Can Europe Make It?

What we talk about when we talk about TTIP

Both pro and anti-TTIP camps have pitched their tents, but their respective points of reference are worlds apart. We need to be clear about what exactly we're discussing here.

Sam Lowe
5 November 2015

Part of the anti-TTIP camp. Image from War on Want.The debate about the Transatlantic Trade and Investment Partnership (TTIP) – a bilateral trade agreement currently being negotiated between the EU and US - has often brought out the worst in people. Opponents have misconstrued and drifted into ad-hominem, proponents have patronised and belittled. Few involved have emerged hands clean, myself included.

Both camps have pitched their tents upon a unifying acronym, but the respective points of reference are worlds apart. Neither is discussing the same thing. Advocates of TTIP see it as a simple trade agreement; its opponents want to save the world.

Yet even the most ardent critic would likely concede that in a globalised world facing global problems it is not possible for national governments to act entirely off their own volition. All international agreements put constraints on governments, almost by definition.

But trade agreements stand in a league of their own.

Unlike most international agreements - such as the UN Framework Convention on Climate Change or the International Labour Organisation conventions - which have weak enforcement mechanisms, trade policy bites.

TTIP’s teeth come embossed with the letters ISDS; an arbitration mechanism that allows foreign companies to sue national governments for millions if a public policy decision is deemed to impede their ability to profit. Averaging $8 million dollars a case, and with awards rising as high as $50 billion, these lawsuits are known to have a chilling effect on government action.

Furthermore, while trade agreements have traditionally sought to reduce import taxes and guard again government discrimination, TTIP intends to go even further. The Centre for Economic Policy Research forecast that up to 80% of the potential benefits of TTIP will come from cutting costs imposed by ‘red-tape’, bureaucracy and regulations, known as non-tariff barriers to trade (NTBs). For example, the US and EU regulate food safety very differently, meaning certain US products can’t be sold in the EU and vice versa. If both parties were to agree on one joint standard, the barrier would disappear and food could flow freely across the Atlantic.

All this may indeed reduce costs for business. However, any policy that increases the ability of exporters and investors to shape and steer EU and domestic regulation comes laced with risk.

To quote Harvard Economist Dani Rodrik:

“In the TTIP, the reduction of so-called non-tariff barriers to trade between the US and Europe will almost certainly restrict the space for domestic regulatory action. Even if regulatory harmonization does not create a race to the bottom, the interests of investors and exporters will cast a longer shadow than before over social and environmental goals.”

As the TTIP negotiations have progressed, we have caught glimpses of what increased investor and exporter influence looks like:

Using the US Trade Representative as their transmission vessel, and TTIP as leverage, industry groups have already succeeded in undermining EU climate legislation designed to reduce the greenhouse gas emissions of transport fuels, and preventing the regulation of endocrine disrupting chemical usage in pesticides.

It boils down to a question of perspective.

If you approach the issue narrowly. If you believe that the reduction of trade frictions and heavy handed government regulation is an absolute global priority then yes, I can see why TTIP appeals. But please don’t deny that purposefully increasing the influence of self-interested investors and exporters over the regulatory process represents a gamble. And for heaven’s sake, stop with the claims that TTIP can be both massive in scope and minimally disruptive. It can’t.

The public debate has never been about whether TTIP will result in a relatively small increase in the number of goods and services traded across the Atlantic. It is about something much bigger. It is about what kind of world we want to live in, what our economy is actually for, and whether TTIP will hinder, or help. 

Ultimately, people on both sides may aspire to similar things. But aspiration is not enough. So long as those standing behind TTIP continue to treat trade policy as distinct from all other global concerns, and ignore the wider implications, the debate will only become more toxic.

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