Why T-TIP is so scary?

Since the first round of negotiation in July 2013, Transatlantic Trade and Investment Partnership (T-TIP) has been facing an uphill struggle. On the webpage stop-ttip.org, over 3.4 million people have signed against T-TIP. European people protest the treaty on social media, in parliaments and on the streets. In the December of 2014, Anti-TTIP protests shut down parts of Brussels.

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T-TIP is seen as a Trojan horse treaty.

T-TIP is a proposed trade agreement between the European Union and the United States, with the aim of promoting trade and multilateral economic growth. T-TIP has 3 main board areas: removing the remaining tariffs, aligning rules and standards, and reducing the paperwork required for doing transatlantic business, which should all lead to economic growths. The negotiations were planned to finalize by the end of 2014, yet are still in process and will not be finished by 2019~2020 according to economist Hosuk Lee-Makiyama.

Why T-TIP is so scary? The first reason is that T-TIP has been seen as threat to European public benefit. One of the main aims of T-TIP is to open up Europe’s public health, education and water services to US companies. European people concern that T-TIP could essentially make the National Health Service privatized. Besides, T-TIP seeks to bring EU standards on food safety and the environment closer to those in the US, which does make European people worry about food safety. EU allows no genetically modified food, while in US 70% of processed food sold in supermarkets contains GM ingredients.

More importantly, European people are worried that they may lose their job. According to Ricardian model, if the assumption of free trade holds, each country will produce the products at its comparative advantage. British farmers are especially concerned about T-TIP. With vaster land, more favorable climate and less strict food-safety regulation, US has obvious comparative advantage in farm products.

“US says that, under free trade, you don’t get the right to choose. Under free trade, we get to sell our hormone beef in Europe. And the impact of that, of course, is that no European producers have got a chance to be able to compete with it” said by John Hilary, Executive Director of War on Want. Radical as it is, this opinion is supported by numerous European farmers.

In addition, T-TIP has been seen as a harm to democracy. The T-TIP negotiation has been conducted mainly in secret. Big business representatives are access to the drafts before the parliaments see them, which provides a chance for the representatives to manipulate the treaty.

Massive protest against TTIP in Berlin, by DW News

While T-TIP is subject to a variety of reproach, it has good original intention on eliminating trade barriers. Although tariffs between US and EU are fairly low, 4% on average, the massive trade flows will bring about considerable tariffs between the two groups. Non-tariff barriers, including regulations and red tape, are even more costly and important. Producers often have to comply with two sets of rules and go through two procedures on either side of the Atlantic. Such barriers are estimated to result in the equivalent of a tariff of between 10 percent and 20 percent on traded products. According to the Delegation of the EU to the US, an independent study shows significant gains both for the EU and the US if an ambitious agreement is fully implemented. US GDP would increase by around 0.4%, or $123.5 billion, while EU GDP would increase by around 0.5%, or $154.7 billion.

What T-TIP committee should do is to find an appropriate approach. First of all, make the T-TIP negotiation and treaty public, so that everyone knows what is going on and T-TIP satisfies the demand of democracy. Besides, government can help people in disadvantage industry learn new skills and transfer to comparatively advantageous industries. Thus in the future T-TIP can be carried out without causing high unemployment. In the regard of public benefit, US and EU need further negotiation. T-TIP may need to follow the stricter rules if necessary.

 

References:

http://www.theguardian.com/business/2016/mar/03/in-or-out-ttip-is-a-threat-to-democracy

http://www.euintheus.org/transatlantic-trade-and-investment-partnership-ttip/why-is-ttip-important/

http://www.economist.com/news/europe/21674772-selling-europes-trade-agreement-america-strategic-has-problems-ttip-spear

https://stop-ttip.org

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2 Responses to Why T-TIP is so scary?

  1. Yujun Guo says:

    This is an interesting article. In both the EU and the US, the most vociferous opponents of the TTIP are Greens/environmentalists, consumer protection advocates, and the “Radical Left” in Europe and the “Progressive Left” in the US. However, it is an interesting observation that TTIP opposition has been almost exclusively confined to Europe. This observation provokes some reflections. EU is not a federal state, but rather an unidentified political object. Under this interpretation, Europe is believed to suffer from democratic deficit. The role of the European Parliament in international negotiations is a relatively new power conferred on the EP in the Lisbon Treaty. Indeed, the TTIP is the EP’s first big test of its power. It seems that EP is not easily recognized by European people.

  2. Yue Zheng says:

    Besides the worries mentioned in the article, It is reported that EU Commission is spearheading a campaign for the interests of the financial sector at the negotiations with the US on a free trade and investment agreement (TTIP). Many people worry that this could endanger reforms made since the financial crisis, and invoke another era of risky deregulation.

    Finance Watch has identified several aspects of TTIP that are relevant insofar as financial services are concerned. The main one is market access. While further liberalisation of the services sector is a key component of TTIP, for financial services this means a level of market access going beyond what has been reached until now in the WTO, which is likely to undermine the EU’s ability to pass precautionary laws to prevent a future crisis.

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