Doha, the BRICS, and Debt are the Main Motives for TTIP
Free trade is not the central motive for TTIP; tariffs are already relatively low within the transatlantic community. But neither is deregulation the primary goal, as is feared by some. Instead, to understand the motivating forces behind TTIP, one should examine the negotiations within the context provided by factors such as the stalling of the Doha Round of WTO negotiations, the rise of the BRIC economies, and the need to create growth without increasing public debt.
Beyond Deregulation: TTIP in the Age of Doha, BRICs, and Debt
As already noted in Dean Baker's article on Atlantic Community, TTIP is not about trade. In fact, the ‘transatlantic tax' is already around 3%, and most negotiation rounds have focused very little on tariff rates overall.
While concerns that TTIP will lead to deregulation and a lowering of health and safety standards in the US and EU are valid, I think it is also important to understand the larger implications of why the US and EU are so keen on such a large-scale agreement in the first place. I posit that the decision to work on this agreement now, in 2014, stems from three specific concerns for the transatlantic partners: Doha, BRICs, and Debt.
Doha is Dead
The Doha Round of WTO negotiations have been, in recent years, increasingly viewed as ineffective and the stalling of the Doha Round has created huge blocks to further opening of trade and investment. The emergence of a bilateral transatlantic agreement is as much an attempt to circumvent this process, as it is an attempt to prod the process along. Whether or not TTIP succeeds matters little when looking at the larger picture: as Doha continues to produce little to no results in the free trade arena, more countries will start to form their own trade agreements outside of this forum in a similar multilateral fashion. In fact as TTIP negotiations continue, the TPP, Trans Pacific Partnership between the US and the Asia-Pacific Region is also occurring. As Doha stalls, free trade agreements live on.
Follow the Yellow BRIC Road
In the context of delicate geopolitics between the West and the BRIC economies, TTIP makes even more sense. As the balance of power slowly shifts from US, EU, and Western dominance to a more evenly distributed global economy that includes Brazil, Russia, India, China, and others, it is no surprise that a free trade agreement promising closer economic cooperation would be attractive to both sides.
This new economic landscape also presents an opportunity for new regulation standards to emerge and the US and EU, both leaders of strict regulation in food, safety, and health standards (despite what it may seem), can achieve more together than apart. This "dynamic duo" approach allows both parties to enter into trade talks with the BRICs as one singular powerful force for stricter regulations than separate, disjointed blocs, and an agreement between the US and EU beforehand on regulatory standards makes it much more difficult for those on the other side of the table to dispute their claims. What the US and EU can agree on now will determine global standards down the road. Where the US and EU can work together vis-à-vis TTIP would encourage China, for example, to increase their own safety standards to in order to compete. This would definitely be a step in the right direction.
Sink or Swim? – Debt Concerns Post 2008
In the post-crisis age of austerity and debt policymakers are searching for more creative and long-term ways to promote economic growth without incurring additional debt. TTIP offers a solution for both simultaneously.
For the United States, national debt is a grey cloud looming over progress. For the EU, it is an attractive alternative to wildly unpopular austerity measures. While it is certainly important how these negotiations play out it must be stated that this desire to encourage economic growth without piling on the debt allows, for the policymakers at least, a huge opportunity to stay afloat a little longer.
All told, the real reasons behind TTIP are more than simply a chance to ‘deregulate'. Of course there are valid concerns, and they should be voiced, but beyond this, the reasons behind TTIP stem from much more than simply deregulating away any differences the US and EU may still have. When looking at the Doha trade round, the larger global economy, and both regions current debt and unemployment levels we can see the benefits of TTIP even more clearly.
Michelle Offik is an MA student in the Transatlantic Master's Program at the University of North Carolina Chapel Hill.
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