TTIP, the proposed free trade agreement between the United States and the European Union, is having its last rites read. Lovers of free trade should dance on its grave and celebrate its passing.
“In my opinion, the negotiations with the United States have de facto failed, even though nobody is really admitting it,” said the German Vice-Chancellor Sigmar Gabriel. To the European Commission, this is unfortunate news; it was hoped that TTIP would be an important deal aimed at dealing with Europe’s need to “kick-start” its economy. However TTIP was never solely a free trade deal: by including excessive deregulation, giving corporations a greater amount of power and putting public services at risk, TTIP may have been a deal that encouraged trade, but one which primarily existed for the interests of large multinational corporations.
Free trade should always serve the interests of the consumer. In general this means lower prices, higher quality and greater choice. To achieve this, firms must be able to provide goods with a low level of regulation; free trade agreements help achieve this not only by increasing the variety of goods but also by lowering the cost at which they can be provided. However, at the end of the day firms are driven by a profit motive and not a social one. Firms will underprovide public services, the poorest will be unable to afford basic needs and problems ranging from the environment to digital privacy would not be dealt with. No country has a truly laissez-faire economy because some measure of intervention is always needed so free trade can work in the interests of consumers, and TTIP fails to do just that.
A core principle of TTIP was deregulation and creating parity with American regulatory standards, which in general means deregulation on the European side. Since TTIP contains specific agreements on everything from cars and textiles to pharmaceuticals and cosmetics this would see impacts in almost every area of our lives. For example many food additives, dyes and pesticides banned in the European Union are available and widely consumed in the US. TTIP also includes regulatory parity for cars which could mean an increased risk of accidents occurring and agreements on digital privacy could see a reduction in digital protection within the EU.
Workers themselves benefit far less from this scale of deregulation than business owners, and as a result the social flaws deregulation poses serve the interests of corporations far more than the interests of consumers. It is therefore no surprise that 92 per cent of the European Commission’s TTIP meetings were with business lobbyists according to research from the Corporate Europe Observatory. TTIP negotiations also take place in a “reading room” shrouded in secrecy. This lack of transparency and barriers to a discussion would only serve large multinationals who lobbied in the first place, giving them a competitive edge over smaller businesses and budding entrepreneurs.
Parity with the US also makes it far easier for jobs to move from Europe to the US. Indeed further studies from Tufts University show that 600,000 jobs could be lost as a result. Believers in free trade should therefore not be fooled; TTIP may offer freer trade but it is not set out for the benefit of consumers. For everyday Europeans, their jobs are at risk, they are more likely to see prices undercut by American firms and the negotiation process has predominantly looked at benefitting multinationals.
When it comes to benefitting multinationals, nowhere is this example shown better than the investor-state dispute settlement. The investor-state dispute settlement (ISDS) allows firms to sue governments if government policy fails to protect foreign investment. Little explanation is needed of how this gives corporations a great deal of power, and many examples of this have already proven this to be dangerous.
When Quebec imposed a moratorium on fracking in order to study potential dangers, Lone Pine attempted to sue the Canadian government for $250m. When Germany shut down old Vattenfall nuclear reactors after the 2011 nuclear disaster in Fukushima, Vattenfall sought potentially up to $5.8bn in damages, and Germany eventually waived certain environmental obligations previously required to be met by Vattenfall. Even in failed investor-state disputes, the government’s legal bills are footed by the taxpayer – all so multinational corporations could maintain their profits.
TTIP presents another form of so-called free trade agreements which actually serve the interests of corporations over the interests of common people. From NAFTA to TPP (which both contain investor court systems like the ISDS) free trade agreements have long been perverted, and support for free trade agreements in the past has really meant support for corporate dominance. The free trade movement has been undermined for far too long as their efforts have only culminated in trade deals which establish corporate dominance, but now with the death of TTIP, its perversion of free trade has been called out.
Growing opposition to TTIP and other similar trade agreements could see a change future trade deals. We could see trade deals which protect key regulations, whilst advocating free trade through lower tariffs and sensible deregulation. Opposition to TTIP may mark the end of the dominance of investor court systems in trade agreements, and hopefully will increase transparency.
The death of TTIP may seem like a blow for free trade, but it is only a blow for a creed of free trade that does not serve the average European. The death of TTIP is a time for true free market supporters to rejoice. With it comes the potential for the free trade balance to be tipped away from corporations, and towards the interests of us all.