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TTIP • EU • Trade

TTIP’s false progressive promise

Ferdi De Ville and Gabriel Siles-Brügge - 23 April 2015

TTIP’s advocates tout the agreement’s potential to generate significant ‘growth and jobs’ and to set high global standards. A new approach will have to be taken to the negotiations for the agreement to deliver these goals

The Transatlantic Trade and Investment Partnership (TTIP) negotiations, which are intended to establish a free trade agreement between the US and the EU, have sparked controversy in Europe like few other trade negotiations. For its advocates, TTIP is a “no-brainer”, generating vast growth and entrenching transatlantic leadership of the global economy. For many of TTIP’s critics, the agreement represents “a full frontal assault on democracy” likely to substantially undermine levels of social and environmental protection – enabling, amongst other things, imports of previously banned foods such as chickens washed in chlorine or hormone-treated beef.

The agreement’s potential provisions for investor-state dispute settlement, which would allow foreign firms to sue governments for perceived violation of their investor rights, have attracted the most opprobrium – including from leading social democrats. The position of many centre-left politicians in Europe has been of hedged support for TTIP, provided it does not include the investor-state dispute settlement nor dilute standards when it comes to the likes of worker rights or food safety.

Away from the headlines about “corporate tribunals” and “chlorinated chicken”, is TTIP likely to deliver for progressive politics? While the negotiations are naturally still on-going, and not all relevant documents are available for viewing, we can already begin to draw some conclusions about TTIP’s likely impact.

For one, the agreement is said by its advocates to generate extra growth of €119bn for the EU, or €545 per family (by the year 2027), at no extra cost to the public purse. As former trade commissioner Karel De Gucht was wont to say, this is “the cheapest stimulus package you can imagine”. Intuitively this is an attractive prospect for those European social democrats pushing for macroeconomic policies that prioritise ‘growth and jobs’ rather than fiscal probity (or ‘austerity’).

Unfortunately, the TTIP ‘growth and jobs’ tale vastly overstates the likely economic gains from the agreement and downplays its potential costs. As we have argued elsewhere, the numbers regularly cited in defence of the agreement come from a series of studies that make some fairly heroic assumptions about the degree to which the EU and the US will be able to align their standards (the main existing impediment to transatlantic trade are such differences in the way the EU and the US regulate socioeconomic risks like Genetically Modified Organisms or chemicals). They also rely on figures that significantly inflate the impact on trade of such measures in the first place – and which simply assume that workers displaced from uncompetitive industries will be reallocated to more gainful employment by a market that is in long-term equilibrium.

Second, advocates of TTIP are keen to stress that the agreement will allow the EU and the US to continue setting the standards for the global economy before the rise of emerging economies (and especially China) eclipses the transatlantic relationship (this, for example, was the case made by President Obama in his 2015 State of the Union address). An additional, implicit argument is also directed at progressives with reservations about the agreement. The EU and US are said to hold strong ‘shared values’ about not only open markets and the rule of law but also when it comes to the protection of human and animal health, labour rights or environmental sustainability  (to name just a few). The subtext is that China is unlikely to be as accommodating to such considerations when it assumes hegemonic leadership of the global economy, so TTIP is a ‘last chance saloon’ for those wishing to preserve a ‘European Social Model’ and environmental protection of some description.

Sadly, TTIP is unlikely to achieve what is promised in this area as well. The argument that the EU and the US will be able to compel other countries to adopt their standards as a result of the agreement depends largely on the form of regulatory alignment adopted through TTIP. And here, rather than pursue a ‘harmonisation’ of regulations (in other words, having the EU and the US converge towards a common standard), EU and US negotiators are largely plumping for a more limited mutual recognition of each others’ standards. Because this is likely to be only applied bilaterally there is little incentive for third parties to adapt their standards. Only EU and US producers of cars and/or other goods and services will be able to benefit from the reduced regulatory burden of only having to comply with one set of regulations.

