TTIPing off the Oil companies

The European Union’s trade commissioner, Karel de Gucht, told the multinational oil company ExxonMobil that the Transatlantic Trade and Investment Partnership (TTIP) ‘free trade’ pact being negotiated with the US would help remove obstacles to fossil fuel development in Africa and South America, documents obtained by the Guardian reveal. He told the firm that TTIP could address its concerns about regulations in developing countries that restrict the company’s activities.

According to minutes of the October meeting, the hour-long conversation focused on shale gas; “geopolitical aspects”; EU plans to label tar sands as high-polluting; and a possible reconversion of ExxonMobil’s liquefied natural gas (LNG) import terminal in the US to export crude to Europe. This would be “costly and may take two-three years,” the minutes said. Heavily redacted records show that two officials from Exxon’s US and EU regions were present in the room with de Gucht, the then-trade commissioner, Claes Bengtsson, his cabinet member, and two other unidentified individuals. The commission was keen to point out the advantages that a TTIP deal could offer ExxonMobil, with respect to countries not party to the trade deal.

“TTIP is perhaps more relevant as setting a precedent vis-a-vis third countries than governing trade and investment bilaterally,” the paper says. “We think that this third country element is in the interest of the energy sector, and especially globally active companies like Shell or Exxonmobil. After all, companies like Shell or Exxonmobil face the same trade barriers when doing business in Africa, in Russia or in South America.” The commission was in effect saying that once the trade deal was in place, other countries outside it would be progressively forced to adopt the same measures, making it easier for companies such as ExxonMobil to expand into their markets. At the time that the brief was written, several countries in the “global south” were tightening regulations on fossil fuel companies for the first time in a decade, despite ExxonMobil’s ambitions to open up shale gas fracking wells in North Africa, Asia and South America. The briefing paper said that the TTIP talks were a unique chance to write a new rule-book for global trade that “could serve as a model for subsequent negotiations involving third countries”.

John Hilary, the executive director of the campaign group War on Want, accused the commission of overstepping its mandate in the talks. “It is tantamount to corruption that the European commission should be prepared to work hand in glove with such vested interests in crafting deals that will have a profound effect on our environment. The commission’s clear priority is establishing a template for all future deals,” Hilary said. “It is critical because it means that no countries will be able to tighten the regulatory regime on fossil fuel companies operating on their territories.”

Dr Valérie Marcel, associate energy fellow at Chatham House, said that in late 2013, fossil fuel firms had been increasingly fearful that the long-term investment climate was changing. “There was a growing trend of producing countries wanting to capture maximum windfalls from petroleum projects,” she said. “They were imposing windfall taxes or threatening to change contractual terms, so they [the oil companies] probably wanted to put political pressure on those governments.”

Steve Kretzmann, the director of the campaign group Oil Change International, described the commission’s behaviour as a “scandalous” attempt to liberalise the global crude market that went beyond shale gas and shale oil. “I see it as standard setting because it would allow the EU to place greater diplomatic and political pressure on those [developing] countries to lower all their trade barriers,” he said. “If the US is not doing this protective policy anymore you shouldn’t either.”