The TTIP promises major benefits to the EU and US, but can it possibly live up to the hype, removing barriers to trade between the continents and benefiting both. Peter O’Dwyer reports.
A golden opportunity to bolster Europe’s position at the centre of the world economy or a full-frontal attack on democracy further empowering the world’s largest corporations? The proposed Transatlantic Trade and Investment Partnership is a topic of fierce debate that shows no sign of abating.
TTIP, used in preference to the proposed free trade agreement’s rather unwieldy full title, is perhaps the most rigorously debated acronym in the world right now, drawing the ire of Americans and Europeans, supporters and protesters alike.
In essence, the proposal is to remove both tariff and non-tariff barriers in order to boost trade between the EU and US to the mutual benefit of both.
However, that contention is far from universally accepted, with those in opposition to TTIP not only disputing its alleged benefits but drawing attention to what they see as a dangerous empowerment of corporates to subvert democratic government and undermine national sovereignty, and the secretive manner in which negotiations have taken place to date.
Proponents — including EU trade commissioner Cecilia Malmström and the commission’s second-in-command, Frans Timmerman — describe TTIP in terms of a great unravelling of red tape from which growth, jobs, and greater prosperity will tumble.
An EU-commissioned assessment of the potential impact of TTIP by the London-based Centre for Economic Policy Research suggested the EU economy could benefit to the tune of €199bn a year — or €545 extra in the pockets of every family of four in the EU, hard-pressed, austerity-worn Irish families included. Similarly, a US family would do even better from the deal, raking in an extra €655 a year.
Furthermore, while EU-US tariffs are generally accepted as being relatively low, their removal would have a significantly positive impact on economic growth and jobs given the sheer scale of the two economic powerhouses. And getting rid of that cumbersome red tape would equate goods 10%-20% cheaper, the report found.
Ibec — the representative body for business here — is sufficiently satisfied that the proposed free trade agreement fits within its stated objectives to throw its weight behind TTIP.
“We see it as having great potential in supporting job creation in Europe and the US; it would be an unparalleled trade and investment agreement,” says Ibec head of international relations and trade Pat Ivory.
“There is a range of tariffs that could be reduced to bring cheaper products to market but the main benefit is in terms of non-tariff barriers… studies would indicate a gain in growth here as a result of the elimination of tariff and non-tariff barriers twice the average of the EU that would support exports and real wages across a number of sectors.”
The current duplication of regulation and inspection is unnecessarily burdensome and could be streamlined to be mutually recognised on both sides of the Atlantic, Mr Ivory argues, adding that such a move would not result in a loosening of standards or deficient regulation.
Not everyone agrees, though.
For starters, the figures produced by the Centre for Economic Policy Research and others are strongly disputed by a range of commentators, including the US Public Citizen’s Global Trade Watch, on the basis that such projections are based on dubiously optimistic assumptions.
The group points to research that has found no empirical evidence of causation between dynamic economic growth and the sort of tariff reductions being proposed, adding that even the commission has effectively ruled out deregulation of certain key sectors such as chemicals, which was identified as the second-most important contributor of gains in the centre’s calculations.
It also suggests that, at a conservative estimate, more than a million workers will lose their jobs if TTIP is implemented, citing a commission report which found “there could be prolonged and substantial adjustment costs” as a result of a relatively immobile labour force. However, the same report also suggests that TTIP would contribute to the protection of employment in Europe by reducing the risk of diminishing US investment in Europe.
The US, naysayers add, has been down this road before with the North American Free Trade Agreement (Nafta) signed by Canada, the US, and Mexico in 1994, which they say failed to produce the sort of rewards that had been promised.
“In the context of Nafta, we were promised huge boosts in jobs et cetera and what we saw was exactly the opposite in the United States so we’ve seen these models before and seen them not play out as promised,” says Public Citizen international campaign director Melinda St Louis.
“We’re concerned just very much about what [TTIP] could mean for consumer protections and our abilities to regulate in the public interest without undue influence by large corporations who we understand, in the US context, have practically a seat at the table… Whereas the majority of the public and even most of our elected representative have no actual input in the process.”
That, for many, is the crux of the issue, regardless of the accuracy of economic projections. The so-called investor-state dispute settlement, included in preliminary negotiations, which could empower corporations to sue sovereigns outside of national judicial systems is, for some, the warning light shining brightest that TTIP will turn into an unseemly ongoing battle between country and corporate from which citizens will ultimately lose.
Proponents say the settlement is critical to protect investor interests and point to the 9,000 such agreements operating globally. Critics counter with examples of the disputes already unfolding such as those in Australia, Argentina, El Salvador, and Canada, where corporations have flexed their considerable legal muscle.
In the Canadian case, US drugmaker Eli Lilly sought $500m (€405.6m) in compensation through Nafta following a Canadian court’s decision to revoke two of its patents. In a post-crash world increasingly sceptical of corporate motives but simultaneously searching for the silver bullet to its economic woes, the allure and apprehension around TTIP isn’t hard to understand.
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