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| A valuable, and long-overdue, economic partnership? Or handover of power to a shadowy corporate understate? (Pic : euintheus.org) |
What is the TTIP?
Transatlantic Trade & Investment Partnership - a proposed free trade agreement between the United States and the European Union that's currently under negotiation. There's a deadline for it to be agreed sometime in 2015, though there are suggestions it could be finalised by the end of 2014.
It stands to become the largest free trade agreement in history, opening up markets for Europeans in North America and vice versa. It would also partially eliminate the threat of a "trade war" between the EU and US, a threat which has bubbled under the surface a few times in the past.
Because of the various entanglements these supra-national agreements have, there'll be knock-on consequences for other members of NAFTA (Canada & Mexico) as well as the EFTA (Switzerland, Liechtenstein, Norway and Iceland).
It could also, in its own way, shift the economic balance of power back towards "The West", taking the wind out of the sails of the "BRICS" somewhat. It's claimed (pdf) it could eventually boost the EU economy by up to €120billion (~£95billion) a year by 2027 - though it's also claimed this figure is massively optimistic and doesn't take into account the potential costs.
It sounds like a no-brainer, but aspects of the proposed agreement are extremely controversial.
In Wales, the most vocal arguments against TTIP have come from Plaid Cymru and their MEP, Jill Evans. In fact – and to their credit - they seem to be the only party in Wales taking this seriously (recently joined by Geraint Davies MP).
Although there are plenty of legitimate concerns about what the TTIP means, some of those concerns have been blown out of proportion, while others aren't being given the close scrutiny they deserve.
Call me cynical, but the moment politicians tell me something is "bad" or "good", I become instantly sceptical. That's perhaps my scientific background at work, but on one side you have those on the left who are probably opposed to free trade agreements for ideological reasons; while on the right you have those who are saying it's great whilst having a vested interest in seeing this through.
Who's telling the truth?
It opens the door to privatisation of the NHS – False, this could only happen if the UK Government decided to privatise it themselves - and they're making good headway on that in England. Monopolised public services, like the NHS, are protected. Most EU members states have public health care (though some charge fees), while the TTIP will have an affect on Canada, which also has public health care. It could potentially lead to American health care companies providing more private treatment in the UK (competing with BUPA etc.), supplying pharmaceuticals and medical devices (without trade barriers), and it could make it easier for clinical trials to be conducted on both sides of the Atlantic at the same time.
That's not to be complacent about this, as some of the reforms being pursued in England could end up privatising the NHS via the back door, inadvertently leading to companies exploiting possible clauses in TTIP. Ultimately, that'll affect the Welsh NHS as spending in England determines the size of the Welsh block grant.
It'll relax restrictions of food standards, in particular genetic engineering – Mixed good and bad news. This is something of a cause célèbre for Plaid Cymru, and I completely disagree with their stance on genetic engineering because I don't believe their policy is based on science. The Americans took advantage of genetic engineering, while the EU resorted to a policy based on a toxic mix of protectionism and "dark green" neo-luddism. Despite all that, TTIP wouldn't change any existing EU laws on GMOs.
The areas we do need to be legitimately concerned about are things like : the use of growth hormones in American beef, the use of certain chemicals in processed American foods (some of which are banned in the EU, like olestra), and America's record on pesticides. If American agricultural exports end up cheaper (due to things like the use of GMOs) it could also send many European farmers to the wall, but ditto the other way around. Opening up America fully to lamb, beef and dairy exports for example would probably be welcomed by Welsh farmers.
It'll relax banking laws and regulation – True. It's one of the big stumbling blocks at the moment and it's bad news. This is the corrupting influence of the City of London at play, who've pushed hard for a relaxation of financial regulations, which would certainly boost the financial service sector. Since the financial crisis, US financial service rules have tightened significantly and are actually more stringent than those in the EU. It's the EU pressing for a harmonisation of rules which will probably weaken regulations in the US, and the US have been keen to keep financial service regulation off the table.
It'll relax regulatory standards on other things like car safety and chemicals – Partially true, but it's unlikely anyone will notice the difference and it could be good in some aspects. It looks like the EU and US are going to retain their particular sets of regulatory standards, just make them "more compatible" with each other, which could strengthen consumer protections in the US and make European industry a bit more competitive.
