TTIP and the Near-stateless Global Giants

Last week, the Guardian’s James Ball wrote about the EU’s recently reopened anti-trust battle with Google. Although relatively narrow (the investigation is looking at whether Google’s search results favour its own shopping service over rivals), Ball argues that should Google win, other regulators will hesitate to investigate the activities of internet behemoths.

Network Effect

Ball’s piece is a quick read, so rather that quote the entirety of it here (I’m tempted), I urge you to read it. However, the essence of his article centres on the following premise:

For all their promise of openness and equality, the technologies of the internet also promote the creation of giant companies.

Without going into the realms of technological determinism, it’s safe to say that the feedback loops and network effects permitted by the internet have allowed companies like Google, Facebook and Amazon to become near-monopolies within their chosen fields. Fuelled by these factors, their growth continues to accelerate, unchecked.

This is something I’ve spoken about before, so reading Ball’s article was largely an exercise in head nodding. However, the role of the EU as the last effective bastion of consumer protection is worth noting. Ball writes:

…there are very few government bodies in the world with the scale to truly hold the largest internet giants to account – perhaps only the US and the EU. The companies can move their servers, their regional offices and their headquarters with relative ease. It’s only those places with enough customers to be irresistible that can try to enforce a rulebook.

He later states:

Traditionally, US regulators have been relaxed about companies gaining large market share provided they don’t use their market power to get advantages in other sectors. European regulators have generally stepped in earlier, capping share.

The EU is often derided in Britain, but many of its diktats have made Europe a safer, fairer and more just place to live.

TTIP

Enter the Transatlantic Trade and Investment Partnership or TTIP, the trade and investment deal currently being negotiated between the EU and US. Beyond reducing trade tariffs, this agreement is primarily focused on removing ‘non-tariff barriers to trade’ by harmonising regulation between the two trading blocks.

This is where the relaxed nature of US regulation becomes a problem. For example, the EU has a precautionary principle that any new technology or product must be proven to cause no harm before entering the market, but the US has no such equivalent. Regulatory convergence would therefore impact working conditions, environmental protections, food safety and financial regulation, compliance falling to that of lowest common denominator.

This harmonisation would be result of a mechanism known as the ‘Investor-State Dispute Settlement’ (ISDS). This gives corporations the power to sue governments for the potential reduction of profits resulting from a law being made.

This clause is already present in similar trade agreements – you may have heard about Philip Morris’ attempts to sue the Australian government for introducing plain packaging on cigarettes:

ISDS disputes take place in secret and bypass and override domestic judicial systems. Any attempts at nationalisation, regulation or consumer protection would soon feel the chilling effects.

Combination

The impact of TTIP has been largely been ignored during the current general election campaign (noticeably so by UKIP), receiving only passing mention in what often sound like academic debates about privatisation of the NHS. The main parties (including Labour) are largely positive towards the agreement, believing it will boast trade and reduce unemployment, regardless of studies that prove the opposite.

It’s worrying to think how legislation like TTIP, designed to liberalise markets, would further empower those corporations born on the internet. As their interests extend to the devices embedded within every aspect of our lives (with the data flowing between them co-opted by the national security services), it’s hard not to see a future where citizens become merely serfs, feeding the machine its daily diet of clicks and taps.