This report on Transatlantic Trade and Investment Partnership (TTIP) explains history and content of the deal, advantages and disadvantages of the deal, groups and parties in favour and against the deal and wider implications of TTIP on globalisation.
What is the TTIP and how did it come about?
Leaders at the EU-US summit of November 2011 set up a working group to find ways to increase growth and competitiveness, given shared concerns over economic stagnation and frustration at the lack of progress in the Doha round of multilateral trade negotiations. The working group finalised their report in February 2013, recommending a “comprehensive” bilateral trade agreement, which later became known as TTIP.
TTIP is a comprehensive free trade and investment treaty currently being negotiated – in secret – between the European Union and the USA. As officials from both sides acknowledge, the main goal of TTIP is to remove regulatory ‘barriers’ which restrict the potential profits to be made by transnational corporations on both sides of the Atlantic.
Tariffs between the EU and US are already low – averaging around 3% – and both sides foresee they will be eliminated under the agreement. The main focus of negotiations is on harmonising regulations, reducing “non-tariff barriers” to trade, or getting rid of them if they’re deemed unnecessary. For example United States and EU regulators have different requirements for testing the safety of cars, drugs and soft furnishings. Going through the different tests is expensive for firms, particularly in developing new medicines. TTIP aims to reduce those costs by bringing in common standards. Other areas being contemplated include protection for foreign investors, co-operation to achieve greater participation by small businesses in EU-US trade and a controversial procedure to resolve investment disputes between the US and EU.
Who supports TTIP and what do they say it will achieve?
The supporters of TTIP such as British government claims TTIP could add £10bn to the UK economy, £80bn to the US and £100bn to the EU every year. It says shoppers would benefit by the removal of EU import tariffs on popular goods, such as jeans and cars. It’s also claimed that reducing regulation would help UK businesses export to the US, with small businesses in particular predicted to benefit. Supporters say restrictive markets would be opened up; for example, currently British lamb and venison cannot be exported to the US. David Cameron has promised to put “rocket boosters” behind talks to secure the deal, saying TTIP is central to his vision of a reformed competitive Europe. TTIP is also supported by the Liberal Democrats. Labour, UKIP and the SNP broadly support it with caveats over the NHS. Plaid Cymru is more sceptical and the Green Party is strongly opposed.
The UK Prime Minister David Cameron is openly in favour of the deal and his view regarding TTIP is as follow: “The opportunities for Britain of trading more with the United States of America are clear…Two million extra jobs, more choice and lower prices in our shops. We’re talking about what could be the biggest bilateral trade deal in history, a deal which will have a greater impact than all the other trade deals on the table put together… We’ve signed trade deal after trade deal and it’s never been a problem in the past. Some people argue in some way this could damage the NHS. I think that is nonsense. It’s our National Health Service. It’s in the public sector, it will stay in the public sector. That’s not going to change. It will remain free at the point of use.”
The Confederation of British Industry (CBI), the UK’s leading business group, is urging European national governments to deliver an ambitious agreement that could create thousands of jobs across the Continent. It is doing so in conjunction with its sister business federations in Germany, Italy, Spain, France, Sweden, Denmark, Finland and Latvia.
The European Business Alliance for TTIP which represents key industry associations was formed recently at the European Business Summit to educate and advocate for the successful conclusion of TTIP. Marking its anniversary, the Alliance highlights five reasons to support TTIP:
First reason is economic growth and consumer benefits. An ambitious TTIP agreement would not only increase the size of the EU and U.S. economies by €120 billion and €95 billion respectively. It would also lower compliance costs for companies leading to lower retail prices and more product choices for consumers on both sides of the Atlantic.
Setting global standards is second reason: Convergent standards across the Atlantic would help to preserve transatlantic leadership and ensure that American and European companies remain standard-setters rather than becoming standard-takers. A transatlantic partnership based on trust, transparency and common principles would be further strengthened.
Thirdly TTIP helps in job creation. Increases in export and investment opportunities would create new jobs in both economic regions. Existing free-trade agreements show that trade liberalisation generates long-term economic prosperity for partner states. A comprehensive TTIP could positively affect the mobility of skilled and specialised professionals.
Fourth reason is increase in competitiveness and innovation. A comprehensive TTIP agreement would accelerate innovation, research and development by creating new business opportunities and enhancing the competitiveness of European and American companies in the international trading system.
Finally investment boost to both sides. Investment is the key driver of the transatlantic economy with the EU and U.S. Being each other’s primary source of foreign direct investment, TTIP would create new opportunities and incentives for companies to invest in the transatlantic marketplace.
