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Should the World’s Largest Chemical Corporations be Allowed to Attack States’ Chemical Safety Protections?

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How would you feel about the U.S. government paying foreign corporations to keep cancer-causing chemicals out of your water bottles?

That is a risk we’d face under a sweeping U.S.-EU “trade” deal under negotiation – the Trans-Atlantic Free Trade Agreement (TAFTA), also known as TTIP.  As proposed, TAFTA would empower thousands of European firms – including chemical giants like BASF, Bayer, and Royal Dutch Shell – to bypass U.S. courts, go before extrajudicial tribunals and demand taxpayer compensation for U.S. policies – including chemical regulations.

We depend on such regulations every day to keep toxic chemicals out of our food, toys, rivers, and clothes.  This past July, more than 100 organizations on both sides of the Atlantic sent a letter to TAFTA negotiators to warn against TAFTA’s threats to such commonsense protections:

Stricter controls (including restrictions on some or all uses) of hazardous chemicals – including carcinogens and hormone disrupting chemicals – are vital to protecting public health…EU and U.S. trade policy should not be geared toward advancing the chemical industry’s agenda at the expense of public health and the environment – but that appears to be exactly what is currently underway with TTIP.

While U.S. federal chemical regulations are sorely outdated – with no major overhaul since the 1976 Toxic Substances Control Act (TSCA) – U.S. states have been filling in the gap, enacting forward-looking policies to protect us from chemicals that pose a threat to human health and the environment.  State chemical safety policies cover everything from mandatory disclosure of chemical compounds on the packaging of consumer goods to outright bans on specific chemical compounds and additives.  According to Safer States, 35 U.S. states have enacted 169 chemical safety policies, while 114 more such policies are pending in 29 states.

But this web of state-level protections on which most U.S. consumers depend could come under attack if TAFTA were to expand the controversial system known as investor-state dispute settlement (ISDS).  Six of the world’s 15 largest chemical firms are based in EU countries. The largest among them have facilities in many of the U.S. states that are currently contemplating new chemical restrictions.

Using TAFTA’s ISDS provisions, these foreign firms would be empowered to challenge U.S. state-level chemical protections with which U.S. firms must comply.  They could do so on the basis of sweeping rights available only to foreign investors, alleging, for example, that new chemical restrictions violated their rights by frustrating their expectations.  Such cases would be decided by tribunals unaccountable to any electorate, composed of three private lawyers authorized to order U.S. taxpayer compensation for “expected future profits” that the corporations claim they would have earned if not for the challenged chemical safety policies.

Recognizing the threat that ISDS poses to the autonomy of U.S. states to regulate in the public interest, the National Conference of State Legislatures (NCSL), a bipartisan association representing state legislatures, has repeatedly stated it will oppose any deal that includes ISDS.

“The unpopular proposal to include ISDS in TTIP would force the public and their representatives to decide between compensating corporate polluters for lost profits due to stronger laws, or continuing to bear the health, economic and social burdens of pollution,” stated the July 2014 letter from more than 100 organizations.

To launch ISDS attacks against U.S. states’ chemical safety measures under TAFTA, European chemical firms would just need to have an investment in the United States – a broad criterion that many of the largest firms easily fulfil.

BASF, the world’s largest chemical company, is based in Germany but has 66 subsidiaries in the United States.  BASF has particularly large facilities in 20 states, including Arkansas, Colorado, Connecticut, Delaware, Florida, Kentucky, Louisiana, Michigan, New Jersey, New York, North Carolina, Pennsylvania, Tennessee, and South Carolina.  Each of these states has considered new chemical safety legislation this year, the likes of which BASF would be empowered to challenge before extrajudicial tribunals under TAFTA.

As a major supplier of chemicals to the U.S. market, BASF has already actively lobbied the U.S. Congress specifically to halt proposed restrictions on chemicals that it manufactures.  In 2014 alone, BASF has spent $2.3 million to lobby Congress on chemicals-related policies. TAFTA would give BASF a new tool to chill the development of U.S. chemical safety measures.

Other European chemical corporations have facilities scattered throughout the United States, manufacturing products ranging from synthetic fibers to rubber chemicals to pesticides.  Bayer, based in Germany, has subsidiaries in nine U.S. states, seven of which have been considering pending chemical safety legislation this year.  Royal Dutch Shell, headquartered in the Netherlands, has a U.S.-based chemical division that claims to make “approximately 20 billion pounds of chemicals annually, which are sold primarily to industrial markets in the United States.”  Shell’s U.S. chemicals division has facilities in Louisiana, which has been enacting new chemical safety measures. Were such new state-level regulations to be imposed on these corporations’ products out of concern for chemical safety, they would be empowered under TAFTA to demand taxpayer compensation.

Fifteen states, for example, are currently considering legislation related to a notorious chemical called bisphenol A, or BPA.  BPA has been identified as an endocrine disruptor, a class of chemicals that, according to the National Institutes of Health, “may interfere with the body’s endocrine system and produce adverse developmental, reproductive, neurological, and immune effects in both humans and wildlife.” BPA is used extensively as a plastics coating and hardener in food and beverage containers, including water bottles and the lining of metal cans. BPA can seep into the foods and beverages it contains, leading to human consumption.

Though usage of BPA in baby bottles, pacifiers, and other baby products wasphased out in recent years due to broad consumer concerns and government reports of potentially harmful impacts on infants’ development, BPA is still widely used in other consumer products.  Recent studies have continued to indicate health concerns for adults, including a 2014 Duke Medicine studyfinding that BPA stimulates the growth of breast cancer cells and lowers the efficacy of cancer treatments.  Another study this year, from the University of Cincinnati, finds a link between BPA levels in men and prostate cancer.

According to the NCSL, 12 states and the District of Columbia have enacted BPA restrictions thus far, including, for example, bans on BPA in reusable food containers and thermoses. With 15 states considering additional BPA-related protections just this year, we are likely to see more states enact policies to limit consumers’ exposure to this toxin.

The risk is real that such policies could become the target of ISDS attacks by European chemical firms under TAFTA.  Some of these firms, including ones with investments in the United States, have already been lobbying against BPA restrictions in Europe for years.  Bayer is even a member of an industry alliance known as the BPA Coalition, dedicated to convincing the public and policymakers “that the safe use of BPA poses no known health risk to people.”

Might such firms be interested in using TAFTA to demand U.S. taxpayer compensation for new efforts to keep our water bottles free of carcinogens?  Let’s not find out.

Patrick Gleeson is Trade and Policy Researcher for Public Citizen’s Global Trade Watch. Learn more at www.TradeWatch.org.

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