Unveiling the curtain

The Transatlantic Trade and Investment Partnership (TTIP) deal between the European Union and the United States has aroused many controversies and questions. Not only might it be the most important free trade agreement of our times, as well as the foundation for a transatlantic trade hegemony, but also the basis for a stronger political alliance between the two shores of the Atlantic Ocean. Furthermore, the deal may prove a breath of fresh air needed to rejuvenate stiff ties in USA-EU relations, allowing to serve bilateral exchange and create a platform for new ideas. It all sounds great and only few people would oppose such an innovative and future-oriented idea. Unfortunately, although its liberal goals look very tempting, there are some crucial points which make this agreement so hard to accept.

TTIP protest in London
TTIP protest in London by World Developement Movment (https://www.flickr.com/photos/wdm/14657251391/) [CC BY 2.0], via Wikimedia Commons
Firstly, something which is worth noticing is that the TTIP is not the sole agreement being currently negotiated by the USA. Along with the TTP (Trans-Pacific Partnership), it is meant to be a pivotal point in President Barack Obama’s economic legacy. The two negotiations are similar and have aroused suchlike controversies, namely the lack of transparency and the Investor State Dispute Settlement (ISDS) mechanism. Taking a look at the numbers, TTIP is conceivably more significant to the USA, considered that Washington and Brussels together generate roughly 50% of the global economic output, cover almost 30% of world merchandise trade and 20% of global foreign direct investment. According to the European Commission website, American investment in the EU is three times higher than in the whole of Asia. What is even more important is that either the EU or the US is the largest trade and investment partner for almost every other country in the world, and hence the transatlantic deal would ultimately give shape to a new global order.

The intertwinement of European and American markets has always been very deep but, as mentioned, the goals of the partnership are going further. Director of OECD Trade and Agriculture Ken Ash indicates that the potential welfare gains to the EU and the US are estimated at as much as 3-3.5% of GDP (different studies range from 0.5% to 3.5%, other reports see gains as high as 13% of GDP for the US and 5% for the EU). Therefore, Ash concludes that “with both economies facing a long-term need for fiscal consolidation alongside persistently high unemployment, these gains are considerable, all the more so because no additional spending or borrowing will be needed to achieve them”. These outstanding numbers are expected to be achieved through the reduction of non-tariff trade barriers in a wide range of market sectors.

Obama thinking
President Obama reflects during an economic meeting with advisors in the Roosevelt Room by Pete Souza
Political objectives of the deal are quite simple. Similarly to the Trans-Pacific Partnership, whose goal is counteracting China’s growing economical influence, TTIP aims at strengthening political and economical ties between the US and the EU at the expense of BRICS countries (Brazil, Russia, India, China, South Africa). In other words, with the increasing strength of emerging economies, Washington is looking for an alliance which may provide a long-term, unthreatened hegemony in the globalized world and set new global standard.

Last May 6,  EU Trade Commissioner Cecilia Malmström discussed with the Members of the European Parliament a reform proposal regarding the Investor State Dispute Settlement, far the most controversial part of the deal. The mechanism of commercial arbitration is commonly considered to be unfavorable to European countries, providing large corporations with too much power. Here’s what she wrote on her blog:  “I have heard many concerns about the traditional ISDS and the rules included in many of the existing agreements. To a large extent, I share these concerns, especially when it comes to the sometimes unclear definitions that leave too much room for interpretation and possible abuse, and the lack of transparency. […] The traditional ISDS system […] is not fit for purpose in the 21st century. I want the rule of law, not the rule of lawyers”. Latest consultations have brought new solutions, including the formation of a permanent multilateral Investment Court, which might be a slight improvement in the general evaluation of the ISDS. However, part of the experts are still not convinced of this measure, proposing to erase it totally from the TTIP.

Open the Door to Transparency- -StopTTIP - 15543248792
MEPs outside the sealed reading room for documents relating to the TTIP negotiations to demand transparency in the EU-US trade deal by greensefa [CC BY 2.0], via Wikimedia Commons
Another controversial point, especially among citizens, is the absence of legal texts. European people feel ruled out from the decision-making process, which is meant not only to shape the TTIP but also to become a pattern of following agreements with other countries in the near future. Although the range of regulated subject is wide-known, the method of regulation and law provisions are still unclear. People don’t know what the EU and the USA have secretly promised each other, and this state of uncertainty is (and will understandably be) a main cause of public protests. So far, the biggest ones were held in Germany, where popular resistance to the TTIP is substantial, mainly because of diminishing support for growing American participation in European politics and economy (also due to revelations of US spying, aversion to wide-spreading American companies like Google). European protesters gathered in many other cities, including Brussels, Madrid, Helsinki,Warsaw and Prague. It’s obvious that the constant suppression of the citizens’ voice won’t reduce the growing unrest against the agreement.

Cui bono? Who benefits? The sought response is: everybody. But the answer is not that simple and joyful. According to the vast amount of opinions, it’s the profit-seeking business which wins, whereas people are likely to lose. The European Commission has rejected the European citizens’ initiative on the TTIP which invites to “recommend to the Council to repeal the negotiating mandate for the Transatlantic Trade and Investment Partnership (TTIP) and not to conclude the Comprehensive Economic and Trade Agreement (CETA)”, in a document signed by nearly 2 million Europeans. In the opinion of many, EC condescending behavior shows its suicidal propensity and consequently undermines the credibility of European institutions. In the words of U.S. lecturer Michael Parenti, “corporate property rights are elevated above all democratic rights under the banner of ‘free trade'”.

Banderas europeas en la Comisión Europea
EU flags in front of the Berlaymont building, head office of the European Commission by Amio Cajander [CC BY-SA 2.0], via Wikimedia Commons
Last but not least: is Europe ready for the TTIP? Unlike the USA, the European Union is not a federal state, but rather the union of 28 countries whose economies are very different from each other. Statistics mentioned above look impressive, yet they refer to the European Union as a whole and, in the absence of legal provisions, it’s almost impossible to estimate how the TTIP may influence particular countries. With ongoing ravages of a dramatic financial crisis, the crucial doubt regards the increment of economic gap among the economies of the member states. In this regard, the NAFTA (North American Free Trade Agreement) outcome is worthy of note, being a powerful warning to both parties of the agreement. During NAFTA 20 year existence, it was the large corporations which have primarily benefited from it, whereas the free trade agreement has contributed to the loss of over 900 thousand jobs in the United States and the closure of more than 300 thousand family businesses in Mexico, instead of promised economic growth.

Positive evaluation of the TTIP is predicated on the assumption of economic growth. However, high numbers can’t be achieved by ignoring democratic voice and hiding behind the creation of a smokescreen. In its current form, without transparency and the good will of European institutions, the TTIP seems to me doomed to fail and the repetition of social outburst (like the one towards the Anti-Counterfeiting Trade Agreement) should be taken for granted.