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US and Europe must approach trade partnership talks in responsible manner


US and Europe must approach trade partnership talks in responsible manner

US and Europe must approach trade partnership talks in responsible manner
Photo credit: Flickr

The Dialogue Forum on the Transatlantic Trade and Investment Partnership (TTIP) between the United States of America and the European Union that took part in Berlin on May 5 ahead of the next round of talks planned on May 19 stimulated the foreign mass media to resume the debate on the viability of the planned agreement and the potential dangers it could present if signed.

During the forum, such politicians as Sigmar Garbiel, Vice Chancellor of Germany, Michael Froman, US Trade Representative, and Karel de Gucht, European Commissioner for Trade, spoke in favour of signing the agreement as soon as possible.

“With a free trade area, we can set standards with respect to third countries and the entire world: on labour rights, environmental standards or protection of intellectual property rights,” Michael Froman stated during the forum, emphasizing the fact that the planned changes will lead to jobs creation, competitiveness improvement and innovation promotion.

Sigmar Gabiel addressed TTIP opponents to take part in the talks, saying that they will lose an opportunity to introduce wanted changes and protect their positions otherwise. In his turn, Karel de Gucht pointed out that setting common trade standards between the US and the EU will help both sides promote their interests in the WTO.

Nevertheless, the agreement in question has many opponents. In their opinion, creation of the free trade zone will lead to the rise of unemployment due to more severe competition, law down-leveling and potential legislatorial impotence of governments against companies, as well as large expenses for equalizing European and American regulations.

Martin Häusling, MEP from the Green Party of Germany and one of TTIP critics, called the above points in favour of the Transatlantic Partnership “naïve” and described them as a “dangerous heresy.”

According to him, the agreement may lead to degradation of environmental and consumer standards by commercial companies in order to earn a profit.

Martin Häusling added that the US trade representatives are not interested in preserving the highly treasured European principles and intend to demote the EU standards to American levels.

In his turn, Robin Niblett, Director of Chatham House, noted that the creation of the Transatlantic trade zone is important for Washington not for economic, but for strategic reasons.

“TTIP is meant to be a confirmation of of the continuing strength of the relationship between Europe and the US. Given the geopolitical environment and great tension with Russia, there is great desire to show that America and Europe can complete an agreement like this despite the difficulties,” the expert said in an interview to “PenzaNews” agency.

According to him, the most important change caused by the free trade zone creation will be not reduction of tariff duties, but adjustment of trade regulations for both sides to a common standard, which will lead to improved economic efficiency for the US and the EU.

“What makes TTIP unique compared to any other agreement is the extent to which it seeks to reduce non-tariff barriers to trade and investment across the Atlantic. Most studies conclude that after reducing those, there will be an increase in the rate of GDP growth,” Robin Niblett explained.

Speaking of the rifts between the negotiating parties, he suggested a possible scenario that would help both sides make the process easier which involves signing a backbone agreement and beginning the process of setting common trade zone rules and standards.

“Rather than try to come to agreement in the next year to 18 months on removing, harmonizing or recognizing lots of standards on each side of the Atlantic, [it is possible to] set up a process of ongoing regulatory negotiations between America and Europe,” Chatham House Director said.

However, in his opinion, even in its current form, the Transatlantic Partnership project may undergo big changes.

“It may turn out that certain sectors end up not being included into TTIP. The ambitious plans that were developed in the beginning may end up not happening as a result of the negotiations,” Robin Niblett noted.

The expert named a possible decrease in personal data protection and potential collection and use of such data as one of the ideas that produce questions from one of the negotiating parties.

“Potentially, some of the lack of protection of privacy and personal data of citizens exposed by the Edward Snowden affair would be formalized. The Europeans are trying to stop it, the Americans are trying to have an ‘open digital market’,” Chatham House Director said.

Stefan Liebich, Bundestag member and representative of the Left Party of Germany, continued this topic by stating that TTIP represents a threat to the citizens' rights.

“In contrast to what apparently is discussed, the agreement is not mainly about the reduction of custom duties or about trade regulations. It's about setting new monitoring standards, new basic laws and rules. For the Left Party of Germany, this agreement is an attack on our hard-won rights,” he said.

The politician criticized the secretive nature of the previous talks on TTIP, and noted that since the Transatlantic Partnership will influence everybody and affect such issues as employment rights and financial market regulation, everybody has the right to know what is being discussed.

In addition to that, Stefan Liebich pointed out the vital role of public response to these events.

“In both Europe and the USA more and more people fight against TTIP. DIE LINKE is cooperating with everyone who tries to stop the agreement. We can only be successful if we work together. More than 400.000 people have signed the online petition against the agreement. The critics against TTIP become more and more visible and the politicians supporting the free trade area are under increasing pressure,” he emphasized.

