Top 3 Reasons Why US Should Oppose TTIP
American critics of TTIP worry striking a free trade agreement with the EU could prove devastating to the fragile US economic recovery. By opening American shale gas to European markets, eliminating "Buy American" clauses in government procurement contracts, and weakening post-financial crisis regulations, TTIP would invite economic turbulence, costing jobs and market stability. If Washington wants to secure a brighter future for America, it must shield the country from transatlantic free trade.
1) Erosion of US' Energy Advantage
One of the greatest comparative advantages currently enjoyed by American industry is the affordability of energy. The ongoing shale gas boom in the country's heartland, combined with improvements in technology and efficiency, have helped keep prices low even as they have risen considerably across the Atlantic. According to basic economic principles, surplus shale gas should be exported to the highest bidders: Europe and Asia. Doing so would dramatically improve American energy companies' bottom lines, spurring investment both in technology and in employees. Due to the OPEC oil embargo of the 1970s, however, the US government enacted policies designed to keep American energy stateside in the event of another embargo. Today, these policies restrict the transatlantic flow of petroleum, making energy plentiful.
As American oil and natural gas production has swelled, firms across the country have benefited from unusually cheap energy. And at a time when the US economy is still recovering from the 2008 financial crisis, politicians are loath to be labeled "job killers". Washington, reports Euractiv, worries that "exporting natural gas would push up prices at home, potentially costing politicians votes and damaging competitiveness for industries with heavy energy use." Although lawmakers have "begun granting licenses to export liquefied natural gas (LNG)," they have resolved to do it "slowly because of price concerns."
Because "the American shale revolution is unlikely to be reproduced in Europe," reports David Koranyi of the Huffington Post, the United States "currently enjoys…significantly cheaper energy particularly in energy intensive industries." Whereas "the United States and European Union cannot compete directly with low Asian labor costs," they "can compete by lowering energy intensity, increasing efficiency, and boosting productivity." Only the United States currently enjoys this competitive advantage; 2012 industry gas prices in the United States, according to the Carnegie Endowment, "were only about a quarter of those in the EU." Opening the petroleum industry to the EU would level the playing field.
2) End of "Buy American" Clauses
Few American industries are as shrouded in mysteries and secrets as is the defense industry. Its products and services, often the best worldwide, are in part the result of generous funding from Washington. For quite some time, they have enjoyed the protection of "Buy American" clauses which stipulate that government procurement operations should, as the name itself makes clear, buy American goods and services. The practice has come under fire across the Atlantic, as it makes it virtually impossible for European competitors to secure equal footing when bidding for contracts. To make the industry more competitive, the European Union has made ending "Buy American" a priority during TTIP negotiations, albeit not without a good deal of controversy in the United States.
While the European Parliament acknowledges "possible stumbling blocks during the negotiation procedure might include…the opening to competition of public procurement in the federal states of the US," it makes clear that the Union will, under no uncertain terms, "try to obtain exemptions from the rules under the ‘Buy American Act'."
This reality has not been lost on American politicians, as noted by the Polish Institute of International Affairs. In fact,
"This reluctance to support TPA is spilling over into full opposition to TTIP among these politicians. A letter to the House Ways and Means Committee ostensibly about TPA, signed by 36 members of Congress dubbed the "Young Democrats", raised objections to TTIP. The members of Congress broached issues such as the possibility of offshoring jobs, threats to the "Buy American" procurement provision, and difficulties surrounding dispute settlement."
3) Weakening of US Financial Regulations
Because American financiers shouldered much of the blame for the 2008 financial crisis and because the United States was among the developed nations hardest hit by recession, the American people are keen to avoid another market meltdown. With this in mind, regulators have crafted new rules ( see the Dodd-Frank Act) designed to prevent risky transactions and the overheating of markets, a move many deemed vital to the country's future economic stability. Now that the economy is beginning to show signs of improvement, any agreement seen as jeopardizing the hard-won regulatory gains in the years since 2008 will likely come under intense fire.
The Allianz-CER European Forum on November 26, 2013 produced a highly detailed report addressing, among other things, American trepidation regarding TTIP. The report's authors reveal that
"it was financial services and data protection that were the contested areas. Some argued that highly complex regulatory issues, such as financial services, should not be part of a trade agreement. They feared that a package deal could force concessions in regulatory standards at the expense of financial stability. Many in the US, especially in Congress, feared that TTIP could lead to a rolling back of financial regulation agreed under the Dodd-Frank Act, explained an American expert."
These concerns may well be justified; a European Institute article suggests "one of the thorniest issues is whether financial services should be a part of a TTIP deal." Noting that "the White House has seemed less enthusiastic in putting the sector on the table" than the financial industry itself, the institute further suggests "Administration officials fear the talks could lead to weakening of Dodd-Frank reforms enacted to address causes of the 2008 financial crisis." If Congress is faced with an "up-or-down vote," "financial regulations may have to be compromised in exchange for trade deals in other sectors."
The arguments included in this article are among those most often brought forth by activisits, journalists, experts, and Atlantic Community members. They do not, however, represent every criticism levied against TTIP. If you have a different opinion or feel an important point has been left out, we encourage you to share it in the comments section below. As always, a strong debate is welcome.
- Sharing, Gigs, On-Demand: Opportunities and Risks of the New Digital Economy
- The UK Cannot Afford Capability and Contribution Gaps to NATO Post-Brexit
- The US needs TPP as much as TPP needs the US
- Trump and NATO: Opportunities and Dangers
- Defense of the West: NATO, the European Union and the Transatlantic Bargain