Why are free trade agreements secret?

There are two schools of thought regarding secrecy in the negotiation of trade agreements:

1. Ratification is more likely because the lack of transparency makes it harder for special interest to rally against the treaty by focusing criticism on an unpopular aspect of the agreement.

2. Others believe that secrecy makes it easier for special interests to seize benefits from the agreement at the public’s expense.

Between these two well held views are the policy makers walking a tight rope in a balancing act between private and public interest.

For instance, the European Commission has sustained the covert nature of the negotiations by introducing a new regulation, “allowing only politicians to view the text in a secure 'reading room' in Brussels.” According to EU Trade Commissioner Cecilia Malmström, this was allegedly necessary because of "important vulnerabilities in the last rounds of negotiations."

In this atmosphere of secrecy of using secret reading rooms, signing “confidentiality agreements and having mobile devices be surrendered a maximum of 8 people are allowed in a reading room at one time, and the computers available have no internet connection. “

The logical explanation of these extraordinary security measures during the talks is that the agreement will include terms that would certainly have push back from the average citizen. The most controversial issue is the Investor-State Dispute Settlements (ISDS) which gives un-elected transnational corporations officials the power to dictate the policies of democratically elected governments.

Under these circumstances the Transatlantic Trade and Investment Partnership (T-TIP), is not a free trade agreement – rather, it is yet another example of “managed trade”. Keeping negotiations secret has certainly spelled a question mark over the intentions underlining the deal or whether it will be in the best interests of American, EU citizens, or any other citizen whose country is currently engaged in secret talks.

As a result, the world is questioning in a great debate about new trade agreements that have outcomes more in line with “managed trade”. As a matter of fact so called “free-trade agreements”; are in fact managed trade agreements, custom-made to corporate interests, mainly in the US and the European Union. Today, such deals have been renamed “partnerships,” such as the Trans-Pacific Partnership (TPP). But in reality these are not partnerships of equals for the US effectively commands the terms of an agreement. Nevertheless, the so call “partners” are becoming increasingly more resistant to bullying into accepting undesirable terms.

Moreover, these agreements reach outside trade into governing investment and intellectual property rights. The most challenging issues are the imposition of unwarranted changes to a country’s legal, judicial, and regulatory charters, without input or accountability from any democratic institution.

Investor protection has become one of the most a thorny question on how to protect investors against the risk of a rogue government seizing their property. But these provisions are not focused on that issue, in fact, there have been very few expropriations in recent decades, and investors who want to protect themselves can buy insurance from the Multilateral Investment Guarantee Agency, a World Bank affiliate. The US and other governments provide similar insurance.

Opponents argue that the real intent of these “protective measure” is to block health, environmental, safety, and financial regulations meant to protect corporate interests. The provisions give companies the ability to sue governments for compensation if a reduction of expected profits resulting from regulatory changes occurs.

This is not an academic issue for in February 2010, Philip Morris filed a complaint against Uruguay arguing that “Uruguay's anti-smoking legislation devalues its cigarette trademarks and investments in the country.” In July 2016, after 6 years, the International Center for Settlement of Investment Disputes (ICSID) ruled in favor of Uruguay. Australia has also obtained a favorable ruling against the tobacco company. In this case, Philip Morris was demanding to be compensated for lost profits because labeling was discouraging smoking.

Now the same interest groups are attempting an end to democratic processes by inserting such requirements in trade bills, while the contents are being kept secret from the public. Leaks had been the only source of information from government officials who seem more committed to democratic processes than protecting corporations.

Joseph E. Stiglitz, Professor at Columbia University and a Nobel Laureate in Economics writes:

“Rules and regulations determine the kind of economy and society in which people live. They affect relative bargaining power, with important implications for inequality, a growing problem around the world. The question is whether we should allow rich corporations to use provisions hidden in so-called trade agreements to dictate how we will live in the twenty-first century. I hope citizens in the US, Europe, and the Pacific answer with a resounding no.”