TTIP and the NHS

20 May 2016
In brief: The proposed EU-US trade deal known as TTIP might have implications for public services, but EU officials want to include wording designed to keep governments free to run services like the NHS. This should stop the NHS from having to be opened up to US companies, although it may still mean that undoing NHS privatisation in future is more expensive. That would depend on what an international court makes of the agreement, which is still being negotiated.

The European Union is negotiating a trade agreement with the United States, on behalf of the UK and the other EU member countries.

Much of the debate about this Transatlantic Trade and Investment Partnership (TTIP, pronounced 'tee-tip') has been about its potential impact on the NHS.

Opponents of TTIP argue that including healthcare in the agreement will force the privatisation of the NHS, or at least make privatisation impossible to reverse.

"European Commission"

The Commission proposes new laws, and is also the EU’s bureaucracy that implements the laws that have been enacted. Commissioners, who have normally been national politicians, are nominated by their government, but must advance the overall EU interest and not that of any one country.

There’s no final text to look at, and the legal issues involved are complicated. It comes down to trust: the European Commission has consistently said that the terms it’s negotiating will keep the NHS safe from privatisation.

The government’s position is that nothing in TTIP will affect its ability to make decisions on the NHS.

For the NHS to be at risk, the Commission would have to be hiding something, or (as has been argued) simply mistaken about whether there's a loophole in the terms it proposes. That’s something we can’t be sure of until the final wording is put to the test.

What’s TTIP all about?

Countries sign these kinds of agreements to “create a better climate for the development of trade”.

The general idea is to make it easier for European firms to trade with and invest in America, and for US firms to do business in Europe.

One aim of TTIP is to reduce or remove tariffs (import taxes) between the EU and US. Another is to either align standards and regulations or get rid of them altogether.

US businesses would also be guaranteed 'market access' to sell services in Europe, and given 'national treatment'—putting them on a par with European companies. The same goes the other way round.

What’s this got to do with the NHS?

Market access means that monopolies must be abolished. These include public services that are provided by the state or by a limited number of suppliers—like the NHS. If the EU or an individual government doesn't want to open its public services to wider competition, it must specify that they’re not covered.

Including public services in the agreement, subject to exemptions, has been criticised by campaigners who argue it puts them at risk of forced privatisation.

The agreement would also try to encourage investment by giving investors extra legal protections. Among other things, EU governments would guarantee ‘fair and equitable treatment’ for US firms, as well as promising not to take their property without compensation (‘expropriation’).

Campaigners worry that this would allow a US firm that owned a stake in an English hospital to sue under the agreement if it were nationalised.

The EU says that public health services won’t be affected by TTIP

The European Commission has said that it will include "tried and tested" provisions in TTIP that will ensure governments have freedom to organise their health services how they wish.

First, it wants the deal to include an exception for services provided "in the exercise of governmental authority".

The Commission also points to the statement that  “public utilities”—including health services—can be provided by a state monopoly or can be limited to a certain number of private providers.

More specifically, it wants the agreement to say that EU countries reserve the right to exclude foreign companies from "health services which receive public funding or State support in any form and are therefore not considered to be privately funded".

And the Commission wants to include a statement that investment protection doesn’t affect the right of governments to pursue “legitimate policy objectives such as... public health”.

All these wordings are intended to allow EU governments to keep their health services public, or nationalise them in future.

The EU trade commissioner has written to the government saying that “there is no reason to fear either for the NHS as it stands today or for changes to the NHS in future, as a result of TTIP”.

In March 2015, EU and US negotiators released a joint statement saying that "US and EU trade agreements do not prevent governments... from providing or supporting services" in areas including health, and don't force the privatisation of public services.

The role of 'secret courts'

Opponents like trade union Unite say that companies could use 'secret courts' to exploit any uncertainties in the law.

This refers to investor-state dispute settlement, or ISDS. Almost all existing agreements involving guarantees to foreign investors use it.

ISDS allows companies that have invested in a foreign country to claim compensation for breach of the agreement in an arbitration tribunal, instead of taking action in local courts or relying on their government to step in.

The arbitrators are usually commercial lawyers and academic experts in international law. Unlike a judge in a British court, they often double up: acting as an advocate for a government or company in one case, handing down decisions in another.

These tribunals have been criticised for being secretive and favouring business over the public interest. The EU wants to set up a permanent Investment Court, with an appeal system, to resolve disputes under TTIP.

Could a tribunal rule against the government on the NHS?

Not all of the exemptions the EU points to are necessarily robust.

Many international lawyers think that the “governmental authority” exception doesn't exempt most public services, for instance.

Tribunals have also decided in the past that a country’s ‘right to regulate’ isn’t a catch-all defence against compensation claims.

In other decisions, they’ve said that changes in law and regulations which occur after an investment has been made can result in compensation if an investor had built up a “legitimate expectation” of stability.

The Commission has tried to head off these avenues of attack in its proposed TTIP wording.

A tribunal decision against Slovakia in 2012 found that a ban on profits in its health insurance market was a breach of the guarantee of “fair and equitable treatment” and an “expropriation”. It stressed that this was because of the way it was introduced and the lack of compensation for the Dutch investor, not the.fact that it was done in the first place.

Campaigners also point to legal advice commissioned by Unite, which concludes that “TTIP poses a real and serious risk to future [government] decision-making in respect of the NHS”.

The lawyers argue that TTIP would provide more opportunities for a company to sue over its assets being privatised than under existing laws, and raise the costs of future NHS nationalisation.

While a tribunal can't force a government to change its laws or policies, the compensation awarded may have a “chilling effect” on its decisions. The Commission says that compensation has been addressed in TTIP, and has responded with competing legal advice.

In any case, Unite’s advice doesn’t suggest that the NHS could be forcibly privatised because of TTIP. All things considered, that seems unlikely.

What can the government do?

Unite’s legal advice suggests that the government push for a specific reference to the NHS in the text of TTIP.

Alternatively, it could write an exemption in the annex, along the lines of “The UK reserves the right to adopt or maintain any measure with regard to the organisation, the funding and the provision of the National Health Service in the UK”.

The government and Commission both argue that this simply isn’t necessary. At the same time, there wouldn’t be any harm in adding this in just to be sure.

TTIP will probably have to be ratified by all member countries, as well as by the EU. The European Commission has said that “there will most likely be a number of elements that will require ratification by national parliaments”, and the government agrees.

That would mean that British ministers would in theory be able to veto TTIP, and MPs would be able to delay it.

Update 20 May 2016

We revised and updated the previous version of this article, dated April 2015.

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