As the 751 members of the new European Parliament meet again next month, a crucial vote lies in front of them. The European officials are considering ratifying the Transatlantic Trade and Investment Partnership (TTIP), an agreement between the two largest trading regions in the world — the United States and the European Union.
Negotiations have lasted over a year, and the current seventh round of talks is moving closer toward a TTIP that would compete with the Trans-Pacific Partnership (TPP) for the honor of creating the single biggest free trade and investment zone on earth. Together, the TPP and the TTIP would regulate an estimated 72.5 percent of all global trade and investment, potentially overpowering the World Trade Organization (WTO) as the main organ of global trade governance.
TTIP proponents argue that it will generate wealth on both sides of the Atlantic, while critics say the deal will favor corporations by deregulating everything from finance to the labor market to intellectual property.
Optimistic projections show the pact leading to an increase in GDP of 0.4 percent in the U.S. and 0.5 percent in the EU — once its effects are fully realized in 2027. EU trade commissioner Karel de Gutch has been quick to proclaim such GDP gains will translate into hundreds of thousands of new jobs for both Europeans and Americans. But others cast doubt on the ability of the TTIP to create jobs, calling attention to the failings of past free trade agreements, such as NAFTA.
More trade, less tariffs
Not much is known about the fine print of the TTIP, which is being negotiated secretly by bureaucrats in the EU and the U.S., away from the media, civil society groups and even elected representatives.
But leaked negotiation documents, including the official TTIP mandate, reveal a commitment to an “ambitious, comprehensive” agreement that helps achieve “liberalization of trade in goods and services.” The agreement will be “binding on all levels of government” and will focus on four key pillars: “market access, regulatory issues, nontariff barriers and rules.”
While most of the public discussion focuses on lower tariffs and trade barriers, it is worth noting that EU countries already have some of the lowest tariffs in the world for U.S. goods. As of 2011, there is $3.7 trillion in bilateral investment between the U.S. and EU economies and nearly $1 trillion worth in trade of goods and services between those economies.
In 2012 the U.S. exported $458 billion to the EU, supporting an estimated 2.2 million American jobs, according to the Office of the U.S. Trade Representative. And EU affiliates in the U.S. employ another 3 million Americans. The TTIP is intended to raise those numbers and provide enhanced market access on both sides of the Atlantic.
What critics fear
Both the EU and the U.S. have fast-track negotiating procedures in place for trade deals. This means elected officials in the European Parliament won’t have access to the agreements until they have been fully drafted and are ready for a vote.
Several memos regarding months of TTIP negotiations have emerged, revealing what many civil society groups consider an agenda to remove regulations. A September 2013 document on energy policies contained attempts to expand fracking and offshore drilling by U.S. companies through the TTIP, despite tight environmental regulations in Europe.
While the EU claims its standards for public health protection will not be diluted by the TTIP’s thousands of pages, experts agree that making regulations consistent across borders most likely means lowering some standards. The EU has seen the U.S. repeatedly challenge its policies on food safety and environmental protection. Now weakened economically and politically, the EU could be pressed to gut some of those regulations.
Other leaked negotiation documents show that altering financial regulation is another key aspect of the talks, with banks in Europe and the U.S. pushing for favorable rules on securities trading, especially involving the kinds of derivatives that led to the 2008 economic crisis.
A recent leak of the TTIP investor services text by Spanish newspaper El Diario showed European authorities are set to offer U.S. corporations access to the management of public services. This could mean de facto privatization of parts of the European welfare state, allowing private operators to manage and profit from water sanitation, mutual insurance, social services, health care and education, which are mentioned explicitly in the EU’s offer.
This document and a letter sent by acting U.S. trade representative Demetrios Marantis to Republican House Speaker John Boehner last year — in which he committed to fight the “designated monopolies” represented by European state-owned public service providers — have created fears that the TTIP will be used to dismantle the European welfare state.
The inclusion of investor-state dispute settlement clauses, which allow foreign companies to sue the countries where they invest over regulations that might hurt their profits, has proved another controversial point. Many claim such language would limit national sovereignty in favor of corporate rights.
Such clauses have elicited public outcry, and in response, the European Commission — which negotiates the TTIP on behalf of European nations — has begun an online public consultation process. Engagement with the public follows calls from the German government that the terms of a new free trade agreement need to be discussed more transparently.