The Transatlantic Trade and Investment Partnership (TTIP for short) is a free trade agreement proposal that is currently being negotiated between the European Union and the United States.
While there are few actual restrictions currently hampering trade between the two entities, proponents of the agreement claim that further loosening of barriers would benefit the global economy immensely, aiding growth and creating millions of jobs. However, there are a number of growing concerns around the agreement, which distort the otherwise beautiful picture.
Current economic theory clearly teaches that there are many, and widespread, gains from trade between two countries. Selling any surplus abroad brings about export revenue which governments can invest to improve the standards of living of its population. On the other hand, importing a good which a country cannot produce efficiently contributes to both efficient allocation of home resources, as well as global gains from trade.
Similar improvements are promised as a direct result of the TTIP, if it ends up being implemented. The US and EU economies collectively make up 60% of global GDP and thus any gains from trade would have a significant positive impact on the whole world. In fact, a report conducted by the European Commission predicts an increase in trade by as much as 50%. It would also boost the EU, US and the World’s economies by 120, 90 and 100 billion Euros respectively.
However, there have been two major concerns over the TTIP throughout Europe in the last couple of months. The first issue that was raised was the lack of transparency in the negotiation process. Noam Chomsky, among others, criticized the secrecy of negotiations. The issue is so severe that the European Commission launched a public consultation on the topic with more than 120 000 participants after a draft of the proposal was leaked in March 2014.
The other reason why the European public has been recently stirred by the proposal is that it would not simply diminish trade barriers, but has the potential to alter EU legislation – something that would have a direct impact on the quality of products consumed in the EU. As currently written, the TTIP would effectively allow GMO food to enter the EU market freely, which would significantly lower the quality of food and will have negative health effects on the population. The legislation would also allow cosmetic products to be sold unless they are specifically proven to be harmful (current US legislation), rather than allow products to be sold only after it was proven they are harmless (current EU legislation). Finally, the TTIP would introduce so-called Investor-State Dispute Settlements, which would allow companies to sue governments if a certain implemented policy leads to loss of profits for that company. Such lawsuits would just waste time and tax money, preventing the government to put the interests of its citizens as a priority.
Overall, it is clear that there are many aspects surrounding the TTIP agreement that seem controversial and unclear. More public involvement, as well as transparency are clearly needed in order to ensure that the interests of the citizens are the primary focal point of decision makers. While the recent congress election results may slow down negotiations, there is certainly no time to be wasted in taking action regarding the TTIP.