What is the TTIP?
The Transatlantic Trade and Investment Partnership is a comprehensive trade agreement being negotiated between the European Union and the United States. The talks are intended to reduce or eliminate barriers to trade in goods and services, legally guarantee investor rights, and promote regulatory cooperation.
What is the status of negotiations?
The TTIP negotiations were initiated in July 2013 and 10 rounds of negotiations have taken place since. The 10th round of negotiation took place in Brussels on 13-17 July 2015. The negotiations have drawn out and the parties announced "a fresh start" to the negotiations in December 2014. EU leaders stated that TTIP negotiations should be concluded in 2015 in the European Council Conclusions of 19-20 March 2015. However, this deadline is generally considered unrealistic. The groundwork for negotiators began in 2011 when the EU and the US established the Higher Level Working Group on Jobs and Growth. Its mandate was to explore the feasibility and potential benefits of a comprehensive trade agreement covering all sectors. The working group concluded its mandate by recommending the launch of formal talks.
The European Parliament (EP) adopted with clear majority its TTIP recommendations on 8 July 2015. The Committee on international trade (INTA) was responsible for drafting the recommendations, but 14 other committees were involved in the process. The draft recommendations of the Committee on international trade (INTA) were adopted on 28 May 2015.
What will the TTIP cover?
The TTIP is intended to be a broad and comprehensive trade and investment agreement covering all sectors and all ways of supplying a good or service across borders. The TTIP will aim to reduce or eliminate tariffs on industrial and agricultural products, and limit the use of subsidies and regulations that are seen to distort or impede trade. In addition, the agreement is intended to apply to all service sectors, potentially including sensitive areas like health care and education. Finally, the deal will also aim to provide legally-binding protections for investors that could constrain public policy space.
Will education services be covered by the TTIP?
The broad scope of the TTIP means that public services like education could be affected both directly and indirectly. Education remains one of the least-covered sectors in trade agreements because of legitimate concerns about how legally-binding trade rules can restrict the ability of governments and designated authorities to ensure access to quality education. However, private and for-profit education companies and several countries have been increasingly active in pressing for the inclusion of education services in trade agreements like the TTIP. Recently, for instance, the UK government indicated in its international education strategy policy that "in order to ensure the UK is best placed to take advantage of global opportunities in the education services sector, the Government will look actively at how significant trade negotiations, both ongoing and future, could address the market access barriers which our education services suppliers face in some third country markets."Additionally, a paper published earlier this year by the conservative Cato Institute urges the United States and other countries to pursue the liberalisation of trade in education, particularly higher education that will "reduce the role of government and lead to significant growth in the presence of for-profit companies."
In short, there are growing pressures from some governments and industry lobby groups to use trade agreements like the TTIP to create new markets for education services.
Is it not true that public services are generally excluded from existing US and EU trade deals?
While negotiations are still early on, it is likely that the TTIP will provide a general exemption for "services supplied in the exercise of governmental authority". This is language that exists in other agreements such as the General Agreement in Trade in Services (GATS). However, this exemption is extremely narrow and open to conflicting interpretations. This is because government services are defined very narrowly as those that are provided on a non-commercial basis and not in competition with other providers. In other words, if any part of a country's education system is provided on a commercial or for-fee basis, or if there are private schools that operate, education may not benefit from this general exclusion. Similarly, the EU approach on publicly funded education services is inadequate. Given that most education systems in the EU and the US do in fact contain a mixture of not-for-profit and commercial actors and public and private provision, it is unlikely that the education sector would fully benefit from general exclusions. A more effective and broad exclusion for education and other public services is needed to protect governments' ability to deliver services through the appropriate mix that they deem suitable to ensuring domestic policy goals.
What are the dangers of including education services in the TTIP?
Including education services in any trade agreement poses significant risks by restricting public policy space and locking in and intensifying the pressures of privatisation and commercialisation.
Generally, trade agreements spell out a number of rules or "disciplines" that countries have to abide by either across all sectors or, depending upon the architecture of the agreement, in sectors where they have specific commitments to liberalise. Of these rules, the most onerous are national treatment and market access.
National treatment requires a party to a trade agreement to extend the same benefits and privileges that domestic providers enjoy to foreign providers from the other party. Market access prohibits parties from adopting measures, such as quotas or limitations on for-profit providers that restrict their ability from entering the marketplace.
These trade rules are legally binding and can have the effect of locking-in and intensifying pressures of commercialisation and privatisation. For instance, if the TTIP fully liberalises education services, national treatment rules could require the parties to extend the same subsidies they provide domestic schools and other educational institutions to providers from the other party.
Rules around market access could restrict the ability of the US and EU member countries to limit the entry and regulate the operations of private and for-profit schools and institutions. Any attempt to do so by imposing new accreditation and quality assurance requirements could be interpreted as a disguised barrier to trade. Even the absence of an accreditation scheme for foreign educational providers could be seen as a violation of trade commitments. In fact, this is currently the subject of an internal EU dispute where the European Commission started an infringement process against Slovenia, requesting that legislation in the field of education be aligned with the Service Directive.
Finally, market access rules could also prevent countries from discriminating between public and private, not-for-profit and for-profit providers. This means that if commitments are taken governments could not treat public schools more favourably than private ones from the other party to the TTIP agreement.
Are there other dangers for the education sector in the TTIP?
Education systems in the EU and the US could also be affected if the TTIP develops new rules on regulatory cooperation. These rules would apply new restrictions on measures taken with respect to qualifications requirements, licensing and other standards to ensure such measures are not more trade restrictive than necessary. Disciplines developed on qualifications could potentially allow the EU and US countries to challenge each other's educational requirements, professional accreditation standards, and certification and testing procedures as "more burdensome than necessary". Rules on licensing procedures and requirements could call into question regulations related not just to professional licensing, but also to the accreditation of schools and education institutions. Technical standards refer to the rules according to which a service must be delivered, thereby potentially exposing quality assurance standards governing education.
Applying a necessity test to domestic regulations ignores the reality of how educational regulations are developed. Rules and standards are designed and implemented through compromises that impose neither the greatest burden nor the least burden on service providers. Requiring all regulations to be the least burdensome would limit both the content and the process for democratic decision-making.
As well, unlike the GATS, the TTIP foresees the Investor-State Dispute Settlement (ISDS) mechanism, which would grant private companies the right to file complaints directly with governments for alleged violations of rules. Most trade agreements provide for the resolution of disputes on a state-to-state basis. The ISDS provision will allow US companies investing in Europe to directly challenge EU governments at international arbitration tribunals for any measure they feel interferes with their profits. EU companies investing in the United States would have the same privilege.
This provision in other agreements has already led to companies successfully challenging legitimate policies aimed at strengthening and expanding public services. At the end of 2012, Dutch insurer Achmea (formerly Eureko) was awarded €22 million in compensation from Slovakia under the investor rights provisions s of a bilateral investment treaty signed with the Netherlands. Achmea challenged a 2006 Slovak government decision reversing the health privatisation policies of the previous administration and requiring health insurers to operate on a not-for-profit basis. The mere threat of litigation may compel policymakers to avoid enacting new legislation and regulations that while in the public interest may have an impact on foreign investors.
How can these dangers be avoided?
The best way to prevent education and other public services from being exposed to commercial trade rules is to negotiate an effective general exclusion or "carve-out" from the TTIP. Already, the European Union Foreign Affairs Council of Ministers has excluded the audiovisual sector from the negotiation mandate for the TTIP. The justification for this was based upon the public interest goal of preserving and promoting cultural and linguistic diversity within the EU. Arguably, the same reasoning applies to education and would similarly seem to justify a carve-out from the TTIP.