What if I told you that there are secret discussions currently going on between the European Union and the United States that had the power to significantly alter the way we do business? Though it may sound like something out a spy novel, these talks are happening as we speak, and they have the potential to impact our lives in a major way. Over this past summer on my tour with the Transatlantic Outreach Program in Germany, I had the opportunity to visit with the Friedrich-Ebert-Stiftung Foundation to discuss current issues regarding the Transatlantic Trade Investment Partnership, or TTIP for short.
Wondering what TTIP is? Basically speaking, it is a potential trade agreement between the United States and the European Union. Never heard of it? Don’t worry, you weren’t meant to. TTIP negotiations have been conducted in secret despite their potential to dramatically alter US and European business relationships in the foreseeable future. Though it has the potential to offer many benefits between the nations, there are major questions and concerns that it brings up as well.
The representative from Friedrich-Ebert-Stiftung that we met to discuss the topic was Phillip Fink- whose role with the organization includes work with climate, energy, and environmental policy, but he is also specifically involved in the TTIP program for the FES. The FES is a political foundation, unique to Germany because they are government-subsidized, created to serve the goals of the ruling majority party (currently the Social Democratic Party). FES is a nonprofit organization that works independently for the values of social democracy- freedom, justice, and solidarity. Some of the current projects and goals of the organization include political education work to strengthen civil society, conducting think tanks, collaborating with an international network of corporations, and to give scholarships which support young intelligent people both in Germany and abroad.
Originally, the World Trade Organization was created with the hopes that all countries around the world could benefit from mutually agreed trade practices. However, with the amount of parties involved, the WTO has slowed to a halt and as a result, countries have reverted back to individual or regional agreements. TTIP is one of these planned trade partnerships between the European Union and the U.S., but the negotiations are semi-secret, which fuels antagonism from critics of the TTIP program. In Germany, there is a lot of debate and fear from people who are afraid of the rollback of regulation for the benefit of market forces.
Benefits of TTIP
Trade Tariffs and Non-Tariff Barriers
Though trade tariffs and non-tariff barriers are already quite low between the US and the EU, removing or reducing these could benefit both regions economically. Basically, both of these concepts are the same- if a business from one country wants to sell their products in another, they are charged a certain amount of fees to do so based on agreed-upon trade agreements. More prosperous nations charge greater tariffs to other countries because they want to give the advantage to their own businesses when possible. Eliminating or reducing these fees would virtually put many businesses on a more even playing field and open up the market for increased competition.
Regulatory Compatibility and Coordination
The largest benefit of this agreement would be in the area of regulation. Currently, many companies are forced to comply with two separate sets of regulations and standards checks on their products when they are selling a product in a foreign market. Often, the standards may be virtually the same, but different labels or tiny differences in wording force companies to re-test their products using the standards of the other nation, costing time and money. If these rules could be agreed upon and standardized, then companies wouldn’t have to spend the money to double-test their products and goods could get to the market much faster for all member nations.
Though free trade agreements often sound good on the surface, there are always concerns on the unintended consequences they can bring up as well. Here are the 5 major concerns of opponents of the TTIP agreement:
1) Consumer Security and Protection
Will European citizens be forced to move to the U.S. Model, and will they be safe in it?
In the United States, a company creates a product and then questions regarding its safety will then later be carried out by courts, whereas in Europe the company must prove that a product isn’t harmful first before bringing it to market. European citizens in general can have confidence that their products are safe for consumer use when they first come out, and as such there are much fewer legal battles where companies can be sued for unsafe products. On the flip-side in America, citizens are usually “warning-labeled to death” to ensure that a lawsuit won’t result from someone’s coffee being too hot, but it typically doesn’t stop individuals from pursuing legal action if available anyways.
2) Workers rights
Will Europe see a rollback of workers rights based on the U.S. Model?
In Germany and Europe, a strong institution of workers rights protections and counsels exist to give workers high levels of benefits and protections in their work. On the contrary, there are varying states in the United States that support right-to-work programs against unions and now remove some of their benefits. If new trade practices are agreed to in the TTIP program, it could change the requirements for businesses in Europe to protect their workers, and many benefits that are standard now could soon be taken away from the people to make a workplace more profitable.
What happens if U.S. companies take European governments to court against regulations that could harm their business interests?
A country normally has sovereignty to make their own decisions and set their own standards and regulations in the workplace. However, an investment protection agreement which has been signed by two governments obligates countries to each other. These are designed to ensure that there isn’t discrimination against foreign investors between the countries in the agreement. Unfortunately, it can also mean that if a company uses the trade agreement to take a country that is part of it to court, it could force a country to allow things it is against.
For example: Germany wants to phase out nuclear energy, but is currently being sued that they are hurting the business model for a Swedish company that makes nuclear energy products and operates in their country. They could claim that Germany’s plan is hurting their business since they sell nuclear products, putting them in violation of the trade agreement between Sweden and Germany since Sweden did not agree to these changes. In other words, business issues could trump social issues and hurt the people of the country.
A second example: Germany subsidizes renewable energy programs, and the U.S. or another country could complain that their spending money to make goods and services cheaper for consumers hurts their right to sell solar panels for their price in the country, driving up the price and hurting the marketplace. This would be a major issue for a country that puts the needs of human dignity above all else, if there was the potential to go against those needs in the interest of business.
4) Employment/Public Services
Would public services offered in Europe change to the US model?
Public services offered are quite different between the U.S. and Europe, and could be changed if the United States goes into Europe more. In Germany today for instance, public health care and college are free based on the tax system they have in place. A trade agreement could even challenge this setup because an American company could take Germany to court claiming that they are unable to pay for every employee to have free health care, for instance, and it could force Germany to change policies to fit into the US workplace.
Secondly, many European companies could move their jobs from Europe to the US in order to fit in with the cheaper US qualifications for employment. Ironically, the way we complain in America about jobs being shipped out of our country, people in Europe could have a similar grips with their jobs being shipped away to America.
Ultimately though there are concerns about TTIP, there are many advantages if the countries involved are able to break down some of the current barriers to trade. Many exports are delayed on both ends for instance because a drug company needs to get approval from each country before bringing their product to the market. Agreeing to a common regulatory system could allow companies to produce products and bring them much faster and cheaper than the current strategies in place. Encouraging freer access between both nations would be a boon to both Europe and the United States and offer more competitive marketplaces for all parties involved.
Why the secrecy? Shouldn’t the people get a say in how our country operates?
Don’t forget, TTIP negotiations are going on in complete secret, and citizens of member nations will not put these decisions up to a vote once it is completed. It will be a law and things will change without any of our input. Secondly, as mentioned earlier, if corporations are granted the ability to sue governments that infringe upon their business, this can lead to potentially dangerous consequences when the needs of the people aren’t the basis of the laws and rules that govern our society. The decision on the formation of an international court system and how it will operate will go a long way in determining whether this is a great boon for business or a nightmare for democracy.
TTIP has the potential to significantly improve the trade relationship between America and the European Union and provide economic stimulus between all countries involved, but the state of current negotiations have led to major concerns from both sides on the topic. Though it could certainly bring prosperity to both markets, many in Europe fear that a mega-conglomerate U.S. corporations could flood the market with their products and take apart the European marketplace in the process.
To solve this potential problem, the current push is to develop international arbitration courts to determine an appropriate ruling on issues between countries within the potential trade agreement. Creating a just, neutral and transparent court system might be the ideal choice to ensure that countries don’t bow to the will of corporations and everyone feels comfortable with the new agreements. However, many debates will rage on before this agreement is ratified either way.