An example's given (pdf) of electric vehicles, where at the moment the EU and US have different standards on things like plugs and chargers. If regulations were "future proofed" now then it would provide a much bigger future market for electric vehicles on both sides of the Atlantic. National governments will also retain the right to pass their own regulatory standards as they do now.
It could lead to an erosion of worker's rights – False, the pressure to do this is coming from right-wing national governments and businesses, not through the deal itself. The US has a pretty poor track record of worker's and trade union rights, the EU on the other hand (with exceptions) looks like a worker's paradise in comparison.
American workers - especially middle and high-earners - are generally more productive and earn more than Europeans (mainly due to lower tax rates and longer working hours). Ironically, a free trade agreement could mean American workers in low-paid jobs and students could seek EU-style rights if they think we're getting a better deal from employers and a higher standard of living because of it. This deal is going to cut both ways and in many aspects, the EU is is on the high ground; this shouldn't be seen as all one way in the Americans favour. If I were a trade unionist I would start making contacts on the other side of the Atlantic and see this as an opportunity, not a threat.
It'll lead to job losses/job gains – It depends on which sector of the economy you're working in. It's claimed that TTIP could create up to 400,000 jobs in the UK alone, and around 2.3million across the OECD area. I'm sceptical about those figures.
According to some reports (pdf), the machinery industry is expected to be one of the big winners on both sides of the Atlantic, while it'll boost the insurance and car industries in the EU, and the steel industry in the US. However, these boosts are likely to be through increased bilateral trade not increased production. Therefore gains on one side of the Atlantic could be wiped out by losses on the other side.
Governments could be sued for harming company profits or commercial opportunities – True, and it's probably one of the more dangerous parts of TTIP, though there are hints that this might be taken off the table. These agreements already exist in current treaties and are called Inter State Dispute Settlements (ISDS). Although it won't make privatisation a "corporate right", in instances where, for example, governments block a takeover (using competition rules that contravene the TTIP agreement), ban a product, or nationalise an industry, the company that misses out will have a right to sue for "compensation" in cases where they haven't already been offered such.
That sounds fair but is open to abuse. In a bit of good news, these cases normally have limited success. Nobody has ever successfully sued the UK through existing investment treaties that have ISDS clauses in them.
It's undemocratic – Neither true nor false. The big concern many people have with TTIP is the distinct lack of transparency. It's being negotiated behind closed doors by eurocrats, trade lawyers and bigwigs, and is seemingly not being held to account by anybody despite the high stakes. Most of the information so far has come from leaks and whatever information the negotiating parties have decided to divulge.
But....
When member states sign up to trading blocs like the EU, they willingly cede some control over trade agreements. It's being at least part-negotiated by the EU Council - which is made up democratically-elected heads of government that have been delegated this power on our behalf – and the EU Commission, which is made up of members nominated by member states.
The final treaty will also have to be ratified by the democratically-elected European Parliament, the US Congress and the 28 EU member legislatures to become law.
If Plaid Cymru and other opponents of TTIP are going to argue this is undemocratic then they're essentially saying the EU itself is undemocratic, as in terms of how it usually operates this is by the book. It's not often they're on the same side as UKIP, who've remained suspiciously quiet on this.
What does this mean for Wales?
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| An agreement could potentially - stress potentially - be very good news for some of Wales' largest employers. That doesn't mean it's all smiles and sunshine. (Pic : Image Group) |
Consider which sectors of the economy are expected to benefit : the car industry (Wales has traditionally had a strong supply chain), insurance (Admiral - who've long tried to crack America - and price comparison websites like gocompare.com and moneysupermarket.com), some aspects of agriculture and general manufacturing.
Based on the most optimistic projections (€240 per capita in extra trade across the EU), TTIP is potentially worth up to €720million (£568million) a year to Wales, and with our strong export record and prevailing economic strengths (listed above), the figure might be even higher than that.
It's safe to say that on many indicators, a successful TTIP is firmly in the Welsh national interest.
That's not to say that the concerns about this are unjustified. I'm not going to criticise Plaid Cymru too heavily. In fact they deserve applause, because at least they've adopted a position on it and tried to give it some publicity. They've done their duty, while other parties have been left wanting on an issue that could be of importance to us, yet has gone largely under the radar.
AMs have been keen in the past to stress the benefits of EU membership to Wales (here, here), so while there's still time, the National Assembly should consider holding a debate on this.
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