Speaking on when will the document be signed, Stefan Liebich suggested that the agreement will not be signed in the immediate future.

“I think considering the growing resistance against the agreement in Europe and in the USA it's going to be hard for the parties to keep the planned timeframe,” the politician explained.

Dean Baker, Co-Director of the US Center for Economic and Policy Research and author of many books on economics, supported this opinion.

“It will likely be at least 2015 before we see a draft agreement,” he added.

In the expert's opinion, the point of the agreement is to create a pro-business regulatory structure that would never be approved trhough the democratic process.

“Presenting this pact as being about free trade is tremendously misleading. The trade barriers between the EU and the US are already minimal. The document is rather about imposing rules limiting the ability of national and sub-national governments to put in place environmental, consumer, and health and safety regulations. TTIP would make many such measures trade violations and subject to penalties,” Dean Baker said.

In his opinion, investor-state dispute resolution boards that will be established by the Transatlantic trade zone agreement will tend to make rulings that are tilted towards business which may significantly limit the capabilities of European governments. For example, the latter may no longer have the right to require labelling of genetically modified foods.

“These forms of protectionism which are directly opposite to free trade will raise prices of items like pharmaceuticals, creating economic distortions and slowing growth,” the analyst emphasized.

Per Åsling, Swedish MP and Centre Party representative, also noted that it is important for TTIP statements to conform to the principles of democracy.

“It is important that democratic values are not undermined in the process,” he stated, also saying that investment protection mechanisms, a part of the planned free trade zone, may require adjustments.

However, in the politician's opinion, TTIP will eventually facilitate economic growth.

“Our party supports this agreement. We live in a global world where each country's prosperity is based on free trade, making them closely interdependent. When the Transatlantic Partnership enters into force, it will make trade easier, erase many of the trade obstacles, and contribute to greater transparency and predictability. This is important for business development and free movement of people, products, services and capital between the EU and other countries,” Per Åsling noted.

Speaking of the common regulations within the free trade zone, the Swedish MP pointed out certain European standards that would be advantageous to keep unchanged during the formation of TTIP, such as a ban on the use of antibiotics and hormones in animal husbandry sector.

“The growing problem of antibiotic resistance is one of today's greatest threat to public health, and one could therefore expect that the Swedish-European model should continue to gain ground over the world. The EU shares these basic values, and the European Commission has made it clear that the basic rules concerning hormones and GMOs is not up for discussion,” he emphasized.

Kimmo Sasi, Finland MP and Head of the country's Finance Committee, bringing up the topic of influence of TTIP on business, expressed his opinion that free trade will positively affect both intrazone and global enterprises.

“We believe that better and more just competition improves productivity. Greater economic area improves the power of competition globally as well,” the politician stated; however, he also emphasized the fact that ailing industries will have difficulties to survive in new conditions.

Speaking on when will TTIP agreement be signed, he expert pointed out that the document is still in its early phase.

“It is difficult to estimate how long the negotiations will continue. My estimate is that the agreement will be ready at the end of Obama´s term,” Kimmo Sasi stated his opinion.

In his turn, Thomas Klau, Senior Policy Fellow at the European Council on Foreign Relations, said that he would not risk to make any speculations on when will the Transatlantic free trade zone be formed and pointed at the large quantity of uncertainties in the situation.

“Do I expect it to be concluded? Yes, I think it is more likely to be concluded. However, there is no certainty because of the resistance in countries like France from the European side, but also in the American Congress,” he emphasized.

Thomas Klau noted that as the presidential elections in the US come near, it will be increasingly difficult for Barack Obama, President of the United States, to push the free trade zone idea through.

Speaking of the after-effects of TTIP creation, the expert pointed out that the Transatlantic Partnership may become a means of achieving reciprocal adoption of common trade norms and safety regulations.

However, Thomas Klau emphasized the fact that the complex structure of the modern world makes the attempts to measure growth caused by the creation of the free trade zone highly hypothetical.

“You have too many other external factors to the agreement which have an impact on the development of the real economy. I don’t think it will make sense to attempt to quantify the positive impact of TTIP,” said the member of the European Council on Foreign Relations, mentioning that the after-effects may take years to surface.

Concluding the topic, the expert noted that the Transatlantic Partnership agreement, as any other trade pact, will cause not only positive but negative consequences, and for both parties. In particular, he mentioned that producers of goods and services may come under the increase of competitive pressure.

In his opinion, TTIP may also become a catalyst of other political and economical changes, just like the inclusion of China in the world trading system led to the making of the PRC as the leading export power.

“As always with the trade agreements, history shows that there are often unintended consequences. Their entry into force comes together with other developments. Trade agreements are always to some extent shots in the dark, and any prediction about what the effect will be, how soon it will materialize, any attempt to quantify it always carries a high degree of speculation, or, depending on who produces the speculation, propaganda,” Thomas Klau summarized.


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