Opposition to TTIP
Much of the opposition to TTIP in the UK and other EU countries including Germany is focused on its provisions for “investor-state dispute settlement” (ISDS). This procedure would allow companies to sue foreign governments over claims of unfair treatment and to be entitled to compensation. Critics say these measures undermine the power of national governments to act in the interests of their citizens and make it weak in the eyes of giant companies. Take Australia as an example which signed an investment treaty with Hong Kong in 1993. When Australia’s federal government introduced legislation to enforce plain cigarette packaging, the Asian arm of the cigarette company Philip Morris used the treaty to sue it.
Campaigners against TTIP see the proposed trade deal is a huge threat to their way of democracy and sovereignty. Natalie Bennett, Green Party leader, who is against the TTIP, clearly explains her party view by saying “We have seen the UK participating in a disastrous race to the bottom on corporate tax rates and wages. We must not also walk into lowering our workers’ rights, environmental standards and food health standards. Chicken carcasses washed in bleach, hormone-stuffed beef and open season on pollution are not things we want to import from the US.”.
Campaigners against TTIP outline six reasons for us to why we should be scared of TTIP:
Firstly public services, especially the NHS, are in the firing line. One of the main aims of TTIP is to open up Europe’s public health, education and water services to US companies. This could essentially mean the privatisation of the NHS. The European Commission has claimed that public services will be kept out of TTIP. However, according to the Huffington Post, the UK Trade Minister Lord Livingston has admitted that talks about the NHS were still on the table.
Second threat is to food and environmental safety. TTIP’s regulatory convergence agenda will seek to bring EU standards on food safety and the environment closer to those of the US. But US regulations are much less strict, with 70 per cent of all processed foods sold in US supermarkets now containing genetically modified ingredients. By contrast, the EU allows virtually no GM foods. The US also has far laxer restrictions on the use of pesticides. It also uses growth hormones in its beef which are restricted in Europe due to links to cancer. US farmers have tried to have these restrictions lifted repeatedly in the past through the World Trade Organisation and it is likely that they will use TTIP to do so again. The same goes for the environment, where the EU’s REACH regulations are far tougher on potentially toxic substances. In Europe a company has to prove a substance is safe before it can be used; in the US the opposite is true: any substance can be used until it is proven unsafe. As an example, the EU currently bans 1,200 substances from use in cosmetics; the US just 12.
Banking regulations changes in another threat. The UK, under the influence of the all-powerful City of London, is thought to be seeking a loosening of US banking regulations. America’s financial rules are tougher than ours. They were put into place after the financial crisis to directly curb the powers of bankers and avoid a similar crisis happening again. TTIP, it is feared, will remove those restrictions, effectively handing all those powers back to the bankers.
Another threat is to the right of privacy. Most of us remember ACTA (the Anti-Counterfeiting Trade Agreement). It was thrown out by a massive majority in the European Parliament in 2012 after a huge public backlash against what was rightly seen as an attack on individual privacy where internet service providers would be required to monitor people’s online activity. Well, it’s feared that TTIP could be bringing back ACTA’s central elements, proving that if the democratic approach doesn’t work, there’s always the back door. An easing of data privacy laws and a restriction of public access to pharmaceutical companies’ clinical trials are also thought to be on the cards. Jobs cut if another fear.
The EU has admitted that TTIP will probably cause unemployment as jobs switch to the US, where labour standards and trade union rights are lower. It has even advised EU members to draw on European support funds to compensate for the expected unemployment. Examples from other similar bi-lateral trade agreements around the world support the case for job losses. The North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico caused the loss of one million US jobs over 12 years, instead of the hundreds of thousands of extra that were promised.
Finally threat to democracy. TTIP’s biggest threat to society is its inherent assault on democracy. One of the main aims of TTIP is the introduction of Investor-State Dispute Settlements (ISDS), which allow companies to sue governments if those governments’ policies cause a loss of profits. In effect it means unelected transnational corporations can dictate the policies of democratically elected governments. ISDSs are already in place in other bi-lateral trade agreements around the world and have led to such injustices as in Germany where Swedish energy company Vattenfall is suing the German government for billions of dollars over its decision to phase out nuclear power plants in the wake of the Fukushima disaster in Japan.
Here we see a public health policy put into place by a democratically elected government being threatened by an energy giant because of a potential loss of profit. Nothing could be more cynically anti-democratic. There are around 500 similar cases of businesses versus nations going on around the world at the moment and they are all taking place before ‘arbitration tribunals’ made up of corporate lawyers appointed on an ad hoc basis, which according to War on Want’s John Hilary, are “little more than kangaroo courts” with “a vested interest in ruling in favour of business.
To conclude TTIP is correctly understood not as a negotiation between two competing trading partners, but as an attempt by transnational corporations to prise open and deregulate markets on both sides of the Atlantic. There is a growing body of concern among EU and US citizens at the threats posed by TTIP, and civil society groups are now joining forces with academics, parliamentarians and others to prevent pro-business government officials from signing away the key social and environmental standards listed above. All people are encouraged to join this resistance by getting in touch with their local campaigns – or starting their own.
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