This short talk presents a brief background to the Transatlantic Trade & Investment Partnership (TTIP), also known as TAFTA, and explains why the predicted benefits are far smaller than are generally believed. It also explores an important but neglected aspect: the likely costs.
2.
transatlantic trade
EU+US
one half world's GDP
one third of world trade flows
EU<->US trade €500bn (2012)
trade agreement to reduce costs
tariffs
under 3%
TTIP is not a traditional trade
agreement (except in its lack of
transparency)
3.
non-tariff barriers (NTBs)
different regulations in EU, US
health, safety, environment,
labour, financial
EU bans on GMOs, chlorine washing
for chickens, hormones in beef;
greater data protection
for citizens
welfare enhancing
cultural expressions
for TTIP: "trade irritants"
4.
tackling NTBs
levelling down - EU says no
levelling up - US says no
mutual recognition
chemicals in cosmetics
1300 ingredients banned in EU
11 ingredients banned in US
1289 chemicals banned in EU could
be used in US products sold here
(future) convergence
5.
regulatory council
"living agreement" - De Gucht
"Horizontal Chapter on Regulatory
Coherence"
"impact assessment/cost benefit
analysis on proposed regulatory
measures covered by this Chapter,
should assess impacts on
international and in particular
transatlantic trade"
dilute/block legislation at a
very early stage
6.
investor-state dispute
settlement (ISDS)
basic idea is to protect
investors from arbitrary
government actions or weak court
systems in developing countries
achieved by allowing companies to
take action directly against
governments
using specialist external
tribunals
3 lawyers, meeting in secret
7.
ISDS (1)
over 500 cases (since 1987)
Ecuador - oil contract ($1.77bn)
Germany - phasing out nuclear
power (€3.7bn; Energy Charter)
Canada – fracking ban ($250m)
Canada - Eli Lilly patents ($500m)
Australia, Uruguay – adding
warnings to cigarette packs ($2bn)
2013 saw 57 more; Czech Rep. (7),
Spain (6), Croatia (2), Hungary
(2), Slovakia (2), Greece (1)
8.
ISDS (2)
EU - fracking, GMOs, pesticide
bans; labour laws; software
patents etc
14,400 US companies with 50,800
European subsidiaries
ISDS a ticking trade time-bomb
even European Commission trying
to "improve" ISDS
chilling effect on future policy
Canada's experience under NAFTA
9.
do we need ISDS?
"US investment in the EU is 3
times higher than in all of Asia"
"EU investment in US is around 8
times the amount of EU investment
in India and China together."
US invested €1.3 trillion in EU
EU invested €1.4 trillion in US
no problem to solve; no need
insurance (World Bank)
ISDS = socialisation of risk
10.
TTIP benefits (1)
Bertelsmann Stiftung (June 2013)
"The leveling of the barriers with
the USA thus leads to a decline in
trade that came about as a result
of preferential treatment of
intra-European trade flow"
intra-EU exports fall by 25%-41%
drop by €650bn/year
TTIP would hollow out the EU
economically
11.
TTIP benefits (2)
Centre for Economic Policy
Research (March 2013)
for European Commission
tariffs only: extra EU GDP of
€24bn - 0.1% of GDP
ambitious comprehensive:
50% of "actionable" NTB removed
extra EU GDP of €119bn - 0.48%
extra €90bn for US GDP, extra
€100bn for rest of world
12.
TTIP benefits (3)
"ambitious comprehensive"
forecast gives extra 0.48%
in *2027* - 0.48% is cumulative
GDP boost over 10 years
GDP growth is measured year-on-
year - how much GDP goes up *in a
year* (UK 2013: 1.7%)
on average, extra GDP growth per
year resulting from TTIP will be
O.05%
13.
TTIP costs
OFSE report (31 March 2014)
for GUE/NGL (Group of the European
United Left/Nordic Green Left)
forgone tariffs - €30bn
labour adjustment costs - €10bn
forgone tax income and social
security contributions - €7bn
ISDS - billions of Euros
social costs of regulatory change
health costs, ecosystem costs,
amenity loss, cultural loss
14.
is it worth it?
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