TTIP

Politics & The World

The Transatlantic Trade and Investment Partnership (TTIP) is dead. It was never really popular on either side of the Atlantic, but the election of Donald Trump finished it off. The socialists in Wallonia and the labor unions in Germany can thank the new men in the White House for doing what they could not.

EU trade commissioner Cecilia Malmström already announced that “TTIP will probably be in the freezer for quite some time, and what happens when it is defrosted, we will have to wait and see.”

But it seems unlikely that the negotiations will ever warm up again. Donald Trump has made it very clear in his “Plan To Rebuild the American Economy by Fighting for Free Trade” that he intends to withdraw from the Trans-Pacific Partnership (TPP), which is already signed but not ratified. Even NAFTA, the trade agreement between the United States, Mexico, and Canada, which has been in place for more than 20 years, could be terminated under his presidency. Stopping TTIP would be the least drastic step among the changes that U.S. trade policy is going to experience in the coming years.

However, withdrawing from TTIP is the last thing to do if Trump intends to rebuild the American economy. A study by the Center for Economic Policy Research (CEPR) concluded that the economic benefits for the United States are 95 billion Euros (103 billion US dollars) by 2027; around the yearly GDP of Utah.

Protectionism has never made a country great again, and America will be no exception.

The main problem of many trade agreements is political. The benefits are spread out over many while the costs are concentrated on a few, who organize to oppose them. TTIP would create a net employment gain of 750,000; a number large enough to employ the working population of New Hampshire. But undoubtedly some people will become unemployed, and they do not care if some Washington think tank points out that their job losses are counteracted by the hiring of many more workers elsewhere.

This is exactly where most of the resentments against trade agreements originate. People are concerned that they will lose their jobs in a world where the pace of change keeps accelerating. It is easy to point to the nearby company that had to close down, but it is much harder to recognize the benefits consumers and workers enjoy because of cheaper goods and a more prosperous economy. As such, the gains for the U.S. from free trade are easily forgotten.

U.S. policymakers did a poor job of addressing the concerns of large parts of the population for too long. 68 percent of Trump supporters say, “free trade agreements have hurt them or their family” and the result of this frustration were seen last Tuesday. Yet the Trump administration would be even more in the wrong to give in to the temptation of isolating the U.S. economy from the rest of the world.

Fortunately a middle path exists. Additional support for workers who are laid off when the economy adjusts could be incorporated into the trade agreements. Or the highly debated investor-state dispute settlements (ISDS), which allow companies to sue governments, could be scrapped. Such adjustments would not only be supported by Trump voters, but could find bipartisan backing from the Democrats as well. A renegotiated TTIP could not only strengthen the U.S. economy, but also help to unite this divided nation. Let us hope this is what Trump means when he promises to “appoint tough and smart trade negotiators to fight on behalf of American workers.”

Politics & The World

by Erik Kemmling

This week the twelfth round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP) started – and the deal is as controversial as ever. TTIP has been one of the most prominent European issues of the past years. It triggered a mass politicization in 2015 but has recently lost a bit of its salience because of the refugee crisis.  Nevertheless, just like the refugee crisis, TTIP will accompany us throughout the new year. It is therefore important to recap and reflect now in order to have new food for thought for 2016.

I personally have decided to be against TTIP and I hope it will be rejected. Nevertheless, I see it as a distinct chance for Europe, especially with regard to its democratic accountability. How do these views fit together? At a first read such an opinion seems completely devious. In the coming paragraphs I will show why it is not, but first, it is important to recapitulate arguments in favor and against the deal.

Since it is a trade agreement, economic reasons seem to be of capital importance. Yet, calculations about potential GDP growth on each side of the Atlantic are rather questionable, as some studies show.

Another argument in favor of TTIP is its geostrategic importance. The US is the closest partner of the EU and is particularly needed considering the EU’s lack of hard power. Arguably, France and the UK have strong militaries but still no mission can be carried out without the help of the US. Also, since the enlargement process has come to a halt, the main soft power source of the EU has become toothless. The result is that countries in the European neighborhood and elsewhere favor cooperation with the China over the EU. China invests in development, but without demanding the respect of human rights in return, which is welcomed by many authoritarian leaders. Thus, an agreement such as TTIP that could foster EU-US relations would potentially increase the EU’s influence globally. For the EU’s geopolitical strategy TTIP is beneficial.

Let’s turn to the criticisms. Concerns over data and consumer protection have been among the most commonly cited. Just think of the famous chlorinated chicken. However, the main criticism is the lack of democratic accountability. Despite of what the chief-negotiator Cecilia Malmström might say, TTIP has several distinct characteristics that make it undemocratic.

First and foremost, the style of the negotiations. To test if something is democratic one can use the characteristics defined by Abraham Lincoln: “Government of the people, by the people and for the people”. Implicit in those characteristics is that government by the people preconditions opportunities for discovering and validating choices that best serve the citizens’ interest. In short, transparency is vital for democracy. Yet, the negotiations have not only been in-transparent but held in secret. This has been a major reason why the European public became suspicious and why the issue became popular. The Commission tried to respond to this criticism with various measures. Since recently, EU parliamentarians can go to reading rooms and have a look at parts of the documents but are not allowed to copy, photograph or even speak about the content. It is hard to speak of a real improvement in terms of transparency here.

Second, the investor-state dispute settlement mechanism (ISDS), allowing companies to sue governments for profits they missed out on because of changes in policies. Governments will fear massive state losses and refrain from social, cultural and ecological policies that would otherwise benefit European society. This cannot really be considered government for the people.

So where do we go from here?  Understandably, a big part of European society is against this very undemocratic treaty that will have devastating effects on the environment, consumers and national governance. Others consider TTIP economically and strategically indispensable for the EU’s role in the world. Where should we stand? Should we stop it? Can we even stop it? Considering what is known about TTIP at this point, the reasons to be against outweigh the reasons to be in favor. Yet, decision-makers do not seem to deviate from their course. 2016 will be a year of debate and protest again.

Despite all the quarrels about TTIP there is a third perspective I would like to introduce. TTIP as a chance for the EU.

TTIP has led to mass demonstrations across Europe. People stand together in a solidary manner and fight for what they like about the EU, ranging from culture, consumer rights and the environment to democratic principles that are not yet completely in line with neo-liberal capitalism. Those demonstrations mark a true European moment. Those are the kind of moments we need in times of a lack of European solidarity, Schengen possibly at threat and alarming developments for example in Poland. TTIP has put a big part of European society on the same page. The treaty politicized the European public and enhanced European civil society.  Active citizens are what a healthy democracy needs and active European citizens are what the EU needs.

For years, one of the most common criticisms of the EU has been its lack of democratic legitimacy, characterized by a weak EP and a technocratic Commission that is said to have lost the connection to EU citizens. The gap between citizens and decision-makers seems to have been too big for too long, TTIP being the latest example. The European Commission and national leaders could now listen to the people and make the treaty acceptable. This would at least mean full transparency and no ISDS. If the treaty becomes one that is shaped by European citizens it would silence critics of the EU. It would prove that the institutional setup of the EU is democratic enough and that civil society can compensate an inherent problem of democratic accountability. People would see their voice matter in the EU. At this point we need to stop dreaming. Nothing points to this utopian compromise.

Therefore, I personally hope to see a rejection of TTIP. Even without TTIP, the US will remain the closest partner of the EU. But despite the apparent strategic tragedy, TTIP will have created a European civil society, a civil society that has defended the rights and principles of the EU. Maybe we should start to consider this a strategic asset for the EU in a global order.

Image by Mehr Demokratie/Friends of the Earth Europe/Lode Saidane, taken from flickr