Is TTIP a normal trade agreement?

Alfonso Llanes, Master Degree in International Development

Answered just now

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed trade agreement and the subject of an ongoing series of negotiations between the EU and US directed at creating the world’s largest free trade zone in the north Atlantic and in the history of the world’s commerce.

This agreement would be the biggest ever in the history of international trade; it could boost the size of the EU economy by €120bn ($100bn) representing 0.5% of GDP and the US economy by 0.4% of GDP. However, this giant agreement is as usual more about corporations than citizens.

It is foreseen to create several million jobs export-dependent where consumers would enjoy cheaper products and services. “The average European household of four would be around €500 a year better off as a result of wage increases and price reductions, according to the study commissioned from the Centre for Economic Policy Research in 2013.”

The envisioned plan is to reduced tariff barriers to zero and other non-tariff barriers by 25-50%. The sectors that would benefit most include industries based on metal products, processed food and chemicals, and more than not the automotive industry.

The main objective of TTIP is to reduce regulatory barriers to trade, in areas going from food safety law to environmental rules and banking regulations. The argument against it is that it will white-wash important EU regulations. One big issue has been food safety as a major stumbling block in the negotiations as both sides prepared for the latest 15th round held in New York October 3 – October 7, 2016.

There are still significant work to resolve differences in several important areas of the negotiations, such as “how to treat the most sensitive tariff lines on both sides; how to expand market access in key services sectors; how to reconcile differences on sanitary and phytosanitary measures; how to encourage the recognition of qualifications to facilitate licensing of experienced professionals; how to improve access to each other’s government procurement markets; how to address standards and conformity assessment procedures in ways that yield greater openness, transparency, and convergence, reduce redundant and burdensome conformity assessment procedures, and enhance cooperation; how best to achieve our shared objective of providing strong investor protection while preserving the right of governments to regulate, including with respect to dispute resolution mechanisms; how to reflect our shared commitment to including strong and effective disciplines on labor and environmental protection; how to structure commitments on data flows that will reinforce the essential electronic commerce and digital infrastructure of our economic relationship while respecting legitimate concerns about protecting privacy; how best to promote transparent, open, and secure energy markets; and how to reconcile differences in our approaches to trademarks, generic names, and geographical indications. On these and other challenging issues, our work over the past three years brought greater clarity to our differences and enabled us to explore avenues for reconciling them.”

A big concern reported by The Guardian Newspaper is whether standards will drop. For example, the EU bans cosmetics tested on animals but the US does not. Another question is what happens if EU countries want some protection, for instance Italy for its Parma ham, and the UK for its pork pies.

Leading the controversies is the Investor State Dispute Settlement (ISDS) provision. ISDS provisions have been included in many trade deals since the 1980s, to inspire overseas investment in poorer countries. It means private investors can ask a tribunal of international arbitrators to judge if a government has treated them unfairly – and be compensated as a result.

Over the past decade some big, mainly American companies, such as big tobacco i.e. Philip Morris, have used ISDS to claim rights to profits. The provision allows in theory that private investors can sue governments for the loss of future profits due to decisions made by national parliaments which of course raises the question of national sovereignty.