TTIP should carry a health warning

Nina Renshaw is Secretary-General of the European Public Health Alliance

Under pressure from the public, who are worried about the future of their health services across Europe, the European Commission, US trade representative and particularly trade commissioner Cecilia Malmström have sought to clarify that the Transatlantic Trade and Investment Partnership (TTIP) will protect public services, including health and education, and maintain consumer protection and health standards. While there’s still everything to play for in the negotiations, the truth is regrettably less reassuring. Especially in light of the leaked US positions, and the continuing lack of transparency of the latest official texts, the public are right to remain worried that TTIP should carry a health warning.

As yet, there are no cast iron guarantees that all health services will be outside the scope of the trade deal in perpetuity. Though the core – emergency services, surgery and so on – will be protected, there is a risk of chipping progressively away at supporting services essential for the efficient running of our health systems. The Commission has confirmed that publicly-funded health services are excluded from TTIP, but the devil may be in the detail of ‘publicly-funded’ and the nature of the deal as a so-called ‘living agreement’. Negotiations will be continuous under the guise of ‘regulatory cooperation’, which foresees that governments would have to give advance notice to their transatlantic counterparts ahead of any planned regulatory changes.

Our fears appear confirmed by the US negotiating position leaked in May, which seeks legally-binding wording that would allow them – and their companies – to have their say, and potentially influence or prevent policy change. This is a daunting prospect, as any proposed regulatory changes affecting public health could be considered as a ‘trade irritant’ and be open to the threat of legal challenge from foreign investors thanks to the investor-state dispute settlement clause (ISDS) or investment court system (ICS). Such a framework could block, weaken or delay proposals to protect and improve healthcare.

How this will affect health services depends on the outcome of the negotiations and whether a ‘ratchet clause’ is applied. If it is, should a government decide that some aspects of healthcare will no longer be publicly-funded, they will then fall into the scope of TTIP, including the controversial investment protection clause. This is important, as a government of one political persuasion could make changes that future governments find extremely difficult to reverse. For example, when the Slovak government reversed the privatisation of health insurers in 2006, it was sued by a Dutch insurance company to compensate for the loss of their investment. The spectre of lengthy legal disputes in international trade courts with calls for compensation running into the millions or billions for lost future earnings should be enough to scare some governments to put changes on ice. Which is why some of us remain concerned about ‘regulatory chill’ or even a regulatory ice age heralded by TTIP.

Since the TTIP leaks, this is no longer mere speculation. And there are many other reasons to attach a health warning to TTIP. Foremost, lacking a proper assessment of what the broader health costs of the deal will be, blissful ignorance rules within the Commission. Take, for example, one of the few fields in which the removal of transatlantic tariffs will be very significant for European consumers: unhealthy processed food. The impacts on our health from their increased availability and lower prices are easily foreseeable. Processed foods including sweets, biscuits, crisps, processed meats, fizzy drinks and so on are covered by the highest average tariffs of any sector today, at almost 15%. It doesn’t take an economist to tell us that if the prices fall once tariffs are removed, we Europeans are going to have diets more closely resembling those in the US.

Lessons from history show us, unsurprisingly, that when tariffs between the US and Central American countries were lowered dramatically (from 45% to 8% between 1985-2000), total food imports into Central America doubled and processed foods replaced healthier staple diets. In Mexico, consumption of fizzy drinks increased by nearly 40% in the ten years after joining NAFTA; and today, Mexico is second only to the US in terms of obesity amongst adults. Diabetes prevalence increased by a quarter between 1993-1999 to become the primary cause of adult hospitalisations – discounting childbirth – and hospital deaths in Mexico.

This isn’t a defence of tariffs or an argument against free trade. The point is rather that the Commission is wilfully ignoring warnings of the obesity and chronic disease time bomb they’re setting for Europeans and our health services. If unhealthy food and drink prices are dramatically lowered, governments will need to compensate by other means, assuming they want to avoid Mexico’s fate. This is where we come back to investment protection and regulatory chill. Who will be bold enough to impose countermeasures such as health labelling, advertising restrictions or taxes on unhealthy foods under the threat of unlimited compensation claims?

Apart from food, one of the most obvious sectors in which there are huge differences between US and EU rules is medicines. Medicines are generally vastly more expensive in the US. European countries are also much better at offering considerably cheaper generic alternatives, which is going some way to manage the increasing costs of ageing and less-healthy populations. No health minister, doctor, nurse, patient or parent would aspire to emulate the US model of health coverage.
The Commission is offering transatlantic pharmaceutical companies fast tracking to the market, but remains silent on how TTIP would make all medicines cheaper. Negotiators claim that increased competition will by nature give us all better access to, for example, generic medicines, which cost less. But this hasn’t been reinforced by any evidence whatsoever. If a comparison with more ‘competitive’ US healthcare systems is anything to go by, there is dramatically more for Europe to lose than to gain from closer regulatory cooperation on medicines. It would be negligent of the Commission not to evaluate this risk before negotiations go any further.

The public health community is still seeking reassurances from the trade negotiators that TTIP will lead to a better deal for cheaper medicines and a healthier future for our health systems, guaranteeing universal access to affordable medicines for everyone. The TTIP leaks illustrate that greater transparency of the negotiating documents is vital to ensure proper democratic and public debate about the impact of trade policy on popular health. We are an evidence-based community, and until the Commission actually shows us their evidence of future benefits to health, we must keep a health warning on TTIP.