speri.comment: the political economy blog

The Transatlantic Trade and Investment Partnership (TTIP) and the changing fault-lines in global trade politics

New conflicts and controversies are emerging as the remit of trade liberalisation broadens

Gabriel Siles-Brügge, Lecturer in Politics at the University of Manchester

Gabriel Siles-BruggeThe stakes are high in the current EU-US free trade talks. The ambition stated by negotiators is that the Transatlantic Trade and Investment Partnership (TTIP) will eliminate many of the remaining barriers to the free flow of goods and services between both partners, creating ‘a more integrated transatlantic market place’.

Advocates argue that this will boost ‘jobs and growth’ on both sides of the Atlantic, with David Cameron calling the agreement a ‘once-in-a-generation prize’ that ‘we are determined to seize’. At a time of austerity, opines Karel De Gucht, the EU’s Trade Commissioner, the TTIP is ‘the cheapest stimulus package you can imagine’. In this vein, advocates of the agreement have often invoked the €119bn a year the agreement is supposed to generate in extra growth (albeit only by 2027).

Widespread opposition to the TTIP from civil society groups and political parties across Europe appears to have caught the agreement’s advocates at least partly by surprise. A House of Lords report published in May 2014 noted ‘that, insofar as a public debate on TTIP exists, EU member states are losing it’. Neutralising opposition of this kind was precisely the point of emphasising the economic gains in terms of ‘jobs and growth’ considered likely to accrue from the TTIP, as highlighted in a leaked European Commission memo from November 2013.

Similar discursive strategies premised on the economic imperatives for trade liberalisation have clearly paid off in the past. When the European Commission, which conducts trade negotiations on behalf of the EU, faced opposition to the EU-Korea Free Trade Agreement from the powerful European automobile industry (which feared competition from Korean car manufacturers), it stressed the inevitability of economic globalisation.  It thus effectively isolated the opposition of car manufacturers as a ‘protectionist hangover that had failed to adapt to the changing nature of the global economy’ and managed to have the agreement signed and ratified by the EU Council of Ministers and the European Parliament.

The reason such arguments appear not to have as much traction at present is that the fault-lines between advocates and opponents have not been drawn on the basis of distributive conflicts, as in ‘traditional’ trade policy.  The focus of the trade policy literature is largely on conflicts between the firms likely to gain from trade liberalisation (exporters and, to an extent, importers) and those likely to lose (import-competitors).  Business organisations, however, have largely been in favour of the TTIP – with most of the opposition coming from groups in civil society (and political parties) motivated by broader normative concerns.  These are largely ignored by the focus on economic imperatives and collective action in the conventional literature on trade policy.

This is partly a reflection of the fact that trade politics these days is no longer just about negotiating tariffs (taxes on imports that exist ‘at the border’); it’s now much more about how economies are regulated, dismantling ‘behind-the-border’ impediments to trade.  Although they have articulated quite a number of reasons why they oppose the TTIP, an important theme running through the campaign of civil society groups is that an FTA between the EU and the US would not only constrain the regulatory autonomy of democratically-elected governments, but also potentially dilute hard-won social and environmental protections.

In relation to the former, one of the most hotly contested issues during the negotiations has been the potential inclusion of investor-state dispute settlement (ISDS) provisions, which would allow investors to bypass national courts and seek redress in independent arbitration tribunals for perceived violations of investor rights by states.  Criticised by some scholars for establishing a system of privatised transnational governance, the worry is that ISDS may be used by firms to sue states taking policy measures to protect the environment, public health and/or other legitimate social benefits.

Aside from the ‘regulatory chill’ that ISDS is said to induce, namely, the idea that governments will avoid regulating for fear of losing an investor dispute, the concern that the TTIP might erode legitimate regulations is perhaps best illustrated by the case of Genetically Modified Organisms (GMOs).  These have already become a sticking point in the negotiations.  In contrast to the US, which regulates according to a ‘science-based’ approach, GMOs are largely banned in the EU, which relies on the ‘precautionary principle’ in its regulatory risk assessment, taking regulatory action even in the absence of clear scientific evidence of risk.  The fear articulated by civil society groups, and amplified by statements such as that of US Secretary of Agriculture Tom Vilsack that the US is definitely seeking a ‘science-based’ approach to addressing GMOs and other agricultural issues, is that the TTIP would dilute the EU’s ‘precautionary principle’ – even if wholesale regulatory approximation in this particular area is unlikely, given the entrenched nature of transatlantic regulators. 

Despite the broadening of this debate beyond distributive questions, the argument that the TTIP will generate significant economic gains is still quite a powerful one, as it allows the Commission to paint opponents of the deal as ‘anti-growth’ and thereby win over politicians on the Left who, despite their concerns over ISDS and other issues, cannot be seen to oppose jobs for their constituents (the UK Labour Party is a case in point).

That said, the economic argument is increasingly also being challenged by academics (such as Ferdi De Ville from Ghent University and myself) and activists, who point to the unreasonable and disingenuous assumptions being made in the econometric modelling of the impact of the agreement.

It remains to be seen, of course, how successful the opposition to the TTIP will be in terms of blocking the agreement or, at least, those provisions perceived to be most egregious.  There is already some evidence of success, as the Commission was pressured into suspending negotiations on ISDS until it had concluded a public consultation on investment protection. What the debate about this transatlantic trade deal has done, however, is to politicise the whole process, with the fault-lines no longer simply drawn between pro-liberalisation groups and protectionists.  If that democratises trade policy-making beyond business and technocrats – who have monopolised the process in the past – then that can only be a good thing.

Print page

Categories: SPERI Comment, trade | Tags: | 1 comment

Articles and comments posted on this blog reflect the views of the author(s) and not the position of SPERI or the University of Sheffield.

Comments (1)

  1. I don’t get why the 28 member states should renegotiate their rules with a single external power that lags behind in legislative reform. The United States would be free to harmonise with the Acquis and remove its barriers to trade as Buy American and Berry Amendments. Rules that work for 28 can also work for the US, as they do for Switzerland, Norway,… you name it.

    European rules are compromises between 28 indepedent nation states that sacked their legacy in a process of European harmonisation. The US legal framework is not up to these standards anymore, unable to make progress on many ends for partisan reasons.

Leave a reply

Required fields are marked *