From across the pond: transatlantic trade and the public services


By Mohammed Hans, CIPFA Procurement and Commissioning Network advisor

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement currently being negotiated between the European Union and the United States. 

Although much of the detail is still being negotiated it is important for senior local authorities to be aware of the possible changes this agreement could have for their service delivery. Public services, especially the NHS, are all subject to this agreement and commentators have agreed that it brings with it both threats and opportunities.

The debate 

Central to the EU’s negotiations is the expectation that TTIP will give European suppliers access to lucrative US public procurement contracts. By creating the world’s largest bilateral free trade agreement supporters claim that it will lead to increased trade and stimulate growth and job creation on both sides of the Atlantic. Removing unnecessary barriers to market access and investment is a key objective.

Better choice, better value? 

Opening up the EU and US public procurement markets to increased competition may result in better value for taxpayers and wider choice, as it could generate increased competition among EU and US companies. However, opponents are concerned at the prospect that certain services such as health, education, social welfare and perhaps utilities like water could be outsourced to US companies, which subsequently results in backdoor privatisation of these vital public services. 

Public sector legal challenges 

One key area of concern is the inclusion of clauses relating to investor–state dispute settlement (ISDS) that are written into international free trade agreements. They are included to increase protection for transnational investors and give investors the right to bring a damages claim against the government of the ‘host’ state where the investment is located. 

This would potentially give multinational US corporations the right to use extrajudicial tribunals and sue the UK government if it introduced any new legislation that could, even unknowingly, damage a corporation’s investment, including its expected future profits. 

Any attempt to ringfence the service from open competition could be challenged by US companies under ISDS, on the basis that such regulation is a ‘barrier to trade’, and could result in huge compensation payments that would divert much needed cash from the delivery of already stretched public services. 

  • CIPFA intends to keep all its members and those interested up to date as this agenda unfolds. A detailed piece on TTIP is available through the CPCN website if you are a subscriber to this Network. Alternatively, if you have any comments or wish to contribute to the discussion please contact Mohammed Hans, CIPFA’s procurement advisor.