EU told ExxonMobil that TTIP would aid global expansion, documents reveal
The Guardian | 23 February 2016
EU told ExxonMobil that TTIP would aid global expansion, documents reveal
by Arthur Neslen
The European Union’s trade commissioner told the multinational oil company ExxonMobil that a major free trade deal being negotiated with the US would help remove obstacles to fossil fuel development in Africa and South America, documents obtained by the Guardian reveal.
At a meeting in Brussels in October 2013, Karel de Gucht told the firm that the Transatlantic Trade and Investment Partnership (TTIP) could address its concerns about regulations in developing countries that restrict the company’s activities.
The news emerged as a Greenpeace barricade delayed the resumption of talks between EU and US delegations on the TTIP deal, which both sides hope can be completed before President Obama leaves office next January.
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.
According to a briefing paper for de Gucht, released to the Guardian under access to documents laws, 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.
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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,” he told the Guardian.
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”.
“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.”
ExxonMobil’s public response was to protest against regulatory frameworks, financial incentives and “protectionist policies,” which it said were holding industry back. It also called on the US to end its ban on exports of crude oil and LNG.
This was a position the firm shared with the EU, and which informed debate at the meeting whose minutes the commission redacted because they “reveal possible strategies that the commission may adopt in the ongoing negotiations,” according to documents previously released to the Guardian.
Greenpeace activists block the main entrance of a conference centre where negotiators are expected to discuss the 12th round of the TTIP in Brussels.
But commission officials deny offering ExxonMobil any advantages and, while declining comment on the discussions, insist that trade reform is needed.
“EU and US companies face discrimination when they need access to resources,” a commission spokesman told the Guardian. “Once they have produced the energy goods, they do not get access to the grid, or access at less favourable conditions. Energy resource countries supply energy resources at below market prices to their domestic industry. The EU and US industry is put at a disadvantage.”
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.”
ExxonMobil would not respond directly to questions about the meeting. But Nikolaas Baeckelmans, the company’s vice-president of EU affairs, said: “ExxonMobil supports an open, unbiased, and rules-based trade and investment system. We see that as essential to global free enterprise and to promoting alignment of business interests, productivity, and economic growth.”
