimum standards as the regulatory ceiling.

    The TPP also includes regulatory cooperation requirements applicable to U.S. states. Tucked into the TBT chapter is a provision requiring the federal government to provide advance notice of state-level proposals for “new technical regulations and conformity assessment procedures” where those proposals “may have a significant impact on trade.”  The federal government must engage in “technical discussions” upon request by another TPP country. The intended outcome of these discussions is to align state regulations with international standards, and move towards mutual recognition of standards of TPP countries as equivalent.

    These provisions don’t specify how—or if—state policymakers would be consulted in these harmonization initiatives. In general, regulatory cooperation would impose new burdens on budget-strapped state agencies and legislatures, shifting resources from the implementation of consumer protections to collating documents and monitoring and participating in international meetings. The consequences could extend well beyond increased red tape. Attempts to harmonize U.S. and EU regulatory standards will necessitate reining in outlier state standards that impose additional or different requirements on businesses, such as enacted and proposed state-level food labeling standards.

  • Investment provisions give corporations a preferential forum in which to challenge state laws. The Investor-State Dispute Settlement (ISDS) procedures in trade agreements allow foreign investors to sue governments directly in private investment tribunals, bypassing the courts or allowing a “second bite” if the investors do not like the results of domestic court decisions. Although the investor-state tribunal has no power to directly nullify U.S. laws, in practice, when a country loses to an investor, it will change the offending law, pay damages or both. Under ISDS, transnational corporations could sue for claimed lost profits due to food labeling requirements or GMO disclosure rules that companies claim will lower sales of their products.

    ISDS clauses in other trade agreements have been used repeatedly to attack environmental and public health measures. Even unsuccessful challenges take years to resolve, cost millions to defend and have a chilling effect on the development of new legislation. U.S. state and Canadian provincial policies, including laws banning toxic gasoline additives and a moratorium on fracking permits, have already been targeted in challenges under the North American Free Trade Agreement (NAFTA). TPP and TTIP would exponentially increase the number of corporations that could take advantage of these special rights to challenge consumer standards. Additionally, government-prepared impact assessments analyzing state regulations proposed in the regulatory cooperation provisions of these agreements could provide support for these legal attacks.

The evidence shows that TPP could drastically limit states’ authority, and what we’ve seen so far from TTIP could take that several steps further. State government officials and other local foods advocates should take steps to get as informed as possible, as quickly as possible, and then communicate their views to the USTR and to Congress, which will soon be reviewing the final agreements under an abbreviated “fast track” process. If not, important state health and consumer protections, including food labeling, could be undermined and likely rendered moot by these international agreements masquerading as trade facilitation.

Read the full report.

Read the two-page summary.




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