Thursday, 15 September 2016

US-EU: Analysis: Debating the ''TTIP''

France wants to halt thorny EU-US trade talks on the Transatlantic Trade and Investment Partnership (TTIP) as President Francois Hollande underlined there would be no deal until after President Barack Obama leaves office in January. France has been skeptical about the TTIP from the start and has threatened to block the deal, arguing the US has offered little in return for concessions made by Europe. 

German economy minister Sigmar Gabriel has said talks for TTIP has de facto failed. Mr Gabriel's statement is in contrast with the position of Chancellor Angela Merkel, who supports the deal. The fact that former British Prime Minister David Cameron, an outspoken proponent of TTIP, is no longer involved in negotiations is another major setback for the deal, which at this point is believed by many to be dead in the water.

US presidential candidate Donald Trump has promoted protectionist trade policies, while rival, Hillary Clinton also cast doubt on the TTIP deal. Congressional opposition has become steep. The lawmakers on both sides of the aisle have railed against free trade agreements as unfair to US companies and workers.

The opponents of the deal believe that in its current guise the TTIP is too friendly to US businesses. One of the main concerns with the TTIP is that it could allow multinational corporations to effectively ''sue'' governments for taking actions that might damage their businesses. Critics claim American companies might be able to avoid having to meet various EU health, safety and environment regulations by challenging them in a quasi-court set up to resolve disputes between investors and states...

In Europe, thousands of people supported by society groups, trade unions and activists take to the streets expressing protest against the deal. Three million people have signed a petition calling for it to be scrapped. For instance, various trade unions and other groups have called for protests against the TTIP across Germany to take place on September 17.

However, the debate in Europe surrounding TTIP relies on faulty critique on one side, and unsubstantiated promises on the other. Citizens on both sides of the Atlantic deserve better.

It is often easier to explain something by saying what it is not, rather than what it is. It should be clear that this article intends neither to champion nor to condemn TTIP. But since the debate has been raging, we can only sadly observe that the arguments on both sides do not live up to the issue at stake. What it reveals about us—Europeans—is disquieting.

The first aspect of TTIP worthy of criticism is the approach that has been employed by the European Commission. Its lack of transparency and secrecy could only attract the anger of opponents and prevent a substantive debate from taking place. This allowed public certainty that the negotiation was evil to easily creep in and spread. If it is true that the EU has a full jurisdiction over trade negotiations as far as the interests of the Union are concerned, that should not imply the exclusion of the people. The pursuit of the EU’s interests should bring all Europeans together, not create divides between the people and the institutions that represent them.
Concerning the cons of the agreement, thinking that such an agreement would devastate the EU’s economy looks like an admission of weakness or even an admission of failure, disparaging the competitiveness of the EU. The EU remains the strongest economic power and the most fully integrated market in the world. We have a chance to benefit from TTIP as well, for example in the field of public procurement. But no one really talks about that, since emotion can be far more easily aroused with chlorinated chicken and GMOs. 

More generally, the perception we have of the US reveals a sort of hypocrisy on our part. While we enjoy the positive economic effects of American growth, we widely still present the US as an aggressive capitalist monster acting out of thirst for money. We can no longer free-ride and be paranoid at the same time. This attitude is not fitting for an economic and political power such as the EU. Also, thinking that EU regulations will have to be lowered to align to the American standards is not reflective of reality. In the field of financial services, for example, the US has stronger regulations than does the EU. Moreover, free-trade does not require lowering standards for public health, environmental regulations, and consumer protection.
Let’s turn now to one of the most prominent critiques surrounding the agreement. The investor-state dispute settlement (ISDS) mechanism is not unique to TTIP. Many free-trade agreements contain an ISDS provision. In the TTIP case, opponents are unclear: Do they reject the principle of such a mechanism, or do they reject the manner in which it will be executed? This nuance is very important. 

Indeed, one could imagine excluding some economic sectors from the ISDS scope. This is for example what NAFTA did with financial services under its Chapter 11. If, however, opponents rather contest the ISDS on principle—the possibility for private companies to legally challenge states—they should remember that even national courts have allowed investors or companies to sue states because of the adoption of a law. For example, a 1934 French law had prohibited the manufacture and sale of any cream substitute not exclusively made out of milk. A company had specialized in the production of such a product before the act was passed. The Council of State—the highest administrative court—recognized that passing constituted an overreach of responsibility on the part of the state. We should also take note that expropriation and discrimination are also forbidden in the EU and that it would be hypocritical to renounce our home principles abroad.

All these details show how dogmatic and demagogic the TTIP debate is turning. If the opponents contest the privacy of this form of justice, they seem to forget that international arbitration allows the parties to chose their arbiter.
The advantages of TTIP are much less prominent in public debate. Because we hear pro-TTIP arguments less, it will be harder to criticize these views. But simply arguing that TTIP will create new job opportunities is not enough. Which guarantees and security can those pushing TTIP really provide to the European people?
Finally, the tragedy of this debate is that we seem to have forgotten that it takes two to enter into a bilateral deal. We too seldom consider the opinion of the American people. Doing so would probably stop many of the stereotypes about both the US and TTIP. Americans are far from all being satisfied with TTIP, and Congress is extremely divided. American isolationism did not die with the Monroe Doctrine. But beyond that, there is also something we should learn from Americans. Their class actions system demonstrates that the opposition to companies’ unfair practices is more structured than in the EU. American consumers organize legal collective actions and defend their interests more efficiently than do their European counterparts. If a similar culture were developed within the European Union, European consumers would probably feel the strength of the fantastic democratic countervailing power they can and should be vested in, and TTIP opponents would maybe be more reasonable.
We need the US as much as the US needs us. Many worldwide issues cannot be seriously addressed without a transatlantic cooperative framework. This is the case with regulatory arbitrage or shadow banking, which harm the both US and the EU economies. TTIP should be the first of a new Free-Trade Agreement generation, designed to conciliate both regulation and liberalization. The classical opposition between the preservation of high protection standards and absolute free-trade can be resolved through deeper transatlantic institutionalization, discussion, mutual recognition and prevention. When Europeans stop fearing everything at all time, that will be possible. But for now what is certain is that both Europeans and Americans deserve a better debate than a simplistic “for or against free trade?”

By Prof Guylain Gustave Moke
Political/Social Analyst/Writer
Investigative Journalist
International Affairs Expert

Photo-Credit: Getty-Images-London TTIP Protest Photo