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The TTIP: good or bad? #UE#USA

The last decades have been characterized by the difficulties to tackle common economic challenges through coordinated actions. US and European policymakers have drawn lessons from the recent economic downturn and are seeking to build a new broader agreement which would respond better to today’s economic reality, characterized by a strong interconnection between international trade and investment. TTIP represents the attempt to rebuild a new development paradigm through international economic cooperation and integration in order to face new global

TTIP is a trade agreement which is dividing public opinion about the potential benefits and the challenges it might bring. According to someone, such a deal would subordinate the EU and the US legislations to free market: multinational corporations would become more powerful and influent than nation states and workers’ and consumers’ rights would lose their weight. The declared objective of TTIP is to facilitate trade relations between EU and the US, bringing new economic opportunities, development and significant increase of exports and employment. The deal should operate in three dimensions: opening a free market area between Europe and the US; making the two legislations uniform and simpler; improving legislations. Therefore, there are three main areas in which the agreement would intervene: access to market, which concerns commodities, services, investments and public contracts; non-tariffs barriers; and legal questions, concerning intellectual property rights, anti fraud measures and other actions.

Pros:
CEPS and the Aspen Institute argue that the agreement would bring significant benefits to the European economy. According to their researches, European exports to the US would increase by 28 per cent, about 187 billion euro. Duties among the US and Europe are quite low but there are huge differences among sectors. Therefore, if they are applied on great volumes they might become a relevant obstacle. This could be even more relevant when the production process is divided among different countries: small duties applied in several processes might have a very salient impact on the final good’s price.

There are also some predictions according to which every single EU Member State’s GDP would increase (the estimation is 545 euro more for every European family). More competitiveness would lead to more innovation and technological improvement. Other benefits are foreseen also for what concerns the simplification of bureaucracy and regulations: there should be a reduction of inspection costs and of all that costs deriving from economic activities which operate in the European and the US markets. Firms would not anymore comply with two different legislations but only with a unified one.

Cons:
The slowness through which negotiations are occurring is partially due to the critiques deriving from many consumer associations and European politicians. Some doubts have been expressed also by some American organizations which complain about the secrecy of the negotiations and the lack of transparency. Only 13 of 751 MEPs are currently allowed to see sensitive paperwork. Such limits are related to the potential consequences for European society.

First of all, according to a report, the economic benefits predicted have been misjudged: the European Commission calculated the impact of TTIP on the region as a 0.1% growth. This would equal growth rate of 0.01% of GDP over a ten-year period. If we compare such a prediction with the industry-funded research that promised a 1% increase in GDP, it could be possible to talk about exaggerated benefits. Moreover, the increased competition between the EU and the USA could trigger economic restructuring that may even lead to job losses. Some researchers argue that TTIP might revoke European workers’ rights to self-organize in the face of rising unemployment in austerity-hit Europe. Another aspect that could suffer problematic consequences from TTIP is related to environment, according to the European Commission assessment, the increase in transatlantic trade would result in negative impacts on the environment. “Mutual recognition” of rules will undermine EU environmental standards: European efforts to minimize the damaging social and environmental impacts would be undermined by the controversial production of biofuels. Regarding the impact on Agriculture, if TTIP were to achieve the parallel elimination of both tariff and non-tariff barriers, there could be the risk to see only large agribusinesses able to compete with the US market. This would be at the expense of consumers and farmers. Related to this point, TTIP seeks to reinforce intellectual property rights (IPRs). A possible consequence of that could be to provide more legal powers in the hands of big business, causing a more restricted access to knowledge and would grant corporations greater access to citizens ‘data. TTIP might have a great impact also on the health sector: some studies tend to demonstrate that TTIP’s proposed “regulatory harmonization” of standards would not lead to stronger chemical rules. It is probable instead that it would oblige public authorities to treat local and transnational companies as equal under international rules. Such a mechanism would weak European health protections and would undermine access to affordable medicines for European citizens.

Another consequence that could stem from TTIP is the so-called rise of the “super banks”. The proposal of liberalize also financial services would remove those government regulations created to prevent new international financial crises. Through the aimed “convergence”, “coherence” and “mutual recognition” principles, the agreement could become a legal instrument for big banks to circumvent national regulations. With TTIP, large US corporations would have more powers to challenge policies designed to defend the public interest. The so-called investor-state dispute settlement provisions would empower US companies investing in Europe to bypass European courts and directly challenge EU governments at offshore tribunals. It has to be said that EU and US companies have used these lawsuits to challenge environmental restrictions, medicine policies, health insurance policies and measures to improve the economic situation of minorities. Through the investor-state dispute settlement, companies would be empowered to engage in litigious wars of attrition to limit the power of governments. The aspect concerning food related issues like American hormone-fed beef, GM organisms, or chlorine-washed chickens is one of the most feared by Europeans. However, according to the European Commission all these processes will not be allowed in Europe without explicit consensus.

It is not easy to clearly assess the entire issue. European politicians should ensure that TTIP will not overpass transparency and democratic principles. The EU should impose such conditions and, once assessed all the elements and ensured that TTIP is a balanced deal which can bring prosperity to the EU economy and society, without compromise European consumers and workers’ rights, it might be signed.

 

Giovanni SAITTA

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