What is TTIP?
TTIP stands for the Transatlantic Trade and Investment Partnership, and represents the potential free trade agreement currently being negotiated between the United States (US) and the European Union (EU). An independent study from the Centre for Economic Policy Research has estimated that the deal could boost the EU economy by up to £85 billion annually and the US economy could gain £68 billion. In combination, growth could increase by 0.5% through the agreement alone, which at face value should be most welcome at a time when both economies are reliant on central bank support and new sources of growth are much needed.
TTIP’s core purpose is to build further on the net benefits achieved by various free trade agreements over the years, responding positively to the threats and opportunities presented by globalization, which has been one of the most significant macro-trends that has impacted the world economy and the world’s people over the last fifty plus years. TTIP is complex in nature, but its primary purpose is to promote economic growth and job creation in the US and EU by cutting trade tariffs, reducing red tape barriers, and expanding market access for the US and EU, on both sides of the Atlantic.
TTIP is ambitious in its scope and will have a significant impact of many EU and US industries such as Energy, Finance, Environmental, as well as Auto Manufacturing and the Food & Drink industry. TTIP, if agreed in broadly its current form, will provide access for EU and US Firms to markets made up of some 820 million consumers, representing a quarter of all Global trade and over 60% of global GDP.
The Obama administration state that the passing of TTIP will increase foreign direct investment, expand market access for US goods and services, cut regulation, promote greater transparency, enhance global co-operation and tackle non-tariff barriers that are anti-free trade. The combined impact of these factors will act as a positive economic stimulus for growth.
The European Commission, which represents the EU executive, similarly believe that this free trade agreement with the US is essential in helping kick start the EU back to growth. In terms of trade, they also believe that the deal will help create links to emerging economics and markets, which will help the EU, influence, and respond more positively, to global affairs. EU officials have stated that they hope to achieve three key objectives through their negotiations. Firstly, they are seeking to open up the EU economy, as the largest single market in the world, to US firms; secondly they aim to cut red tape and other regulatory burdens for firms seeking to export, and finally they plan to set new, more accommodating, trade rules to make it easier to export, import and invest overseas.
Member states within the EU, such as the UK, argue that through this agreement the cost of meeting different regulations and standards will be reduced, creating a far more integrated transatlantic marketplace. This, in turn, will create real benefits for consumers through cheaper goods and increased job growth and opportunities, while helping achieve higher levels of health and safety at work. Furthermore, the UK Government believes that the implementation of TTIP could add £10 billion annually to the UK economy.
Despite TTIP being at the top of US and EU Administrations trade agendas, both proponents as well as sceptics have extensively criticised the process by which the agreement is being negotiated. Currently, the EU Trade Commissioner Cecilia Malmstrom, who represents all EU member states, heads the trade talks as the negotiations rotate between Brussels and Washington. In parallel, the European Commission consults on the negotiation process with member states through a trade policy committee.
Many argue, that as a consequence, the European public is being deliberately excluded from the TTIP negotiations as unelected officials update National Governments, who represent the democratic will of the people, on the process of negotiations, only after the event. In the eyes of many Eurosceptics this provides a further illustration of one of the EU’s greatest problems – the so-called democratic deficit – between the Commission and the peoples of Europe.
In the US, TTIP has also created major concerns. Earlier this month President Obama was defeated by his supposed Democrat colleagues in Congress, who voted against legislation that would give him fast track authority to negotiate trade deals, such as TTIP as well as the Trans-Pacific Partnership (TPP) another potential trade deal with 11 Asia-Pacific countries. The Democrats have long been concerned about the impact of globalisation on the jobs and incomes of Middle America, and they fear deals like TTP and TTIP will make this yet worse, by removing protection for America workers, creating a race to the bottom on wages as Asian and EU Firms with new access to US markets place profits before people.
With concerns on both sides, TTIP according to Former EU Trade Commissioner Karel De Gucht, may not be agreed by the proposed deadline in 2015, and could face further delay due to the 2016 US Presidential Election. Accordingly, there is a real possibility, that TTIP may not be implemented by the time President Obama leaves the White House at the end of his term.
Since the inception of TTIP negotiations in 2013, negotiations have made progress, but have faced much dither and delay due to the divided opinions on the deal.
Many EU nations argue that it represents a threat to national sovereignty and democracy, as the agreement would allow multinational corporations to sue national governments if they are perceived to be acting out of line with the agreement and adversely impacting business performance and corporate profit potential. This is because of the Investor Dispute settlement mechanism proposed within TTIP. Critics view this mechanism as a significant threat to democracy, as it may compromise the democratic legitimacy of governments to act in the national interest of it citizens.
Image credit European Union 2015 via the daily Mirror
(MEP’S demonstrate against TTIP within the European Parliament)
In the UK, the centre of TTIP opposition is its potential affects on public services and institutions such as the NHS. Opponents believe that it is a recipe for back- door NHS privatisation. These claims are made despite repeated statements from Government officials, stating categorically that NHS services will continue to be managed by local NHS commissioners and that local democracy will continue to drive all major decisions on public policy.
With regards to other proposed measures many environmental campaigners argue that TTIP would reduce food and environmental standards as EU regulations would be brought into line with less strict US Laws. Such TTIP Opponents argue that TTIP will weaken European regulation on environmental safeguards in areas such as growth hormones, cosmetics, chemicals and genetically modified crops.
EU and US officials are still in the process of negotiations, as the 9th round of negotiations took place in New York in April. Once the negotiations are finalised and an agreement is reached it will be sent to the executives and legislatures of the EU and US for approval.
Within the EU, in order for TTIP to be implemented in full, the deal must be approved by the European Council and ratified by the European Parliament. The TTIP agreement might also need to be passed by the 28 National Parliaments of EU Member states for it to proceed. Across the Atlantic, Congress must also approve the deal for it to be enacted. So despite negotiations progressing, TTIP has many hurdles to face before it can be implemented in full.
In summary, TTIP offers the potential of becoming the largest free trade deal the world has ever seen, and given the fragile state of the US and EU economies, it can be viewed as a strongly positive force for the global economy, as a much needed stimulant to growth and job creation.
TTIP might also result in nation-states sacrificing elements of their sovereignty, as the deal enables the forces of globalization to ratchet up a further gear. The deal puts into question the role of multi-national corporations as political actors, and at the industry level creates the potential for ‘win-lose scenarios’ that comes with the promotion of free market economics and the harmonisation of common product/service standards.
Despite these real concerns TTIP overall supports economic growth, will boost job creation, deepen integration and lay the foundation for a competitive environment that will benefit US & EU households and consumers economically and socially. With much subject to ongoing negotiation, the devil is in the detail, but on balance at the level of principle TTIP offers the potential of a deal that can contribute materially to renewed trans-Atlantic prosperity, as nations continue to search for a stronger economic recovery in the post-crash world.
Christopher Bowerin is currently an undergraduate studying Politics and Business Management at Oxford Brookes University. Christopher has a strong interest in European and American politics, Middle Eastern Affairs, international conflicts and post-war reconstruction.
*Cover image ‘TTIP_13-06-18_13‘ by Campact (Photo from Jakob Huber)
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