Rather than setting new high global standards, TTIP is likely to put downward pressure on existing and future domestic rule-setting. First of all, mutual recognition can dilute standards where these are not equivalent. Firms could in that case simply circumvent higher requirements by conforming to the lower standard. Second, TTIP negotiators are seeking for the agreement to have a cross-cutting regulatory cooperation chapter. This would institutionalise processes to vet new and existing regulations for their impact on transatlantic trade, especially through the establishment of a new ‘Regulatory Cooperation Body’ and a requirement to release new regulatory proposals for comment to the other party’s regulators and possibly also its stakeholders. This is likely to privilege input from business, which has the resources to scrutinise and intervene in the various regulatory processes.

TTIP, as it is currently set up, is thus all about cutting ‘red tape’ rather than generating vast growth and jobs or cementing transatlantic leadership of the global economy. In this, it bears important similarities to the EU’s internal ‘better regulation’ agenda, the so-called Regulatory Fitness and Performance Programme (or REFIT), which is intended to reduce the regulatory burden for business. Painting (transatlantic differences in) regulation as a social ill to be eliminated, as TTIP and REFIT both do, ignores the important function of ‘red tape’ as an instrument to protect from risks not adequately managed by markets: unhealthy working conditions, dangerous chemicals or harmful food additives.

A progressive TTIP would turn the tables on the deregulatory agenda behind the current agreement and turn it into a vehicle to pursue higher standards in several fields, from workers’ rights to environmental protection. One mechanism would be to consistently harmonise regulations upwards in the EU and US (either towards the highest standard amongst the two parties or towards a higher international or newly established standard) – e.g. the US adopting the EU’s far more ‘precautionary’ REACH regulation for chemicals. This is actually the only way that the promised benefits of TTIP in terms of ‘growth and (decent) jobs’ and establishing ambitious global standards without diluting levels of protection can be met. Alas, this is not what is currently on the cards.

Ferdi De Ville is assistant professor in EU studies at Ghent University. Gabriel Siles-Brügge is lecturer in politics at the University of Manchester and visiting assistant professor at the University of Copenhagen’s Centre for European Politics. This piece draws on their forthcoming book, TTIP: The Truth about the Transatlantic Trade and Investment Partnership

Tags: TTIP , EU , US , Trade


02 July 2015 10:50

The great fear of course is that by the time ordinary Citizens get insight into the details of the proposed agreement it will be virtually a fait accompli and too late to start a debate or take a nuanced standpoint. Because of this alone the deal needs to be resisted since it is in its inception an assault on normal and legitimate democratic processes quite apart from what it might eventually contain. It is nothing less than a scandal. Some of the worst BS I've read on the subject maintains that negotiations need to be kept secret because different nations have different standards of political practice and it might therefore prejudice the outcome of negotiations if they were held openly because focus would inevitably move to these differences, instead of being kept on the terms of the deal. But what do US and Europe have to hide from each others populations which isn't already known? And if it isn't known why is it not known since the two partners have their raison d'être in being open democratic societies. The whole thing stinks,

Dr David Hill
26 April 2015 12:17

For future democracy and freedom, we need the truth about things, including what mainstream parties in the UK are not saying. Especially the major repercussions for 90% of the British electorate (who rely upon the NHS for their health needs) concerning the TTIP (Transatlantic Trade and Investment Partnership) and how it will over a relatively short period of time, dismantle the NHS. Miliband in this respect seems so convincing and sincere when he says that he will save the NHS when he speaks, but why won't he tell the people the truth about the TTIP, once signed between the EU and the USA, that it will destroy the NHS over the next 20-years. Indeed once signed and sealed, it is irrevocable. But that support for TTIP goes for Cameron, Clegg and Sturgeon, who have all (including Miliband) declared their agreement to sign up to the TTIP and where this so-called trade treaty will not allow a monopoly to exist. If people did not know, the TTIP sees the NHS as a monopoly. The trade agreement makes this clear - 'The TTIP (Transatlantic Trade and Investment Partnership) will be an Absolute Disaster for the People of the EU (European Union) and the People of America (USA) in the long-term - We simply have to Vote AGAINST this behind closed doors Transatlantic Trade deal before it is signed up and too late for the People to do anything about it' - http://worldinnovationfoundation.blogspot.co.uk/2014/08/the-ttip-transatlantic-trade-and.html Most people have probably never heard of the 'secretive' TTIP, but you will after it is signed and sealed. Strange that such an important treaty has been more-or-less silenced in the media. I wonder why?

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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