The impact of EU free trade agreements on public services

Duration 2014–2016

Institute Research Institute for Urban Management and Governance

Department Department of Socioeconomics

Austrian Association for Public and Social Economy, Austrian Association of Cities and Towns, Vienna Chamber of Labor, younion

The European Union is currently negotiating free trade agreements with a number of countries that go well beyond liberalizing traditional trade in goods and services. The TTIP and CETA negotiations have been subject to especially fierce public criticism, in part because they were conducted behind closed doors for a long time, and in part because of fundamental disagreement regarding potential benefits and risks. From a legal perspective, many of the issues raised involve complex legal questions, such as whether investor-state arbitration is compatible with EU law. Aside from the controversial issue of investor-state arbitration, the debate has focused in particular on the agreements’ potential effects on the organization, provision, and financing of public services. These public services traditionally play an important role in the Austrian welfare state.

The research identified provisions potentially affecting the organization and provision of public services and showed how free trade agreements increase the regulatory complexity for local, regional, and national governments when providing public services.

The aim of the research project was to identify and analyze the various challenges posed by the so-called free trade agreements of a new generation. This included a systematic analysis of the complex regulatory structures and the interactions of different treaty chapters and mechanisms. Based on the CETA text (as negotiated at the time), the analysis aimed at identifying concrete provisions which could affect the policy space for the organization and provision of public services. Apart from an analysis of the potential effects of the planned investment protection regime, the analysis included, among other things, a sector-specific assessment of the effects on public procurement. The results showed that CETA and similar agreements significantly increase the regulatory complexity for local, regional and national governments when providing public services. The research project also included a detailed analysis of the division of competences between the EU and member states in the fields of international trade and investment policy.

The research results on the distribution of competences between the EU and member states informed policies and legislation and were even cited by the German Federal Constitutional Court.

The project has succeeded in making a highly complex topic accessible to a diverse audience and the interested public in a legally sound way, thus contributing to a more objective discussion. Verena Madner contributed to various Austrian media formats (ORF, Der Standard), and the study was also quoted in the Luxembourg “Tageblatt” and “Le Quotidien.” In addition to numerous discussions with representatives from politics and civil society, the project also advised local governments on drafting effective information materials. The detailed analysis of the division of competences between the EU and member states in the fields of international trade and investment policy generated by the research had a noticeable impact on politics and legislation. Verena Madner presented her findings to the Austrian National Council as part of a parliamentary expert hearing on free trade agreements, pointing out the plethora of legal and interpretative issues raised by free trade agreements like CETA. In an important ruling, the German Federal Constitutional Court cited a paper by Stefan Mayr on the division of competences between the EU and member states (BVerfG October 13, 2016, 2 BvR 1368/16 and others). The results of the research contribute to strengthening institutions and international cooperation (SDG 16 “Peace, Justice and Strong Institutions” and SDG 17 “Partnerships for the Goals”) and promote fair interactions in international trade.

Content analysis of current EU free trade agreements

Detailed insights into the division of competences between the EU and the member states in the fields of international trade and investment policy

Contributions to a more rational and balanced discourse on free trade agreements