Barriers to US-Europe Trade Deal Remain
A US-EU free trade zone is a no-brainer. But the devil is in the details.
A free trade zone between the United States and the European Union is a no-brainer. But the devil is in the details.
The Independent (“David Cameron’s trade deal with America outrages critics“):
The free-trade agreement with the US that David Cameron has spearheaded at the European Union is expected to be widely condemned this week as bad for workers’ rights and the environment. The deal opens trade between the US and the EU to an unprecedented level and threatens to do away with swaths of local regulations on businesses. Barack Obama, Mr Cameron and European ministers say removing such “barriers” will create jobs and boost the economies of both trading blocs.
The EU says the Transatlantic Trade and Investment Partnership deal (TTIP) could increase the region’s GDP by 0.5 per cent by 2027 and create more than two million European jobs.
The Prime Minister championed the deal during his presidency of the G8 last year. The Department of Business, Innovation and Skills estimates that long-term it could raise UK national income by between £4bn and £10bn a year.
But critics say it will drive down European standards of wages and employment rights to US levels and erode environmental standards.
The American economy is easily the world’s largest and American productivity is among the highest in the world. It’s rather embarrassing that the concern about a free trade deal reducing the living standard to the lowest common denominator is coming from the Europeans, not us. And yet the floor for individual workers is much higher across Europe.
Activists are especially concerned by proposals to allow multinationals to sue countries in international arbitration courts, bypassing the laws and policies of democratically elected governments. The provision enabling them to do this is known as the investor state dispute mechanism. The negotiators pour scorn on such talk, accusing the activists of scaremongering.
Before the next round of TTIP talks in Brussels next week, War on Want is launching its “National Anti-TTIP tour”. Speakers from the US and Germany will team up with unions including the NUT, Unison and Unite and representatives from other countries opposed to the plan. A demonstration on Saturday will include a march starting at the Department of Business in London.
Unite is pressing Mr Cameron to secure an exemption for the NHS. The union fears future governments will be blocked from renationalising privatised healthcare services because US multinationals could sue for jeopardising future profits.
The United States Senate, which has to ratify treaties, has historically balked at these sort of provisions, fearing loss of American sovereignty. But here the shoe is on the other foot. Whatever one’s view of the degree healthcare should be government run or privatized, it’s hard to argue that that decision ought be made by judges rather than national legislatures.
Polly Jones of the World Development Movement, which is also stepping up its campaign against TTIP, said: “We’ve had some successes in the past blocking these enormous multilateral deals. Many developing countries don’t like them. They don’t feel it’s fair that they should be pushed around by rich countries. The EU and US are responsible for half the world’s trade and a third of all GDP. This will be a very dominant bloc and the smaller countries outside fear it.”
Yeah, well, too bad. While there are clearly major details to be worked out, reducing trade barriers among the world’s wealthy democracies should have been done long ago. That doesn’t preclude bilateral or multilateral deals with less developed countries, such as the United States and Canada bringing Mexico into their free trade zone two decades ago.
It’s this sort of thing that’s more worrisome:
Many groups are concerned about the proposed courts to settle investor state disputes. Ms Jones cited “chilling” cases brought under similar agreements. In one such case, a French utility group sued Egypt for raising the minimum wage; in another the US tobacco giant Philip Morris sued Australia for introducing plain cigarette packaging.
Again, outside actors shouldn’t be able to sue against practices clearly designed to promote the health and welfare of the local citizenry, so long as the laws are uniformly applied rather than a disguised attempt to advantage domestic industry. That line, of course, is not always clear:
Other claimed threats include the adoption of less stringent food rules from the US which allow the sale of hormone-treated beef and pork. These are banned in the UK.
These issues are always contentious. Localities often hang on to outmoded practices, ostensibly out of misplaced health concerns. At what point does that become simple protectionism? Europe was well ahead of the United States in recognizing the benefits of food irradiation, which not only vastly increases shelf life and prevents the growth of harmful bacteria but also kills pests. The US banned the import of irradiated foodstuffs long after it became clear that the practice was beneficial, relenting only about a decade ago.
These sort of questions make both the negotiation and ratification of omnibus trade bills exceedingly difficult. The fact that the EU has the ability to negotiate for 28 member states on these matters does help enormously, however. It would be next to impossible to work out such a deal with that many countries on a multilateral basis.