Francisco A. Laguna & Amy Turner
Today, we conclude our series on the Trans-Pacific Partnership (TPP), focusing on the views expressed by the international community on the Transatlantic Trade and Investment Partnership (TTIP).
Everyone who has been paying attention to international relations over the past few years has been inundated by the trade agreements between the U.S and Asia (TPP) and US and Europe (TTIP). With all that has happened over the past year, international trade has been thrust into the spotlight. Since being put on the main stage TPP and TTIP, appear to be meeting with serious resistance.
The problems for TTIP and TPP started with the actual premise for their passage. If you talk to TTIP proponents in Germany, Britain and the United States, they usually state that its passage is intertwined with the future success of the West. In the early going, proponents claimed it would generate growth and jobs on both sides of the Atlantic. Indeed, some have called the TTIP “an Economic NATO”, implying that the TTIP will guarantee economic security to its members. Since then, several think tanks conducted independent research and concluded, not surprisingly, that the effects would be lower than the initially forecast. The studies discovered that it would increase the European economy by a rather modest 0.1 to 0.5 percent of GDP over a 10 year period.
Opponents of the TTIP say that it has just as much ability to cause transatlantic controversy as it does to create transatlantic unity. Opponents point to the European media coverage of the leak by Greenpeace of papers from the treaty negotiations. In Germany, there is “Stop TTIP” movement. Some 70 percent of Germans are estimated to oppose it. According to critics, the leaked TTIP papers confirm their worst fears about lowering standards of consumer protection for genetically modified food, among other issues: The papers showed Europeans being pressed by US negotiators to loosen restrictions on genetically modified food in exchange for a loosening of export barriers for European cars.
Opponents on both sides of the pond claim that TTIP could increase animosity between Europe and the United States. Europeans would probably hold Americans accountable for any lowering of consumer, health and environmental standards, particularly in sensitive areas such as food safety. The probability is high that the Americans would point to Europeans for any job losses in the automotive sector, and others, as a result of increased competition from Europe.
UK politicians are making statements like TTIP “may need another year or two”, which is bureaucratic speak for “no agreement has been reached as yet”. In Germany, the Minister of Agriculture, Christian Schmidt, made a very strong statement that “access to sell German cars on the US market isn’t worth the price of giving up the ability to ban harmful chemicals in food.” German support is essential to the success of the TTIP.
Another worrisome element is the Investor-State dispute Settle Mechanism (ISDS). ISDS is one of the most controversial parts of TTIP in Europe. ISDS allows corporations to take precedence over parliaments. Citizens worry that the tribunals lack transparency and forces governments to make concessions to corporations. Opponents claim that a system of tribunals to adjudicate disputes between companies and states is not needed to protect US companies from expropriation in Europe as might be the case in Asia.
Another problem with TTIP is that it may not have synergy with TPP. Although TTIP can theoretically live its own life, it’s really intended to be used together with TPP. Proponents insist it will allow the West to set the rules for the 21st century. At a time when power is shifting from west to east, it is not clear that the TPP will adhere to the rules set by TTIP instead of the rules in TPP. Proponents say that TPP will increase the democratic and market-based development of Asian economies. TTIP members are already democracies with market economies. So TPP rules should not be applied to TTIP countries. In a speech before the Economic, Social and Environmental Council in Paris on October 28, 2015, EU Commission President Jean-Claude Juncker was characteristically blunt about the stakes at hand. “If we cannot reconcile the viewpoints of Americans and our own in a balanced and symmetric way, we will be the losers in the construction of tomorrow’s global trading system. If tomorrow, we want the rules and norms of trade to be set by the United States and our Asian friends, we should abstain. But, if we want to maintain our influence on the big questions that are at the heart of the world’s future, then, we must act. Opponents are concerned that their high standards will be lowered by TTIP.
A major blow was dealt to TTIP just a few days ago. The United Kingdom voted to leave the E.U. Now that TTIP has a question mark hanging over it, the TPP appears to be going on the rails also. How Brexit may affect TTIP and possibly TPP will be discussed in a forthcoming series. Stay informed with this TransLegal blog.
Call TransLegal with your questions concerning the TPP, the TTIP or trade agreements in general.