Promises of prosperity, welfare, employment opportunities and economic growth are made by the negotiators and proponents of the free trade treaty between the United States and the European Union. But are they right? What is the agreement exactly about? What is its purpose? And whose interests are represented?
What is the TTIP?
The Transatlantic Trade and Investment Partnership, TTIP in short, is a proposed agreement for free trade between the European Union and the United States that is still under negotiation. The TTIP aims to stimulate the economy through the standardization of legal regulations. Having standard legal regulations on both continents will open markets and will help make the export/import between the EU and US easier and more efficient. The idea for such a treaty has been in existence since the 1990s, and there have been several negotiation rounds, but each time they came to an end because both parties were unwilling to make serious concessions and because there was not enough political support. But since the summer of 2013, negotiations started on TTIP in an attempt to finally get a free trade agreement between the EU and US done.
What are the contents?
The EU and US are negotiating the contents of the legal regulations they want to set as standard in TTIP. This is not an easy task, since regulations in Europe are sometimes very different from those in the United States. Hormone treated meat, chlorinated chicken and genetic engineering are legal in the US. Companies there are not willing to give these procedures, which are prohibited in the EU, up. Thus, the EU – if it wants to negotiate an agreement – likely has to make some concessions regarding its strict rules regarding food safety. Another example is fracking, which the US allows to increase gas supplies. The risks of fracking are quite unclear at the moment, but it could possibly lead to the contamination of drinking water and soil contamination. TTIP promises cheap gas exports, which would help the EU to be more independent from Russia for this, but at what price? Also, who pays for the externalities of fracking is not negotiated in the context of TTIP and that is quite problematic, because it is unclear who is responsible when there would indeed be cases of contaminated drinking water or soil.
However, in some areas, the EU would be better off to take over the US regulations. After the financial crisis, in 2010 the US gave its administrative authorities the option to regulate the foreign subsidiaries of banks. This angered the banking industry and the banks lobbied strongly with the TTIP negotiators. Because of this, the TTIP will possibly take the much weaker EU laws as standard legal regulations, which means banks would be deregulated again in the US, while the regulation of banks must be an item on the reform agenda of both the US and EU to avoid new bubbles and financial crises in the future. Achievements in this area that are reached in both the EU and US are at risk now. Once TTIP is signed, it will be more difficult to push reforms through for the US Congress and the European Parliament.
Who benefits from TTIP?
Almost all of the advisers consulted by the US and EU represent corporate interest. Negotiations are also taking place behind closed doors. Democratic transparency is lacking. It is clear that corporate interests prevail in the TTIP initiative and negotiations.
The winners of free trade agreements are usually banks and multinationals. This also counts for TTIP Deregulation of banks and the newly introduced possibility for companies to sue states when they make laws that have negative consequences for profits (the investor-state dispute settlement), are only beneficial to multinationals and banks. Multinational companies can sue states for damages, which will be paid from tax-payers money. Lawsuits are likely, because companies could sue states for policies such as minimum wage legislation, environmental laws, social policies, etc. Do we really want to put free trade before public values?
Grandiose promises of economic growth and new jobs are how the EU and US try to promote TTIP to its citizens. Free trade agreements, however, can be very costly for tax-payers. NAFTA is a case in point. The EU citizen will possibly be left with fewer jobs and more poverty, like NAFTA brought to citizens of the US, Canada and Mexico.
Presented as a key element for economic growth in the future, the creation of more jobs and lower prices, the TTIP seems like something EU citizens should welcome with open arms. However, TTIP is designed much like a Trojan horse: it is presented as a gift to citizens, promising new jobs and a better economy, but once signed and ratified, corporate interests will prevail.