ARGUMENTS ON TTIP

What is TTIP and what does it aim to do?

The bilateral trade agreement negotiated between the EU and US is called the Transatlantic Trade and Investment Partnership, or in short TTIP. Because it is a free trade agreement, it aims to eliminate all duties on bilateral trade between the EU and the US, with the shared objective of achieving a substantial elimination of tariffs and a phasing out of all.⁽¹⁾ Furthermore, it aims to increase trade and investment between the EU and US by releasing the untapped potential of a truly transatlantic market place, generating new economic opportunities for employment and growth through increased market access and greater regulatory compatibility and setting the path for global standards.⁽²⁾ According to Hans Straberg, Europe Co-Chair for Transatlantic Business Dialogue, TTIP is more than a traditional free trade agreement: While a traditional free trade agreement regulates customs and tariffs the EU and the US want to establish a regulatory harmonisation.⁽³⁾

The formal negotiations of TTIP were launched in July 2013; and it is hoped that the agreement will be completed in 2015. An estimated number of seven high level negotiations have taken place to conclude TTIP so far.

Table 1.1, Process of the Negotiations

The EU negotiates through Trade Commissioner while the US negotiates through the Trade Representative. Together they carry out the negotiations under the EU-US High Level Working Group on Jobs and Growth, which set a framework for subsequent rounds of negotiations between the parties. In this group, there are 24 joint working groups to consider a separate aspect of TTIP. And, there are three broad phases during the negotiations: position papers, textual proposals, and consolidated text.

The Reason(s) of TTIP

The idea of such a trade agreement between the EU and the US is not a new one. In fact, governments, business groups and academics have been discussing it for a long time. Actually, the first attempts were made in the 1990s, and later in 2006 by the German Chancellor Angela Merkel in reaction to the collapse of the Doha world trade talks.⁽⁴⁾ In recent years, the EU and the US began to feel that it was an idea whose time had come.⁽⁵⁾

According to Mark Brzezinski, the US Ambassador to Sweden, the main necessity of TTIP emerged from the last financial crisis in 2008. He says that the Europeans, Americans, and the world have just experienced the most severe financial crisis in a globally interdependent economy; especially in the US, this has been the most severe financial crisis since the Great Depression of the 1930s.⁽⁶⁾ Thus, it is clear that the last financial crisis encouraged the realization of the TTIP.

Arguments within the EU on TTIP

While TTIP negotiations are ongoing, there are two positions within the EU towards the TTIP: Europeanists as the opponent group and the Atlanticists as the proponent group.

Arguments of the opponents

The opponent group within the EU is mainly organized around the Europeanist. They put forward five main arguments: differences on banking regulations, food safety, risk of losing jobs, possibility of violating the public services, and competitiveness on labour and wage standards.

The first argument of the opponents is based on the differences on banking regulations between the EU and US. After the last global financial crisis in the world, the US has introduced stricter banking regulations which have worried the opponents that TTIP will bring America’s stricter approach to regulating the banking system to the EU.

Because the regulations in food safety within the American market are less strict, the second argument of the opponents is based on food safety. Today, 70 % of all processed foods sold in US supermarkets contain GMOs while the EU allows virtually no GMO. ⁽⁷⁾ Also, the pesticides and hormones used in food are more restricted in the European market. Thus, the opponents believe that the lacks of the US’s food safety will affect the EU’s higher level position negatively. However, about GMOs, the European Commission declared that “Under EU rules, GMOs that have been approved for use as food, for animal feeding or for sowing as crops can already be sold in the EU. So far, 52 GMOs have been authorised.”⁽⁸⁾ This indicates that GMOs have already been applied in the EU.

The third argument of the opponents is based on the risk of losing jobs to American workers. The last global financial crisis has shown that the rate of unemployment in the US increased from 5.4 % in (May) 2008 to 9.4 % in (May) 2009⁽⁹⁾ which makes the opponents fear an increase in unemployment rates within the EU.

The fourth argument of the opponents is based on the possibility of violating the public services because they believe that one of the main purposes of TTIP is to open up Europe’s public health, education and water services to US companies.⁽¹⁰⁾ Although the European Commission has declared that public services will be kept out of TTIP, the British Trade Minister Lord Livingston has admitted that talks about the National Health System (NHS) are still on the table.⁽¹¹⁾

The final argument is based on competitiveness on labour and wage standards. Although the European Commission declared that TTIP will include mechanisms to support the promotion of decent work through effective domestic implementation of ILO labour standards.⁽¹²⁾ the opponents claim that the low labour standards and wages of the US will deteriorate the relatively higher labour standards and wages in the EU.

Arguments of the proponents

After the last global financial crisis, the German economy in the EU has been consolidated. Also, if we consider that the US’s asset base in Germany ($721 billion) in 2012 was over 50 % larger than its asset base in all of South America;⁽¹³⁾ it is understandable that the proponent group is mainly shaped around Germany and Atlanticists. The proponents have four main arguments: creation of new jobs, reduction of unnecessary rules, reduction of the Chinese power from the international market, and more competitiveness within the market.

