EU Foreign Policy

What’s the TTIP? Here’s a handbook.

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Since the second half of the 19th Century, international trade has inflated as a mishmash of bilateral or multilateral agreements, some great and some small. They have built, and incrementally strengthened, a network of global trade.

1860 marked a fundamental step in this direction with the historical Cobden-Chevalier deal between France and Great Britain. However, it’s only in the 1940s that global trade began to take shape with the General Agreement on Tariffs and Trade (GATT). This agreement laid the foundations of an international order devoted to trade, and the creation of international institutions tasked with promoting, regulating and protecting free trade among States, like the World Trade Organization.US-EU-TTIP

A new deal has been in the pipeline for a few years now: it’s the so called TTIP (Trans-Atlantic Trade and Investment Partnership), and it’s considered the biggest trade deal in history. We are talking about a bilateral deal between the two largest economies of the world: the European Union, and close second, the United States. Together they comprise roughly 45% of Earth’s GDP. If the deal were to be signed, it would give birth to the largest common market of the planet. Talks related to the treaty have gone forward for over a decade, but it was only in 2013 that U.S. President Barack Obama and former European Commission President, Josè Manuel Barroso, have officially started negotiations. In spite of the precise content of the deal being only accessible by negotiators themselves, the media have managed to get a hold of information and release it to the public: it’s mostly drafts that regard few of the numerous relationships and processes that the deal will affect. The European Union, however, has decided to publish a document illustrating the guidelines over which the TTIP will be framed. This is what we know:

The Treaty mandates the complete elimination, on both sides, of the respective (and already considerably low) tariffs of traded goods. The same is prescriped for non-tariff barriers, that is obstacles or limitations of non-fiscal nature imposed on goods of foreign origin with the objective of limiting or preventing their access in determined economic zones. The Treaty includes a relative harmonization of regulations, and a liberalization of services (excluding audiovisual ones), markets, tender processes and public services, with the objective of allowing American and European firms to operate on respective markets on an equal footing with local competitors. When it comes to investment, the Treaty’s aim is to implement tutelage for foreign investors..

How is this enforced? Through a process called the ISDS – Investor State Dispute Settlement, a tool already in use in some areas devoted to free trade. The ISDS will become an independent tribunal for companies to appeal to, if they believe a State has implemented policies that are contrary to the company’s activity. The tribunal will be presided by three judges, one chosen by the company, one by the State being called under judgement, and another being chosen by both. If the two cannot agree on a third judge, one will be selected by the World Bank.

A famous case discussed among academics of international trade saw tobacco multinational Philip Morris, sueing Uruguay for increasing the size of health danger warnings on cigarette packages, and implementing other measures aimed at dicinsentivizing sales. Since the ratification of NAFTA, the free trade deal between Mexico, the U.S. and Canada, the latter has been sued the most, losing over 168 million dollars, not including legal expenses.

Several think tanks, economists and research centres have underlined the positive aspects of TTIP. A few papers, like the one published by the London-based Centre for Economic Policy, or by the Aspen institute, have predicted an increase of 28% in trade volumes, and that European families would receive a further 545€ per year. It is worth noting that the former paper has been criticized because the Centre for Economic Policy is primarily financed by international banks with a stake in the Treaty. Increased competition between American and European firms would further innovation and technological development. The European Commission foresees a GDP increase of 0,5% for Europe, and Trade Commissioner Karel de Gutch claims both parties would benefit from the creation of hundreds of thousands of job. Carlo Calenda, Italian minister (and former vice minister) for economic development, hopes that the deal will be concluded as soon as possible, in order to intercept investment capital that would otherwise head to the Pacific, where a similar deal is being hammered – the Trans Pacific Partnership.

However, many voices have been raised against the deal, both within civil society and from other sources.
Several organizations have underlined how negotiations need to become more transparent. Neither Congress nor the European Parliament have had access to the documents. Secondarily, it has been pointed out that eliminating non-tariff barriers will undermine European safety standards, destroying the quality of foodstuffs and environmental protection for which European regulation is far more comprehensive than that of the United States; it is valid to assume that we would see a devolution of European standards, converging towards the lax norms of our Atlantic ally. One such example is the precaution principle adopted by the EU, which dictates that a product needs thorough testing before being given market access, to verify it brings no risk to consumers. This process is not always guaranteed in the United States. Speaking of competition, opening the European market completely to American multinationals would endanger the survival of small and medium businesses forced to compete under unfavorable conditions, as has happened with Mexican agriculture after the ratification of NAFTA. Twenty years on, NAFTA has also contributed to job losses in the United States, and the reduction of salaries in a few sectors and industries. Scott Sinclair, a senior analyst of the Canada Center for Policy Alternatives, has denounced the anti-democratic nature of this tool: “We have these completely irresponsible judges taking care of public affairs. Why should companies be able to bypass national justice systems?”

East of the Atlantic, British opposers to the TTIP fear that the Treaty might endanger the NHS, given that companies could sue the British government if it decided to nationalize services currently in the hands of private investors. In order to oppose the ratification of TTIP (and CETA, a similar bilateral deal between Europe and Canada), over 380 European associations have launched a joint campaign of opposition through the European Citizens Initiative. In spite of the Commission ruling the petition inadmissible from a judicial standpoint, over three million citizens from all 28 member States have signed so far. An illustrious opposer of TTIP is Joseph Stiglitz, who won a Nobel prize for economics in 2001, and has told the Italian parliament in September 2014: “With the deal you want to sign, or rather the USA want you to sign, you will relinquish the right to protect your own citizens.”

Translation by Tullio Pontecorvo (Shep)

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Bruno Formicola (Tracer)

Graduate in Political Science and International Relations from the University of Naples "L'Orientale", co-founder of My Country? Europe and member of the Young European Federalists. Addicetd to information, memes and Autechre.

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