TTIP: Modest Deal Now or Comprehensive Deal Never?
Dullien, Garcia, and Janning call for a limited version of the Transatlantic Trade and Investment Partnership to be finished now so that an agreement can be passed. For this to happen, the EU must do a better job in engaging the public about the economic benefits of an agreement, emphasizing the winners while compensating the losers, and dropping the over ambitious sections such as ISDS and areas with marked cultural differences in risk assessments.
Summary of: "A Fresh Start for TTIP" by Sebastian Dullien, Adriana Garcia, and Josef Janning. European Council of Foreign Relations. February 2015.
Sitting across from each other at the negotiating table are two of the biggest powers in the world discussing a free trade agreement, the Transatlantic Trade and Investment Partnership (TTIP), which can drastically change the game if they can agree on a proposal. For these negotiations to conclude successfully, Sebastian Dullien, Adriana Garcia, and Josef Janning of the European Council on Foreign Relations (ECFR) recommend a "quick narrow agreement." Increasingly the public, especially in Germany and Austria, has voiced anti-TTIP feelings. The authors doubt a resurgence of "stopping the Western decline" tagline even in light of the annexation of Crimea could sway the opponents of TTIP. Instead, they advocate that it is time for a "fresh start" for TTIP. Law makers need to engage the public with debates as they need to take the opposition seriously.
Though the growth projections have been largely overinflated according to the ECFR; they emphasize there will be sectors that win in Europe with TTIP. For instance, the automotive industry is projected to gain the most, but other industries such as wood and paper products, chemicals, cosmetics, and metal products are also expected to gain. Some industries, such as agriculture are more likely to be negatively impacted but since negotiations are not concluded, it is more difficult to know the exact ramifications of a proposal.
Another effect that needs to be mentioned is the trade balance of individual member states. Since the 28 EU countries already have preferred access over other nations, meaning they access each other's markets for free, they may lose out when the US can enter those same markets as easily. Member states, who already export a large amount to the US and whose exports to other EU member states are not in direct competition with US firms, like Ireland are more likely to gain according to their analysis. States, like Slovenia, may be more negatively impacted if their exports resemble US exports and they do not have large tax barriers to export to the US. The ECFR authors estimate the UK and Germany are likely to walk away as the biggest winners of the larger states with projected growth of 4% and 2%, respectively. Other member states like Estonia, Spain, and Portugal are also among the top beneficiaries of a TTIP agreement. As ECFR points out "TTIP is likely to produce losers as well as winners among EU member states – something on which little attention has so far focused."
The experts also advocate that some of the bigger issues surrounding TTIP cannot be easily rectified using only economic explanations. They highlight cultural norms as some of the biggest barriers to the approval of a TTIP agreement. While the consumer preferences might be similar between the EU and US, there are still big differences in how they view risks, access to public services, and the tradeoff between national security and individual civil liberty. These differences may be too difficult to overcome and TTIP negotiators should not try to overcome them. Instead, they advocate that where standards can be mutually recognized, to do so but in other areas, such as chemical products, this may not be possible because of these differences in approaches. Contentious items such as Investment State Dispute Settlement (ISDS) should be dropped as they are also over ambitious.
Dullien, Garcia, and Jannings conclude by saying "But in light of the overall decline in trust, both in national governments and parliaments as well as in the EU, policymakers should take the opposition to TTIP seriously. If the EU and the US fail to reach an agreement, the negative fallout would reach beyond transatlantic trade. But even if they succeed, a failure to engage with public concern on both sides of the Atlantic could cause an even greater backlash against globalization and trade liberalization in the future." Thus the best option for the EU is to agree to a barebones accord, dropping investment protection and other contentious issues to the European public, and including compensation to the proposal's potential losers.
This article was written by Katherine Shea of the Editorial Team at the Atlantic Community.
This article is part of our project TTIP Review supported financially by the US Embassy in Berlin. Click on the link to read more articles and our governance rules.
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