Firstly, the TTIP proponents claim that the US would benefit Germany more than virtually all other OECD nations because by converging regulatory requirements and eliminating unnecessary barriers to trade, it would bring about strong job creation and economic growth, expanded access to the US automobile market, and a strengthened transatlantic alliance.⁽¹⁴⁾ This view is supported by Markus J. Beyrer, Director General at Business Europe, who notes that Germany will be the biggest beneficiary of TTIP, and Germany’s growing export will have a positive impact on the European industry. ⁽¹⁵⁾

Secondly, the proponents claim that TTIP will reduce bureaucracy, unnecessary barriers and procedures which shall pave the way for new opportunities for businesses, especially small and medium sized enterprises that are currently unable to enter the US market.⁽¹⁶⁾

Thirdly, proponents claim that China will suffer severely due to TTIP. Jcek Krawczky, President of the European economic and social committee’s employer’s group and its rapporteur on TTIP, says that TTIP will set the standards for the commercial negotiations in the future and will force China to adhere to the standards worked out by Europe and the US.⁽¹⁷⁾

Finally, Joe Kaeser, the CEO of Siemens, claims that TTIP would strengthen the EU and US global competitiveness by reducing trade barriers, improving intellectual property protections, and establishing new international rules of the road.⁽¹⁸⁾

References and Endnotes

1. European Commission, 2014, Recommendation for a Council Decision: TTIP, Strasbourg, p. 8.
2. European Commission, 2014, Recommendation for a Council Decision: TTIP, Strasbourg, p. 7.
3. Video by American Chamber of Commerce in Sweden, TTIP – Removing Trade Barriers, http://www.youtube.com/watch?v=1XTvhW_4SzU (date of last access: 11.04.2015).
4. Spiegel: Trans-Atlantic Free Trade? Merkel for EU Agreement with the US, http://www.spiegel.de/international/trans-atlantic-free-trade-merkel-for-eu-agreement-with-us-a-440335.html (date of last access: 11.04.2015).
5. European Commission: European Union – Trade in goods with USA, 2014, p. 1.
6. Video by American Chamber of Commerce in Sweden, TTIP – Removing Trade Barriers, http://www.youtube.com/watch?v=1XTvhW_4SzU (date of last access: 11.04.2015).
7. Independent: What is TTIP? And six reasons why the answer should scare you, http://www.independent.co.uk/voices/comment/what-is-ttip-and-six-reasons-why-the-answer-should-scare-you-9779688.html (date of last access: 11.04.2015).
8. European Union, Trade in goods with USA, p. 6.
9. Bureau of Labor Statistics: Database, Tables & Calculators by Subject, http://data.bls.gov/timeseries/LNS14000000 (date of last access: 11.04.2015).
10. Independent: What is TTIP? And six reasons why the answer should scare you, http://www.independent.co.uk/voices/comment/what-is-ttip-and-six-reasons-why-the-answer-should-scare-you-9779688.html (date of last access: 11.04.2015).
11. Independent: What is TTIP? And six reasons why the answer should scare you, http://www.independent.co.uk/voices/comment/what-is-ttip-and-six-reasons-why-the-answer-should-scare-you-9779688.html (date of last access: 11.04.2015).
12. European Commission, 2014, Recommendation for a Council Decision: TTIP, Strasbourg, p. 16.
13. Hamilton, D.S. and Quinlan, J.P., 2014, The Transatlantic Economy 2014: Annual Survey of Jobs, Trade and Investment between the United States and Europe, Johns Hopkins University, Washington, p. 9.
14. Atlantic Community: Focal Points of the TTIP Debate on Atlantic Community, http://www.atlantic-community.org/-/focal-points-of-the-ttip-debate-on-atlantic-community (date of last access: 11.04.2015).
15. European Forum For New Ideas, 2014, What development opportunities does the TTIP bring for Europe?, p. 1.
16. The Parliament Magazine: TTIP discussion must be brought back to reality, https://www.theparliamentmagazine.eu/articles/opinion/ttip-discussion-must-be-brought-back-reality (date of last access: 11.04.2015).
17. European Forum For New Ideas, 2014, What development opportunities does the TTIP bring for Europe?, p. 1.
18. Wall Street Journal: Why a U.S.-European Trade Deal Is a Win-Win, http://www.wsj.com/articles/SB10001424052702303973704579350783279285204 (date of last access: 11.04.2015).

Hacı Mehmet BOYRAZ

Head of Academic Council, Platform of Students in the Centre for Strategic Research of Ministry of Foreign Affairs

Undergraduate student, Gediz University in the Department of International Relations, double-majoring in the Department of Political Science & Public Administration